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Department of Justice Puts Individuals in the Cross Hairs When Companies Investigated

December 16, 2015

Posted in Business Start Ups, Corporate Law

photo - DOJThe Department of Justice (DOJ) will be putting more emphasis on individuals when enforcing civil and criminal laws on businesses. This could result in individuals being charged with federal crimes if evidence supporting such a charge is developed during the investigation or litigation of a civil matter involving the federal government. This approach was unveiled when a memo by Deputy Attorney General Sally Quillian Yates was published in September.

Yates writes, “One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing.” The memo makes clear that individual employees should not feel sheltered from individual legal liability (civil or criminal) if they work for a corporation that’s being investigated, sued or prosecuted for federal law violations.

While in the past employees may have felt the best defense may have been to “stick together” that may no longer work so well. If there is more pressure on individuals, lower ranking employees may be more willing to provide incriminating evidence on higher ups while those in upper management more be less willing to open up incriminate themselves.

Yates makes it clear that DOJ attorneys working on civil cases need to look for possible individual civil as well as criminal liability when investigating a business. “In addition to recovering assets, civil enforcement actions serve to redress misconduct and deter future wrongdoing,” Yates writes, “Thus civil attorneys investigating corporate wrongdoing should maintain a focus on the responsible individuals, recognizing that holding them to account is an important part of protecting the public in the long term.”

She set forth guidelines for DOJ attorneys, putting companies on notice what to expect if the DOJ comes knocking on the door.

  • Corporations may get credit for cooperation only if DOJ is provided with “all relevant facts” concerning all individuals responsible for the alleged misconduct, no matter the level or seniority.
  • Both criminal and civil DOJ investigations need to focus on individuals from the start of the investigation.
  • Criminal and civil DOJ attorneys should be in “routine communication” so that criminal attorneys can notify their civil counterparts “as early as permissible” if they see conduct potentially giving rise to individual civil liability (and vice versa).
  • “(A)bsent extraordinary circumstances,” DOJ should not agree to resolve a case against a business that provides immunity to possibly culpable individuals.
  • There should be a “clear plan” to resolve investigations of individuals if a case against the business is resolved.
  • DOJ attorneys working on civil cases should focus on individuals as well as the organization in general, considering issues of accountability and deterrence in addition to the person’s ability to pay.

If your business finds itself the focus of a civil or criminal investigation, it’s critical to obtain legal representation. You need to fully understand the legal issues and get a good grasp as to whether your past behavior as a company, and as individuals, may have violated federal civil or criminal laws.

In addition to stressing potential individual liability the memo also emphasizes the need for companies to fully divulge all relevant information on the organization and individuals to be credited for full cooperation. Depending on your situation, given there may be civil and criminal liability for both your business and those who own, manage and work there, if and how that disclosure should be handled needs to be discussed with an attorney.

If you think your business may be investigated for a civil law violation, is now being investigated or a lawsuit has been filed against your company by the DOJ, you should contact our office so we can talk about what’s going on, which laws are at issue and the best ways to move forward to protect your rights and interests.