It’s getting hot in here. But some like it hot. I do. As a law professor and author focusing on white-collar crime and our country’s infuriatingly lackadaisical approach to prosecuting it, I’ve been waiting for someone to turn up the thermostat.
That’s why I was thrilled by a virtual keynote address to the American Bar Association’s National Institute on White Collar Crime late last month by Deputy Attorney General Lisa Monaco. It didn’t make big national headlines, but in the small (but growing larger every day) white-collar criminal bar community, it’s the talk of the town. The veteran prosecutor lit a fire under career corporate criminals, would-be offenders, and their defenders. With clarity and detail, the 53-year-old Department of Justice veteran identified the department’s new efforts—and new mind-set—to combat corporate crime.
Bottom line: Corporate criminal enforcement has moved from the deep freezer to the front burner.
Monaco’s address was not a lofty speech. It was a warning shot. And it hit its mark because she is second in command at Justice and has the background and track record to follow through. A graduate of the all-girls Winsor School near Boston, Harvard, and the University of Chicago Law School, followed by a prestigious appellate court clerkship, Monaco cut her teeth on corporate crime. As a newly minted prosecutor in the U.S. Attorney’s Office for the District of Columbia, she witnessed successful convictions of rogue executives in the early 2000s, including WorldCom, Qwest, Adelphia, and Tyco. She received the highest award from the Department of Justice for her performance as a prosecutor on the Enron task force. It’s primarily in the area of national security that Monaco has made her name, though. She was chief of staff to Robert Mueller when he was FBI director and served as assistant attorney general for national security under President Barack Obama, making the prosecutor Main Justice’s point person on everything from cybercrime to Gitmo. After that, Monaco continued her upward trajectory, becoming Obama’s White House adviser on homeland security, and was often seen near the president during intense national security moments such as after the Boston Marathon bombings. White-collar criminals look at her and can visualize doing a five-year stint in Otisville.
Knowing the audience of white-collar criminal defense attorneys, Monaco said, “I’m sure many of you . . . are going to get calls from clients. So let me conclude by giving you the answers—with these five points:
“Companies need to actively review their compliance programs to ensure they adequately monitor for and remediate misconduct—or else it’s going to cost them down the line.
“For clients facing investigations, as of today, the department will review their whole criminal, civil, and regulatory record—not just a sliver of that record.”
“For clients cooperating with the government, they need to identify all individuals involved in the misconduct—not just those substantially involved—and produce all non-privileged information about those individuals’ involvement.
“For clients negotiating resolutions, there is no default presumption against corporate monitors. That decision about a monitor will be made by the facts and circumstances of each case.
“Looking to the future, this is a start—and not the end—of this administration’s actions to better combat corporate crime.”
That’s a short way of saying she’ll be all over C-suite executives like a bespoke Turnbull & Asser suit. Monaco’s pre-Halloween address also spooked compliance officers, board members, and corporate attorneys alike. As one example, consider the full-on freak-out by Tom Fox and Matt Kelly, hosts of the usually sober, weekly podcast Compliance Into the Weeds, something corporate general counsels might listen to while doing Pilates. The duo recorded “a rare emergency podcast” on Monaco’s speech.
“We should have a little emergency siren sound in the background,” Kelly told his listeners, adding that Monaco’s keynote was “the thing that we’ve all been waiting for. Everybody knew at some point the Biden administration would start to roll back the relaxations that we saw against corporate misconduct during the Trump administration.” The podcaster’s lead concern was the DOJ looking at all of a company’s prior misconduct when it considers how or if to settle.
This seems reasonable, the kind of thing a layperson would have thought the DOJ already did. If a company evades taxes or violates pollution law, it should be a no-brainer that law enforcement takes into account whether the business did it before or engaged in some other crime. But Monaco’s stake in the ground is a significant departure. As Kelly noted, “If you were in a financial services firm trying to clean up [a Foreign Corrupt Practices Act] violation, the Justice Department might think about, ‘Well, what about your prior issues with money laundering or tax avoidance, or have you had regulatory enforcement from the Consumer Financial Protection Bureau? And if you’ve had a lot of that, that means you have a weak corporate culture, so we should take that into consideration.’ That could be the new mind-set of the Justice Department.”
