Shifting Priorities: DOJ's New Approach to White Collar Enforcement

Areas of Heightened Focus

In its announcement, the DOJ unveiled its new White Collar Enforcement Plan, which prioritizes the investigation and prosecution of crimes that pose direct risks to public safety, national security, and economic stability. Consistent with its "America First" approach that seeks to root out waste, fraud, and abuse that harms the public funds the DOJ identified categories for what it considers to be "high-impact areas" that will remain or become DOJ priorities. Specifically, the ten "high-impact areas" enumerated are:

1. Waste, fraud, and abuse, including health care, federal program, and procurement fraud that harms the public funds
2. Trade and customs fraud, including tariff evasion;
3. Market manipulation or other fraud, especially if perpetrated by or through Chinese-affiliated companies listed on U.S. exchanges;
4. Investment fraud;
5. Sanctions violations;
6. Money laundering offenses;
7. Material support by corporations to foreign terrorist organizations;
8. Unlawful manufacturing or distribution of narcotics and opioids;
9. Bribery that impacts U.S. national interests, undermines U.S. national security, harms the competitiveness of U.S. businesses, or enriches foreign corrupt officials; and
10. Crimes involving digital assets, including investor or consumer fraud and the use of digital assets in furtherance of criminal activity.

While these include some traditional DOJ focuses, such as healthcare and government procurement fraud, money laundering, and market manipulation, it now also contains areas aligned with the policy agenda of the current administration, such as trade and customs fraud, tariff evasion, and fraud committed by or for the purposes of funding foreign terrorist organizations and transnational criminal cartels.

In particular, the DOJ now emphasizes the growing threat of Chinese Money Laundering Organizations and the use of laundered funds in the manufacturing and distribution of illegal drugs, such as fentanyl. Prosecutors are instructed to prioritize schemes involving senior-level personnel or other culpable actors, demonstrable loss, and efforts to obstruct justice, and to seize assets that are proceeds of high-impact offenses.

Expansion of Whistleblower and Self-Disclosure Incentives

To signify its dedication to combating these "high-crime areas," and in alignment with its focus on threats to national security, the DOJ has also expanded its Corporate Whistleblower Awards Program to encourage individuals to report offenses related to transnational criminal organizations or cartels, immigration law, support of terrorism, corporate sanctions, trade, tariff, and customs fraud, and procurement fraud. If an individual provides novel information to the DOJ that results in a forfeiture of assets, the individual can qualify for a monetary portion of the funds.

Simultaneously, the DOJ revised the Corporate Enforcement and Voluntary-Disclosure Policy to entice companies to self-disclose in a timely manner, meaningfully cooperate with the government, and sufficiently remediate. In turn, companies can receive the following based on their eligibility:

1. A presumptive declination, if there are no aggravating circumstances.
2. If there are aggravating circumstances making a company ineligible for a declination, a company could receive a non-prosecution agreement with a term of less than three years, not including an independent compliance monitor, and a reduction of applicable fines by 75% on the low end of the U.S. Sentencing Guidelines range.
3. If a company is ineligible for both a declination and a non-prosecutorial agreement, it could still receive a reduction of applicable fines by up to 50% on the low end of the sentencing guideline range based on the prosecutor's discretion.

These changes provide clarity and predictability for companies on a path towards resolution and corporate compliance, and continue the trend started during earlier administrations to significantly reward early self-disclosure.

Streamlining Investigations and Narrowing of Corporate Monitorships

In recognition of the time, effort, expense, reputational harm, and overall interruption to daily business operations that can stem from federal investigations that last many years, the DOJ now emphasizes more focused and efficient investigations. Prosecutors are now under instruction to conduct early assessments on the appropriateness of prosecution and evaluate whether investigations can be resolved without imposing disproportionate burdens on businesses. This new directive presents significant opportunities for targets of DOJ investigations to seek earlier charging or declination decisions from federal prosecutors.

Finally, this streamlined approach also includes a more restrained stance on the use of corporate monitors, which have been popular tools for the DOJ in corporate enforcement actions in recent years, but which have carried tremendous costs for U.S. businesses. Under this new guidance, monitorships are to be used only when necessary – when a company lacks an effective compliance program or demonstrates a high likelihood of recurring misconduct – and when imposed, monitorships should be narrowly tailored to minimize expense, burden, and interference with business.

Key Takeaways

These DOJ policy shifts reflect a new orientation towards more targeted enforcement, with increased scrutiny in areas associated with national security and transnational crime, while also providing domestic businesses with opportunities for quicker and more favorable resolutions.

Baker Donelson attorneys in the firm's Government Enforcement and Investigations practice group routinely handle white collar investigations and enforcement actions for corporate and individual clients. In fact, our attorneys are currently seeking declination decisions and favorable resolutions on behalf of several clients specifically based on these new DOJ policy changes.

For any questions regarding white collar enforcement or other recent developments in DOJ policy, please contact Sean B. O'Connell, John S. Ghose, Sabrina Marquez, or any member of the Firm's Government Enforcement and Investigations practice group.