Transparency in Criminal Division Enforcement

A crucial element of the Justice Department’s fight against white collar crime is transparency — being clear about what we at the department are doing and why. As someone who has spent significant time as a defense lawyer, I know from personal experience how important it is to be able to explain to your client — whether that client is an individual or a board of directors at a publicly traded company — what is happening in an investigation, how the government might view their actions, and the risks and the benefits of proceeding in a certain way.

This is not a new concept. The Justice Department has long valued transparency. That is why the Justice Manual, which outlines department polices on a wide range of issues, including critical decisions such as charging, is publicly available. And that is why all sorts of department policies — such as policies addressing when to charge mandatory minimum sentences or take actions that could affect members of the news media — are also publicly available.

But the need for transparency is particularly acute in our efforts to tackle white collar crime and corporate criminal enforcement. Why is that? Because corporations have compliance officers.

For a lot of my career, I was an organized crime prosecutor. I prosecuted members of the mafia, the five families — criminal organizations that exist to profit through greed and crime. Their members take a vow of silence. They don’t have compliance officers. White collar crime is different because most companies are not criminal organizations — yes, they operate for profit, but most companies are made up of hundreds or thousands of people just doing their jobs, who want to operate within the law. And when individuals at a company start committing crimes — for example, fraud, insider trading, or bribery — if the company has the right mechanisms in place, there can be many opportunities for others at the company to learn of the misconduct and stop it in its tracks.

That’s the ultimate goal, and it’s why transparency around white collar criminal enforcement is so critical.

First, it encourages companies to stop bad actors and deter them from misconduct. The Criminal Division has long had public policies that focus on effective compliance programs, including questions directed to how well the compliance program is resourced, whether compliance personnel are empowered at the company, and more recently, how the company uses compensation as both a carrot and a stick to incentivize good corporate behavior or to hold to account those who engage in or allow bad behavior. There is no oath of omerta here. To the contrary, being transparent about our expectations and the factors we consider in determining the appropriate resolution in a case makes it more likely companies will implement robust compliance programs that will detect and prevent misconduct before it spreads. With our policies and our words and actions, we at DOJ try to empower compliance personnel to demand a seat at the boardroom table to ensure that compliance programs are properly designed and appropriately resourced. To make the business case for compliance.

Second, transparency is also key for companies and their boards, executives, employees, and counsel to navigate investigations and prosecutions — so they know what to expect if we come calling. We don’t want our expectations to come as a surprise or to catch individuals or companies off-guard.

So how do we at the department and the division make sure that we are being as direct as possible about the policies our career prosecutors are following, as well as how those policies work in practice?

By releasing posts like this, by having our policies on our website, by explaining our decision making in the relevant considerations section of our corporate resolution documents, and through a new, exciting resource that I will describe below.

In the spirit of transparency, this post describes some of the key policy changes and their impact during my time leading the Criminal Division: (1) our Compensation Incentives and Clawbacks Pilot Program; (2) how we account for a company’s history of misconduct; (3) how we credit payments to other authorities as part of our “anti-piling on” policy; and (4) our Corporate Enforcement and Voluntary Self-Disclosure Policy. This post will also discuss several steps we’re taking today to clarify these policies and codify our recent practices when implementing them.

First is the Criminal Division’s Compensation Incentives and Clawbacks Pilot Program. In September 2022, Deputy Attorney General Monaco directed the Criminal Division to formulate guidance to reward companies that employ compensation clawbacks or similar arrangements that shift the burden of corporate financial penalties away from shareholders — who frequently play no role in misconduct — onto those more directly responsible.

We created a working group in the Criminal Division, consulted widely, and heard various concerns and ideas raised by experts and stakeholders. And we looked to our prior experience, including the resolutions with MoneyGram, Western Union, and Danske Bank, in which these financial institutions agreed to implement compliance-related criteria in their compensation systems. In March 2023, then-Assistant Attorney General Kenneth Polite announced the Pilot Program.

