Should the Justice Department Prosecute More Individuals?
The drumbeat of criticism continues – companies pay huge fines for illegal behavior and no individuals are prosecuted for criminal offenses. The political left and right are there to criticize every prosecutorial decision. Headlines are made when a case is closed without individuals being prosecuted and then politicians and political interest groups line up to launch new criticisms.
I have a lot of sympathy for prosecutors these days. Every action or inaction results in criticism. Someone is always unhappy. Luckily, most prosecutors adhere to professional standards and ignore these complaints. But do not let their silence fool you – they listen and sometimes they bristle to their colleagues.
Lawmakers started to criticize prosecutors in 2010 when Senator Specter carped about the absence of individual prosecutions in the Siemens FCPA case. As the former Philadelphia DA, Senator Specter knew what he was talking about – why in the biggest FCPA prosecution ever did the Justice Department avoid charging any individuals? His questions range true and clear.
The Justice Department responded eventually to Senator Spector by prosecuting eight individuals related to the Siemens case for their activities in Argentina. The eight individuals have never been apprehended and the case sits on the docket gathering cobwebs.
Senator Specter’s criticism of the FCPA prosecution program has spread now to the Justice Department’s False Claims Act enforcement program. GlaxoSmithKline recently paid a $3 billion fine – consisting of a criminal fine and civil penalties, and no individuals were prosecuted. Again, the left and right were at the microphone to criticize the deal to criticize the Justice Department for its failure to prosecute any individual officer or manager of the GSK.
If you consider the theories underlying corporate criminal liability, you would be more sympathetic to these criticisms. With one theoretical exception, a company cannot be held criminally liable unless the government can prove that one or more employees violated the law, meaning that they satisfied all the elements of the criminal offense. The employee need s to have violated the law in the scope of his or her scope of duties and did so to further, in part, the company’s business interests. In most cases there are more than one employees who satisfy the test for corporate criminal liability.
There is one exception to this doctrine – in some cases, the government may rely on the doctrine of “collective knowledge,” meaning that there is no one employee who had the requisite intent to violate the law, and the government will alternatively rely on the “collective knowledge” of a group of employees to argue that the company had the requisite intent to violate the law. This is a difficult prosecution theory to pursue and prosecutors are reluctant to rely on it.
Putting aside the “collective knowledge” theory of criminal intent, the question comes down to this – of the company has sufficient evidence to prosecute a company based on at least one individual actor, why do they not prosecute the individuals who satisfy the elements of the criminal offense?
There can be a number of reasons for exercising prosecutorial discretion and not charging the individuals who satisfy the elements of the criminal offense.
1. The evidence relating to the individual may not be sufficiently strong to prosecute the individual – meaning that while the elements are satisfied, the evidence is not compelling to show that the individual engaged in criminal behavior.
2. The individual has certain personal circumstances – illness, age, or other personal characteristics which would make the prosecution of the individual unfair and not compelling to a jury.
3. The individual’s history shows that while he violated the law on occasion, on numerous other occasions he complied with the law. Such evidence may make it difficult to establish beyond a reasonable doubt that he acted with the requisite intent to violate the law.
4. The individual has left the company and is now in a jurisdiction which is unlikely to extradite to the United States.
It is easy to criticize the government on the individual prosecution scorecard but in fairness there are a number of considerations which may explain why the government has exercised its discretion not to charge individuals. Until we know those reasons, political criticisms ring hollow in today’s political atmosphere.