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Justice Takes a Closer Look at Companies’ Ability to Pay Fines (1)

Oct. 8, 2019, 6:27 PMUpdated: Oct. 8, 2019, 9:43 PM

Federal prosecutors must now follow a new, streamlined process when weighing a company’s claim that it can’t afford to pay a criminal fine.

The Justice Department’s Criminal Division issued a memo Oct. 8 to clarify the factors its attorneys should consider as they evaluate whether a company is truly unable to hand over the funds needed to resolve criminal charges. It also unveiled a questionnaire that businesses on the hook for criminal charges will be expected to complete in order to paint a clearer picture of their finances.

Prosecutors will use these documents along with federal sentencing guidelines to structure their interactions with any organization seeking a reduced criminal fine or penalty based on an alleged inability to pay.

The new materials “help ensure that prosecutors stick to a more uniform set of considerations, and also that companies looking to resolve matters have greater insight into how prosecutors think,” according to prepared remarks of Assistant Attorney General Brian Benczkowski. He announced the memo during a speech at a corporate enforcement and compliance conference in New York City.

“We want you to know what we consider to be a legitimate inability to pay argument, but also the facts and arguments that won’t be given credence,” Benczowski said.

The memo is the latest in a string of recent Criminal Division policies and guidance documents aimed at cluing in companies and their lawyers to how Division attorneys approach white-collar investigations and prosecutions.

“Some might joke that this is akin to handing defense lawyers a toolkit they can use to make prosecutor’s work that much more difficult,” said Benczowski. “But in fact, we want lawyers on the other side of the table to be well-prepared and base their advocacy on the very criteria that our prosecutors find relevant to their decisions.”

That’s because it makes the interactions more efficient and productive for both sides, he added, while hinting that more guidance could be on the horizon.

Enforcement

Benczowski also touted the Criminal Division’s commitment to corporate criminal enforcement, saying it remains a top priority for the Department as a whole.

The Justice Department, and the Trump Administration generally, has come under fire in recent years for what some government watchdogs have said is a more business-friendly approach to its scrutiny of corporate America.

But Benczowski said Oct. 8 that his Division is “on track” this year to top the number of charges against individuals and companies it leveled in 2018. The Division is also expected to recover more money through corporate fines, penalties, restitution and forfeiture, he said.

“As the numbers show, we are intensely focused on holding both culpable individuals and corporations accountable.”

To contact the reporter on this story: Jacob Rund in Washington at jrund@bloomberglaw.com

To contact the editor responsible for this story: Seth Stern at sstern@bloomberglaw.com