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New DOJ Fraud Chief Lands On Cusp of Pivotal White-Collar Change

Sept. 14, 2022, 8:55 AM

The Justice Department’s new criminal fraud chief has arrived just in time to implement forthcoming white-collar policy changes, an agenda that will lean on his experience from both sides of government enforcement.

Glenn Leon, a former Hewlett Packard Enterprise senior vice president, started Sept. 12 as head of the Criminal Division section responsible for investigating and prosecuting companies for overseas bribery, securities fraud, and other financial crimes. Leon’s priorities as DOJ’s first non-acting fraud leader in two years will be fleshed out on Thursday when Deputy Attorney General Lisa Monaco unveils specifics on her promise to crack down on corporate crime.

A former federal prosecutor and Fraud Section deputy chief, Leon also brings an outsider’s perspective after nearly nine years guiding HP’s recovery from a sweeping DOJ criminal resolution.

“He has a tremendous amount of prosecutorial experience but he’s also spent significant time at HP and has a deep understanding of how these investigations that the fraud section pursues can affect companies,” said Jessie K. Liu, a partner at Skadden who was the Trump-era US attorney for the District of Columbia. “That’s something that makes his experience unique and well-rounded.”

Leon’s understanding of how Fortune 500 companies face DOJ subpoenas and other investigative tools is considered by some defense lawyers as a welcome change. Some of Leon’s predecessors in the slot were promoted from within, bringing a career prosecutor’s mindset that doesn’t always consider business realities, said former Fraud Section attorneys who now represent corporations.

Among corporate compliance officers’ top complaints about DOJ is that it doesn’t “understand what is actually possible in the real world—that the job has people pulled in a hundred different directions,” said Kevin Muhlendorf, a former Fraud Section supervisor who’s now a partner with Wiley Rein. “Glenn’s experience at HP should help both alleviate those concerns and help fine tune DOJ’s approach to compliance.”

Leon, who was HP’s chief ethics and compliance officer, is a well-known figure in the compliance community public speaking circuit. But he will need to keep an open mind about how corporations of different sizes function, including those much smaller than HP, said Hui Chen, a former Fraud Section compliance consultant.

Chen said she hopes Leon is “open to saying, ‘OK, I’ve had experiences with one company, but that might not be the same as everyone’s experience.’”

Faster Change

Monaco, in a speech at New York University Law School, will share the results of a year-long review by DOJ leaders of corporate crime policies. The advisory group was tasked with considering updates to decisions on whether a company can resolve misconduct through a deferred prosecution agreement or a guilty plea; the process of selecting compliance monitors; and leveraging technology to comb through exploding volumes of investigative data.

In addition to shaping the execution of Monaco’s policy updates, Leon’s arrival could end a summertime lull in corporate resolutions, which yield court filings that provide tangible language reflecting enforcers’ latest areas of emphasis.

After guilty pleas that closed longstanding negotiations with Glencore and Fiat Chrysler in the spring, the Fraud Section hasn’t announced any additional resolutions of cases in the pipeline that former prosecutors expected to have wrapped by now.

But DOJ veterans say in past leadership transitions, the department will wait, if possible, for a new fraud chief to land before rolling out more agreements that have been reached in principle for months. They expect Leon’s entrance will soon usher in major company settlements, providing corporate defense counsel with further concrete evidence of what Monaco’s policy goals mean in practice.

Other key decisions that remain unresolved include who to appoint as independent compliance monitors policing companies like NatWest, Balfour Beatty, and Stericycle. Another is how to interpret Criminal Division head Kenneth Polite’s March instruction for prosecutors to begin asking senior executives to certify at the end of a resolution’s term that a compliance program is “reasonably designed.”

“A lot of the policymaking and rhetoric coming out of this administration is aimed at getting companies to clean house themselves,” said Benjamin Singer, a former Fraud Section supervisor who’s now a partner at O’Melveny. “His depth and breadth of experience will give him a sense of the levers that DOJ can pull to get those results.”

Fair Hearing

The defense bar expects Leon will give their clients a fair hearing, but that won’t necessarily result in outcomes they want.

The department is pressing ahead on principles that corporate lawyers have criticized for disincentivizing cooperation with investigators. These include charging more senior executives, reviewing a company’s full range of prior misconduct, and imposing expensive third-party monitors with greater frequency.

Leon will now apply those objectives when companies under investigation present their case to the Fraud Section about why they shouldn’t be indicted.

“Glenn is a person of even temperament—I think he’ll be fair and judicious,” said Adam Safwat, who supervised the Fraud Section alongside Leon in the early 2010s. “But I also don’t think he’s going to roll over just because of his corporate experience.”

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: Seth Stern at sstern@bloomberglaw.com; John Crawley at jcrawley@bloomberglaw.com