DOJ seeks to revamp and re-energize its prosecution of individuals: key takeaways

White Collar Alert

Litigation Alert


In the first major policy pronouncement of Attorney General Loretta Lynch’s term, the Department of Justice has instituted new guidelines intended to reshape how the Department investigates and prosecutes corporate executives and other employees.

Deputy Attorney General Sally Yates, in a memorandum  entitled “Individual Accountability for Corporate Wrongdoing,” wrote that the prosecution of individual corporate employees deters future illegal activity, incentivizes reforms to corporate behavior, ensures that the proper parties are held responsible for criminal actions and promotes public confidence in the justice system.

The Yates Memo sets forth six specific policies that have the objective of  sharpening DOJ’s focus on holding individuals accountable for corporate misconduct.  These policies, which will be followed by revisions to the US Attorneys’ Manual, provide that:

  • To be eligible for any cooperation credit, corporations must disclose to prosecutors all relevant facts about the individuals involved in corporate misconduct.
  • Both criminal and civil corporate investigations by DOJ attorneys should focus on individuals from the inception of the investigation.
  • Criminal and civil attorneys handling corporate investigations should be in routine communication with one another.
  • Absent extraordinary circumstances, no corporate resolution will provide protection from criminal or civil liability for any individuals.
  • Corporate cases should not be resolved without a clear plan to resolve individual cases before the statute of limitations expires, and declinations as to individuals in such cases must be memorialized.
  • Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay.

The Yates Memo characterizes turning over all relevant facts regarding individuals involved in corporate misconduct as a “threshold requirement” for the receipt of cooperation credit.  Only once this bar is met may prosecutors consider the factors that have traditionally been relevant in assessing the level of cooperation credit given, such as the timeliness of the cooperation, the speed and quality of the internal investigation and the proactive nature of the cooperation. This condition applies to civil matters as well as criminal investigations.  Specifically, the memorandum notes that in order to receive credit for “full cooperation” under the False Claims Act the company must provide the government, “at a minimum, all relevant facts about responsible individuals.”

DOJ attorneys must also focus on individual criminal liability from the outset of an investigation.  The guidance states that DOJ attorneys will proactively investigate individuals before, during, and after any corporate cooperation.  According to the Yates Memo, this approach will maximize the DOJ’s “ability to ferret out the full extent of corporate misconduct,” increase the likelihood that individuals with knowledge of wrongdoing will cooperate in prosecutions of more senior individuals and maximize the chances that a resolution will include civil or criminal charges against both corporations and individuals. 

The Yates Memo also states that prosecutors should not, absent extraordinary circumstances, enter into resolutions with corporate defendants that provide protection for potentially culpable individuals.  Any resolution of an investigation or prosecution of a corporate defendant must preserve the ability of the DOJ to hold individuals responsible and any release of claims against individuals based on corporate settlements must be personally approved in writing by the relevant Assistant Attorney General or US Attorney.  Relatedly, corporate cases should not be resolved without a clear plan to resolve related individual cases before the relevant statute of limitations expires, and if a decision is made not to bring charges against culpable individuals, the reasons for that determination must be memorialized and approved by the US Attorney or Assistant Attorney General whose office handled the investigation, or their designees.

Finally, the memo requires civil attorneys to consider factors beyond an individual’s ability to pay a judgment when determining whether to bring a suit against an individual. Whether an individual has the resources to pay a judgment, the memo states, should not control whether the government brings suit. Regardless of the defendant’s ability to pay, pursuing civil actions against individuals will, according to the memorandum, “result in significant long-term deterrence.”

Key takeaways

The Yates Memo indicates that the government is interested in bringing more criminal prosecutions as a result of civil investigations, and vice versa. This could dramatically change the landscape of certain types of investigations and litigation, especially involving the False Claims Act. 

The memo also makes clear that the DOJ will no longer consider executives and individual actors as merely secondary targets.  These new policies are also likely to dramatically alter the way corporate investigations are handled by the DOJ and defense attorneys.  Typically, when the DOJ begins an investigation into a corporation, attorneys conduct internal investigations which focus on the conduct of the corporation and the adequacy of its internal controls. Now companies must focus on identifying responsible individuals and gathering information to relay to the DOJ about those individuals. Defense attorneys, like their counterparts in the government, need to be thinking beyond mere corporate liability from the outset of the case. And, as companies gather information to turn over regarding their executives and employees to the DOJ, they need to be very sensitive to potential conflicts of interest that may arise as a result of the increased focus on identifying individual targets for the government.

Find out more about the implications of the Yates Memo by contacting any of the authors.