Justice Department Weak on Charging Individuals for White Collar Crime

January 20, 2014 by Thomas F. Burke, P.C.

On Friday, January 17, 2014, the Wall Street Journal reported that a University of Virginia law professor's analysis revealed that the Justice Department hadn't charged employees at nearly two thirds of nearly 400 companies that have settled criminal investigations or been convicted of crimes in recent years.

The Justice Department did not contest the figures but defended its role in fighting white collar crimes. It countered that it has criminally prosecuted thousands of defendants for financial fraud and related crimes in the last five years and that it has a high burden of proving executives intended to commit fraud. According to the Justice Department, federal prosecutors have charged more than 10,000 people with white collar crimes since September of 2011.

Even given the figures cited by the Justice Department, many of its highest profile investigations, including those where hiding transactions with sanctioned countries and illegal drug marketing, haven't resulted in prosecuting employees.

Between 2001 and 2012, no individual was charged in 65% of cases in which the Justice Department reached deferred-prosecution agreements or non-prosecution agreements, which allow firms to avoid criminal convictions. During the same time period, no employees were charged in 75% of 125 cases in which public companies were charged and convicted or reached plea agreements.

HSBC Holdings PLC reached a $1.92 billion settlement deferring prosecution for allegedly failing to combat money laundering, allowing drug proceeds into the United States and overlooking links to terrorist financing. Senator Charles Grassley (R. Iowa) wrote a letter to Attorney General Eric Holder alleging that "HSBC has quite literally purchased a get-out-of -jail-free card for its employees."

Traditional prosecutions of companies resulting in pleas or convictions have remained relatively stable since 2001. Whether the Justice Department decides to prosecute more individuals for white collar crime remains to be seen.

Thomas F. Burke has been handling securities litigation in state and federal courts and in arbitration forums since 1983. If you feel that you have received unsuitable trade recommendations or you have been the victim of fraudulent conduct, please contact Mr. Burke at 312/362-1300 or by email at tburke104@att.net.