The Department of Justice (DOJ), through the Office of the Assistant Attorney General, has issued a memorandum outlining DOJ’s primary points of focus in white-collar crime. The memo details how white-collar crime is intertwined with a variety of other criminal activity and organizations, such as cartels and transnational criminal organizations (TCOs), human smuggling organizations, the flow of drugs into the United States and terrorism. DOJ is particularly interested in investigating and prosecuting white-collar crimes as they relate to these issues.
DOJ specifically outlined various harms posed by white-collar crime, the first being fraud aimed at health care and other government initiatives. For example, the Criminal Division intends to focus on any corporations or individuals who defraud government initiatives, such as Medicare, Medicaid and defense spending. Another harm DOJ associated with white-collar crime is complex frauds aimed at U.S. markets. Such conduct includes Ponzi schemes, investment fraud and elder fraud. Additionally, DOJ identifies trade and customs fraud as a potential threat and therefore an investigative and prosecutorial priority threat, particularly to American businesses. DOJ notes such fraud can be furthered by financial institutions, shadow bankers and other intermediaries who process transactions involving the evasion of sanctions.
DOJ will also be focused on white-collar crimes and fraud which can be directly related to national security. DOJ’s Memo references the National Security Presidential Memorandum/NSPM-3 and its emphasis on the importance of investor protections against frauds connected to foreign adversary companies which are listed on U.S. exchanges. Of particular concern are variable interest entities (VIEs). These are companies, typically with affiliations to China, which are listed on U.S. exchanges and can pose risks to U.S. investors.
The Criminal Division identified such other high-impact areas as: (1) complex money laundering, including Chinese money laundering organizations, and other organizations involved in laundering funds used in the manufacturing of illegal drugs; and (2) violations of the Controlled Substances Act and the Federal Food, Drug, and Cosmetic Act (FDCA), including the unlawful manufacture and distribution of chemicals and equipment used to create counterfeit pills laced with fentanyl and the unlawful distribution of opioids by medical professionals and companies.
DOJ’s memo does note, however, federal criminal prosecution may not be appropriate for all corporate misconduct and may instead be dealt with through prosecution of individuals or civil and administrative remedies directed at corporations. This is relevant specifically in the context of low-level corporate misconduct, taking into account “whether the company reported the conduct to the Department [of Justice], its willingness to cooperate with the government, and its actions to remediate the misconduct.” The DOJ memo notes its intent to revise the Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP) to provide additional benefits, including shorter punishments, for companies that self-disclose misconduct and cooperate with the DOJ.
Summer Associate Adam Webber contributed to this report.