The Pilot Program has two parts. First, in every criminal resolution with the Criminal Division, the company must include criteria related to compliance in its compensation and bonus system. Second, every company resolving with us is eligible for a fine reduction for any compensation withheld or clawed back from certain culpable employees, either at the time of resolution or during the period of the agreement.

We’re now just more than halfway through this Pilot Program, and in the spirit of transparency, I wanted to address how we think the program is working. To that end, today we are announcing a first-of-its-kind: a status report on one of our pilot programs. This report is an example of how the division can continue to be transparent about trends or issues that span more than a single resolution. We have long sought to be transparent in our resolutions, including by discussing in the papers the factors we considered in determining the appropriate resolution in the case. This kind of status report is another way for us to be transparent about how we are approaching issues that arise across cases. We know that the business community looks to our policies and our words in implementing and calibrating compliance programs, and so we understand that our assessments of our policies and our enforcement work — looking both at past precedent and future trends — are particularly relevant.

In short, our Pilot Program has been a success.

In the time we’ve had the Program, 16 companies have entered into corporate resolutions and agreed to implement compliance criteria into their compensation programs. This helps promote a corporate culture that rejects wrongdoing for the sake of profit and rewards those who do the right thing.

We’ve also seen three companies — Albemarle, SAP, and TD Bank — take advantage of the second part of the program and receive fine reductions for withheld compensation. In fact, TD Bank not only received a fine reduction of about $2 million at the time of its guilty plea for compensation it had already withheld, but it also may receive an additional reduction of up to $5.5 million if it recoups more compensation during the term of its plea agreement.

What have we learned since March of last year? Well, we heard before we released our Pilot Program that certain local laws may make it difficult for companies to recoup money that’s already been paid, and this has been borne out. Therefore, we’ve made clear that we will award fine reductions not only to companies that recoup compensation from qualifying employees, but also to those that withhold the money from ever being paid in the first place. We’ve also communicated to our prosecutors that they should make sure companies know early during an investigation that we are interested in, and able to reward, appropriate withholding and clawbacks of compensation from culpable individuals. So, defense counsel should expect that our career prosecutors will bring that up in their early conversations with you and your clients. We’ve updated our Evaluation of Corporate Compliance Programs with suggested questions that our prosecutors can pose to companies on this topic.

So, looking back, over a dozen companies have been required to align compliance and compensation systems, and, from what we hear both at conferences and in our work, many more have likely done so on their own. And in our resolutions, a portion of fines has been shifted from innocent shareholders onto more responsible individuals. While we are only halfway through the Pilot Program, I am proud of our achievements thus far.

That brings me to the second policy: how the department considers a company’s prior history and how we approach multiple resolutions by a single company. In October 2021, DAG Monaco announced changes to department policy such that prosecutors now must consider the full criminal, civil, and regulatory record of any company when determining an appropriate resolution. Second or successive DPAs and NPAs are disfavored. In assessing all aspects of a company’s prior history, we consider the type of prior resolution, the age of the misconduct, the similarity to the conduct currently under investigation, any overlap in culpable personnel, and more. Under the Criminal Division’s revised Corporate Enforcement Policy and Voluntary Self-Disclosure Policy (CEP) it is clear that, for recidivist companies, cooperation and remediation reductions will generally not be from the low end of the U.S. Sentencing Guidelines’ fine range, and prosecutors will have discretion to determine the starting point for the reduction based on the particular facts and circumstances of the case.

In the past three years, we have accounted for prior history by selecting an appropriate starting point for a criminal penalty, before any reduction for cooperation and remediation. For companies that have no prior history, the starting point is often the bottom of the otherwise applicable range under the Guidelines. But for companies with prior misconduct, depending on the nature and seriousness of that misconduct, and as guided by the factors established by DAG Monaco, we will now start at a higher percentile, as you will have seen from our resolutions. For example, for the resolution with ABB we started at the 75th percentile because ABB had multiple prior criminal resolutions, including two FCPA criminal resolutions. In contrast, we started our calculation with Trafigura at the 5th percentile of the Guidelines range because the company had a dated prior criminal guilty plea.

