DOJ’s Monaco Memorandum Refocuses on Individual Accountability, Prompt Self-Disclosure, and Clear Guidelines to Prosecutors

September 21, 2022

In September 2022, the United States Department of Justice (DOJ) released a memorandum from Deputy Attorney General Lisa Monaco that included significant changes to the way the DOJ handles corporate criminal enforcement.  The (Monaco Memorandum) built upon and expanded the DOJ’s manner of handling so-called “white collar” crimes and provides guidelines for federal prosecutors across the country on how they are to address both corporate and individual responsibility associated with corporate crimes.

The focus of the Monaco Memorandum is on how to ensure individual and corporate accountability.  It details how factors such as a company’s history of misconduct, its use of available self-disclosure mechanisms and cooperation with a prosecutor, effectiveness of existing corporate compliance programs, and the use of monitoring of a corporation’s activities impact how prosecutors should address detected corporate crime.

Focus on Individual Responsibility for Wrongdoing

The Monaco Memorandum refocused DOJ efforts and approach to dealing with corporate crimes for individual accountability.  This is not a new concept.  The DOJ has trended toward a focus on individual responsibility for wrongdoing within a company.  A 2015 memorandum released by Deputy Attorney General Sally Quillian Yates entitled “Individual Accountability for Corporate Wrongdoing,” previously focused on individual accountability. But the Monaco Memorandum announced some “first-ever Department-wide policies” in a variety of areas that are being incorporated into the DOJ’s Justice Manual for distribution to all DOJ personnel nationwide.  Some of the issues presented in the Monaco Memorandum are new, such as specific guidance on how prosecutors should evaluate corporate compensation plans.

The Monaco Memorandum doubles down on this approach by focusing on individual accountability and encouraging corporations to cooperate when individual wrongdoing is detected.  It builds upon the concept of individual accountability, calling it the “Department’s top priority.”   In effect, the DOJ is saying that the way corporations can be accountable to their shareholders is to proactively detect and report wrongdoing committed by individuals and not let wrongdoers hide behind the corporate shield.  This in turn reduces the risk and exposure of the corporation and focuses it on the individual within the organization who committed the act that exposes the corporation to potential criminal or civil liability.

Corporation Credit for Timely Self-Disclosure

The Federal Sentencing Guidelines have included the potential for corporations to receive credit at sentencing if they cooperate with authorities.  Disclosure of all relevant facts about individual misconduct is required before the DOJ will consider granting credit for cooperation.  Disclosure must be made promptly in order to receive credit; it should be the first priority when corporate wrongdoing is discovered through investigation.  Delays in disclosing all relevant facts to the DOJ risks making cooperation credit unavailable.

The DOJ intertwines self-disclosure with individual responsibility.  In essence all corporate crimes are rooted in the actions of individuals within the organization.  It is the disclosure by the corporation, acting through its Board of Directors and other appropriate officials, of acts by individuals within the organization who commit wrongdoing that the DOJ is seeking.

Swiftly and Without Delay

In the Monaco Memorandum, the DOJ’s position is clearly stated that in order to receive cooperation credit “it is imperative that Department prosecutors gain access to all relevant, nonprivileged facts about individual misconduct swiftly and without delay.”  To me this means immediately at the beginning.  No mulling it over and deciding, but right away.

According to the Monaco Memorandum, companies “that identify significant facts but delay their disclosure will place in jeopardy their eligibility for cooperation credit.”  Companies bear the burden of producing all relevant facts about individual wrongdoing in a timely manner so that the DOJ has a chance to investigate and bring appropriate charges.

Production of evidence to the government that is most relevant for assessing individual culpability should be prioritized. Information about individual culpability should be prioritized when providing information to the DOJ.

Specific Direction to Prosecutors

The Monaco Memorandum provides specific direction to DOJ prosecutors throughout the country that they are required to specifically assess whether a corporation provided cooperation in a timely fashion.

Prosecutors will consider, for example, whether a company promptly notified prosecutors of particularly relevant information once it was discovered, or if the company instead delayed disclosure in a manner that inhibited the government’s investigation. Where prosecutors identify undue or intentional delay in the production of information or documents–particularly with respect to documents that impact the government’s ability to assess individual culpability–cooperation credit will be reduced or eliminated.

Completion of Investigations into Individuals

The Monaco Memorandum requires federal prosecutors “strive” to complete investigations into individual wrongdoing and to seek individual criminal charges before or at the same time as resolving the matter with the corporation. In cases where this is not possible and the matter is first resolved with the corporation, the corporate resolution must include a memorandum  discussing all potentially culpable individuals, a description of investigation status regarding their conduct, the investigative work that remains to be done, and an investigation plan to resolve the individual issues prior to the expiration of applicable statutes of limitation.  In other words, the DOJ does not want to let individual accountability slide through the cracks of a resolution at the corporate level.

Resolving a matter with a corporation regarding individual issues still pending requires the approval of the supervising United States Attorney or Assistant Attorney General.  This stresses to prosecutors and the public the importance the DOJ places on individual accountability.

Summary of Issues

The issues of individual responsibility and corporate cooperation have been finding their way into DOJ investigations and into corporation compliance programs over the years.  The Monaco Memorandum is arguably the strongest iteration of these concepts to date.  On the issues of individual responsibility and prompt self-disclosure, the Monaco Memorandum builds on concepts already in existence but places special emphasis on them.

What is even more significant about the Monaco Memorandum are the guidelines the DOJ is issuing to prosecutors across the country through the sections of this memo entitled “Guidance on Corporate Accountability.”  The standards laid out in the Monaco Memorandum will be published in the DOJ’s Justice Manual, which guides prosecutors across the country.  Additionally, the Monaco Memorandum announces the establishment of new guideline areas such as the “first-ever” department-wide policies on certain areas of corporate crime, such as guidance on evaluating a corporation’s compensation plans.

The specific new and significantly revised nationwide policies will be discussed in Part Two of this article series.  Part Two will also include practical take-aways for compliance officers and others in the compliance chain of command to help address the focus on individual accountability and the other issues raised by the Monaco Memorandum.

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