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Beyond the Yates Memo: A New Era of Enforcement?

Welcome, it’s my job to welcome you here today. I’m Dean Reuter, vice president and general
counsel and director of practice groups at the Federalist Society. Very pleased to see such a big turn out on
such a hot day. It would’ve been easy to skip this lunch. Um, it reminds of me of a, a saying I heard,
it’s not very, a very nice saying about the French. Uh, one of the American generals said, uh,
that the French are always … Wait a minute. When we, when they need us they’re always
there, that was the saying so. Uh, but it’s my job to introduce our four
panelists. I’m going to be almost and certainly mercifully
brief in introducing them. Uh, we’re going to hear opening remarks from
each after the judge makes a few remarks as the moderator. Uh, in that order we’ll hear from Matt Miner. He is a partner at Morgan Lewis and Bach,
[Bachias 00:00:49] right here in town. Uh, he’ll be followed in his opening remarks
by George Terwilliger, Partner at McGuire Woods and finally we’ll hear from Alice Fisher,
Managing Partner at Latham and Watkins. As I mentioned uh, Judge, uh, Richard Leon
is our moderator today. I want to thank him in advance for uh, his
help with this program. He was appointed in 2002 by President Bush
and is a senior judge of the US District Court for the District of Columbia, where he keeps
his courtroom at 68 degrees. So, we’re going to try and keep the room cool
here. Um, he received his AB from Holy Cross College
in 1971. His JD cum laude from Suffolk Law School and
an LLM from Harvard Law School in 1981. He was in private practice from 1989 to 2002,
over a decade. He’s also been at the justice department and
he teaches as an adjunct at GW in Georgetown. Now, importantly perhaps for our purposes
today, before private practice he worked on Capital Hill, where he served as a counsel
to Congress in the investigation of three presidents in the Iran-Contra Matter, the
October Surprise Matter and the White Water Matter. Um, everyone there benefited from his legal
expertise and today we benefit from his moderating role. With that Judge Leon. (applause)
Judge Leon: Well I’m not using a microphone in a space this small. I’m not going to um, speak as loud as I used
to, but uh, welcome everyone. I think this should prove to be an interesting
and perhaps even uh, let’s say uh, a confrontational presentation today. (laughing) We’ll, we’ll see, we’ll see how
this goes. Um, my role is really limited. I’m just, I’m just basically a traffic cop
here for the three of them because they’re all going to have so much to say, that um,
you know I’m going to keep them from dominating the conversation. But, I want to emphasize to you all one thing. And this is my only mission today for certain. Today’s program is a discussion about the
Yates Memo, not about the Comey testimony, or for that matter the Yates testimony. So, let’s stay in topic. Let’s ask questions that relate to the Yates
Memo. Uh, you know George and I have been around
long enough to remember a time when Deputy Attorney General, of which George was one,
didn’t write memos, but now we seem to be in a period where there’s memos all the time. I can only imagine what Rosenstein is cooking
up right now. (laughing) But, hopefully, he’s not cooking
anything up and he’s just focusing on doing his job, but that’s the whole different subject,
the Yates Memo. We’ll start with Alice. We’re starting with Matt. Oh, I’m sorry with Matt. But thank you Judge and I hate to disagree
with you, sorry. (laughing) Respectfully so of course. You’re welcome to disagree. So, I will accept Alice’s lateral and I will
try to set the stage a little bit on the Yates Memo, a little bit of background for those
who uh, aren’t as familiar with the policy and it’s background and some of the surrounding
DOJ policies that predated it. The Yates Memo uh, was announced in a speech
by uh, then Deputy Attorney General Sally Yates, September 9th, uh, 2015. So, it’s almost two years old now. And the policy memo, uh, was labeled the individual
accountability policy. And it, it, it was rolled out with a focus
on individual accountability. So far so good, everyone believes that individuals
who engage in wrongdoing should be held accountable. But there was a perception within the department
and in her comments that came later, that individuals were not being held accountable
and I’m sure that’ll be part of our discussion today, as the overlay on the Yates Memo and
why it was written. On the very day that it was announced the
New York Times had a headline about the story. It said Justice Department set sights on Wall
Street Executives. And here, here’s in the body of the piece
down a ways. Under Attorney General Eric Holder, the Justice
Department faced repeated criticism from Congress and consumer advocates, that it treated corporate
executives leniently, after the 2008 financial crisis no top Wall Street Executives went
to prison and it continues and continues. So that’s sort of the background and, and
when this was launched, how it was perceived. So what it did say? What did it do? The Yates Memo had six principles embedded
in it, all of which you would think would be aimed at individual accountability and,
and bring greater attention and focus on the prosecution and investigation on individuals
engaged in white collar crime and corporate wrongdoing. And for some of the factors that is the case. So, for three of the factors, an increased
focus on culpability of the individual. Prosecutors were to focus on, on that as part
of their uh, corporate investigation. There was to be a broadening of pursuit of
remedies, criminal and civil against individuals, so great parallel investigations and prosecutions. And the department’s prosecutors in reaching
resolution, uh, should focus on retribution and deterrence. Uh, don’t just monetize, don’t just look at
how much an individual or a corporation should pay, let’s, let’s focus on deterrence. So those three of the six factors were focused
on individuals. Three other factors, however, focused largely
on corporations, which is interesting in an individual accountability policy. Uh, one, that I’ll, I’ll talk more about um,
is, is the all or nothing approach to cooperation credit that was embedded in the Yates Memo. Corporations were told through the memo and
prosecutors were directed, that a corporation should receive no credit for its cooperation
unless it turned over all relevant facts as to any potentially culpable individual. So, all or nothing, there’s a threshold now
for cooperation credit. Unless you give it all you get nothing. Um, there should also be no protection for
individuals in a corporate resolution. So, you can’t just have an umbrella settlement,
where officers and employees are not going to be pursued and everything is going to be
resolved at the corporate level. And as a requirement in resolving corporate
uh, uh, investigations and charges, that there needed to be a plan in place among the department’s
prosecutors, well the civil and criminal uh, and lawyers involved for resolution as to
individuals. And if you’re going to move forward with a
corporation and you don’t have a plan for resolution, it has to be signed off on at
a high level, by the Assistant Attorney General, by the US Attorney, uh, him or herself. So that, those are the six principles and
as you can see not all of them relate to individuals. Half of them relate to corporations. And I think that that’s an important piece
because in considering those changes, you have to look at what has been around for a
quite a while in the department as part of these deputy memos. Uh, starting in 1999 with then-Deputy Attorney
General Eric Holder and going through a Thompson Memo and a McNaughlty Memo. Um, you have the the Phillip factors, which
means that Mark Phillip didn’t want to write a memo. He put the factors in the US Attorney Manual. There have been uh, a set of factors that
are to be considered, or principles that are to be considered whenever prosecutors evalu-
what, evaluate how to close out a corporate criminal investigation and whether to bring
charges. One of those nine factors is, did the company
voluntarily disclose to the gov, uh to the government and, and did the government cooperate,
or the uh, uh, the cooperation cooperate with the government and its prosecutors. Over time that has been treated as more or
less a sliding scale and one of the questions with the Yates Memo, when it came out in September
is will that change, will that change, this, this policy that’s been embedded in the US
