Friday, September 25, 2015

Justice Plans to Hold Individuals Responsible for Corporate Wrongdoing

The Department of Justice (DoJ) issued a memorandum on September 9, 2015 calling for a new emphasis on holding individuals accountable fraud. In DoJ's words:
One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing. Such accountability is important for severl reasons: it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public's confidence in our justice system.
The DoJ however, recognizes that there are substantial challenges unique to pursuing individuals for corporate misdeeds. DoJ stated:
In large corporations, where responsibility can be diffuse and decisions are made at various levels, it can be difficult to determine if someone possessed the knowledge and criminal intent necessary to establish their guilt beyond a reasonable doubt. This is particularly true when determining the culpability of high-level executives, who may be insulated from the day to day activity in which the misconduct occurs. As a result investigators often must reconstruct what happened based on a painstaking review of corporate documents, which can number in the millions, and which may be difficult to collect due to legal restrictions.
The memorandum lays out six key steps to strengthen the Department's pursuit of individual corporate wrongdoing. These are:

  1. In order to qualify for any cooperation credit, corporations must provide to the Department all relevant facts relating to the individuals responsible for the misconduct.
  2. Criminal and civil corporate investigations should focus on individuals from the inception of the investigation.
  3. Criminal and civil attorneys handling corporate investigations should be in routine communication with one another.
  4. Absent extraordinary circumstances or approved department policy, the Department will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation.
  5. Department attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases, and should memorialize any declination as to individuals in such cases.
  6. Civil attorneys should consistently focus on individuals as well ass the company and evaluate whether to bring suit against an individual based on considerations beyond that individual's ability to pay.
You can read the entire guidance paper by clicking here.

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