DOJ’s First-Ever Comprehensive Corporate Enforcement Policy Gives Companies Guidance, Clarity and Predictability

In a historic announcement that all company leadership should follow closely, the U.S. Department of Justice (DOJ) released the first-ever DOJ-wide Corporate Enforcement Policy (CEP). It applies to all criminal matters pursued by the DOJ and its components (except antitrust matters).

This replaces a hodgepodge of corporate enforcement policies that were widely dispersed across the DOJ, sometimes conflicting and often confusing, depending on the location of a particular U.S. Attorney’s Office or a specific component within the DOJ.

The new policy gives companies clearer, more predictable incentives to self‑disclose misconduct, cooperate and remediate early, increasing their chances of avoiding prosecution and reducing penalties.

Deputy Attorney General Todd Blanche announced the new policy, noting that “[w]ell-intentioned businesses . . . will be rewarded when they self-disclose wrongdoing, cooperate with [DOJ’s] investigations, and remediate the misconduct.”  Criminal Division Assistant Attorney General Tysen Duva added that the DOJ’s new Corporate Enforcement Policy “takes the principles the Division has long promoted – disclosure, cooperation, and remediation – and applies them uniformly across the Department.”

The DOJ explained that it designed its new CEP to:

1. 1. Drive early, voluntary self-disclosure of criminal conduct
   2. Promote timely and effective enforcement of criminal laws, including holding culpable individuals accountable
   3. Reduce harm
   4. Facilitate prompt remedial action, including requiring companies to compensate victims and address corporate deficiencies
   5. Help ensure consistency across the DOJ
   6. Transparently describe the DOJ’s policies and decision making.

The CEP is divided into three categories of potential outcomes:

1. Declinations

The CEP sets forth four factors that, when met, will result in DOJ declining to prosecute a company for criminal conduct:

1. 1. Voluntary self-disclosure by the company of misconduct to an appropriate DOJ criminal component
   2. Full cooperation with the DOJ’s investigation
   3. Timely and appropriate remediation of the misconduct
   4. No aggravating circumstances related to the nature and seriousness of the offense, egregiousness or pervasiveness of the misconduct within the company, severity of harm caused by the misconduct, or corporate recidivism (i.e., criminal adjudication or resolution either within the last five years or otherwise based on similar misconduct)

Even where there are aggravating circumstances, the CEP grants prosecutors the discretion to recommend a declination, weighing such circumstances against the other three factors (self-disclosure, cooperation, remediation).

2. Non-Prosecution Agreements

The CEP still incentivizes companies to come forward even if they are unable to secure a declination from the DOJ because their self-disclosures are not considered “,” or because there are aggravating circumstances that warrant a criminal resolution.

If companies disclose the wrongdoing, cooperate with the DOJ and remediate the misconduct, they may be eligible for the policy’s Non-Prosecution Agreement (NPA). This is a contract between the DOJ and a company whereby the DOJ agrees not to file formal charges against a company in exchange for the company agreeing to cooperate with DOJ and perform specific actions.

Significantly, the CEP allows for such NPAs to be less than three years, not require an independent compliance monitor, and have reduced fine amounts of at least 50% but not more than 75% of the low end of the U.S. Sentencing Guidelines (USSG) range.

3. Other Resolutions

In cases that fail to meet the two prior scenarios, all is not lost. The DOJ’s CEP gives prosecutors the discretion to “determine the appropriate resolution including form, term length, compliance obligations, and monetary penalty.” However, companies will not receive a recommendation from DOJ of more than a 50% fine reduction pursuant to the USSG range.

For companies that fully cooperate and timely remediate, there will be a presumption that this reduction will be taken from the low end of the USSG range. Otherwise, a prosecutor will determine the appropriate starting point in the range, based on the facts or circumstances of the case (including a company’s recidivism).

Prosecutors will also use these factors to determine monetary penalties:

1. 1. The need for the sentence to reflect the seriousness of the offense, promote respect for the law, provide just punishment, afford adequate deterrence, and protect the public from further crimes of the organization
   2. The organization’s role in the offense
   3. Any collateral consequences of conviction, including civil obligations arising from the organization’s conduct
   4. Any nonpecuniary loss caused or threatened by the offense
   5. Whether the offense involved a vulnerable victim
   6. Any prior criminal record of an individual within high-level personnel of the organization or high-level personnel of a unit of the organization who participated in, condoned, or was willfully ignorant of the criminal conduct
   7. Any prior civil or criminal misconduct by the organization
   8. A culpability score higher than 10 or lower than 0 as calculated under the USSG
   9. Partial but incomplete satisfaction of the conditions for one or more of the mitigating or aggravating factors set forth in the USSG
   10. Any factor listed in 18 U.S.C. § 3572(a)
   11. Whether the organization failed to have, at the time of the instant offense, an effective compliance and ethics program

While the U.S. Department of Justice’s new Corporate Enforcement Policy is a noteworthy development, companies, business owners and corporate leadership still need experienced legal professionals. A trusted legal team can develop an effective strategy to quickly respond to discovered wrongdoing or misconduct and help companies navigate this complicated process.

Contact Mike Hurst, Drew Norwood, or any member of the Phelps litigation or white collar defense and investigations teams if you have questions or need advice or guidance.