Attorney’s Manual since 2008 and been a part of the department’s policy since 1999. Um, leaving no doubt to that, in November
the US Attorney Manual was modified and here’s a statement from then Deputy Attorney General
Sally Aid’s speech to the American Banker’s Association on that day. And as if to remove any ambiguity. In the past cooperation, credit was a sliding
scale of sorts and companies could still receive at least some credit for cooperation, even
if they fail to fully disclose all facts about individuals. That’s changed now. As a policy makes clear, providing complete
information about an individual’s involvement in wrongdoing is a threshold hurdle that must
be crossed, before we’ll consider any cooperation credit. So, there’s really no ambiguity about it at
all. The US Attorney’s manual when it was modified
made clear that there was now a minimum threshold for cooperation, that it would be decided
at the end of the cooperative efforts and there would not be a determination, unless
prosecutors agree and it was really a determination by the prosecutor who was handling the case,
signed off one by superiors as to whether corporations would receive any cooperation
credit. And so that’s where we find ourselves now. Thank you [inaudible 00:10:19], thank you,
Matt. Um, it’s a good um, great foundation for,
for this discussion. Um, Judge Leon mentioned um, the um, sort
of cascade of memos that seemed to flow from the, the deputy’s office. There once was a Terwilliger memo. This memo um (laughing) being two years old,
um, is ancient, um by terms of I think mine was gone in the first three days of the Clinton
administration, so um, it’s high time we reconsider the Yates Memo I think. (laughing) Um, what I thought I might do is
try to um, put the Yates Memo and it’s exportation to prosecute individuals into uh, slight larger
context involving the prosecution of business crime. Um, and that concerns the, the, what many
of us have said for some time, uh, it may be the overuse of criminal law to prosecute
and sanction corporations. Um, just a, the very briefest of background
on that notion. Uh, corporations, of course, can’t think. So they can’t form the traditional intent
uh, that marks a criminal violation in our, in our law and the tradition of our law going
back to the origins of criminal law really. Um, corporations also can’t be imprisoned
which is another hallmark of, of a criminal prosecution. You can just take their money. So, you can take their money through civil
enforcement mechanisms, just as readily as you can criminally. So, a question can be asked, why should the
innocent shareholders of a corporation be punished for what managers, uh do. People obviously think, um and the logic goes
that, because people within the corporate structure think and thus can form mens rea,
the intent to do a bad act, um, that that makes them, the people that should be held
responsible for culpable criminal conduct. So, that in turn leads to the notion theoretically
that it’s much more fair as a general proposition, um, to hold true to principles establishing
criminal responsibility and hold real persons responsible for, um acts committed on behalf
of fictional corporations that may violate the law. But that notion also carries some problems
with it all by itself. Um, and that is generally that business people
don’t like to go to jail. They don’t like to send other people uh, to
jail. Um, and they don’t like people who help send
their colleagues to jail. So, a practice evolved in as white collar
uh, prosecutions and defense developed, that more often or not, the corporation would and
I’m generalizing, but more often than not, corporation would take the fall um, for the
individuals. And while there might have not been an explicit
quid pro quo between prosecutors and uh, corporate defense counsel, there was a task and understanding
that if the corporation will plead to A, B, C and D, um, then we’ll leave the individuals
here alone. And there are, there were clearly were um,
have been exceptions to that. Um, and um, uh, but generally that’s kind
of how things worked. The Yates Memo um, is kind of the culmination
of resistance to that notion, that corporations should be allowed to take the fall and individual
wrongdoers um, escape. But that resistance also ran into problems,
particularly in the last administration and for reasons which we could take this hour
and a few more to, to discuss. Basically, that administration made sport
out of pillering corporations for alleged criminal activity like having sticky accelerators
that never caused an accident, or pooling payment streams from various kinds of mortgages
into a security and not disclosing risks that by anybody’s reckoning uh, anybody would know
were there, but any … I digress, sorry Dick. Um, so into the middle of all this evolution
uh, lands the Yates Memo. And that the Yates Memo itself produced, even
more, problems, because as Matt explained, what it does is basically say to prosecutors,
look before we’re going to let you close a case out, you’re going to have to get permission
to prosecute the corporation and leave individuals alone. So what’s it easier for a prosecutor to do. Work up the food chain of the, the uh, US
Attorney’s Office or the Justice organization and get permission to move ahead without prosecuting
an individual and explain why the prosecutor was so inadequate, that he or she could not
gather enough evidence to prosecute somebody or indict somebody. That’s easy. You put it in an indictment, you put it before
the grand jury, you’re done. Um, so, how do they do that? Um, well one of the ways that that’s been
done and phenomena that’s developed in this over-criminalization, is we have a vast array
of federal regulations that govern all kinds of things that businesses do. Medicare cost reports and environmental regulations,
financial services regulations. So prosecutors have become super regulators
in many cases, where they interpret those regulations themselves and they say, “Oh you
were supposed to do A, B, C, or D here and you didn’t and you know what that’s a crime
because you submitted that report. Um, that’s a false or fraudulent statement
with the intent to get money or some benefit from somebody else. So, um, you committed a felony. We’ll just put that in the indictment, then
I don’t have go up the food chain and explain why I don’t want to indict you. Um, so, this is produced another sort of basic
unfairness and the Yates Memo has sort of hastened uh, the trend uh, towards, towards
doing that, um, because the Yates Memo demands holding individual uh, pros, uh, individual
um, uh, business people accountable. Um, and it’s easier to overreach then it is
not to indict. So is there an answer to this, to stop being
facetious, somewhat facetious um, and, and address a, a serious policy issue? I think the answer is yes. Clearly, individuals who actually form the
intent to do a bad act in the context of some business crime, need to be held accountable. Fraudsters and um, other kinds of crooks that
either use a business as a criminal enterprise or turn a legitimate business into a criminal
enterprise. Yes, those people should be prosecuted, because
um, the whole purpose of federal criminal law is to preserve from dishonesty, the means,
and instrumentality of interstate commerce. That’s the federal role, uh, the proper federal
role in my view in all of that. So, if somebody is doing something that basically
uh, permeates the the stream of commerce with fraud and, and other kinds of basic criminality,
of course, they should be prosecuted. But, we ought to take the emphasis off that
the Yates Memo put on of having to hold somebody accountable as Matt said, as sort of a threshold
determination for corporate cooperation, because it has the, the, the kind of uh, gravitational
effect of bending the universe of fairness um, in my view. Um, there are some other aspect of this that
maybe we’ll get to, but with that I’ll, I’ll flip it to Alice. Alice Fisher: Great, um, great segway into
something that I think, that I think about, which is on the other side of this, um, when
you’re holding the corporation liable when there isn’t an individual that actually had
the specific intent to do something wrong. And that’s not something that the Yates Memo
talks about it all, but it is as Matt said, the Yates Memo and the prescriptions are part
of the corporate charging principles and, and what prosecutors are trained on when they’re
thinking about charging a corporation. And so, you know part of this and, and George
has talked about the going up the chain to justify why you’re not indicting a particular
