Remarks as prepared for delivery
Thank you, Marshall, for that gracious introduction, and for
your service in the Department of Justice. I am also grateful to Michael
Schachter for chairing this event, and to the staff of the New York City Bar
for your courtesy. I think I last visited this office to speak at a tax seminar
about 15 years ago.
There are many current and former colleagues from the
Department in this room, as well as friends from law firms and the private
sector.
I am very happy to be with you in Manhattan. You may have
heard that I have been kind of busy in Washington.
After I speak with you this morning, I need to head across
Times Square to participate in the annual conference about the Foreign Corrupt
Practices Act.
I did not intend to deliver two speeches about white collar
crime today. When I received the invitations a few months ago, I hoped to
delegate one of them to a Senate-confirmed Assistant Attorney General for the
Justice Department’s Criminal Division.
The President nominated a highly qualified lawyer named Brian
Benczkowski to serve in that position almost one year ago. But Brian is still
awaiting a confirmation vote, as are Jeffrey Clark, our nominee for the
Environmental Division; Eric Dreiband for the Civil Rights Division; and Jody
Hunt for the Civil Division.
Each nominee meets or exceeds the qualifications normally
required for those important jobs. President Trump deserves great credit for
nominating champions of the rule of law to serve in the Department of Justice.
There are seven litigating components in Main Justice. Only
two of them have Senate-confirmed leaders.
When the founders drafted the Constitution in 1787, this is
probably not what they had in mind.
It used to take only a few days to secure the Senate’s
advice and consent for presidential nominations.
Fortunately, under the leadership of Attorney General Jeff
Sessions, we assembled a superb team to serve as acting heads of the Justice
Department’s key components, and we will keep moving forward.
We are aggressively pursuing the crimes that pose imminent
danger to the American people. They include terrorism, gang violence, drug
trafficking, child exploitation, elder abuse and human smuggling.
Fortunately, we have sufficient resources to enhance our
commitment to our new enforcement priorities without detracting from our
commitment to prosecute other violations, including white collar crime.
White collar crime undermines the rule of law, defrauds
victims, and disrupts the marketplace.
Our goal is to deter crime, and we can only do that by holding
accountable the perpetrators who cheat in an effort to gain a competitive
advantage.
Effective crime prevention requires strong relationships
among enforcement authorities and law-abiding businesses. Our Department is
committed to reinforcing its relationships with good corporate citizens.
That is reflected in a series of concrete policies announced
by the Department over the past year. You will continue to see it in the
faithful execution of those policies by our agents and lawyers.
One of my favorite management parables is about a child who
watches her mother prepare a roast beef.
The mother cuts the ends off the roast before she puts it in the oven. The child asks why. The mother says that she
learned it from her mother. So the child asks her grandmother. The grandmother
explains, “When your mother was a child, I cut the ends off because my pan was
too small to fit the whole roast beef.”
The moral is that the solutions of the past are not
necessarily the right solutions today.
Circumstances change. We should
be willing to reconsider our assumptions.
Whenever we mention that an existing policy is under review,
defenders of the status quo proclaim that the current version of the policy is
exactly right. Maybe so. Maybe some Department policies are exactly
right. But sometimes we need to review
whether an existing policy accomplishes its goals and best meets our current
needs.
I hope that our attorneys continue to share their
experiences, to accept input from stakeholders, and to make suggestions about
policy changes.
Let me discuss a few recent policy changes.
In June of 2017, Attorney General Sessions announced that
the Department would end the practice of directing third-party settlement
payments to non-governmental entities that were not harmed by a defendant’s
conduct.
Last November, the Attorney General announced a Department
policy to prohibit improper use of and reliance on agency guidance documents.
Also in November, we announced the Department’s new Foreign
Corrupt Practices Act Corporate Enforcement Policy. It promotes greater clarity
and consistency in FCPA enforcement efforts, and provides stronger incentives
for companies to voluntarily disclose misconduct, fully cooperate, and
remediate any harm.
Today, we are announcing a new Department policy that
encourages coordination among Department components and other enforcement
agencies when imposing multiple penalties for the same conduct.
The aim is to enhance relationships with our law enforcement
partners in the United States and abroad, while avoiding unfair duplicative
penalties.
It is important for us to be aggressive in pursuing
wrongdoers. But we should discourage disproportionate enforcement of laws by
multiple authorities. In football, the term “piling on” refers to a player
jumping on a pile of other players after the opponent is already tackled.
Our new policy discourages “piling on” by instructing
Department components to appropriately coordinate with one another and with
other enforcement agencies in imposing multiple penalties on a company in
relation to investigations of the same misconduct.
