News

Professor Brandon L. Garrett urged legislators at a U.S. Senate Judiciary Committee hearing to take steps to improve the prosecution of corporate crimes and offered a list of recommendations to do so.

“There is more that both Congress and the judiciary could do, and while the Department of Justice has evolved in its approach, this shouldn’t just be driven by prosecutorial discretion,” Garrett said. “A greater role for lawmakers and the judiciary is much needed, so that the process does not purely depend on evolving prosecutorial discretion and the application of complex internal DOJ guidelines.”

Garrett, the L. Neil Williams, Jr. Distinguished Professor of Law, provided expert testimony at the hearing last week titled “Cleaning Up the C-Suite: Ensuring Accountability for Corporate Criminals.” The author of Too Big to Jail: How Prosecutors Compromise with Corporations (Harvard University Press, 2014), Garrett was the only academic witness on the panel. Also testifying were Andrew Lelling, a former U.S. Attorney and senior Department of Justice official now at Jones Day, and Ryan Hampton, an addiction recovery advocate who spoke on the opioid crisis and lack of accountability for pharmaceutical corporations that contributed to it.

In his introductory remarks, Garrett told the Senate committee that when he began researching and tracking federal criminal prosecutions of organizations some 20 years ago, federal prosecutors in the post-Enron era had begun to make greater use of deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs) to settle significant cases without an indictment or conviction.

“While my early work involved tracking what then amounted to dozens of large-scale cases, which I could print them out and stack them in a single pile on my law school desk, by the time I wrote my book there had been many hundreds of these largely out-of-court negotiated settlements,” he said.

Such agreements are made at prosecutors’ discretion, with little to no involvement or oversight by federal judges. Because such agreements are not filed in court, making them inaccessible to the public, Garrett co-created, with University of Virginia librarian and data scientist Jon Ashley, the Corporate Prosecution Registry. With more than 4,400 records, the database is the most comprehensive online public repository of information on federal organizational prosecutions dating to 2001. It also includes more than 600 deferred and non-prosecution agreements, some of which were only obtained by suing the Department of Justice for the information.

Questioned by Sen. Mazie Hirono (D-Hawaii) on what the data shows, Garrett said that while there has been a remarkable rise in the size of penalties levied by the DOJ – $1.8 billion in criminal penalties so far this year and a recently announced $4.3 billion settlement with Binance – the number of prosecutions remains relatively low.

“Billion-dollar corporate criminal fines are now annual events and they would have been inconceivable three decades ago. And yet, concerns do persist that the largest criminal offenders are corporations and that they escape the types of punishment routinely meted out in much lower-level cases,” Garrett testified.

“Each year, the bulk of those total penalties come from just a handful of cases. Typically, the largest cases are resolved not through trials or guilty pleas, but rather out-of-court deals crediting companies for cooperation and compliance. Whether they deserve that credit is often hard to gauge based on the limited information that is disclosed in these deals.”

Agreements also have become lengthier and more complicated, and it appears that prior agreements may be used as templates in negotiating settlements.

“You don’t want this to become a cookie cutter operation,” Garrett said. “There should be evidence-based thinking about what that the right approach is and how much detail should be in these agreements. You don’t want them to become self-replicating.”

The data also reveals a number of repeat offenders, Garrett said, raising concerns that enforcement may not be strong enough to discourage corporate recidivism.

“Over time, concerns have grown that we not only lack sufficient information about corporate crime, but that enforcement may not be effective enough, given high-profile examples of repeat offending by corporations.” Garrett’s written testimony can be downloaded and the hearing viewed in its entirety here.

Little judicial oversight over agreements negotiated by the DOJ

Garrett told the committee that while the DOJ has made important refinements as its approach to corporate crime has evolved, the current system of relying on negotiated outcomes fails to adequately deter or remediate wrongdoing or deliver sufficient certainty for corporations. Relying on prosecutorial discretion and internal DOJ guidelines also does not adequately serve the public interest, he said, calling for lawmakers and the judiciary to have a greater role.

Deferred prosecution agreements were never intended or imagined as a vehicle to resolve prosecutions of major corporations, Garrett said. Rather, they grew out of a provision in the 1974 Speedy Trial Act that reflected efforts to divert first-time and juvenile non-violent offenders for rehabilitative reasons. In fact, the act has no provisions for the rehabilitation of corporate offenders.

“As a result we have little to no judicial involvement in the approval of these agreements, as would occur for a plea bargain,” Garrett testified. “Nor do we have adequate judicial oversight of these undertakings, as would occur for a civil consent decree or corporate probation under the terms of a plea agreement. When judges have occasionally intervened to potentially review or supervise corporate prosecution agreements, appellate courts have reversed such efforts."

Garrett offered a number of recommendations for Congress, including passing legislation to amend the Speedy Trial Act to incorporate provisions specific to DPAs and to provide for judicial oversight of such agreements. Prosecution agreements also should disclose far more about the nature of the conduct that led to the prosecution, he said.

Congress could also allocate more funding for corporate monitoring and enforcement, and for testing the effectiveness of compliance mechanisms to reduce corporate recidivism, he said.

“In other areas [of criminal justice], the DOJ and prosecutors have long insisted on routine monitoring with public reporting, where monitors’ reports for consent decrees are introduced in court and made available for review and input by stakeholders,” said Garrett, a preeminent scholar of criminal justice who currently is serving as independent monitor of a misdemeanor bail reform consent decree in Harris County, Texas.

“In corporate prosecutions, however, oversight process is typically not transparent. Instead, oversight in corporate prosecutions should include public reporting, as in other areas in which there is government oversight.”

He also called for federal legislation to promote more comprehensive data collection and disclosure of organizational non-prosecution agreements and other agreements not filed in court. The DOJ began this year to put case resolutions online but has released only about 50 cases so far, he noted.

Garrett said that while he and Ashley remain committed to maintaining the Corporate Prosecution Registry, which is updated with the help of law students, they believe that work should be a public function.

“I would love to be put out of the business of updating the Corporate Prosecution Registry because the relevant government actors began to do such a thing themselves,” Garrett said.

The DOJ is welcome to use their thousands of records, he added.

In addition to Hirono, senators questioning the panel included Peter Welch (D-Vermont) and Sheldon Whitehouse (D-Rhode Island). Committee Chair Dick Durbin (D-Illinois) presided over the hearing.

On an earlier panel two senior DOJ officials, Matthew Olsen, assistant attorney general for national security, and Nicole Argentieri, acting assistant attorney general for the criminal division, faced sharp questions on the agency’s record by committee members including Amy Klobuchar (D-Minnesota), Thom Tillis (R-North Carolina), Chuck Grassley (R-Iowa), and Marsha Blackburn (R-Tennessee).