deferred prosecution

  • January 23, 2015
    Guest Post

    by Rena Steinzor, Professor of Law, University of Maryland Carey School of Law, and President of the Center for Progressive Reform. Steinzor is also author of the new book, Why Not Jail? Industrial Catastrophes, Corporate Malfeasance, and Government Inaction from Cambridge University Press.

    Candice Anderson was 21 when she lost control of her Chevrolet Cobalt in a moving stall caused by a defective ignition switch, drove into a tree, and killed her fiancĂ©. Two years later, in 2006, Texas police charged her with reckless homicide. Her parents liquidated their retirement account to pay for her defense. She pled guilty, spent five years on probation, paid $10,000 in fines, and had to live with the shame of the crime on top of the grief of the accident. In 2014, General Motors (GM) sent Anderson a letter explaining that her accident was the company’s fault. A judge in Texas cleared her criminal record a few weeks ago.

    The Department of Justice has opened a criminal investigation into GM’s conduct and the next attorney general will decide whether and how to charge the company. President Obama’s nominee, Loretta Lynch, will need to make a break with the misguided policies of her predecessor, Eric Holder, when the GM case hits her desk.

    Under Holder, the Justice Department has handled white collar criminal cases involving the largest companies in the world with “deferred prosecution agreements,” a form of settlement that does not require the defendant to acknowledge any criminal culpability, no matter how heinous the crime. Instead, these special deals require the defendant to pay large sums of money in civil penalties. Given their ample financial resources, such sums end up being an affordable cost of doing business. 

    Deferred prosecution agreements undermine the straightforward application of white collar criminal laws that punish everything from racketeering and fraud to deadly violations of health, safety, and environmental laws. The Obama Justice Department has entered roughly twice the number of deferred prosecution agreements as the George W. Bush administration and has been rightly criticized for embracing the corrupt notion that some firms may be “too big to jail.” 

  • November 21, 2014
    Guest Post

    by Erwin Chemerinsky and Samuel Kleiner. Chemerinsky is Dean of the University of California, Irvine School of Law; Kleiner is a fellow at the Yale Law Information Society Project.

    In the face of an ongoing humanitarian crisis as families are broken up by deportations, President Obama’s bold executive action is legally permissible and morally necessary. The angry Republican rhetoric is misguided both as a matter of constitutional law and as a matter of desirable social policy.

    In terms of the Constitution, President Obama drew a careful distinction based on what he can and can't do without congressional action. The President cannot bestow citizenship on individuals except as authorized by law. President Obama’s executive order does not attempt to do this. 

    But what a president may do is set enforcement priorities, choosing who to prosecute or who to deport. No government brings prosecutions against all who violate the law. Resources make that impossible and there are laws on the books that should not be enforced. Nor has any administration, Democratic or Republican, sought to deport every person who is illegally in the United States.   For humanitarian reasons or because of foreign policy considerations or for lack of resources, the government often chooses to focus deportations along certain criteria.

    In fact, as recently as two years ago, the Supreme Court in United States v. Arizona recognized that an inherent part of executive control over foreign policy is the ability of the President to choose whether or not to bring deportation proceedings. On numerous other occasions, the Supreme Court and lower federal courts have recognized prosecutorial discretion to decide when to bring criminal prosecutions or immigration enforcement actions.

    The overblown Republican rhetoric fails to recognize that what President Obama announced was enforcement priorities. He has instructed the executive branch, which is under his control, to prioritize deportation proceedings against felons and those who pose a public danger, but not to deport parents of young children who are United States citizens and who present no threat.   Such discretion is clearly and unquestionably part of the president’s power.     

    Nor is there any realistic chance that any court will find otherwise. No one is likely to have standing to challenge President Obama’s policy. And even if a court were to address the issue, the law is well established that presidents have discretion to decide whether to prosecute or bring deportation actions. Contrary to the Republican rhetoric, President Obama is violating no law and is acting within his constitutional authority.

  • December 10, 2013
    Guest Post

    by David M. Uhlmann, the Jeffrey F. Liss Professor from Practice and Director of the Environmental Law and Policy Program, University of Michigan Law School. For more on deferred prosecution agreements and corporate liability see Professor Uhlmann’s Maryland Law Review article, “Deferred Prosecution and Non-Prosecution Agreements and the Erosion of Corporate Criminal Liability.” Also see his recent post for The CLS Blue Sky Blog.

    The Justice Department announced last month that JP Morgan Chase would pay a record $13 billion for its role in the mortgage crisis that produced the Great Recession of 2008. The Justice Department deserves praise for reaching a civil settlement that will restore billions to investors and homeowners who were misled by JP Morgan Chase and Washington Mutual, the failing savings and loan that JP Morgan Chase bought in the midst of the financial crisis. In addition, if there is sufficient evidence, the Justice Department still can bring criminal charges against the individuals involved in the corporate wrongdoing.

    It is unlikely that JP Morgan Chase will face criminal charges, however, despite causing billions in losses and untold more in collateral damage to the global economy. Instead, if the bank pays anything more, it almost certainly will be the beneficiary of a disturbing shift in corporate prosecution policy that began in the Bush administration and has accelerated during the Obama administration: the increased use of deferred prosecution and non-prosecution agreements to address corporate wrongdoing. Under these agreements, corporations can avoid criminal charges if they pay large penalties, improve their compliance programs, and cooperate in investigations. Yet plea agreements -- the preferred approach to corporate crime before the last decade -- offer the same benefits without making it appear that justice can be bought.

    The Justice Department’s embrace of deferred prosecution and non-prosecution agreements has been dramatic. From 2004 through 2012, the Justice Department entered 242 deferred prosecution and non-prosecution agreements with corporations, after entering just 26 in the preceding 12 years combined (half of which occurred from 2001 to 2004). The use of the agreements has become so routine that the Justice Department’s Criminal Division now resolves most of its corporate criminal cases using “non-criminal alternatives” to prosecution. From 2010 to 2012, the Criminal Division entered more than twice as many deferred prosecution and non-prosecution agreements with corporations (46) as plea agreements (22). 

    Nor are these small cases involving technical violations of the law. The Justice Department agreed to a deferred prosecution with HSBC even though the bank was involved in nearly a trillion dollars of money laundering, much of it from drug trafficking. The Justice Department entered a non-prosecution agreement in the Upper Big Branch Mining disaster even though 29 miners died, and the Labor Department found that Massey, the company that owned the mine, committed over 300 violations of federal mine safety laws and kept a double-set of books to hide its misconduct from safety inspectors.

    The failure to prosecute corporations like HSBC and Massey sends the wrong message about how our society views corporate misconduct and sows doubts about the Justice Department’s commitment to address corporate crime. The Justice Department would never allow individuals who committed such serious crimes to escape prosecution. So why the double-standard for corporate defendants? Why has the Obama administration continued the questionable corporate crime policies of the Bush administration?