In highly regulated industries, a company may be accountable
to multiple regulatory bodies. That creates a risk of repeated punishments that
may exceed what is necessary to rectify the harm and deter future violations.
Sometimes government authorities coordinate well. They are force multipliers in their
respective efforts to punish and deter fraud. They achieve efficiencies and
limit unnecessary regulatory burdens.
Other times, joint or parallel investigations by multiple
agencies sound less like singing in harmony, and more like competing attempts
to sing a solo.
Modern business operations regularly span jurisdictions and
borders. Whistleblowers routinely report allegations to multiple enforcement
authorities, which may investigate the claims jointly or through their own
separate and independent proceedings.
By working with other agencies, including the SEC, CFTC,
Federal Reserve, FDIC, OCC, OFAC, and others, our Department is better able to
detect sophisticated financial fraud schemes and deploy adequate penalties and
remedies to ensure market integrity.
But we have heard concerns about “piling on” from our own
Department personnel. Our prosecutors and civil enforcement attorneys prize the
Department’s reputation for fairness.
They understand the importance of protecting our brand. They
asked for support in coordinating internally and with other agencies to achieve
reasonable and proportionate outcomes in major corporate investigations.
And I know many federal, state, local and foreign
authorities that work with us are interested in joining our efforts to show
leadership in this area.
“Piling on” can deprive a company of the benefits of
certainty and finality ordinarily available through a full and final
settlement. We need to consider the impact on innocent employees, customers,
and investors who seek to resolve problems and move on. We need to think about
whether devoting resources to additional enforcement against an old scheme is
more valuable than fighting a new one.
Our new policy provides no private right of action and is
not enforceable in court, but it will be incorporated into the U.S. Attorneys’
Manual, and it will guide the Department’s decisions.
This is another step towards greater transparency and
consistency in corporate enforcement. To reduce white collar crime, we need to
encourage companies to report suspected wrongdoing to law enforcement and to
resolve liability expeditiously.
There are four key features of the new policy.
First, the policy affirms that the federal government’s
criminal enforcement authority should not be used against a company for
purposes unrelated to the investigation and prosecution of a possible crime. We
should not employ the threat of criminal prosecution solely to persuade a company
to pay a larger settlement in a civil case.
That is not a policy change. It is a reminder of and
commitment to principles of fairness and the rule of law.
Second, the policy addresses situations in which Department
attorneys in different components and offices may be seeking to resolve a
corporate case based on the same misconduct.
The new policy directs Department components to coordinate
with one another, and achieve an overall equitable result. The coordination may
include crediting and apportionment of financial penalties, fines, and
forfeitures, and other means of avoiding disproportionate punishment.
Third, the policy encourages Department attorneys, when
possible, to coordinate with other federal, state, local, and foreign
enforcement authorities seeking to resolve a case with a company for the same
misconduct.
Finally, the new policy sets forth some factors that
Department attorneys may evaluate in determining whether multiple penalties
serve the interests of justice in a particular case.
Sometimes, penalties that may appear duplicative really are
essential to achieve justice and protect the public. In those cases, we will
not hesitate to pursue complete remedies, and to assist our law enforcement
partners in doing the same.
Factors identified in the policy that may guide this
determination include the egregiousness of the wrongdoing; statutory mandates
regarding penalties; the risk of delay in finalizing a resolution; and the
adequacy and timeliness of a company’s disclosures and cooperation with the
Department.
Cooperating with a different agency or a foreign government
is not a substitute for cooperating with the Department of Justice. And we will
not look kindly on companies that come to the Department of Justice only after
making inadequate disclosures to secure lenient penalties with other agencies
or foreign governments. In those instances, the Department will act without
hesitation to fully vindicate the interests of the United States.
The Department’s ability to coordinate outcomes in joint and
parallel proceedings is also constrained by more practical concerns. The timing of other agency actions, limits on
information sharing across borders, and diplomatic relations between countries
are some of the challenges we confront that do not always lend themselves to
easy solutions.
The idea of coordination is not new. The Criminal Division’s
Fraud Section and many of our U.S. Attorney’s Offices routinely coordinate with
the SEC, CFTC, Federal Reserve, and other financial regulators, as well as a
wide variety of foreign partners. The FCPA Unit announced its first coordinated
resolution with the country of Singapore this past December.
The Antitrust Division has cooperated with 21 international
agencies through 58 different merger investigations during the past four years.
