DOJ Revises Criminal Corporate Enforcement Policy (Again)

The Department of Justice has once again revised its criminal corporate enforcement policy to encourage cooperation and self-disclosure of criminal misconduct by corporations and their executives.

On January 17, 2023, Assistant Attorney General Kenneth A. Polite, Jr. announced changes to the Department's existing enforcement policy.  That policy – announced in April 2016 – provides a presumption against prosecution for any company that voluntarily self-discloses misconduct, fully cooperates with investigations, and timely remediates. And where a company self-discloses but a criminal resolution is still warranted, the existing policy offers a fifty percent reduction off of the low end of the applicable Sentencing Guidelines penalty range.

Revised Criminal Enforcement Policy

The revised policy provides greater incentives for companies that self-disclose, cooperate, and remediate. Specifically, the policy makes three key changes.

First, the policy provides the Department additional discretion where “aggravating circumstances” exist. “Aggravating circumstances” are present when the misconduct within the company is pervasive, executive officers are involved, the conduct resulted in significant profit to the company, and the company is a recidivist.

Under the former policy, companies were ineligible for declination where “aggravating circumstances” were present. Under the revised policy, the Department may now decline to prosecute a company even where aggravating circumstances exist if the company demonstrates that:

• Voluntary self-disclosure was made immediately upon the company becoming aware of the alleged misconduct;
• At the time of the misconduct and the disclosure, the company had an effective compliance program and system of internal accounting controls that allowed the company to identify the misconduct that led to its voluntary self-disclosure; and
• The company provided extraordinary cooperation with the Department’s investigation and undertook remediation.

In addition, even where a criminal resolution is warranted, the Department will provide increased incentives for companies that voluntarily self-disclose, cooperate, and remediate. These incentives include:

• The Department will accord, or recommend to a sentencing court, a fifty to seventy-five percent reduction from the low end of the U.S. Sentencing Guidelines fine range, except in cases of criminal recidivism. This revision represents a significant increase from the previous potential maximum reduction of fifty percent off the Guidelines range; and
• The Department generally will not require a corporate guilty plea – including for criminal recidivists – absent multiple or particularly egregious aggravating circumstances.

Finally, the revised policy provides that companies that fail to self-disclose misconduct will remain eligible for incentives if they later cooperate with the government. In these cases, the Department will recommend up to a fifty percent reduction off the low end of the Guidelines fine range, except in cases of criminal recidivism. Additionally, prosecutors will have the discretion to determine the specific percentage reduction and starting point in the range on a case-by-case basis.

 Individual Accountability

Above all, Polite stressed the importance of individual accountability under the revised enforcement policy, especially as it relates to whether a company has provided “extraordinary” cooperation. Specifically, four concepts govern the Department’s determination of a company’s degree of cooperation: immediacy, consistency, degree, and impact.

When an individual executive is involved, Polite provided the following examples of extraordinary cooperation:

• “when an individual begins to cooperate immediately, and consistently tells the truth;”
• “individuals who allow [the Department] to obtain evidence” otherwise not available to it, such as imaging their electronic devices or having recorded conversations; and
• cooperation that “produces results, like testifying at a trial or providing information that leads to additional convictions.”

Polite remarked that the Department’s number one goal in this area is individual accountability, emphasizing the importance of companies and their executives going “above and beyond the criteria for full cooperation” and providing cooperation that is “truly extraordinary.”