The US Department of Justice Criminal Division’s Fraud Section (DOJ) recently released its annual Year in Review report, detailing the Fraud Section’s accomplishments in 2022. Consistent with stated DOJ policy, the Fraud Section demonstrated a continued focus on individual accountability with a record-setting number of trial convictions. 2022 also showcased the Fraud Section’s increasing cooperation with foreign authorities, continued use of independent compliance monitors, and emphasis on the importance of corporate compliance programs.
In recent years, the number of corporate resolutions has declined annually. According to the Year in Review report, the Fraud Section completed seven corporate resolutions in 2022. By contrast, there were eight corporate resolutions in 2021, 13 in 2020, and 15 in 2019. 2022 also saw the lowest total global settlement amounts collected during that same time period: $2.14 billion.
This year, more corporate resolutions emanated from the Foreign Corrupt Practices Act (FCPA) Unit than from the Market Integrity and Major Frauds (MIMF) Unit. There were only two MIMF resolutions in 2022—the Glencore and Fiat Chrysler Automobiles US matters—in contrast with six MIMF resolutions in 2021. However, both MIMF resolutions were significant, and demonstrated the DOJ MIMF Unit’s flexibility in addressing both market manipulation and consumer fraud. Indeed, speaking at a recent conference, Fraud Section Chief Glenn Leon remarked that his team of prosecutors are looking past just numbers to ask whether “we are doing the right cases, are we bringing the right results, are we having the right impact?” and added, “by that measure, I would say yes.”
By contrast, the number of individuals convicted and trial convictions continued to rise. In 2022, the Fraud Section recorded its highest number of trials and trial convictions ever—51 trials and 56 trial convictions. Trial convictions in 2022 nearly doubled the 2021 figures—30 trial convictions in 2021, as compared with 56 trial convictions in 2022. The 2022 figures are a meaningful increase even when compared to prepandemic 2019 levels, when the Fraud Section secured 37 trial convictions. Also noteworthy is the Section’s success rate of securing convictions at trial—78%—with 72 individuals tried and 56 convicted at trial.
The Fraud Section also secured more individual convictions than in years past. In 2022, 342 individuals were convicted versus 329 individuals convicted in 2021. This is a significant jump since prepandemic levels in 2019, when 256 individuals were convicted. In other words, convictions in 2022 exceeded 2019 levels by 34%. These numbers are noteworthy and illustrate a continued focus on individual accountability.
As ever, the driver of individual convictions is, by far, healthcare fraud (HCF) enforcement efforts. In 2022, there were roughly twice as many HCF convictions as there were MIMF convictions. The HCF Unit is also a driver of the Fraud Section’s record-setting 51 trials in 2022—the HCF Unit conducted 38 of these trials. The number of trials in 2022 was more than double the 15 trials conducted in 2021.
The 2022 numbers—and the upward trend leading up to 2022—make clear that the Fraud Section is heeding the call to focus on individual accountability. DOJ leadership has made repeated public policy pronouncements about the importance of and focus on individual accountability.
In October 2021, Deputy Attorney General Lisa Monaco announced that the DOJ was restoring prior guidance issued by former Deputy Attorney General Sally Yates in her September 9, 2015 “Individual Accountability for Corporate Wrongdoing” Memorandum. One year later, Monaco announced significant updates to the DOJ’s corporate criminal enforcement policies intended to give effect to the tougher-on-corporate-crime approach Monaco announced in 2021.
On the subject of individual accountability, Monaco said that it is the DOJ’s “top priority” and that the DOJ is committed to “do more and move faster.” The new updates placed additional emphasis on the speed of disclosure by requiring cooperating companies to come forward more quickly with evidence of individual wrongdoing. A continued upward trend of individuals convicted is expected in 2023.
Before 2022, DOJ leadership also announced a renewed focus on the use of independent corporate monitors in resolutions. During the same October 2021 announcement, Monaco highlighted that to the extent that prior guidance indicated a presumption against corporate monitors, such guidance was going to be rolled back and prosecutors would be able to impose monitors where they deem appropriate.
Following this announcement, 2021 ended with two corporate resolutions that both imposed independent monitors: Balfour Beatty Communities and NatWest. At the time, it seemed like 2022 was destined to bring even more resolutions with monitors imposed. However, in 2022, only two corporate resolutions required monitors. In some instances, such as the FCPA resolution with ABB, a Swiss-based global technology company, the company’s cooperation and remediation specifically allowed it to avoid the imposition of a monitor. 2023 resolutions will shed more light on how the Fraud Section intends to impose monitors in the future.
After issuing no public declinations pursuant to the Corporate Enforcement Policy in 2021, the FCPA Unit entered into two CEP declinations in 2022. In both matters, the companies voluntarily self-disclosed the misconduct, fully remediated the underlying issues, and fully cooperated with the DOJ’s investigation.
Recent policy announcements indicate the DOJ clearly wants to incentivize companies to self-disclose misconduct and fully cooperate with DOJ investigations. In January 2023, Assistant Attorney General Kenneth Polite, Jr. announced the first significant changes to the DOJ Criminal Division’s Corporate Enforcement Policy (CEP) since the CEP was initially announced in 2017, outlining how companies—even those facing aggravating circumstances—may qualify for a declination. The requirements include voluntary self-disclosure, having had an effective compliance program at the time of the misconduct, and providing extraordinary cooperation with the DOJ investigation. This presents a high bar with no bright line guidance. It remains to be seen whether future declinations will shed more light on how companies can meet these expectations.
Increased cross-agency coordination and cooperation with foreign authorities will undoubtedly continue. Global anticorruption laws have become more seasoned, global whistleblowers are on the rise, and countries are becoming more serious and more adept at prosecuting corruption within their own borders.
In 2022, each of the five corporate FCPA matters that resulted in a criminal resolution was coordinated with parallel resolutions by domestic and foreign authorities—both authorities that the Section has partnered with before, as well as new partners. For example, the resolution with ABB saw the FCPA Unit’s first coordinated enforcement action with South Africa, and the Fraud Section has demonstrated dexterity in pursuing corporations domiciled abroad, such as Glencore.
While much remains to be seen in 2023, expect an increase in prosecution activity in 2023 and beyond. While companies and prosecutors continue to adjust to the “new normal” following the height of the global pandemic, with travel, office, and courthouse functions largely resuming, the Biden administration has repeatedly made its priorities clear by taking a tough-on-white-collar-crime approach.
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