And the National Security Division works with the Treasury
Department’s Office of Foreign Assets Control, among others, to coordinate and
secure resolutions of sanctions and export control violations in which OFAC
deems its penalties satisfied by a company’s payments to the Department of
Justice.
Coordination also will help us to identify culpable
individuals and hold them accountable. We will seek appropriate corporate
penalties when justified by the facts and the law. But the primary question
should be, “Who made the decision to set the company on a course of criminal
conduct?” Our investigations should focus on those individuals.
Our commitment to enhancing international coordination and
promoting individual accountability is demonstrated by our increased
cross-border enforcement. The Attorney
General assigned additional attorneys and paralegals to the Department’s Office
of International Affairs to achieve those goals.
The additional resources help us promptly and efficiently
obtain necessary evidence from abroad through Mutual Legal Assistance Treaties
and other mechanisms of foreign assistance. They also strengthen efforts to
return fugitives from abroad for prosecutions here in the United States.
At the same time, we will improve our ability to support our
foreign counterparts by more expeditiously responding to their requests for
assistance in securing evidence and fugitives located within our borders.
In 2017, our Office of International Affairs successfully
returned more than 70 individuals to the United States to face fraud-related
charges.
That trend continues. In March, the Office of International
Affairs successfully concluded a 10-year long extradition process that led to
the criminal conviction of a Canadian fraudster. The defendant orchestrated a
telemarketing scheme that cheated at least 60,000 victims of more than $18
million.
We often talk about deterrence as a goal of law enforcement,
but what causes deterrence?
For twelve years, I commuted 40 miles each way from Bethesda
to Baltimore, mostly on Interstate 95. The speed limit is 65 miles per hour.
Some people take that as a suggestion. They know the enforcement strategy.
During those long drives, I sometimes thought about how well
traffic laws illustrate the mission of law enforcement.
Speed limit signs deter law-abiding people. If the rules are
clear, most people obey them out of a sense of duty and honor.
But some people are not deterred by rules. If we announce a
speed limit, but we do not enforce it, then law-breakers always get ahead of
law-abiding people.
What if we post a speed camera? A speed camera deters many
law-breakers. They slow down as they approach the camera. Then they speed up
again. It is not a complete solution. Nonetheless, it does illustrate
deterrence.
But some people do not bother to slow down at all. Those
people are thinking one of two things. Either they do not believe the
government will enforce the penalty, or they calculate that the likely benefit
of breaking the rule outweighs the potential penalty.
The lesson is that deterrence requires enforcement. The rules that matter most are the ones that
carry expected penalties that decision-makers are unwilling to pay.
Focusing on deterrence requires us to think carefully about
what we can achieve in our enforcement actions. Corporate settlements do not
necessarily directly deter individual wrongdoers. They may do so indirectly, by
incentivizing companies to develop and enforce internal compliance programs.
But at the level of each individual decision-maker, the deterrent effect of a
potential corporate penalty is muted and diffused. Our goal in every case
should be to make the next violation less likely to occur by punishing individual
wrongdoers.
In order to promote consistency in our white collar efforts,
we established a new Working Group on Corporate Enforcement and Accountability
within the Justice Department. The working group includes Department leaders
and senior officials from the FBI, the Criminal Division, the Civil Division,
other litigating divisions involved in significant corporate investigations,
and the U.S. Attorney’s Offices.
The working group will make internal recommendations about
white collar crime, corporate compliance, and related issues.
We look forward to collaborating with other agencies and
regulators in implementing the new coordination policy. And we welcome input
from stakeholders who share our commitment to reduce crime and uphold the rule
of law.
Most American companies are serious about engaging in lawful
business practices. They want to do the
right thing. They need and deserve our support to help protect them from
criminals who seek unfair advantages.
Corporate America should regard law enforcement as an
ally. In turn, the government should
provide incentives for companies to engage in ethical corporate behavior and to
assist in federal investigations.
Companies can help protect themselves by using caution when
choosing business associates and by ensuring appropriate oversight of their
activities.
By effectively combating white collar crime and prosecuting
individuals when appropriate, we can protect Americans from fraud, and reduce
the risk of another corporate-fraud epidemic.
That will require us to get the policies right, articulate
the policies clearly, train our agents and attorneys properly, and provide
appropriate supervision.
The Department’s rhetoric gets a lot of attention – the
policy memos and speeches. But
performance matters most.
When we are serious about wanting people to follow the law,
it does no good merely to post a sign. We need to make clear our intent to
enforce the law, with sufficient vigor that people fear the consequences of
violating it.
That is the lesson I learned on I-95. I appreciate the opportunity
to share it with you today.
Thank you very much.
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