DOJ Fraud Division Directs Prosecutors to Weigh 10 Factors in Corporate Cases

DOJ's National Fraud Enforcement Division directed prosecutors to bring corporate fraud cases under a new Corporate Enforcement Section's oversight and to give "great weight" to 10 factors in charging decisions.

In Directive 26-12, Assistant Attorney General Colin McDonald promised an "aggressive, all-tools approach" while avoiding overbroad enforcement that interferes with legitimate business. Priorities are (i) health care fraud, controlled-substance distribution, and Food, Drug, and Cosmetic Act violations; (ii) procurement, government-contract, and other government-function schemes; (iii) significant revenue evasion; and (iv) tariff evasion, importation schemes, and forced labor.

Prosecutors deciding whether to charge or resolve a company's case must weigh the following factors: (i) management's knowledge or involvement; (ii) concealment from agencies or auditors, or obstruction; (iii) conduct lasting three years or more; (iv) threats to Americans' safety or security, including military readiness; (v) substantial hardship to a taxpayer-funded program; (vi) effects on multiple such programs; (vii) effects in three or more federal districts; (viii) 25 or more victims or $25 million or more in losses; (ix) movement of U.S. dollars abroad to support foreign adversaries; and (x) immigration offenses.

The list is not exclusive. Prosecutors must also follow the Justice Manual's Principles of Federal Prosecution of Business Organizations and the Corporate Enforcement and Voluntary Self-Disclosure Policy.

Prosecutors must work with the Section from intake through resolution or litigation. Within seven days of the directive, they must report ongoing corporate investigations to the Section's chief. They must also promptly notify the Section of new investigations and major developments. The Section leads compliance evaluations for corporate criminal resolutions. The directive excludes cases a U.S. Attorney's Office has assigned to a District Fraud Counsel that the Division does not also supervise.

Assistant Attorney General McDonald also told leadership to design programs encouraging whistleblowers, including participants in the misconduct, to report fraud. He said the Division, using the National Fraud Detection Center's data analytics, is opening new investigations "at a rapid pace."