This emphasis on culture is sensible, not shocking, but it shows how lax the DOJ and the phalanx of regulatory agencies have been when it comes to corporate crime. In Monaco’s own words, “Corporate culture matters,” which sounds banal to the untrained ear but was a klaxon for boardroom criminals.
Of further concern to Kelly was the potential end of deferred prosecution agreements and non-prosecution agreements for repeat offenders. These arrangements have been of huge benefit to those repeatedly caught violating the law, and we’re not talking about a small percentage of prosecutions. As Monaco revealed, “What we saw is that recently somewhere between 10 percent and 20 percent of all significant corporate criminal resolutions involve companies who have previously entered into a resolution with the department. So we need to consider whether and how to differently account for companies that become the focus of repeated DOJ investigations.”
Fox said he was “struck” by Monaco’s plan to return to the guidance set out by Sally Yates, Obama’s last deputy attorney general (who, when serving as acting attorney general, was fired in the early days of the Trump administration for refusing to enforce the Muslim travel ban), requiring companies to cooperate by identifying anyone involved in illegal conduct, not just those who were “substantially” involved, and not just handing over “someone on a platter” to the DOJ.
Importantly, this crackdown is not Monaco freelancing. The attorney general has her back. She is too experienced as an inside player to stake out big territory like this without the support to back up her threats. And, after Monaco’s speech, in his November 4 remarks at the Securities Industry Forum, Securities and Exchange Commission Chair Gary Gensler cheered her on, saying, “While our organizations are independent, and our enforcement tools, authorities, and missions are distinct changes are broadly consistent with my view of how to handle corporate offenders.”
In her speech, Monaco made it clear that Merrick Garland was on board, describing the new regime as “the attorney general’s and my enforcement policies when it comes to corporate crime.”
This is a big f**king deal. Here’s why. Remember that Garland did not hire Monaco. President Joe Biden nominated her for the role, and the Senate confirmed her appointment this spring. She’s the commander in chief’s pick, so she has her own power base with a president she knows well from the Obama years. One can fault Garland for not taking a more aggressive stance when prosecuting former President Trump. I certainly have. But we can give the Mitch McConnell–blocked Supreme Court nominee credit for taking a muscular approach to white-collar crime by joining forces with Monaco.
Until now, we could not know for sure where Garland stood. I previously lamented this for the Monthly. In May, I recommended, here, that, starting with Trump, it was time for Garland to initiate a white-collar crime crackdown. And in October, here, I expressed relief and delight about a trial-balloon-type speech by John Carlin (an attorney who reports to Monaco and who worked with her on cybercrime and other issues at the DOJ under Obama), indicating new resources plus a significant mind-set change at Justice. Carlin said that “the department’s leadership will make clear that prosecutors should never refrain from a white-collar prosecution out of fear of losing.”
But Monaco’s speech is a higher order of magnitude. If Monaco’s goal was to put her audience on notice, mission accomplished. And yet, we must recall the deservedly derided announcement by George W. Bush he stood standing on an aircraft carrier under a “Mission Accomplished” banner that combat operations in Iraq were over. They would not end for years. Similarly, this scary speech will be ridiculed if swift action does not follow harsh words. As I have said before, the proof will be in the prosecution. And not just of high-level corporate offenders, but also, most notably, of the white-collar criminal-in-chief, Donald Trump.
While this article was being edited, more encouraging news came in. On Friday, the DOJ indicted the Trump confidant Steve Bannon for obstruction of Congress in connection with his refusal to testify and turn over documents to the special committee investigating the January 6 attack on the U.S. Capitol. This indictment coupled with the Monaco speech is quite encouraging that the Garland Justice Department is not afraid of blowback from Big Money or accusations of partisanship. Will Donald himself be next? Hope springs eternal.