I want to highlight a slightly different circumstance that has arisen in several recent investigations. Instead of a company having prior civil or criminal resolutions, a company may have several ongoing investigations into different criminal offenses that are resolving concurrently. While an ongoing investigation does not constitute a prior resolution, we must account for a company’s commission of multiple criminal schemes. Depending on the particular facts and circumstances, this can be indicative of a broader failure in a company’s culture or compliance program.

Take our recent resolutions with Raytheon Corporation. The company committed two schemes: a major government fraud scheme involving defective pricing, prosecuted by our Fraud Section’s Market Integrity and Major Frauds Unit along with the U.S. Attorney’s Office in Boston; and a scheme involving the bribery of a Qatari government official, led by the Fraud Section’s Foreign Corrupt Practices Act Unit, along with my old office the Brooklyn U.S. Attorney’s Office, and the National Security Division.

These schemes overlapped in time: 2012 through 2016 for the foreign bribery conspiracy and 2012 to 2013 and again from 2017 to 2018 for the defective pricing misconduct. Both schemes were sufficiently serious to warrant criminal resolutions with the department. But there was no overlap in personnel and the mispricing and bribery misconduct were far different from each other. The company was willing to resolve both cases at the same time, and did not engage in misconduct after receiving a prior DPA or NPA — and therefore did not implicate our policy disfavoring successive NPAs or DPAs. As a result, Raytheon resolved both investigations with DPAs. But starting at the bottom of the Guidelines range would have understated the totality of Raytheon’s criminality. As we explained in the relevant considerations section of the agreements, we therefore calculated the penalty starting above the bottom of the Guidelines range in each of the two DPAs to account for the company’s culpability in multiple criminal violations.

This does not mean that a company should expect to receive a heightened penalty simply because there are other investigations at play. We recognize that companies, particularly multinational entities or those in highly regulated industries, may have frequent touchpoints with regulators. And the policy disfavoring successive DPAs or NPAs does not apply when a company resolves criminal investigations concurrently. But where a company has committed two criminal schemes that warrant criminal prosecution, including when resolving at the same time, we will account for that in our resolutions — something we expect will be seen again soon.

The third policy I would like to address concerns our determinations of whether, and if so, how much, to credit payments made by companies simultaneously resolving with other authorities, whether criminal or civil, domestic or foreign. In each of our criminal resolutions, we review the evidence and the law and determine the available penalties, forfeiture, and victim compensation. Once that is complete, we assess other financial aspects of the resolution, including crediting payments to other agencies, ability to pay, and payment terms.

Since 2018, our formal “anti-piling on” policy has been outlined in the Justice Manual, but we applied a similar approach to coordinated resolutions before that time. Under this policy, department prosecutors investigating the same misconduct are to coordinate with one another to avoid the unnecessary imposition of duplicative fines, penalties, and/or forfeiture against a company. Prosecutors should also endeavor, as appropriate, to coordinate with and consider the amount of fines, penalties, and/or forfeiture paid to other federal, state, local, and foreign enforcement authorities seeking to resolve with the company for the same misconduct.

As you all have seen, prosecutors implementing this policy often exercise discretion to credit a portion of the penalty or forfeiture owed to the department against payments made to other authorities. For instance, in FCPA cases against issuers, we typically credit disgorgement payments made to the SEC against criminal forfeiture. The rationale is simple — where a company is already disgorging its ill-gotten gains, it does not make sense to have the company also pay criminal forfeiture, which serves the same purpose. On the flip side, we have made clear we now require all companies resolving FCPA violations, including non-issuers, to forfeit their ill-gotten gains and disgorge any profits gained through the scheme.

