Remarks as Prepared for Delivery
Good morning. Thank you for that warm welcome. It is a true pleasure to discuss the Justice Department’s corporate criminal enforcement work with such a knowledgeable, experienced, and international group of subject matter experts.
I am particularly pleased to speak at this International White Collar Crime Symposium. Back in 2019, I had the privilege to work with Andrew Levine, Jenna Dabbs, and the great staff at the New York City Bar Association, as well as the International Bar Association, to conceive of and launch this annual event.
Today, as I look out across the many faces in this historic room, I’m impressed by how the symposium has thrived under Jenna and Andrew’s leadership. Seeing so many talented practitioners from across the world here – in person – to commune and collaborate, I’m feeling a sorely needed sense of hope, not just for the future of our profession but for our world, which needs gatherings like these to bind us together, across international borders, and despite geopolitical conflicts. Thank you all for making the journey, for forging cross-border connections, and for contributing to increased international understanding.
In my remarks, I will focus on how today’s world demands that the Department of Justice expand, innovate, and modernize our corporate enforcement efforts to meet the moment, and how the private sector can also adapt to combat misconduct and promote compliance.
As Deputy Attorney General Lisa Monaco has said, “Corporate enforcement is in an era of expansion and innovation.” Given the volatility and rate of change in the geopolitical landscape and the world economy, that should come as no surprise. To meet the moment, the Department is modernizing and adapting – which means that today’s white-collar crime program is strikingly different from when I helped lead the Department’s Criminal Division in 2014 and 2015.
First, our corporate enforcement efforts are evolving to address the rapidly increasing intersection between corporate crime and the risks that threaten both U.S. and global security. From terrorist financing, sanctions evasion, and export control circumvention to cybercrime and crypto-enabled crime, sophisticated white-collar criminals are contributing to global instability and threatening U.S. national security to a degree never seen before.
And we are also seeing national security dimensions in more familiar areas of corporate crime – intellectual property theft and international corruption, for example, interrupt supply chains, divert disruptive technologies to dark places, and fuel the misdeeds of rogue nation-states.
With a mounting number and growing share of the Department’s corporate investigations and resolutions implicating national security, we are surging resources to address the challenge – adding more than 25 new corporate crime prosecutors to our National Security Division and increasing by 40% the number of prosecutors in the Criminal Division’s Bank Integrity Unit, which prosecutes violations of U.S. sanctions and the Bank Secrecy Act by financial institutions and executives.
We are already seeing our attention to the intersection of corporate crime and national security bear fruit:
- Last October, the Department secured the first-ever corporate guilty plea to material support for terrorism from French cement company LaFarge, which made payments to the Islamic State and an al Qaeda affiliate to protect the company’s profits and gain market share.
- In April, the venerable British American Tobacco company entered into a deferred prosecution agreement (DPA) and its subsidiary pleaded guilty to violating sanctions by selling tobacco in North Korea, with the associated North Korean revenue propping up the DPRK regime and funding its nuclear program.
- In September, the Department secured a corporate guilty plea in the first-ever criminal resolution for sanctions violations from illicit sales and transport of Iranian oil, with the shipping company Suez Rajan Ltd. pleading guilty, and authorities seizing almost one million gallons of contraband oil.
- Just last month, our Disruptive Technology Strike Force and our Task Force KleptoCapture joined forces to take down a Hong Kong-based business operation that circumvented export controls to funnel millions of dollars-worth of microelectronics with military applications to Russia.
- And over the last year, we have achieved great success executing cyber and crypto-related law enforcement actions, including disrupting cryptocurrency exchanges and mixers that had enabled criminals to launder almost $4 billion in illicit proceeds, and infiltrating the infamous Hive ransomware group to prevent more than $130 million in ransom payments.
The second area where we are modernizing our corporate enforcement program is by targeting our efforts to the most important white-collar cases, where we can make the most impact. That includes charging the most culpable corporate executives, no matter how high they rank on the company org chart – and taking those cases to trial on an increasingly frequent basis.
