The Obama administration had a mixed record on white collar crime. On one hand, it extracted $4 billion and a guilty plea from BP in the...
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- deferred prosecution agreements; too big to jail; Sally Yates; Eric Holder; corporate criminal liability; white collar crime; willful blindness; U.S. attorney's manual; corporate counsel; Holder Memo
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In September, 2015, Deputy Attorney General Sally Yates issued a memo developed by a career staff task force updating the Department of Justice’s (DOJ) approach to the prosecution and settlement of white collar criminal cases. Among other clarifications, exhortations, and instructions, the “Yates Memo” said that DOJ would now emphasize the investigation and prosecution of cases against individual corporate managers and that, in order to get credit for cooperating with prosecutors, corporations must share all available evidence of wrongdoing by individual employees with the government. Because being deemed as having cooperated with the government is central to reducing criminal fines, and can even make the difference between a decision to bring or forgo criminal charges, the Yates Memo caused a small tsunami of alarm among the defense bar and members of the Chamber of Commerce. Whether newly appointed Attorney General Jeff Sessions will request a review of the policies in the Yates Memo remains to be seen. On one hand, the Trump Administration is business-friendly to a new degree but, on the other hand, being accused as going soft on white collar crime would not play well with the president’s working class base. This article argues that all of the private bar’s complaints must be placed in the context of the DOJ’s anemic white-collar enforcement program and its effect on the American body politic. As legal historian Lawrence Friedman explained, in addition to deterring harmful activity and punishing people who violate the law, the third equally important core function of the criminal law is to uphold the moral values of society as a whole. Many Americans are deeply disturbed by the fact that financial institutions and their employees could drain billions of dollars out of the economy by committing fraud in the issuance, bundling, and marketing of subprime mortgages, precipitating market collapse. To add insult to injury, many of these same institutions were bailed out of crisis by the government, and, even though they eventually paid the money back, they sidestepped the long-term ramifications of what they did. The last time bankers organized a comparable scam—namely, the savings and loan crisis that involved one-seventieth of the 2008 financial losses—their bad behavior resulted in a thousand felony convictions, including cases against six hundred individuals and three hundred institutions. These perceptions of unfairness exacerbate the anger that increasingly drives our national politics. Resentment of the yawning income gap between the richest one percent and the rest of the population, static wages, and the exodus of industrial jobs to poorer countries are themes that dominate the political debate. The divide between how prosecutors deal with street criminals and how they fail to pursue white-collar miscreants is an integral part of this larger picture. Critiques that consider the Yates Memo and the issues of white-collar enforcement, as if they exist independently of these larger problems, are based on patterns of thought that are both ahistorical and myopic.