But we take a different approach to crediting when the monetary components of our resolutions can support victims. We never credit restitution or forfeiture that can be used for remission payments to victims, because both provide direct compensation to victims of the underlying crimes. The rare exception to this rule is when another agency has an equally effective mechanism to compensate victims. The fines and monetary penalties in our resolutions, as you may know, are deposited into the Crime Victims Fund, or CVF. The CVF provides general assistance to victims of crime by distributing its funds to federal, state, local, and tribal victim assistance organizations and similar programs. Because of the critical support offered by the CVF, once our prosecutors determine the appropriate penalties and forfeiture, our goal is to be deliberate in our decisions about crediting to ensure that the penalties to be paid are appropriately apportioned and that we are considering the uses to which those penalties will be put. To ensure that these principles are implemented in a consistent manner, we are issuing additional guidance to all Criminal Division prosecutors, which will codify and clarify our existing practices while ensuring that all penalties and forfeitures we impose in our corporate resolutions are based on the facts and the law.

The last policy change I’d like to highlight is the Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy, or CEP.

Our CEP’s roots trace back to the FCPA Pilot Program from 2016, which was one of the first department policies to set out, in black-and-white, the real benefits that come to companies that step up and own up by voluntarily self-disclosing misconduct. Since that time, the FCPA Pilot Program evolved into the CEP, which, since 2018, has applied across the Criminal Division. And now all litigating components across the department have their own VSD policies.

In January 2023, we announced the first substantial changes to the CEP in over five years. These changes helped widen the gap between the benefits that inure to companies that act as good corporate citizens, and the penalties for companies that do not. We created a potential path to a declination with disgorgement for companies that voluntarily self-disclose misconduct, even in the face of aggravating factors. We also increased the potential fine reduction available to companies that fully cooperate with our investigations and timely and appropriately remediate the misconduct — up to 50% for companies that do not voluntarily self-disclose and up to 75% for those that self-disclose but for which a criminal resolution is warranted.

One of the goals of these changes was to allow our prosecutors to make finer distinctions among companies to reward those that truly go above and beyond.

Companies should not expect to receive the maximum possible fine reduction simply for cooperating with our investigation. All companies start with zero credit and must earn any reduction that accounts for both cooperation and remediation.

You’ve seen us make those distinctions in the past two years: for example, SAP received a 40% fine reduction for its significant cooperation and remediation, which was immediate, proactive and preserved important evidence. In contrast, Trafigura only received a 10% fine reduction because its cooperation and remediation was slow, reactive and failed to preserve relevant evidence.

In none of those case did the company voluntarily self-disclose the misconduct. As a result, they were not eligible for the greatest benefit under our CEP, a declination with disgorgement. That is by design—we want to encourage companies to come forward when they detect misconduct and do so promptly. That helps us preserve evidence about misconduct we otherwise would never have known about and hold individual actors accountable. After all, companies act only through individuals, and individual accountability is our number one goal.

But we recognize that whether a company meets the precise requirements of a “voluntary self-disclosure” can have significant impact on the nature of the ultimate resolution. If a company does not qualify for a CEP declination, it could face a potential criminal resolution that carries significant penalties and obligations over several years, including cooperation and reporting requirements and necessary improvements to compliance programs.

We therefore must balance our desire to incentivize reasonably prompt disclosures of crimes we are not aware of with the reality that sometimes companies may come forward and fulfill many of our requirements but not qualify for a VSD under our policy.

Take Albemarle. We’ve discussed this case frequently. That’s because it stands as a key example of a company that tried to do the right thing, but narrowly missed the VSD mark. The company substantially cooperated and undertook significant remediation. It also voluntarily disclosed the misconduct that formed the basis for this agreement before the conduct came to the department’s attention. To be sure, the company was not “reasonably prompt” in doing so, as defined under the CEP, and therefore was ineligible for a declination with disgorgement. But the company’s decision to come forward — even if belatedly — resulted in significant and concrete benefits, including entering into a non-prosecution agreement rather than a DPA.

