Before settling with the U.S. Department of Justice’s Fraud Section, companies must now certify that they disclosed all information about individuals involved in the underlying misconduct. According to a recent Wall Street Journal article, the Fraud Section is developing a “certification process” whereby companies finalizing settlements with the department will have to certify to this disclosure. (The Fraud Section investigates and prosecutes complex economic crimes, including FCPA violations, health care fraud, and securities and financial fraud.) The new certification process is under review, but it could entail a written statement of cooperation. Companies will have to confirm to DOJ that they have turned over all non-privileged information about individuals as part of the company’s cooperation with the government’s investigation.
This requirement is the latest reverberation of the Yates Memo, DOJ’s policy announcement last September on pursuing individual accountability for corporate wrongdoing. Under the policy, later engrafted into the DOJ’s Principles of Federal Prosecution Of Business Organizations (USAM § 9-28.000 et seq.), companies under government investigation and seeking credit for cooperating with the investigation “must identify all individuals involved in or responsible for the misconduct at issue … and provide to the Department all facts relating to that misconduct” (§ 9-28.700). Not only must companies not withhold those facts; they must also seek them out. Declining to uncover the facts, as with failing to provide them, takes “cooperation credit” off the table when DOJ makes charging decisions or negotiates resolution agreements with companies, or later at sentencing. (Id.)
The prospect of a formal certification of full disclosure raises several questions. Who would make the certification? What if the certification is false and who would decide that? What is full disclosure? What is inadequate fact development? Would liability for a false certification fall upon the individual who made it, the company, or the organizational body responsible for the internal investigation? Should the individual making the certification be disengaged from the investigative process until the end, or should it be the person involved from the beginning?
Formal certification or not, the department will expect more than the company’s assurance of a complete disclosure. It will expect a proactive, forward-thinking, and targeted internal investigation, and companies will be under pressure to trace the basis for settlement to concrete, individual conduct. With a well-designed investigation, and investigative steps and strategies that are documented, if a company’s factual disclosure is less fulsome than the government expects or wants, the company can point to the investigative process to justify the disclosure. What full cooperation requires under this heightened scrutiny remains to be seen, and may be too case-dependent to predict. But we know for the Fraud Section at least, a company will have to vouch for the investigation and the disclosed facts leading into settlement.