individual and if you don’t, as corporate counsel provide all the facts and circumstances
about the individual that would be accountable, you can’t get cooperation credit. What happens when there is no one person within
a corporation, that has that specific intent to commit the crime. And, and there’s no guidance about that, in
the, in the context of the Yates Memo and I’m certainly not suggesting because I do
not want to disagree with Judge Leon that there should be another memo on this. But I do think that it’s something that the
Department of Justice should think about and I’m sure that they are thinking about, in
the context of collective knowledge and collective intent and how that interplay um, comes into,
into account when there is no one person, individually that has that specific intent
to commit the crime. So, if you go all the way back to the first
circuit case of Bank of New England, you see that a corporation acts through individuals
and sometimes there’s many different pieces of a corporation that has knowledge of particular
bad acts that are you know the basis for the criminal uh, conduct. So that’s collective knowledge and, and people
talk about that as saying you could take this piece and this piece from this person and
this piece over here and this person over here and you add that all up together and
that’s the corporate knowledge. Um, and that’s what you think about when you’re
charging a corporation, when there’s not just one uh, individual that you can get respond
it superior kind of vicarious liability through. So, you have that collective knowledge and
that, that seems to make sense, you know a company can have more knowledge than just
is housed in one, one individual or one agent. But what’s happened in the specific intent
area, where the crime is, you have to do it knowing and willfully, how do you get that
willfulness. And what you see is, is different courts addressing
the collective intent prong of corporate criminal liability differently. And I see sometimes there’s confusion and
there’s courts that do it differently and there’s prosecutors that come to a discussion
differently when you’re talking about can you add up all of the knowledge, such to an,
an, an event that that will equal enough specific intent to say that the corporation is liable,
when there’s no individual that can be accountable. And um, you know how does that interplay with
regulatory crimes and how does that interplay with other things that the Justice Department
rightfully so, needs to hold companies liable for. So, so, I, I worry about it um, from that
perspective as, as well, because you’re sitting across the table from a prosecutor and you’re
defending the corporation and they say, well you’re not cooperating if you don’t show me
which individual is accountable. Then you’re not going to get cooperation credit. And if you’re not having a discussion that’s
really a dialogue that … You know are we talking about collective knowledge, are we
talking about collective intent and how they’re supposed to address that. Then all of a sudden you have a corporation
that, where there’s nobody that had specific intent. You have a lot of knowledge, but it’s unclear
where the wilfulness comes from and yet the, the corporation is going to pay a large settlement
at the end of the day, because the corporation is not going to be able to take that risk
and take it to trial, particularly in a regulated uh, industry where your main customer is the
government. And so, again, no memo and that’s not even
addressed in the, in the Yates Memo, but when you’re having the discussion about individual
accountability, I think it’s good to also you know have a discussion of what are the
limits of collective knowledge, collective intent and how does that interplay appropriate
with regard to corporate criminal liability in the criminal context. Civil may be different, maybe not. Some of these cases on collective knowledge
are civil cases but … Judge Leon: Well let me start off by asking
the three of you a question and get each of your uh, viewpoint on this subject. From an outward observer point of view as
a judge, this what this memo looks like to me is, the government wants you to conduct
their investigation for them. Now the three of you are in the business of
conducting internal investigations for corporations obviously. This is one of the ways you earn your living. So, my question would be this, if you want
to conduct, if you’re going to conduct an investigation for the company that’s hired
you. Uh, to what extent do you interpret the Yates
Memo to require you to give them the factual conduct of individuals in the company, or
even more than that, the inferences and conclusions that you draw from the factual conduct, because
as you all know from experience, often times you’ll have facts about what a particular
individual did, but that … Whether or not they intended X, Y or Z is an inference that
you draw from those facts. Where do you draw the line as to what you
view in light of the Yates Memo? Cooperation to consist of? Is it the facts of what the individuals did,
or is more than that? Is it the inferences and conclusion that you
and your client, with your advice, draw from those facts? Matt? Matt Miner: Well I, I think that what you
want to do is you only want to present the facts, but the investigation is intended to
gather the information through the lens of, of counsel. And that includes how it will impact the company,
including the mental impressions during the interviews. That’s what’s captured in the work product
and it’s very difficult to divorce that from what is presented to the government, especially
when [crosstalk 00:24:35] … You don’t have to put it in the work product,
do you? You don’t have to put it in the work product,
but you run risks if you divorce your, your um, interview memos from any mental impressions
whatsoever and it’s looks like a transcript. Well, those are covered by the attorney, client
privilege aren’t they? This … (laugh) Now we’re getting into interesting
conversations you have with the Department of Justice where they do ask for and they’ve
increasingly started asking for again, um, memorandum of interviews, uh, and including
in unredacted, unedited [crosstalk 00:25:04] memorandum. That’s going back to the Mary Jo White era
that we thought uh, Larry Thompson had, had trumped that and said, “No more of that.” Waving attorney, client privilege requirement
stuff. And there’s [crosstalk 00:25:13] …
Oh we just want the facts. Yeah. And that’s, and that’s what’s been said. So, uh a, attorney, or Deputy Attorney General
Yates when uh she was speaking at the American Bankers Association and elsewhere, she said,
“We’re not interested in, in your privileged materials. We’re not interested in that at all. All we want are the facts. But if you think about it from the perspective
of how you get those facts, it’s kind of like going and asking the priest. I don’t really care what you said, uh, to
the parishioner, to the pennant, I just want to know what they told you. You defeat the privilege when you go there. Alice. No, no, please. Um, well it’s a great question judge and um… That’s why I’m asking. (laughing)
Of course. Um, and not, not surprising from the, from
the uh, perspective of sitting up in a courtroom on the bench and listening to testimony, because
indeed the answer to your question really is, that’s why we have trials for right? Exactly. Um, but the fact of the matter is that um,
the in, in terms of corporate criminality we’ve basically lost sight of the adversary
system. Um, it’s, it’s one big uh, uh, cooperation
party, or, or so it’s designed to be. And it does put counsel doing an internal
investigations in most circumstances into a, uh, a very difficult position. You know the memo says uh, the Yates Memo
says, corporations must provide to the department all relevant facts relating to individuals
responsible for the misconduct. Well, who’s responsible for the misconduct
is a judgment, not a fact isn’t it? Yes and that should be covered by the attorney,
client privilege shouldn’t it? Well, it can be, or it cannot be. I mean that’s, that’s sort of up to the corporation
and something that as a practical matter, companies have to look at it at the outset. It’s one of the things that has led in some
circumstances to having one law firm do the fact investigation, which is non-privileged
and another law firm do the legal analysis, which remains privileged. Um, it also [crosstalk 00:27:07] …
That can be expensive George. (laughing)
It can be, but it all costs money. Um, um, so, so is getting indicted. Um, but um, it, it also depends sometimes
