Individual Accountability for Corporate Crimes after the Yates Memo: Deferred Prosecution Agreements & Criminal Justice Reform

By Henry, Paola C. | American University Business Law Review, January 1, 2017 | Go to article overview

Individual Accountability for Corporate Crimes after the Yates Memo: Deferred Prosecution Agreements & Criminal Justice Reform


Henry, Paola C., American University Business Law Review


Introduction

According to a July 2015 Department of Justice ("DOJ") Report, federal prosecution of white-collar crimes has hit a twenty-year low.1 Rather than prosecuting individual corporate wrongdoers, the government often utilizes deferred prosecution agreements ("DPAs") for corporate crimes.2 A deferred prosecution agreement is an agreement between the government and a corporate defendant in which the government agrees to suspend prosecution in exchange for the corporation paying a fine, agreeing to a period of increased monitoring, or other conditions.3 The government uses DPAs for a myriad of corporate crimes including offenses that severely threaten the United States' national security and crimes that led to the deaths of more than one hundred Americans.4 The current use of DPAs for egregious corporate crimes and lack of individual accountability raises concerns about the ability to deter future corporate misconduct.5 For example, most of the financial institutions and banks responsible for the 2008 global financial crisis were granted DPAs leading to a notable lack of accountability for the individual executives and employees of these entities.6 Furthermore, recent proposed federal legislation, if passed, would make individual accountability for corporate crimes even less likely.7

This Note will explore the evolution of DP As from their original intended use per the legislative history of the Speedy Trial Act to their current widespread use in the resolution of corporate crime. In doing so, it will discuss the DOJ's Yates Memo and how the continued use of DPAs without any individual accountability is inconsistent with this policy. It will provide background on recent precedent concerning judicial review of DPAs and will analyze the arguments for and against judicial review of DPAs. Additionally, this Note will introduce the proposed Sentencing Reform and Corrections Act of 2015 and discuss its potential impact on the prosecution of corporate crimes. Finally, this Note will recommend (1) that DPAs be accompanied by individual accountability, (2) that there should be judicial review of DPAs, (3) that the Speedy Trial Act should be amended to further clarify the role of judges in reviewing a DPA, and (4) that the mens rea requirement of the proposed Sentencing Reform and Collections Act be rejected and the Park doctrine be accepted in its place.8

II.The History of Deferred Prosecution Acts

Under a DPA, a criminal information is filed against the defendant, and the parties simultaneously enter into a DPA to defer the prosecution.9 Thus, while there is a criminal charge on the defendant's criminal record, there will be no conviction for that particular charge.10 The federal government obtains its power to enter into these agreements from the Speedy Trial Act. Section (h)(2) of this Act grants federal prosecutors the power to enter into DPAs, which are now widely used to resolve corporate crime.11 Yet, this was not the legislative intent of DPAs when the Speedy Trial Act was drafted in 1974.12 DPAs were considered alternative solutions, only to be used in circumstances to rehabilitate individuals charged with nonviolent, low-level criminal offenses.13 Section (h)(2) of the Speedy Trial Act "was intended to encourage practices that had been ongoing in certain courts, which permitted the deferral of prosecution on the condition that a defendant participate in a rehabilitation program."14 These agreements were frequently used for nonviolent drug offenders, juveniles, or defendants who had particularly sympathetic or compelling cases.15

Although the Speedy Trial Act created DPAs to rehabilitate low-level offenders, today these agreements are rarely used to encourage individual rehabilitation.16 Instead, DPAs are used to defer prosecuting corporations that commit crimes in exchange for large fines paid to the federal government, and sometimes agreements to be monitored for a set period of time.17 The current use of DPAs for large-scale corporate misconduct is a far departure from Congress' original intent in drafting Section (h)(2) of the Speedy Trial Act. …

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