Monday, April 11, 2016

Deferred Prosecution and Non-Prosecution Agreements Used in Corporate Criminal Cases

Originally published by John Floyd.

Historically, federal prosecutors have three ways to handle criminal cases: decline to prosecute, secure a plea agreement, or try the case before a judge or jury.


Deferred Prosecutions


The Speedy Trial Act of 1974, which is found in 18 U.S.C. § 3161, offers a different method for handling the prosecution of minor offenses. Subsection (h)(2) of the act allows U.S. Attorneys to handle these cases through pretrial diversion agreements known as Deferred Prosecution Agreements (DPAs) and Non-Prosecution Agreements (NPAs).


This subsection provides that the 75-day time limit for bringing a criminal case to trial is suspended during “any period of delay during which the prosecution is deferred by the attorney for the Government pursuant to a written agreement with the defendant, with the approval of the court, for the purpose of allowing the defendant to demonstrate good conduct.”


Increased Use in Corporate Criminal Cases


This provision is now rarely used in criminal cases involving individual defendant(s) but is now more frequently being used in corporate crime cases involving fraud and wrongdoing.


In September 2014, June Rhee, co-editor of the Harvard Law School Forum on Corporate Governance and Financial Regulation, posted a piece on the HLS website that said “the increasing use of Non- and Deferred Prosecution Agreements (N/DPAs) has enabled federal prosecutors to incrementally expand their traditional role, exemplifying a shift in prosecutorial culture from an ex post focus on punishment to an ex ante emphasis on compliance. N/DPAs are contractual agreements between the government and corporate entities that allow the government to impose sanctions against the respective entity and set up institutional changes in exchange for the government’s agreement to forego further investigation and corporate criminal indictment. N/DPAs enable corporations to resolve allegations of corporate criminal conduct, strengthen corporate compliance mechanisms to prevent corporate wrongdoing in the future, and mitigate the risks that collateral consequences of a conviction can bring companies, their shareholders, employees, and the economy.”


But, in reality, these hallowed objectives are seldom met.


General Motors Strikes Deferred Prosecution Agreement in Ignition Switch Case


Last September the U.S. Justice Department announced a $900 million DPA with General Motors which was accused of concealing information about a safety defect in its vehicles that led to more than 124 deaths worldwide. U.S. District Court Judge Emmet Sullivan was outraged by the agreement, calling it “a shocking example of potentially culpable individuals not being criminally charged.”


In a sharply worded opinion, Judge Sullivan, who has been frequent critic of the Justice Department’s “soft on corporate crime” approach, said: “Despite the fact that the reprehensible conduct of its employees resulted in the deaths of many people, the agreement merely ‘imposes on GM an independent monitor to review and assess policies, practices, and procedures relating to GM’s safety-related public statements, sharing of engineering data, and recall processes’ plus the payment of a $900 million fine.”


Recent proclamations by Deputy U.S. Attorney General Sally Yates that the Justice Department will be cracking down on corporate crime notwithstanding, prosecution of corporate crime in this country by the DOJ has declined by 29 percent over the past decade. This decrease can be attributed to the significant increase in the DOJ’s use of DPAs and NPAs..


In an April 5, 2016 opinion, the D.C. Court of Appeals said that DPAs/NPAs exist to “afford a middle-ground option to the prosecution when, for example, it believes that a criminal conviction may be difficult to obtain or may result in unwanted collateral consequences for a defendant or third parties, but also believes that the defendant should not evade accountability altogether. Both DPAs and NPAs generally include an admitted statement of facts, require adherence to ‘conditions designed … to promote compliance with applicable law and to prevent recidivism,’ and remain in effect for a period of one to three years. While prosecutors at one time seldom relied upon NPAs and DPAs, their use has grown significantly in recent years.”


DOJ Should Make Use of Deferred Prosecutions in Individual Cases


Certainly if the Justice Department can reach a DPA with GM, in a case where dozens of individuals were killed, it should employ the same pretrial diversion method with thousands of non-violent offenders sent to federal prisons each year having never hurt anyone.


There seems to be a groundswell of bipartisan support for sentencing reform in this country today. We don’t need a new law for DPAs or NPAs. These agreements exist to be used in criminal cases—and the Justice Department should be as willing to use them in non-violent run-of-the-mill criminal cases as it does in corporate crime cases.







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