On January 17, 2023, Assistant Attorney General Kenneth A. Polite delivered remarks announcing revisions to the Department of Justice (“DOJ”) Criminal Division’s Corporate Enforcement Policy (“CEP”) at Georgetown Law Center. The revisions aim to encourage additional companies to voluntarily self-disclose potential criminal conduct they may uncover by setting more granular incentives that will be provided to companies in such circumstances. While there is still substantial subjectivity embedded in the revised policy regarding when and how such incentives will be made available to companies, the revisions will put added pressure on companies to make self-disclosures in certain circumstances.
While the DOJ’s CEP had long provided such incentives, it had made them unavailable in the presence of aggravating factors. The revisions change that and provide that even if aggravating circumstances are present and a presumption of a declination is unavailable, prosecutors may nonetheless determine that a declination is an appropriate outcome. And even when declination is not awarded, there are clear reductions from the sentencing guidelines for those who self-disclose. To qualify for such incentives, companies must meet three factors:
- The voluntary self-disclosure was made immediately upon the company becoming aware of the allegation of misconduct;
- At the time of the misconduct and the disclosure, the company had an effective compliance program and system of internal accounting controls that enabled the identification of the misconduct and led to the company’s voluntary self-disclosure; and
- The company provided “extraordinary” cooperation with the Department’s investigation and undertook “extraordinary” remediation.
Should a company voluntarily self-disclose misconduct, fully cooperate, and timely and appropriately remediate, and the DOJ concludes that a criminal resolution is still warranted, under the revised CEP the Criminal Division:
- will now accord, or recommend to a sentencing court, at least 50%, and up to 70% off of the low end of the U.S. Sentencing Guidelines fine range, except in the case of a criminal recidivist. In the case of a criminal recidivist, the reduction will generally not be from the low end of the fine range, and in all cases, prosecutors will have the discretion to determine the starting point within the Guidelines range; and
- in these circumstances, the department will generally not require a corporate guilty plea, including for criminal recidivists, absent multiple or particularly egregious aggravating circumstances.
Polite emphasized that the 50% reduction should not be considered a new norm. Rather, it will be reserved for companies that are able to distinguish themselves and demonstrate “extraordinary” cooperation and remediation. In distinguishing between extraordinary and full cooperation, according to Polite, prosecutors will now analyze the following concepts: immediacy, consistency, degree, and impact. Specifically, in assessing the quality of the cooperator’s assistance, the DOJ will value the following from an individual and corporation: the immediacy of cooperation, consistency in telling the truth, allowance of the department to obtain evidence it would otherwise not obtain, for example, imaging electronic devices, and cooperation that produces results, like trials or additional convictions. For corporations in particular, Polite noted that they must demonstrate going above and beyond—“not just run of the mill, or even gold-standard cooperation, but truly extraordinary.”
These standards necessarily continue to include substantial subjectivity, and thus time will tell how they are applied in practice. But overall, it is clear that the DOJ is pushing companies to self-disclose and will treat harshly those that do not.