Authors: Mark J. Cipolletti, Brittain Shaw, Ben Sandlin

On May 12, the U.S. Department of Justice (DOJ) issued updated policy memoranda relating to the investigation and prosecution of white collar crimes, including its White-Collar Enforcement Plan, Revised Corporate Enforcement and Voluntary Self-Disclosure Policy, Memorandum on Selection of Monitors in Criminal Division Matters, and the Criminal Division’s Corporate Whistleblower Awards Pilot Program Revisited. These memoranda should guide companies, executives, and compliance professionals in handling matters relating to their operations, compliance, reporting obligations, and potential investigations and prosecution. Following are our top five takeaways from the memoranda.

Trade Crimes Enforcement Is a New Major Focus

The DOJ clearly states its intent to root out crimes relating to trade. In its Enforcement Plan, DOJ announces that it places “[t]rade and customs fraud, including tariff evasion,” among its top enforcement priorities – ranked second only behind “[w]aste, fraud, and abuse” of federal programs and procurement fraud. In its Whistleblower Program, DOJ emphasizes that a whistleblower’s information “must pertain to one of the following subject matter areas,” which includes “[v]iolations by or through companies related to trade, tariff, and customs fraud.” Companies face increasing difficulties in compliance with trade laws and regulations as the Trump administration continues to modify and implement tariffs against various foreign countries. Our team predicted this enforcement priority and presented its analysis as part of our “Transition: A Presidential Change” webinar series (view the video here).

Waste, Fraud, and Abuse of Government Programs and Procurement Fraud Remain Top Priorities

DOJ will continue investigating and prosecuting individuals and companies that commit waste, fraud, and abuse of government funds. DOJ’s Enforcement Plan identifies “[w]aste, fraud, and abuse, including health care fraud and federal program and procurement fraud that harm the public fisc,” as its highest white collar enforcement priority. DOJ ranks this enforcement priority ahead of bank fraud, “[c]onduct that threatens the country’s national security,” “[m]aterial support by corporations to foreign terrorist organizations,” “[c]omplex money laundering” schemes, and more. DOJ includes reporting waste, fraud, and abuse of federal funds and procurement fraud in its Whistleblower Program, which confers potential financial benefits to whistleblowers who report information leading to the successful forfeiture of more than $1 million in net proceeds in connection with a prosecution, corporate criminal resolution, or civil forfeiture action related to corporate criminal conduct. Government contractors should engage counsel to ensure they meet regulatory and compliance obligations with prime contracts, and individuals and entities interacting with government programs, including Medicare and Medicaid, should protect against waste, fraud, and abuse of federal funds.

Companies in International Supply Chains Face Unique Challenges

The DOJ identified several enforcement priorities that will impact companies operating across borders or with foreign nationals. The Trump administration remains committed to several core priorities, including rooting out cartels, human and drug trafficking, and Transnational Criminal Organizations (TCOs). To that end, DOJ’s enforcement priorities include investigating and prosecuting offenses relating to lending “[m]aterial support” to cartels and TCOs; money laundering, especially when it involves Chinese money laundering organizations; and activities that “enable transactions by cartels, TCOs, hostile nation-states, and/or foreign terrorist organizations.” DOJ will scrutinize companies operating internationally or involved in an international supply chain for compliance with or violation of federal laws relating to these enforcement priorities. Well-meaning companies should guard against these investigations by implementing robust Foreign Corrupt Practices Act and anti-bribery programs, ensuring that payments to and support of international partners are for lawful purposes, and seeking counsel for compliance needs.

Corporate Self-Disclosure Requires Strict Compliance and Forthright Disclosures

DOJ’s Corporate Self-Disclosure Policy contains numerous deadlines and reporting requirements, including four requirements it identifies for a company to take advantage of potentially valuable self-disclosure:

  • Voluntary self-disclosure
  • Full cooperation
  • Timely and appropriate remediation of the reported misconduct
  • A lack of aggravating circumstances relating to the nature and seriousness of the offense

Each of these elements contains specific requirements for a company that is self-disclosing conduct. A company that becomes aware of reportable conduct should be advised on proper internal investigation protocols and engage experienced white collar counsel to manage any investigation and ensure that the company meets the requirements for self-disclosure, if that is the company’s goal.

It’s Never Too Early to Engage White Collar Counsel

DOJ will investigate and prosecute white collar offenses at all levels of corporate America. While many companies and executives will retain counsel or call a trusted advisor when a federal agency executes a search warrant or serves a grand jury subpoena, DOJ’s enforcement policies demonstrate that engaging white collar counsel before that happens is essential to appropriately managing a company’s relationship with the government. For example, the Corporate Self-Disclosure guidance contains pre-investigation requirements even a company operating in good faith could fail to fulfill. Experienced counsel can help create and manage sophisticated compliance programs; advise on regulatory compliance procedures and requirements; target specific areas of an organization that have a potential to suffer from fraud, waste, or abuse; conduct complex internal investigations for suspected schemes or unsuspected schemes as routine checks of critical systems; and manage remediation efforts to protect against further misconduct. Early and proactive engagement is critical to understanding DOJ’s newest beneficial guidance and its enforcement priorities to avoid becoming a target of an investigation or enforcement action.

This post was written by the Thompson Hine White Collar Defense & Investigation team.

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