Eight years after the financial crisis blew
Wall Street apart, major banks have paid out tens of billions of dollars
to settle charges of wrongdoing. Yet, as politicians like Bernie
Sanders regularly note, no senior-level executives have gone to jail.
On Tuesday, a top Department of Justice official shed some light on why that might be.
In short, she said, prosecutors in the past
let companies get away with blurring details on who was individually
responsible for fraudulent activity within major corporations, despite
existing DOJ policy emphasizing the importance of knowing who, exactly,
did what.
“Holding individuals accountable for corporate
wrongdoing has always been a priority,” Deputy Attorney General Sally
Yates said Tuesday at the New York City Bar Association White Collar
Crime Conference. “But as I and others at DOJ have said before, these
cases do have a special set of challenges, challenges that can impede
our ability to identify the responsible parties and to bring them to
justice.”
In particular, Yates said, corporate defense
attorneys have evaded DOJ policy meant to ensure that when companies
seek full credit for cooperating in an investigation, they have to
provide details on individual responsibility. To get the maximum amount
of leniency, the policy stated, companies had to hand over names.
Previously, they could get partial credit without doing so.
“But despite all that, we found that we still
got passive voice, ‘mistakes were made,’ presentations from defense
counsel, without identifying who made what mistakes,” Yates
said. “Companies were still expecting to get cooperation credit, even
though they hadn’t really advanced the ball at all in determining who
did what.”
She continued: “And sometimes, companies still
got credit for cooperation even though they hadn’t provided what is
most valuable to us — the facts about individuals.” In other words,
companies never turned over precise identifying information about
illegal activity that occurred behind closed doors.
Former U.S. Attorney General Eric Holder addresses the media in New Orleans in 2012. Photo: Chris Graythen/Getty Images
“As the Deputy Attorney General made clear in
today’s remarks, it has always been DOJ’s practice to pursue individuals
aggressively whenever the facts and evidence warrant it. That hasn’t
changed,” DOJ spokeswoman Emily Pierce wrote in a statement. “What has
changed is that there is no longer a sliding scale under which companies
receive some credit for some cooperation — unless companies provide
information on individuals, any cooperation credit is now off the
table.”
The admission comes as the DOJ adjusts to a new set of guidelines promulgated by Yates
last September — since dubbed the “Yates memo” — that provide clearer
instructions for prosecutors investigating white-collar crimes. In
addition to tightening requirements about what corporations need to do
to receive cooperation credit, Yates required that investigators focus
on individual accountability from the very start of an investigation.
“It is our obligation at the Justice
Department to ensure that we are holding lawbreakers accountable,
regardless of whether they commit their crimes on the street corner or
in the board room,” Yates said last year.
Yates emphasized that the DOJ had not ignored individual wrongdoing in a previous era — under former Attorney General Eric Holder
— before the “philosophical shift” she and current Attorney General
Loretta Lynch have undertaken in the past year. Rather, Yates said, the
new guidelines had led to “a more uniform, systematic and sustained
focus on individuals.”
Before leaving his position in April 2015, Holder issued a notice giving prosecutors
90 days to bring him any individual cases relating to the financial
crisis they could assemble. The unusual request, largely seen as a
face-saving measure, fizzled.
This story has
been updated to include comments from the Department of Justice and to
clarify that corporations could previously get partial cooperation
credit without providing details on individuals.
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