Justice Department, LA Office Spar Over White-Collar Enforcement

A Justice Department official in Washington is pushing back on acting Los Angeles US Attorney Bill Essayli’s reliance on recent white-collar policy to dismiss charges against a fast-food executive who’s donated to President Donald Trump.

Essayli’s court filing Tuesday pointed to a May memo from the head of DOJ’s criminal division to justify his office’s July 29 motion to dismiss the $47 million fraud case against Andrew Wiederhorn, the founder and chairman of FAT Brands, Inc. The judge in the case demanded an explanation for the dismissal.

White-collar defense lawyers have been quick to interpret the development in LA as an invitation to ask for dismissals on any matters that fall outside the Trump administration’s priorities. But on Wednesday, an official from the department’s headquarters distanced the criminal division from Essayli’s filing.

“The Criminal Division is not on the Wiederhorn matter, and the Division’s policies are not applicable to U.S. Attorneys’ Offices,” the official said in a statement to Bloomberg Law. “Equally, case decisions and policies made by U.S. Attorneys apply only to their office.”

Scope of Memo

Essayli, whose team Bloomberg Law reported is experiencing mass resignations from prosecutors who say he’s been politicizing the office and pushing MAGA-aligned charges, cited the criminal division memo that emphasizes cases involving cartels and transnational criminal organizations. The policy also cautions against white-collar enforcement that imposes excessive burdens on US businesses.

The indictment of Wiederhorn and FAT Brands—which operates Fatburger and Johnny Rockets—should be dismissed “because the conduct alleged” falls outside “the scope of these criminal prosecution priorities,” Essayli told the court.

The acting US attorney also referred to priorities laid out in a Feb. 5 memo from Attorney General Pam Bondi, which directs DOJ to focus resources on areas including immigration enforcement, human trafficking, and drug cartels.

While Bondi oversees all of DOJ, the nation’s 93 US attorneys report to the deputy AG and fall outside the criminal division’s chain of command. The May 12 policy memo from criminal division head Matthew Galeotti was addressed only to his office’s personnel.

“Our office’s decision to dismiss this criminal case was based on our determination of Justice Department enforcement priorities,” Essayli’s office said in a statement in response to the DOJ official’s pushback. “As has been the standard practice in these types of cases, no approval from the Justice Department’s Criminal Division was sought nor was it needed.”

Defense Bar Reaction

Yet by invoking the criminal division’s policy, Essayli’s action set off a chain reaction among lawyers representing defendants in active litigation with the department.

“This administration keeps sending the signal that they’re fundamentally reevaluating their approach to white collar enforcement,” said David Rybicki, who co-leads the white collar practice at K&L Gates and was a senior criminal division official in Trump’s first term. “We’re seeing more and more data points that the policies apply to pending matters.” Rybicki was interviewed before the DOJ official commented.

Another Big Law partner, speaking on condition of anonymity, said he’s already started discussing with a client how the Wiederhorn filing creates a potential avenue for relief.

Several white collar partners acknowledged, however, that Essayli’s reasoning won’t necessarily sway other US attorney’s offices and Main Justice, especially when non-Trump donors are being prosecuted.

Galeotti, a career line prosecutor from Brooklyn who got elevated to the criminal division role in March on a temporary basis, addressed a white-collar legal conference last month and warned that his May policy doesn’t mean leniency.

“To the extent anyone may have misread these remarks, let me be clear: Under my leadership, the criminal division has not and will not close meritorious investigations or dismiss meritorious cases,” Galeotti said in his speech.

Essayli moved to dismiss the Wiederhorn case last month immediately before he ended his time as interim US attorney to assume the longer-term “acting” role. The federal bench didn’t appoint him as US attorney after his 120-day interim period expired.

Bloomberg Law reported that he’d previously met with defense lawyers for Wiederhorn without inviting the line prosecutors on the case and was considering a dismissal. This meeting took place before Galeotti’s memo.