On Wednesday February 22, 2023, the Department of Justice (DOJ) announced a voluntary corporate self-disclosure policy for all U.S. Attorneys' Offices, effective immediately. The policy adopts a uniform standard for companies that self-disclose corporate misconduct regardless of which of the 94 U.S. Attorneys' Offices (USAOs) a company reports to—an assurance that was previously available only for disclosures made to Main Justice components. Under the policy, companies that self-disclose misconduct prior to the imminent threat of publication or government investigation of the misconduct can be entitled to substantial benefits.
The policy follows DOJ's September 2022 "Monaco" memorandum, which clarified DOJ's expectations for corporate cooperation and self-disclosure. As discussed in our earlier commentary, companies that self-disclose in a timely manner all relevant facts regarding the reported misconduct will still be required to fully cooperate with the government's investigation, and in investigations of implicated individuals and third parties. Companies will also need to remediate the misconduct, including making appropriate employment determinations and enhancing related compliance programs and procedures.
The Benefits of Self-Disclosure
Companies that promptly self-disclose misconduct can receive significant benefits, including that the government will not seek a guilty plea, the USAO may choose not to impose any criminal penalty whatsoever, and, even if a criminal penalty is required, the penalty would not be greater than 50% below the low end of the United States Sentencing Guidelines (USSG) fine range. Finally, the USAO would not seek the imposition of a compliance monitor if the company demonstrates that it has implemented and tested an effective compliance program.
Aggravating Factors and Self-Disclosure
Not all self-disclosing companies will be eligible for the most beneficial treatment under the new policy. The USAO may still seek a guilty plea where (1) the misconduct poses a grave threat to national security, public health, or the environment; (2) the misconduct is deeply pervasive throughout the company; or (3) the misconduct involved current executive management of the company.
Nevertheless, the presence of an aggravating factor does not necessarily mean that the USAO will require the company to enter a guilty plea—the policy provides that the USAO will determine the appropriate resolution based on the facts and circumstances of each case. Even if the government determines that a guilty plea is appropriate, the company can nevertheless receive the recommendation of a criminal penalty of at least a 50% and up to a 75% reduction from the low end of the USSG fine range. Additionally, the USAO will not require the appointment of a monitor if the company has adopted and tested an effective compliance program.
Ultimately, this policy provides welcome guidance to companies that discover misconduct that does not clearly fall within the scope of one of the DOJ components, such as the Foreign Corrupt Practices Act or Healthcare Fraud Units, which already have detailed self-disclosure guidance.