Deputy AG’s Speech Puts Focus on Prosecution of Individuals

By Pamela J. Bethel

In a much-publicized speech on September 10 at the New York University School of Law, Deputy U.S. Attorney General Sally Yates set forth what she said was a new Justice Department policy to go after “not just corporate entities, but also the individuals through which these corporations act.”

The new guidelines, which prioritize the prosecution of individual executives and corporate employees, and not just their companies, were widely viewed as a response to the criticism that the department has taken for its decisions to accept massive fines from companies in the fallout of the Wall Street meltdown of 2000s but not to try to put individual executives in prison.

The guidelines have been sent to all the U.S. Attorney’s offices across the country, and clearly, according to both Justice Department spokespeople and outside commentators, represent a get-tough attitude toward corporate crime. It remains to be seen, however, what effect these broad pronouncements will have in the day-to-day activities of assistant U.S. attorneys. They may not make much of a difference.

Although it may be true that no Wall Street executives went to prison in the aftermath of the financial crisis, the Justice Department has always taken action against individual wrongdoers. Just take a look at the current prosecution of former peanut company executive Stewart Parnell, who received a 28-year prison sentence on September 21 for his role in distributing peanut products that contained salmonella back in 2009; nine people died in the outbreak. This is the longest sentence ever meted out in a corporate food-contamination case.

One thing is clear to us. In the wake of Yates’ speech and the amount of publicity that has been given to the sentencing of individuals for white-collar crimes, federal prosecutors who want to follow the guidelines and make a name for themselves will be looking to find some individual to take the blame for almost any instance of wrongdoing. This will be the practice in relatively small cases as well as large matters of corruption. What this means is that in cases of alleged fraud on the government, price-fixing, contract irregularities, and the like, U.S. Attorney’s offices will be looking with fresh scrutiny at the actions of individuals as well as their companies. Anyone who may find himself or herself caught up in such a matter is well advised to turn to legal counsel.

Because of Yates’ speech, the stakes are higher than ever before. We will write additional blog posts on this issue in upcoming days. We will look at issues such as the focus by prosecutors on white-collar crimes that some may view as victimless, such as the corruption charges against leaders of FIFA, the world soccer governing body; the possible impact on government contract fraud; and the perhaps enhanced role of corporate internal investigations as part of the process.

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