on who the client is. Um, um, I’ve worked on situations for example
where the client is the audit committee of a public corporation. And they not only want to get all the facts
and find out who’s responsible, they want to get the people in management that are responsible
out. When you’re working for management that might
be less order, um, to identify bad guys, but again that depends on the level. I mean most corporations, major corporations
are inherently honest businesses and if somebody is dishonest, um, it’s a, it’s a sort of stain
on their culture. So, they want to find the facts, but the fact
remains that it’s still a subjective judgment. Um, what, what usually results from that is,
um, you do more spilling of the guts, rather than less and leave it up to the prosecutors
to decide who is responsible for the misconduct, um, by giving them all the facts. But that can be very, very difficult and in
terms of an ongoing business creates a lot of day to day problems. Judge Leon: Well if you know, if you know
that going into your investigation, wouldn’t that incentivize you in consultation with
your client, to get an outside counsel for the individual uh, …
Absolutely. Executive in the company who you suspect might
be guilty of possible uh, culpable conduct? Yes, yes indeed and indeed one of the effects
of the Yates Memo has been that people lawyer up a lot earlier in the process uh, then they
[crosstalk 00:28:49] used to. Which might end up frustrating the objective
that the government is trying to achieve. And slows things down. That’s right. And makes it more expensive. Alice Fisher: It does, it absolutely does,
because I, when you know where they’re coming from and you don’t know exactly where the
investigation is going and you have to decide from the very beginning, we’re going to cooperate
by giving all the facts and circumstances, then you do have to worry about putting somebody
in a trick box. Um, and that is in con, that’s contrast with
your duty to the company to find all the facts, so they can remediate and get rid of the wrong
doers. And so, you know, it, it does put a little
strain on that relationship. Having said that um, my experience since the
memo, uh, it hasn’t changed that much. I think that experienced counsel was always
getting defense counsel in for the individual, when they believe that something cross, crossed
the threshold that they were going to either disclose to the government, or that person
could put themselves in jeopardy and you know offer that up and try to get the facts uh,
regardless of that. So, I think um, the, the, the fact that there’s
no sliding scale and it’s all or nothing, potentially creates strain at the beginning
and I think it slows things down, unfortunately. Judge Leon: What, what happens Alice? You were Assistant Attorney General of the
Criminal Division obviously at one point in your career. What happens in a situation where the criminal
division and its counsel reach one conclusion about the degree of cooperation? And the counsel for the company, probably
people who were former prosecutors themselves have a completely different view about the
extent to which they’ve cooperated under Yates or any of the memo for that matter. Who, who decides, does, does a judge decide
somewhere? Okay, I think the, the government is right,
or I think the defense is right. There’s really been cooperation here, or there
hasn’t been cooperation here. How does that get resolved? Alice Fisher: Um, sadly I don’t really think
that there is some appeal mechanism for cooperation and the reason is, it, it’s not going to court,
the, the corporation is going to settle at the end of the day. And so, how prosecutors are viewing the company’s
cooperation is going up the chain within the Department of Justice if you want to appeal
it right? So it’s going from the prosecutor to the US
Attorney, or it, if it’s a main justice it’s going from, you know through a section chief
to you know, up to the Assistant Attorney General. And by the time you’re in front of the Assistant
Attorney General you’re not, you’re not complaining about cooperation, unless, unless it’s a big
part of the find that you’re not getting. You’re complaining about the merits. You’re trying to make your legal arguments
because you can’t argue about everything there. And the worst thing to do is start pointing
fingers at the prosecutors or saying you know they’re uh, not being reasonable or things
like that. You want the Assistant Attorney General or
the US Attorney to focus on the merits and to give you some relief that way. So, I think that cooperation dialogue has
to, you know go on throughout the investigation and you should not wait until the end to see
whether the the prosecutor is going to give you full credit or not. Because if [crosstalk 00:31:56] you don’t
know going on, it’s going to change your strategy. Judge Leon: Did you ever have a situation,
at least when you were there, or have you known of any since you’ve been there, where
the parties agree to disagree on the extent of cooperation, will enter a plea and will
let the judge decide the extent to which cooperation is actually uh, occurred and then let him
or her factor that into their sentence? Alice Fisher: Yeah, I don’t remember any cases
like that in the corporate context that came up. I can’t say that there weren’t, I don’t, I
don’t remember them. Judge Leon: Hm-mmm (affirmative). Alice Fisher: But I would say the Yates Memo
wasn’t in place when I was the Assistant Attorney General. Judge Leon: Right. Alice Fisher: And so, it was very much a sliding
scale of how you were going to cooperate and some people cooperated by, you know, getting
overseas evidence, uh, the Justice Department otherwise couldn’t get, or over complying,
or different kinds of disclosures, but it wasn’t an all or nothing thing. And at the end of the day it may be a downward
departure when you’re negotiating the fine, 25% credit, or, or something like that. Um, the, the thing that sometimes concerns
me that judge, that George hit on was, if you disagree about what the facts mean. And, you can turn over all the facts, but
at the end of the day, if you say, “We don’t think this adds up to a crime here.” Judge Leon: Right. Alice Fisher: And they disagree on that, um,
sometimes that’s couched as you’re not cooperating, because you don’t agree with me. And that’s something to be very mindful of. I don’t think it happens a lot, but once in
a while, you know, you have to continue to be able to advocate for your client, even
if you turn over all of the facts, as to what it means. George Tewillig: Another fact Dick, along
those lines of, of individuals um, uh, this emphasis on individuals is um, individuals
get nervous when you get into a situation um, like this. And what do people do when they think they’re,
they’re conduct in their job um, might come under scrutiny. They start thinking about well, what did I
say to him or her? What did I put in an email? Should I delete those emails. Um, what did I say in my tests, or other instant
messages? Should I delete those? What is so and so is going to say when the
investors talk to them? Maybe I should talk to them. Each one of those instances is of course fraught
with the possibility that they engaged in some non cooperative conduct. And one of the things I’ve noticed with the
Department um, at least uh, you know over the last few years has been that, the actions
of a few people. You know the old saw about the cover up is
worse than the crime. The actions of a few people sort of down the
employment chain a ways, will be held against the corporation as being either obstruct,
obstruction, or uh, or non cooperative conduct. When in fact the corporation as Alice was
just eluding to, as really turned all the facts over, um, but you can’t, you can’t uh,
fight human nature. And a little bit more reasonableness from
prosecutors sometimes, in terms of understanding that this pressure on individuals, you know
when they see somebody, like in the Volkswagen case to use an example, get arrested at an
airport in Miami when they’re coming here for vacation or whatever. That has an effect on how people react as
a practical matter to the fact of an investigation. Judge Leon: Well the, the provision in here
about no protection for individuals in a corporate resolution, has that resulted in companies,
as a result of not being able to do that? Taking out more insurance to pay for the legal
fees, of the attorneys they’re going to bring in to represent corporate executives who might
be the target of the internal investigation? I’ve, I’ve heard [crosstalk 00:35:42] …
In your experience, I mean I, I, you know ….
