White-Collar Crime, DPAs and Repeat Business

Trying to keep your balance in a DPA.

Trying to keep your balance in a DPA.

The phenomenon of extending corporate deferred-prosecution agreements (or “DPAs”) continues, as here with medical device maker Biomet, and controversy inevitably ensues:

Life was supposed to return to normal for Biomet, the giant medical devices manufacturer accused of foreign bribery, when its federal probation expired next week. But on Tuesday, Biomet disclosed that prosecutors would extend its probation another year as they investigate new evidence of wrongdoing at the company, the Justice Department’s latest attempt to stem a widening pattern of corporate recidivism.

The Department of Justice, however, has been clear recently:

“Make no mistake: The criminal division will not hesitate to tear up a D.P.A. or N.P.A. and file criminal charges where such action is appropriate and proportional to the breach,” Leslie R. Caldwell, head of the Justice Department’s criminal division, said in a speech on Monday. “Just like an individual on probation faces a range of potential consequences for a violation, so, too, does a bank that is subject to a D.P.A.”

In the speech, Ms. Caldwell outlined her policy on repeat offenders in significant new detail. Noting that “we have a range of tools at our disposal,” she said the Justice Department could extend the term of a deferred-prosecution agreement while prosecutors investigate “allegations of new criminal conduct.” And when a breach has occurred, she said, “we can impose an additional monetary penalty” and “most significantly, we can pursue charges based on the conduct covered by the agreement itself — the very conduct that the bank had tried to resolve.”

We have written about DPAs and non-prosecution agreements (“NPAs”) here.

Builds wrist strength.

Builds wrist strength.

Note the reference to “a widening pattern of corporate recidivism.”  There may be such a pattern, and there are startling cases from  time to time, but hard data is scarce.  Anecdotally, we see few repeat white-collar customers on a significant scale, and for not unexpected reasons — cost, reputation and damage to stock price being the most common.


Confidentiality and Transparency in Deferred Prosecution Agreements

"Transparency" or "Opacity"?

“Transparency” or “Opacity”?

Here’s a note about.DOJ Transparency In Deferred Prosecution Agreements

Professor Podgor argues:

It is hard to believe that someone would have to file a lawsuit to obtain information about a non-prosecution agreement of a corporation.  One can understand the need to protect individuals from the sting of criminality when an agreement is reached to defer a prosecution or when an individual is being spared a prosecution as an alternative method to rehabilitate that individual.  But corporations are not afforded the same rights as individuals. The government is quick to note that corporations do not have the same rights as individuals when they are trying to obtain corporate documents. 

Fair enough, and “transparency” is supposed to be better than “opacity,” but is the question about NPAs and DPAs really one of “rights”?  Such agreements are the result of horse-trading and power plays.  A company (unlike an individual) may have to worry about private plaintiffs and other follow-on litigation.  Depending on the situation, the confidentiality of the factual basis for the agreement may be the quid pro quo for the company entering into negotiations at all.  In other words, if the collateral damage from disclosure is potentially greater than the cost and risk of litigating, then the company may force the Government to litigate (or cave).

At the Old Bailey

At the Old Bailey

As a white-collar lawyer who like trials, I like that latter option, but I’m not sure it’s in the best interests either of American businesses or efficient investigations and prosecutions.

Here’s the website mentioned in the BLT article:  Brandon L. Garrett and Jon Ashley, Federal Organizational Prosecution Agreements, University of Virginia School of Law, at http://lib.law.virginia.edu/Garrett/prosecution_agreements/home.suphp.