Polite’s comments stack more incentives in favor of company self-disclosure and cooperation with DOJ

On January 17, 2023, Assistant Attorney General Kenneth A. Polite, Jr. delivered remarks on revisions to the US Department of Justice (DOJ) Criminal Division Corporate Enforcement Policy (CEP).

These remarks came on the heels of Deputy Attorney General Lisa O. Monaco’s speech on corporate enforcement, delivered on September 15, 2022, in which she highlighted upcoming key changes in the way DOJ prosecutes corporate crimes.  We discussed her comments in a prior Client Alert.

Polite’s remarks introduce the first significant changes to the CEP since 2017, offering companies “new, significant, and concrete incentives to both self-disclose misconduct and timely cooperate and remediate the misconduct.”

Recidivist companies that promptly and voluntarily self-disclose misconduct may receive a declination

Polite stated that the revised policy will allow prosecutors to determine a declination is the appropriate outcome in a matter, even if a company does not qualify for a presumption of declination due to aggravating factors (including recidivism), if three factors are met:

• The voluntary self-disclosure (VSD) was made immediately upon the company learning of the allegation of misconduct
• At the time of both the alleged misconduct and 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 VSD and
• The company provided extraordinary cooperation with the DOJ’s investigation.

Polite noted that to receive “extraordinary cooperation” credit, companies will need to go “above and beyond the criteria for full cooperation set in the Department’s policies,” emphasizing that “immediacy, consistency, degree and impact” of the cooperation by both the corporations and the individuals will be key in assessing this enhanced cooperation credit.  

Companies that promptly and voluntarily self-disclose, fully cooperate and remediate misconduct will receive at least a 50 percent reduction and up to 75 percent reduction off the Guidelines fine range when a criminal resolution is still warranted

Polite also previewed incentives for those companies that will not be able to satisfy all three of the factors and thus, that will not be eligible for discretionary declinations. In such situations, the Criminal Division will recommend reduced sentences of “at least 50%, and up to 75% off of the low end of the U.S. Sentencing Guidelines fine range” for non-recidivist companies, assuming that they:

• Voluntarily self-disclose the misconduct
• Fully cooperate and
• Timely and appropriately remediate the misconduct.

Recidivist companies will not be entitled to a reduction from the low end and “in all cases, prosecutors will have discretion to determine the starting point within the Guidelines range.” 

Companies that do not voluntarily self-disclose may still receive a 50 percent reduction off the low end of the Guidelines fine range

Lastly, in cases where companies do not self-disclose, the revised CEP will afford prosecutors more options for resolutions. For example, the revised CEP will allow “up to a 50% reduction off of the low end of the Guidelines fine range.” While recidivists will not be afforded this benefit, prosecutors will still have discretion to determine the percentage reduction and starting point for the reduction. Whether companies will be able to earn a 50 percent reduction will be tied to their cooperation.

Polite said that all companies start at “zero cooperation credit” and that the maximum reduction will be reserved for those who “demonstrate extraordinary cooperation and remediation.”

Key takeaways

As Polite articulated in his speech, these revisions send a clear message to corporations: “come forward, cooperate and remediate.”  They preview both enhanced scrutiny and expectations from prosecutors on corporations’ level of cooperation, particularly in the way they discipline bad actors and reward the good ones, and they reemphasize that individual accountability is one of the Criminal Division’s top priority.

Find out more about these priorities by contacting any of the authors.