I, I don’t know the number, but I have had, I’ve had the question raised. I know it’s something that’s being considered
by companies and it’s, it’s a real, real issue, but I don’t have the numbers to know if that’s
gone up or not. Alice Fisher: I think, I think jury is still
out so to speak on that and where it’s going to lead at the end of the day. I think when you think about the language
in the memo as it applies civilly. You know go after individuals, hold individuals
accountable in the civil context. Even if in the past you might not have included
them in a complaint because they didn’t have any resources, or something like that and
it wasn’t worth the Department’s time. That there’s a deterrent effect in um, using
individuals as part of that complaint. Maybe in a false claims act case or something
like that. I think that’s where insurance really comes
into, to play, because if a corporation wants to settle uh, a regulatory civil case, but
the, the government will no longer give you release for the civil individuals, for the
civil liability of the individuals. Generally, those individuals are going to
be covered by the insurance policy because now we’re talking about recklessness as the
standard, not out and out criminal conduct or fraud. And so it’s so important if a company is settling
a civil case criminally, not to know that it’s going to have to double pay, either through
insurance or through directly for that reckless conduct by somebody in the billing department. Um, so I do think that aspect of this is still
kind of percolating through and I’m not sure exactly what it, impact it will have. Have any of you had the experience yet, uh,
in the aftermath of the Yates Memo? Of having a client, or are you aware of any,
anyone having this situation? Or are you aware of a client who wanted to
get a resolution for his corporation that he was representing, or her corporation they
were representing? They wanted to get a resolution, but the Assistant
US Attorney, or Fraud Section lawyer, uh, couldn’t get a check off from their superiors
on no individual liability for certain individuals, which is a requirement now under the Yates
Memo. You have to get a written check off from your
superiors, of you’re the pros, the frontline prosecutor, uh, of no individual liability. So there was basically a debate between whether
there was individual liability. Counsel for the company said, there, there
isn’t a, a viable case here. Prosecutor agreed with them, but the superiors
were saying, there is a viable case here. Have you, have you see that kind of situation. I have. Not yet. But, but as Alice said, things have gone more
slowly and there, there is this sand in the gears, uh, aspect to the memo, by requiring
these levels of check off, by requiring um, cooperation that is, you know all is to everyone. And, and I also think that there is tension
because if you approach things from counsel, from the perspective of counsel for a company
and you look at some of the incentives that the department has created from moving quickly. Hm-mmm (affirmative). Hm-mmm (affirmative). Whether you’re talking about the FCPA Pilot
Program at the National Security Division. Voluntary disclosure guidance. Those are, are intended to create a carrot
to bring uh, companies in early and disclose the facts from their investigation early on. Well, if you’re slowing things down on the
back end, you really wonder what kind of, of odd dis-incentives you’re creating and
are you, are you also creating confusion um, to the regulated community of the bar, as
you send these mixed signals. Hm-mmm (affirmative). And that’s, that’s true in um, in antitrust
as well, which is, as you know has had a so-called leniency policy for a long time, that the
first one in with real cooperation um, uh, get a pass, uh, which is probably the most
generous of, of all those programs. But um, the other phenomena that gets created
uh, by this that’s probably worth at least noting, if not a little bit of discussion
is that um, uh, supposed just to take your last question Judge. The, the corporation has reached a resolution. Um, but you have an individual who is not
willing to reach a resolution. Um, corporations you know are motivated more
often than not by we just want to get this behind us. Judge Leon: Absolutely. Um, pay money, get rid of it, lose the adverse
publicity and so forth. Um, and when you’re just paying money that’s
a relatively easy decision to make. Hm-mmm (affirmative). But when um, an individual faces a resolution
that may expose them at least to the possibility of going to prison, not so fast. (laugh) Um, and as a result um, the ability
of corporations to bring things to complete closure, um, becomes more limited, because
a lot of the, the benefits of, of closure through some kind of a, a deferred prosecution
agreement, or other resolution, successful resolution with the government. Many of those benefits are lost, if there’s
going to be another two years worth of publicity when the president of the company goes to
trial. Judge Leon: Well um, we’ve had the experience
in our courthouse in recent years of example after example after example. Two of them, in particular, played out in
my courtroom, in the FCPA arena, where the government totally misread their chances of
winning a case at a trial in a white collar setting. And it raises questions, at least in my mind
and I’m sure in other people’s mind, as to how capable the decision makers are at a certain
level, in a, at a time when 97 to 98% of all criminal cases are resolved by plea. Hm-mmm (affirmative). Okay. How capable the decision makers are in evaluating
the realistic prospects in actually succeeding at trial. I mean we have had a series of white collar
cases that have fallen apart and blown up in our courthouse and that’s just one courthouse
here in this country in the last, the last five years. It’s a great point. I wouldn’t put it so much perhaps in the,
in, under the context respectfully of capability as experience. I think we all know that a prosecutor who’s
tried a bunch of cases and sort of can place a given situation on a continuum, between
a dog and wiener. Judge Leon: Hm-mmm (affirmative). Um, is uh, a much a fairer adversary …
Absolutely. Than somebody who is, is less well informed,
we’ll put it. Well, um, uh, I think that most of the people
in the Department of Justice that are bring these cases are there to work at the Department
of Justice and investigate cases and uh, do their job and they do it ethically and professionally
and they’re trying their best. And sometimes they’re going to win and sometimes
they’re going to lose. And sometimes the decisions that they make
at the beginning of the case will take different, different, uh, uh, weights in the trial. So I, I don’t know, I wouldn’t say it’s capability
or experience. My experience at the Department of Justice,
where people were, you know, very much focused and committed on doing their job and that’s
my experience now as a defense counsel. That doesn’t mean that cases wouldn’t go aside
from time to time. And, and, you know, I don’t, I don’t know
about all the particular cases that uh, you’re referring to, I think I know of one. Oh, you know of more than one. (laughing)
Um, I don’t think I was there. They weren’t on your watch, but …
Yeah, but um, in any event, I, I do think that there is a point here, which is most
of the cases against corporations are settled and particularly because, they, the corporation
if they are dealing with the government. The government is their customer. They’re regulated by the government. It’s exactly what George said, which is, at
some point it has to end because we are about business, we, we aren’t about the business
of defending ourself with the Department of Justice and we need a good relationship with
them. And so, then there are the individual white
collar cases that are brought in the 93 US Attorney’s offices and Main Justice. And um, sometimes they’re uh, based on full
facts that you know at the beginning and sometimes they’re not. Judge Leon: Did you find that uh, there are
four jurisdictions that have strict protections for employees against criminal liability,
uh, when there’s an investigation of the company they’re working for. And of course many of the, the companies that
the, the Yates Memo would apply to, operate around the world. And so, you know they have uh, employees in
these various jurisdictions around the world, where there’s strict protections for those
employees, uh, should there be a internal investigation or something like that. Did you ever find that that was a particular
challenge or problem to the resolution of the case? Either from a prosecution side or from a defense
side? Go ahead. Well, it’s certainly if I’m understanding
your question right. It’s certainly um, a challenge to a resolution
based on facts, where internal investigations become a lot more difficult, because of the,
those kinds of employee protections. Hm-mmm (affirmative). Um, in some jurisdictions it’s also just the
opposite. In Germany for example, a corporation cannot
be held criminally liable, except, um, on the basis of something that one of its agents
or employees did. So, there’s the, the investigation in Germany
by German authorities, is always of the individual, as a way to get to the corporation. Hmm (affirmative). I do think that as we do internal investigations
all over the world, that you come into situations where there’s a work’s counsel, then you have
different, you know mandates about how you can and can’t investigate, or you can and
can’t talk to that person, or if you do talk to that person, when they have to be terminated,
you know, within 30 days and things like that. There are those kind of employee restrictions. There’s also restrictions on when you can
fire somebody, even if you found, find out that you believe that they were engaged in
