Policy is my love language. As a law professor, attorney, citizen, and author, corporate criminal accountability is my obsession. It’s folly, perhaps, to hold out hope for change. Cynics tell me the system is rigged for white-collar and corporate criminals. They say Attorney General Merrick Garland, whose 1990s tenure at the DOJ was best known for prosecuting domestic terrorists, isn’t that interested Wall Street perp walks. I’ve criticized Garland as attorney general for going soft on prosecutions related to Donald Trump.
To my relief and delight, I learned last week that in a little-noticed speech, John Carlin, principal associate deputy attorney general, acknowledged the corporate crime wave and announced a sea change in policy at Main Justice, as the Robert F. Kennedy Main Justice Department Building is called. Carlin allowed that the DOJ has been inconsistent about taking on corporations.
Then he brought the hammer down. He informed the listeners that “the department’s leadership will make clear that prosecutors should never refrain from a white-collar prosecution out of fear of losing.” He emphasized that the fear that “‘we might lose’ is not an argument that will have much weight here, as long as the proposed action is supported by facts and the law, and it is more likely than not that a jury presented with those facts would convict. We need to encourage white-collar prosecutors also to be bold in the way that they investigate and have new thinking when it comes to new types of fraud manipulation, and other corporate malfeasance.”
The Harvard Law graduate and cybersecurity expert delivered his remarks at the virtual Global Investigations Review conference, an event attended by white-collar crime defense lawyers and sponsored by corporate law firms and organizations like the Women’s White Collar Defense Association. Certainly the audience left with the distinct impression that Garland’s Justice Department is not part of what the Pulitzer Prize–winning journalist Jesse Eisinger referred to in his eponymous book as the “chickenshit club,” his term for prosecutors unwilling to prosecute white-collar crimes in the wake of the 2008 global financial crisis.
Pointing to vigorous prosecutions in the past under Republican administrations, Carlin recalled the more than 1,000 convictions of bank officers in the wake of the savings and loan crisis of the late 1980s. He also referred to the “aggressive prosecutions” after the WorldCom and Enron accounting fiascos of the early 2000s. As I noted in Big Dirty Money, in the four years between July 2002 and March 2006, George W. Bush’s DOJ convicted more than 82 CEOs, 85 corporate presidents, 36 chief financial officers, and 14 chief operating officers in corporate fraud cases. Of course, Carlin likely knows all of this, and not just because his boss Deputy Attorney General Lisa Monaco served on the DOJ’s Enron Task Force, where she helped convict several executives from Enron Broadband on an assortment of wire fraud and conspiracy charges. Such enforcement fell off during the Obama administration, which was, shall we say, reluctant to prosecute crimes related to the financial crisis.
While Carlin did not announce the creation of a new task force, often the sign of deadly seriousness at Main Justice, he said there will be no lack of money or personnel to prosecute white-collar crime. “I think you’ll see in the days and months to come that we are building up to surge resources for corporate enforcement.” Novel approaches include creating “a new squad of FBI agents to work full-time and be embedded with the department’s criminal fraud division,” said Carlin, who has cred, having worked at the bureau. He served as chief of staff to FBI Director Robert Mueller, who would, of course, later become the Russia election interference special counsel. While touting data analytics as a method for detecting and prosecuting white-collar crime, Carlin added, as a bit of a jab, no doubt to the defense lawyers (and their clients), that Big Data is “never going to remove the need for search warrants, wiretaps, other law enforcement tools in white-collar cases, but it does provide another tool for holding criminals accountable and also for predicting and preventing the crime from occurring in the first place.”
Carlin also gave warnings to repeat offenders. That’s important, because in the past the DOJ has offered tap-on-the-wrist settlements when it could have been much tougher. While the department will continue to use the controversial deferred prosecution and non-prosecution agreements, which allow companies to avoid criminal charges if they undertake reforms, it’s no longer a free-for-all, he said. “Particularly now, with scrutiny on the use of those agreements, we’ll need to make sure that those who get the benefit of such an arrangement comply with their responsibility. And if not, you should expect to see serious repercussions . . . Violating those conditions may result in punishment greater than the original sentence.”
These sweet words cause a gal to swoon. Especially this one, as several of Carlin’s announced plans are closely related to ideas that I proposed a year ago in Big Dirty Money in the chapter entitled “The Six Fixes.” The first step is admitting we have a problem and devoting the resources to fixing it. Main Justice appears to be doing that. Also, critical for cleaning up the white-collar crime and public corruption mess, I noted, was addressing the repeat offenders. Again, Carlin said that was the plan. Areas that still need focus will involve asking Congress to strengthen the tools prosecutors use, including the anti-bribery and honest services wire fraud statutes, and to better empower whistleblowers and journalists.
Sadly, despite the next-day write-up in the The Wall Street Journal, Carlin’s address has not gotten the attention it deserves. But those of us who were listening heard the right lyrics and the right music. The proof will be in the prosecutions.