The Justice Department is getting tougher on white-collar crime — or, more specifically, the people behind those crimes. At least that’s the gist of a memo sent to federal prosecutors this week. The new guidelines say in future investigations, corporations won’t get credit for cooperating with prosecutors unless they name names of the people involved. The changes follow criticism that very few perpetrators involved in the 2008 financial crisis paid any real price. But there’s a problem:
“It’s much more difficult, obviously, to find individuals guilty of crimes than it is to hold companies accountable by way of corporate fines and other things,” says Robert Ray, a former federal prosecutor now with Fox Rothschild.
Especially top executives, who tend to be insulated by layers of lower-level employees.
“Generally these cases have to be built from the ground up, which means starting with low-level employees and working your way up right to the corporate board room,” says Robert Mintz, a former federal prosecutor who practices white-collar defense at McCarter & English. “We’ll have to see whether this Department of Justice is going to devote those type of resources to bring these complicated cases.”
If companies do start naming names, it could sour corporate culture by pitting corporations against their employees, says Ellen Podgor, who researches white-collar crime at Stetson University.
“You don’t want individuals being afraid to ask corporate counsel whether this is a good thing to do, whether it’s legal or not legal,” she says.
Former regulator William Black, who helped put many people behind bars during the savings and loan crisis in the 1980s, doesn’t buy it.
“It leads to employees telling the truth,” he says. “Any alternative policy leads to cover-ups.”
Black says the memo probably came too late to secure many convictions related to the financial crisis. He says the Justice Department has waited so long, the statute of limitations either has run out, or is about to.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.