wrongdoing in certain countries. There’s all sorts of data privacy issues that
are real and some are criminal, as far as when you can bring documents into the US. So, for international investigations, very
um, very much can slow things down, as to how you need to proceed. And lawyers, both the, both the government
and defense counsel need to be aware um, so they’re not coloring outside the lines on
what those uh, regulations are in a foreign country. It’s very important in this day and age to
be under, to be able to understand what you’re getting into when you go onto foreign soil. And that’s for the government as well as defense
counsel. Matt Miner: There’s a … So when the Yates
memo was embedded into the US Attorney Manual, there’s actually a footnote that is very much
buried in the text, you have to look for it, but it does say that if there are facts that
the company cannot present as part of this cooperation, this all or nothing cooperation,
that the burden is on the company and the company’s counsel to identify what those facts
are and to explain the obstacles. So, I think the point of that is, as to data
privacy, as to the obstacles that you would run into in these jurisdictions, but the way
it’s worded, uh, it’s, it’s a little bit more broad. And so, of course, it leads to questions about,
well I don’t, if I don’t know what I can’t find, how can I point out to the government
what I’m unable to identify. So, I think that can be tightened up a little
bit, but I do think there was a nod to that in the US Attorney Manual, I just think it
probably should be tightened up and be made more express. Which kind of begs the next question which
is, how do you determine uh, in consultation with your client, say it’s the general counsel
of the company. The, the breadth and the scope and the expense
of the investigation you’re going to conduct, in order to, in order to comply with the Yates
Memo on the one hand, but not bankrupt the company on the other. How, how do you find that balance point? Where you’re doing more than enough to satisfy
the government that you’re, hey you’re investigating this, but on the other hand you’re not bankrupting
the company. Because not every company is General Motors,
or you know, Volkswagen. How do you do that? How do you, how do you find that balance point? That’s right. Yeah. I mean it’s uh, to give credit where credit
is due, I thought that in the, in the last administration when Leslie Coldwell had Alice’s
job and made a couple of uh, speeches, one of which the department made her walk back,
but that was sort of a little different. Um, she, she, she tried to give some guidance
on the expectation of prosecutors, on the answer to that and said among other things,
you know, you don’t have to boil the ocean to do a thorough and complete investigation. Um, but your, your question again Judge is
right on the money because it … I mean in my book
It’s about the money. Uh, well yeah it is about the money, but it’s
also about the disruption to the business um, and I will say the cultures in my experience,
the cultures you run to in different companies can be really different, in terms of how they
effect uh, that. One, one of the … Probably the most um,
important driving factors is the role of outside directors on the board. Um, where you have very active outside directors
on the board and probably I don’t know uh, people in the uh, audit committee. Um, they want to, that internal investigation
to get to everything because the best protection that a board member has against a shareholder
suit is, I saw a red flag, I acted on it. We got all the information, we fixed it. Um, management may not share that view. Uh, [crosstalk 00:49:51] …
Exactly. In, in many instances and striking the balance
between the two of those um, and after all, I mean one of the things we all have to remember
is they are the clients, they decide. Um, and um, and frankly sometimes you have
to, um, not uh, not undermine your advice, but you have to couch your advice, in terms
of what their expectations are for what’s a reasonably thorough effort. But, but in sense George, aren’t they being
asked by you as their counsel to make a choice, as to how much is it worth to cooperate? Yes, yes, [crosstalk 00:50:32] …
Judge Leon: How much, how much are you willing to spend? Yes. Yeah. To satisfy this cooperation agreement? Right. A, a lot of time frankly, I mean I’d like
Alice and Matt to address this, but a lot of times it really, it also depends on the
size of the company and the size of the problem Right. Um, you know, when you have a problem, um,
again I’ll just, I’ll pick on Volkswagen. Um, you know, when you have a problem of that
dimension, um, when, when you look at the potential consequences. Sure. Um, the cost of investigation becomes a minor
irritant. Sure, sure. Yeah, I agree, I, you know, I tend to think
that dialogue with the government is important and that means they have to be willing to
talk to you, so sometimes I feel like, you know, taking off the handcuffs a little bit,
to have more of a transparency would be better. Because it helps everybody. You know what they want you to look at it. You go look at them. It’s an iterative process, where at the end
of the day you don’t have to, as George said, boil the ocean from the beginning. What you can do is just phase it. Say we’re going to look at this first and
then if that leads us to look at more, we’re going to look at more. And, and, and we’re going to have a dialogue
along the way, so we’re not trying to hide it. What he said about the tension between the
company and the board is very true. And one of the things that I um, like to avoid
general counsels on, is that you need to make sure your auto committee, or compliance committee,
or whoever it is, is happy with the scope that you’re doing, because there is a tension
there, as far as you know, where, how far do you go and you don’t want to be second
guessed as to how you drew the scope. Exactly and and I was going to say, just echo
something that Alice said, and, and it really is a point for good advocates and good counsel
and, and I’ve seen George and Alice in action on this. We’re, we’re engaging with the government
uh, and trying to get them to narrow their request, the follow on request. Understanding not only there’s a cost to it,
but there are cost in terms of not just monetary costs, but delays um, and the, you’re going
to wind up producing a lot of hay and not a lot of needles. To the extent that you can have that cooperative
dialogue with the government, you can convince them of that. You can narrow their request and the follow-ons
and try to speed things along. Now, I, I think the Yates Memo and the expectation
of, you know, all as to everybody that works against that. Hm-mmm (affirmative). Um, but at the same time you have prosecutors,
who if they want to close their case, they want to get to the facts, um, they will work
with you and I’ve seen that happen a fair number of times and I’ve seen a lot reasonable
conduct to get to exactly that, what the issue is. Judge Leon: Is there any sense in the private
bar, or for that matter among people who are you know, in the government right now. That the Yates Memo will either be uh, in
some way jettison, or modified, or do you have any sense of where it’s going? Uh? Made worse. Or made worse, yeah. Do you have any sense of that? Is it too soon? I don’t know. I mean I doubt that they’re going to do some
wholesale withdraw of the Yates Memo. I mean some of the things as George and Matt
were putting out, some of these things have been around the department for a long time. Sure. And the whole historical conduct of holding
individuals accountable and I think that that is, that is good and that’s guidance. I, I would be surprised if over the next the
few years um, there’s tweaks along the way. Hm-mmm (affirmative). As far as um, that could be in the form of
training, or internal guidance and things like that. It doesn’t necessarily have to be in a memo. Hm-mmm (affirmative). Um, that’s my predication, but it’s based
on nothing. In April the Attorney General said, in remarks
at the Ethics and Compliance Initiative Annual Conference. Um, he said it’s “Not always possible.” To hold individuals responsible. The prosecutors need to take into account,
a company’s cooperation when making charging decisions and the businesses should not be
held responsible for isolated mistakes by employees. Now, that’s not a memo and it’s not a, uh,
a firm policy pro announcement, but if it’s indicative of a little thinking in that direction,
maybe there is some hope. I, I think that you will, you will see changes
over time. This is a policy that has changed over time. I, I talked about the Holder Memo, becoming
the Thompson Memo and so on and so forth. So there have been tweaks over time. Actually, I think that’s when I first met
you George was when I was working the Senate Judiciary Committee and there was a debate
about the Thompson Memo and would it be uh, changed, or repealed and it was modified. And these policies are modified to bring clarity
to um, not just what prosecutors should be doing, but also to the bar and corporate community. And to the extent that some of the things
we talked about here are not clear and that’s being um, and, and the department is aware
of those. You’ll see um, some pressure to make some
changes, but I agree you’re not going to see the concept of individual accountability uh,
just thrown away, or the Yates Memo repealed in a wholesale fashion. Judge Leon: Do you think as a result of the
Yates Memo, prosecutors will be unable to make deferred prosecution agreements? Some of which I’ve seen that included within
it, no prosecution for any individuals? Alice Fisher: You, you cannot have a DPA that
