‘New Era Of Heightened White-Collar Crime Enforcement’ Highlighted By Breuer

Assistant Attorney General Lanny A. Breuer had some interesting things to say yesterday at “Compliance Week 2010 – 5th Annual Conference for Corporate Financial, Legal, Risk, Audit & Compliance Officers,” beginning with the Justice Department’s “determination to prosecute – and prosecute aggressively – financial fraud and corruption in all its forms.” He declared that we are in a “new era of heightened white-collar crime enforcement – an era marked by increased resources, increased information-sharing, increased cooperation and coordination, and tough penalties for corporations and individuals alike.” 

Breuer then highlighted some trends in this regard, beginning with “the attention that the Obama Administration has given to combating financial fraud” and its creation of the Financial Fraud Enforcement Task Force last November. He noted that the department “has been ramping up,” with a 2011 budget request that seeks a 23 percent increase over 2010 levels for economic fraud enforcement. In addition, Breuer added, the department is adding “a number of attorneys to the Fraud Section – lawyers who will be deployed immediately to prosecute crimes like securities fraud, health care fraud, and foreign bribery under the Foreign Corrupt Practices Act.” He pointed out that the Fraud Section’s new leader, Denis McInerney, is a former prosecutor and deputy criminal chief in the U.S. Attorney’s Office in Manhattan and, most recently, a partner at Davis Polk.
 
Importantly, Breuer also explained that the department is “now using in the fight against white-collar crime various undercover techniques, including court-authorized wiretaps.” He referenced the fact that the SEC “will now make use of cooperation agreements, as well as deferred and non-prosecution agreements” (and that the U.S. Sentencing Commission recently approved amendments to its Sentencing Guidelines, one of which reaffirmed the importance of compliance and ethics programs within organizations).
 
Internationally, Breuer pointed out that the federal government is working with foreign governments “to ensure that country borders won’t limit our ability to fight fraud.” He stated that foreign bribery “obviously is at the center of this heightened enforcement climate" and that it "presents unique compliance challenges.” He cited the following statistics: Since 2004, the Fraud Section has achieved 37 corporate FCPA and foreign bribery related resolutions, with fines totaling over $1.5 billion. It has charged 81 individuals with FCPA violations and related offenses. Forty-six have been charged since the start of 2009 – more than the total number of individuals charged in the previous seven years combined.
 
According to Breuer, the individuals charged have included CEOs, CFOs, other senior-level corporate officials and several foreign officials.
 
Breuer then discussed “compliance monitors.” In resolving criminal conduct, he said that department’s goal “is to vindicate the law and ensure adherence to it in both letter and spirit.” In that regard, he continued, a compliance monitor “may be particularly useful” where an agreement “requires the corporation to design, or substantially re-design, and implement a broad compliance and ethics program and internal controls.” As an independent observer, he said, the monitor “can enable the government to verify whether a business is fulfilling the obligations to which it agreed. In other cases, however, a compliance monitor may not be needed for a variety of reasons, such as where the business organization has ceased operations in the area where the criminal conduct occurred, or where the business has re-designed and effectively implemented appropriate compliance measures and internal controls before entering into an agreement with the United States.”
 
Breurer’s conclusion: “The Justice Department will continue to stand ready to root out corruption in those markets, and we hope and expect that you will do your best to partner with us in that most important of efforts.”