Last month, the head of the Criminal Division of the U.S. Department of Justice (DOJ), Matthew R. Galeotti, issued a Memorandum outlining DOJ’s enforcement priorities and policies for prosecuting white-collar crime, identifying three core tenets to guide prosecutors: “(1) focus; (2) fairness; and (3) efficiency.”
Among the areas of focus listed, the Memorandum identified as a continuing enforcement priority “rampant health care fraud,” which it characterized as a threat to the country’s limited resources, noting that “corporations and individuals defraud important government initiatives, including Medicare, Medicaid . . . and other programs intended to assist vulnerable citizens.” The Memorandum stated that the Criminal Division “will lead the fight in holding accountable those who exploit these programs and harm the public fisc for personal gain.”
On the issue of fairness, the Memorandum stated that the “first priority is to prosecute individual criminals” because it is “individuals – whether executives, officers, or employees of companies – who commit these crimes,” and the Criminal Division “will investigate these individual wrongdoers relentlessly to hold them accountable.” To ensure fairness regarding whether and how to resolve corporate misconduct through criminal prosecution, the Memorandum stressed the need for “an individualized assessment of the facts and evidence in each case” to allow “an appropriate determination based on the application of the law to those facts.” In this vein, the Memorandum stated that DOJ’s Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP) is being revised to “clarify that additional benefits are available to companies that self-disclose and cooperate, including potential shorter terms” and so that the CEP’s “core components – the paths for potential declination, the available fine reductions for a company’s cooperation and remediation, and relevant factors that determine the contours of a corporate resolution – are more easily understandable.”
Regarding efficiency, the Memorandum recognized that federal investigations of corporate misconduct “can be costly and intrusive for businesses, investors, and other stakeholders . . . [and] can also significantly interfere with day-to-day business operations and cause reputational harm that may at times be unwarranted.” As a result, the Memorandum stated that while the complexity of some white-collar schemes may take substantial time to unravel and can last years, prosecutors “must take all reasonable steps to minimize the length and collateral impact of their investigations, and to ensure that bad actors are brought to justice swiftly and resources are marshaled efficiently.” The Memorandum directed all prosecutors to “move expeditiously to investigate cases and make charging decisions” and stated that his office will work to ensure that investigations “do not linger and are swiftly concluded.” The Memorandum also stated that monitorships would only be imposed when “such heavy-handed intervention” is needed because the company is unable to implement an effective compliance program or prevent recurrence of the misconduct, and that when used they “must be narrowly tailored to achieve the necessary goals while minimizing expense, burden, and interference with the business.”
Galeotti followed up the issuance of the Memorandum with remarks that he delivered on June 10 to the American Conference Institute, where he sought to clarify any misunderstandings the Memorandum might have created concerning DOJ’s determination to prosecute meritorious investigations. Galeotti stressed that the Criminal Division “has not and will not close meritorious investigations or dismiss meritorious cases” and that “we will vigorously pursue these investigations and open new ones . . . move them expeditiously . . . [and] resolve them, fairly and justly.” Galeotti also specifically warned companies to be “conscientious about what, when, and how you appeal the decisions of Trial Attorneys and AUSAs,” noting that “seeking premature relief, mischaracterizing prosecutorial conduct, or otherwise failing to be an honest broker actively undermines our system” and will “also be counter-productive to your appeals, coloring arguments that may carry more weight, especially when made judiciously at the appropriate time.”
At the same time, Galeotti reiterated DOJ’s unwavering commitment to rewarding companies that voluntarily self-report, cooperate, and remediate, stating that “those companies will receive a declination, not just a ‘presumption.’” And while DOJ retains discretion where there are “aggravating circumstances,” Galeotti promised that “this is not a game of ‘gotcha’,” and that he would be “closely reviewing all corporate resolutions” and that he is “standing behind this policy.” Galeotti further noted that “issuing declination for voluntary self-reports is sound policy – both to hold the most culpable individuals accountable and as a preventative measure to deter misconduct from happening in the first place – and I will closely scrutinize any [voluntary self-disclosure] that is not recommended for a CEP declination,” stating that “circumstances would have to be truly aggravating and sufficient to outweigh the fact that the company voluntarily came forward.”