says we won’t prosecute individuals. You cannot under the memo. So, unless that part of the memo is repealed,
you can’t do a civil settlement or a criminal settlement with the Department of Justice
that releases individuals. What you can do, is you can say, we need clarity
and we would like you to tell us, are you going to continue to pursue individuals. They may tell you, they may not tell you um,
that they’re continuing. And of course, with every deferred prosecution
agreement, there’s an ongoing cooperation commitment for the three years or the length
of the DPA. So, there always could be ongoing investigation
after, during the DPA period, where you, where the company is required to cooperate, including
against individuals. So um, I think the days of release on the
civil side, or the criminal side are over and I, I don’t, I don’t know that they’ll
change that particular part of it. I haven’t, I haven’t heard anybody talking
about it. Well, let’s take some questions from the audience? Sir? There’s a microphone right there. No, right there, right there. (laugh) Oh, let him come up to the stand. Come on. (laughing)
So, there was mention about nervous executives lawyering up. There was one mention only about lower level
employee. I think Alice mentioned the billing department. Do you think you should have an obligation
when interviewing an employee? Not an executive, to inform them that you
are also acting as an agent for the Department of Justice? Because you really are. Matt? Well I, I … (laughing) The the adjunct warning
is, is, is always been intended to make that point clear for the, the uh, the employees
who are being interviewed, that you’re acting on behalf of the company. And if there is an ongoing investigation,
uh, I’ve, I’ve always felt that you’re better of acknowledging that there is an ongoing
government investigation to the extent you’re allowed to. Sometimes uh, investigations can’t be disclosed. Part of that is, if one person in the billing
department in Poughkeepsie knows about it, then you can be pretty well assured that their
sister office in Des Moines knows about it. And so, you should acknowledge it up front. You should mention uh, and be very clear in
your adjunct warning. And, and, and that should be your policy throughout
those interviews. I don’t think that it behooves anybody in
uh, in an interview context to say, “I and here as an agent of the government.” Unless you really are an agent of the government. I think … Go ahead. No, no … (laugh)
Uh, I think, I think … I don’t mean to make light of uh, of a serious question because
it does go straight to lawyers ethical obligations to protect people from themselves sometimes. Um, it’s a balance to be struck. It’s often difficult to tell until you have
some level of interview with somebody, whether they might be in jeopardy or not. So, you give a standard adjunct warning. Um, I do not think it’s a bad idea for several
reasons, including um, telling people the consequence, the potential consequences of
not telling the truth in an internal investigation. To tell them that it may be reasonably foreseeable
that your statements will wind up in the hands of the government and therefore um, could
expose you. That’s even more true, the way prosecutors
are using what is uh, 18USC, 1519, which is uh, uh, a criminal section that uh, was added
through the Sarbane Oxley law, that prosecutors are interpreting as um, the uh, the mother
of all false statement statutes. So, if you make a false statement in company
records, that may be looked at by the government someday. That could be a felony violation, carrying
a 20 year penalty by the way. So, the stakes on the, on the question have
been raised, professor, is my, is my view. Um, and um, so, I think you talk to somebody
long enough to see that maybe they do have some jeopardy and then you have to stop and
uh, tell the company, “Look I think we need to get counsel, or offer counsel for that
individual.” Um, I don’t, I don’t think there’s a line,
it’s kind of a zone. Alice Fisher: Yeah, I agree, but I do think
it definitely, you need to be forward leaning when you talk to them and say, “You know it
may be that the company is going to turn over the statements that I gather. Yours and anybody else over the government,
or some third party at some point in time.” And, and I think you know, that emphasis may
or may not have been on the adjunct warnings that, that were given 15 years ago, but it
certainly is something I think in the forefront of every defense counsel’s mind and it’s underscored
and I absolutely think that everybody should make sure that they fully understand that. I will say that there was a lot of talk at
the beginning of the memo, that you were going to get less cooperation and people would clam
up, once you you know, were direct about that. That has not been my experience. Like, I still have seen … I’d be interested
in what you all see. I mean people will talk to me and they want
to talk and it doesn’t mean that they all will, but most … It hasn’t changed, the
number of people that are willing to talk in an internal investigation. Half of that probably is because, a company’s
code of conduct says, you got to cooperate with an internal investigation and they, you
know, don’t really know what else to do maybe, but I, it has, I haven’t seen a dramatic decrease
in the willingness of people to talk during an internal investigation. I agree with that, with one exception, um,
based on some experience. So, anecdote isn’t data, but um, if there’s
somebody that has actual knowledge that may be material to the proof of a crime and they
have counsel. Um, that counsel is pretty well incentivized
to say, “We’re not talking to you. We’re going to go talk to the government.” Yeah, that’s right. Um, and, and make a deal. That’s right. I would say that obligation under the company
policy [inaudible 01:01:48] … Well, I, I haven’t seen one of those come
to, to logger heads yet, um, but it’s probably inevitable that it, that it will. Um, I mean obviously the obligation remains
there, but what you’re going to do to somebody who’s cooperating with the government. Yeah, or, or asserting their fifth amendment
right. Right. Can you really terminate somebody that’s asserting
their fifth amendment right? I mean tough. They, they … People, people in that position,
um, like who suffered adverse consequences from the company, would probably find a friend
in Senator Grassley’s office. (laughing)
Next question. You would expect nothing less right, George? Right. I, I’m Don [Santarelli 01:02:32]. You once sat up there on the fourth floor
next to George’s office, before George but … Uh, I have a, a view. All coins have two sides. We have discussed here under the Yates Memo,
the burden on the prosecutor if he makes a decision not to indict an individual for review. The levels of review aren’t so clear. Uh, there doesn’t seem to be a written, or
even firm policy procedure for that kind of review. But what about the other side of that coin? In a case where the defense counsel cannot
persuade his client to plead guilty, because he doesn’t feel he is guilty and you want
a review from an Inspector [Jevaire 01:03:15] type Assistant US Attorney. There doesn’t seem to be a way to accomplish
that. Uh, you have to advise the Assistant US Attorney
and his his boss, the US Attorney that you wish to have it reviewed by the department. But then it becomes their job to set it up
and it’s unilateral. He writes a memo, it goes somewhere to the
department. Whether it enters at the Attorney Gen … At
the Deputy Attorney General Office, an Associate Deputy or something. Whether it goes to the criminal division. It doesn’t … You don’t seem to know that
and you don’t seem to have a way in which to be heard. They will review that unilateral memo from
the US Attorney’s Office and tell you, you know, go away. What’s the procedure? And why isn’t there bigger uh, emphasis by
the Department of Justice to be fair? We were fairer in my day than this. (laughing)
Of course it’s always the case. (laughing) Um, well I’ll, I’ll be able to
take a first crack at that Don. Um, the, there is no procedure, you’re, you’re
absolutely right. And um, in my day, uh, who got heard depended
a lot on who was asking um, frankly. Why don’t you? And, and the merits of the case, um, you know,
whether it was something that um, had um, uh, important to some national enforcement
policy, was um, a highly visible matter, things, things of that sort. Um, um, I had a couple that came to me that
involved potential prosecutions of, of members of the Senate for example. And those things sort of, they do, you know
merit, um, uh, some attention. I had the Speaker of the House. Okay. Which we declined. So um, so, but, but, I, I have a couple times
in the public discussions and perhaps more in private discussions said, it would be good
for the department to put in place a more regularized process. The argument against that is, that as soon
as you do that, everybody and his brother and sister are going to try to avail themselves
of that process. And you … Excuse me. You obviously could bring the whole system
grinding to a halt if everybody that disagreed with an a USA somewhere in the field um, was
able to appeal up the chain to, to main Justice. Um, so those kinds of reviews are um, are
granted more rarely um, in order to tamp down the sort of appellate rights that um, if you
will, that uh, people might say they have. But um, from the public perception of fairness
in the Justice system, it would seem that some guidance, at least as to what merits
review ought to be out there, rather than the sort of grand or traditional of oral policy
that exits. Well maybe if we started a debate. Maybe. It didn’t do any good when I served with the
professor on the over-federalization of criminal law. It didn’t stop for a minute. All right, we have another question right