The company’s decision to disclose also factored heavily in our decision to award a 45% discount off the low end of the penalty range — the highest reduction ever and near the maximum possible under the CEP.

Rooted in this experience, today we are amending our CEP to account for that scenario. Specifically, where a company’s self-disclosure does not meet the definition of “voluntary self-disclosure” as articulated in the CEP, but the company has demonstrated that it acted in good faith to self-report the misconduct — and that it fully cooperated and timely and appropriately remediated — prosecutors will consider the company’s self-disclosure in determining the appropriate resolution, including the appropriate form, the appropriate monetary penalty, and the length of the term of the agreement.

Our revisions to the CEP now reflect our experience with Albemarle and reflect another incentive for companies to do the right thing. Those that make good faith efforts to self-report, even if they do not qualify for a declination, could still receive substantial benefits. These potential benefits include, among other things, the possibility of a non-prosecution agreement, greater credit for cooperation and remediation, and a potentially shorter length of the term of agreement. And this is consistent with the approach that other DOJ offices have taken, including U.S. Attorneys’ Offices, who favorably consider prompt self-disclosure even if all the VSD criteria are not satisfied.

The message remains clear — there are real and concrete benefits to calling us before we call you.

We are also codifying two other current practices in the CEP. First, consistent with our longstanding practice, the policy now makes clear that, to quality as a voluntary self-disclosure, the company must disclose original information, that is, information about which the department was not already aware. This aligns with one of the primary goals of the CEP, which is to encourage companies to disclose — and allow us to prosecute — crimes about which we were not aware. It is also inherent in the definition of “disclosure” and the definition we use in our Corporate Whistleblower Awards and Individual VSD Pilot Programs. Although we will consider a company’s good faith disclosure of information that — unbeknownst to them — we already knew about under the CEP amendment we’re announcing today, a declination with disgorgement will not be available.

Second, the updated CEP removes one of the aggravating circumstances — significant profit — that could make a company ineligible for a presumption of declination. We recognize that the amount of profits may not be known during the early stages of an investigation. We don’t want companies to hesitate in coming forward out of fear that, down the line, we may determine that the amount of profits were significant. After all, even with a CEP declination, companies are required to disgorge their illicit profits, whatever they may be.

This change aligns our CEP with the voluntary disclosure policy issued by the U.S. Attorneys’ Offices and our primary goal: to encourage companies to come forward at the earliest possible juncture so we can prosecute culpable individuals. This applies with even greater force to those who orchestrate a significantly profitable scheme. And while significant profits may in some cases be correlated with egregious misconduct, we reached the conclusion that a separate aggravating factor of “significant profits” is not necessary.

Over the years, the Criminal Division has continued to lead the way in the department’s corporate enforcement efforts. We never stop thinking, discussing, and evaluating the best way to root out and deter misconduct. While the particular facts or issue may change, one thing remains constant — the division’s commitment to transparency. We view our enforcement strategy as an ongoing conversation that is enriched by differing viewpoints and robust discussion. We may not always agree with the defense bar, but we know that our policies are made stronger, more effective, and more just when we are transparent.

It has been my great privilege to lead the dedicated career public servants of the Criminal Division. I am awed every day by each member of the division in all that they do on behalf of the American people. Our prosecutors work tirelessly, and with the highest integrity, to see that justice is done in each and every case. I am proud to have been a part of the Criminal Division for the past two-and-a-half years, and I look forward to seeing its continued successes.

View the Corporate Enforcement Page: Criminal Division | Criminal Division Corporate Enforcement

View the CEP: Criminal Division | Revised Corporate Enforcement Policy and Voluntary Self-Disclosure Policy

View the Enforcement Note: Criminal Division | Corporate Enforcement Note: Compensation Incentives and Clawback Pilot