DOJ Fraud Staff to Prosecutors: Use Every Charge and Seize Loot
The DOJ National Fraud Enforcement Division directed its prosecutors to assess securities fraud, consumer fraud, tax, and cybercrime charges in fraud cases and to freeze and seize proceeds early.
Assistant Attorney General Colin M. McDonald issued the memorandum, Directive 26-13, which builds on the Division's corporate enforcement directive (see prior coverage).
Prosecutors should look beyond common charges such as wire fraud and health care fraud when needed to "fully dismantle the fraud schemes and networks," according to the directive. In every case, they must assess whether tax law was violated. Where tax charges could help the case or asset recovery, they should invite IRS Criminal Investigation to join.
The Public Trust and Financial Integrity Section of the Division is to prioritize securities fraud tied to government programs and contracts, health care, tax, and trade. It will compare federal program and contract data against market activity to generate cases.
Mr. McDonald said in the directive that "we must take the profit out of fraud." Prosecutors must work with the Asset Recovery Section at every stage. The tools are (i) restraining orders or seizure letters to freeze assets at banks and cryptocurrency exchanges soon after theft; (ii) warrants and in rem forfeiture to seize funds, wallets, and securities before charges; (iii) warrants to seize websites, domains, online accounts, and satellite and cellular terminals; (iv) civil restraining orders and injunctions against banking law violations, health care offenses, and government fraud; and (v) civil prejudgment remedies, such as attachment, garnishment, and receivers, for any offense.
Cooperators must accept responsibility, forfeit property, and pay restitution. When appropriate, prosecutors will tell the court about their "substantial assistance." Prosecutors are to assess flight risk early and seek detention where appropriate. At sentencing, they must argue for general deterrence and should seek all supported guideline enhancements.