here. Hi, my name is Elaine Middleman, I’m an attorney
in private practice. And this may be more about the push of criminalization,
but uh, case I wasn’t involved in, but I read about the Blankenship case in West Virginia. Um, he was convicted as essential I think
of violating a mine safety statute, but … And the, I think there were three charges against
him, but the jury just found one. But, after they voted it turned out it turned
out it was only a misdemeanor, they didn’t realize that so, because the maximum sentence
that he has, which he has now served. I think he’s going to the Supreme Court to
say that this wasn’t … Shouldn’t be a crime, because of his safety violations. So, [inaudible 01:07:11] thought about that. I don’t know too much about the specific facts
of that case. I read about it um, as, as you did, um, in
the newspaper. I do know that there seemed to be a lot of
controversy surrounding it and um, it probably, whatever the merits of the case, it is representative
of more cases that we see more regularly today, where some kind of general, criminal allegation,
wire fraud, mail fraud, false statement, defrauding the United States are based on regulatory
standards, which are inherently ambiguous um, and subject to interpretation. There have been a couple courts um, you can
read about it an article I wrote for the Georgetown Law Review in 2007, called Under breaded Shrimp
and Other High Crimes and Misdemeanors. (laughing) Um, where, where courts uh …
Never coming to your house for dinner. (laughing)
Uh, some courts have um, exonerated, some appellate courts have exonerated defendants
who were convicted on the basis of ambiguous regulatory standards, on the basis that um,
where there’s, there’s a legitimate disagreement between experts, or even between judges, on
the interpretation of a statute. It’s a violation of the due process clause,
to write a new standard per the prosecutor and then hold somebody accountable for, for
violating it. I …
Oops, go ahead. I was just going to add one thing. Some, some of this is, is less um, due to
the prosecutors and the Department of Justice. They’re, they’re dealing with the standards
that they have. And I’ll say this to somebody who, who worked
uh, to draft criminal legislation in, in Congress. Congress can do a better job at defining standards
and a lot of times you wind up uh, with matters finding their way to judges who, after somebody’s
been charged, looking at an ambiguous statute with, with uh, questions as to, what are the
standards under which, not just somebody be prosecuted, but, but what, what are the standards
for any formal liability? The ambiguity in terms of definitions within
the statute and then you have a regulation, which George said often times, they’re ambiguous,
they haven’t been interpreted previously. And so, some of those prosecutors are put
in a bad spot, because the tools they’re working with uh, haven’t been sharpened and they need
to be sharpened more. Yes, we have another question. You can hear me? Okay. Uh, so, I’ve heard a lot, a lot about getting
rid of the Yates Memo. Uh, some of the business concern to resulting
from the memo. Um, but I haven’t heard a lot about the fact
that when the DOJ is coming to investigate. It’s usually as a result of some accident. Uh, you know people were being killed. I, I think the uh, Massey uh, mine disaster
was just mentioned. So, I’m curious, because those, you know … Disaster
cost money too and, you know, we don’t want, we don’t want to see people dying, but I haven’t
a lot about what to do to prevent DOJ from coming in. So, have you seen companies, you know, I guess
backing up before an investigation, before an accident, to prevent all of this from happening
in the first place and what would you advise that they do if you’re not seeing this? Uh, I think um, corporations today spend an
inordinate amount of resource and focus generally on compliance and trying to prevent fraud
from happening at the company. Trying to prevent accidents, or safety issues,
particularly in the safety issues. And as George said earlier, most corporations
are you know, really strong ethical and they understand that compliance needs to be part
of their business going forward and I think that not only helps from a business perspective,
but it helps on the other end. If the Justice Department does come in, the
fact that you had a functioning, implemented, focused, well resourced, compliance program,
to prevent criminal acts from happening at the corporation, is taken into account by
the Justice Department. And, and you know they had even this past
year or two, a compliance expert in the fraud section at the Department of Justice, who
advised on these things. And I think she’s leaving, but I suspect they
might um, have another one. But I do think that there’s a big focus on
that and I think that most public companies and most corporations really do focus on trying
to make sure that ethics and compliance is a part of a day to day business. Uh, I, I agree with that. Um, Brian Miller is sitting here, who is an
expert on compliance programs from the perspective of both within the government um, and without. If you don’t know, he’s the guy who exposed
GSA and their party hardy [crosstalk 01:11:59] (laughing) schedule. But, but, but not undercover right. (laughing)
No, when he was the, the IT guy. But um, you know, it, it’s a great question,
because um, when the whole compliance sort of industry in a movement if you will got
started, there started to be a lot of trending uh, in my experience at least, towards compliance
for compliance sake. Kind of check the box. Here’s 10 things you need to do, to be, have
a good compliance program. Uh, but I think that’s evolved and it certainly
in the better companies um, have, has evolved. It really is a risk management tool. Um, there are lots of risks. There’s legal risks. There’s risks of accidents. There’s environmental risk and so forth. And um, most companies in my experience that
operate truly effective compliance programs are using them as a risk management tool. So they’re really putting their dollars where
the risk is the greatest. I, I, agree and it’s a, it’s a great question. It’s a great carrier of emphasis. In the Phillip factors, the existence of a
pre-existence compliance program. That is one of the factors, but I think the
one thing that the department could do, to really incentivize investments in that space,
is to make compliance programs and the effectiveness and adequacy of those programs a super factor. So that if you have a company that has invested
wisely, they have an effective program and something happens and, and no program is perfect. That there is additional weight given to that
investment, to try to get out and prevent, detect, remediate any sort of potential, whether
it’s a health or safety issue, or something along the lines of corruption, fraud uh, because
I think that’s it’s on that front edge that companies can do the most. On, you know, after something has happened,
they’re hiring lawyers to go in and, and mitigate and reduce the exposure, but on the front
edge, as George said, it’s a risk management tool. If you incentivize it, more will be spent
there. I think we have time for one more question. Anyone else? Any final thoughts? Alice? Um, well, I, I just think you know, look the,
the Yates Memo um, is, is out there. I think that the Justice Department is trying
to follow it and if there are tweaks, I think they can do it through guidance, or training,
or things like that, but you know, I don’t think that we should … Whatever talk about
this, don’t lose sight of the men and women at the Department of Justice that you know,
thankfully go there every day to protect us and you know try to do their job and are focused
and committed. And that certainly was my experience and there
are a lot of people in the room that are former Justice Department um, people uh, that worked
really hard there and I think that continues. That upholding justice, comradery and, and
mission is really important. Well said. My final thought Dick is to thank the Federalist
Society, not just for this event, but for all the tremendous work they do. Um, if the um, if the maximum, maxim rather
from humble beginning every applied to any organization it’s this one, so thank you. Matt. I, I think that um, my, my sort of takeaway
would be this memorandum has, as it’s embedded in the US Attorney Manual, uh is, isn’t as
clear as it should be, but that’s, this isn’t the first of those type of memos that’s occurred
and over time they’ve been addressed to try to create clarity to those in the field who
are trying to follow it, who are as Alice said um, good public servants. But, that doesn’t mean that the policy can’t
be sanded a little bit, refined and remove some of the confusion that’s, that’s in it
and the tension with other policies. And my final thought is no matter how good
a system you think you’ve designed, in the final analysis, unless the people who are
charged with um, uh, implementing it have good judgment, it’s not going to work well. And so it’s, it puts a heavier burden, more
heavier than ever on the leadership of the Department of Justice to determine who has
good judgment. To promote those who have good judgment and
those who don’t have good judgment, to ask them to seek other. Amen. (laughing)
Have a great day. Thank you Judge. (laugh)


  1. Aredi Barrett
    Aredi Barrett June 18, 2017

    how many consider prevention when granting authority or permissions for corporation to exist. how much forethought is going into consequences of their existence?????

  2. Aredi Barrett
    Aredi Barrett June 18, 2017

    it is so much easier to ask for forgiveness than it is to ask for permission. think about that.

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