This approach is resource-intensive: prosecuting the most important cases requires breaking down complex criminal schemes, understanding cutting-edge markets, and analyzing terabytes of data, with high-powered defendants mounting aggressive defenses and hiring sophisticated counsel (like many of you in this room). But we will not shy away from the challenge.
To give a prominent example, last week the Department announced charges against Binance, the world’s largest virtual currency exchange, and its founder, Changpeng Zhao, resulting in $4.3 billion in penalties.
As the Attorney General noted, this is among the largest criminal penalties in the history of the Department of Justice, and it is the single largest penalty ever assessed on a money services business.
Zhao, Binance’s founder and CEO, pleaded guilty – an outcome that represents another installment payment on the Department’s pledge to prioritize individual accountability for top corporate executives who break the law.
The successful Binance prosecution exemplifies the Department’s approach to complex corporate cases. As the Attorney General made clear when announcing the resolution, last week’s historic guilty pleas were the product of the combined capabilities of the Criminal Division, the National Security Division, and the U.S. Attorney’s Office in Seattle. The Department is further supporting this type of collaborative effort through its campaign to develop crypto-expertise, including through the creation of the National Cryptocurrency Enforcement Team at DOJ headquarters, the Digital Asset Coordinator Network across the U.S. Attorney community, and the Virtual Asset Exploitation Unit at the FBI. Investing in high-tech, cross-department capabilities is resource-consuming – but it enables the Department both to solve and prosecute crypto-related offenses and to disrupt and deter crimes in the digital-asset space before they happen.
Of course, the prosecution of Binance CEO Zhao is also a prime example of our determination to hold accountable corporate executives no matter how prominent or influential. It is but the latest in a series of such prosecutions, ranging from crypto and financial services executives to health care and high-tech entrepreneurs – from Goldman Sachs and Uber to FTX and Theranos.
And we are taking those cases to trial, whenever appropriate. In 2022, the Criminal Division’s Fraud Section took the most individuals to trial in its history. Some of the Department’s trials have secured convictions of the nation’s most prominent business people:
- Last month, the Department secured a swift conviction after trial of Sam Bankman-Fried, the high-flying founder and CEO of an international cryptocurrency exchange who perpetrated one of the biggest financial frauds in American history.
- Last year, the Department won trial convictions and secured lengthy sentences against Theranos founders, Elizabeth Holmes and Sunny Balwani, for bilking investors and jeopardizing patient health through a multi-year fraud scheme tied to blood analysis technology.
- And the Department secured the trial conviction of Goldman Sachs executive Roger Ng for conspiring to violate the FCPA in connection with the massive 1MDB bribery and money laundering scheme.
These trial convictions provide anecdotal evidence of the fruits of our efforts to prosecute the most culpable and increase the impact of each prosecution. And our efforts are also reflected in data that the white-collar defendants we’re prosecuting caused greater losses than in years past and are receiving heftier sentences.
As the cases I just mentioned show, we are holding companies and individual executives accountable when they violate the law. But we aren’t just measuring success in the number of prosecutions we bring or the higher sentences we are securing; we’re also providing incentives for good corporate compliance to detect and deter bad actors and discourage recidivism. Improved corporate compliance safeguards the public, increases the fairness and reliability of markets, and protects our collective security.
One way we are promoting good corporate compliance is through the Department’s Voluntary Self-Disclosure (VSD) policies. At the direction of the Deputy Attorney General, every DOJ component that did not already have a leniency or voluntary self-disclosure policy has now adopted one. For the first time, all 94 U.S. Attorneys’ Offices have now adopted a single Voluntary Self-Disclosure policy that applies from Anchorage to Honolulu to right here in New York – and everywhere in between.
The goal of these VSD policies is to identify misconduct at the earliest possible opportunity. That way, we can put a stop to the conduct and take swift and effective action against individual wrongdoers – enhancing the individual accountability that is our top priority in fighting white-collar crime.
The VSD policies also ensure that companies that invest in effective compliance programs that enable swift identification of misconduct of which the government was not aware, then step up and own up by promptly self-reporting and remediating that misconduct, will fare better – in some cases by qualifying for a declination of prosecution. The criteria and predictable results of voluntary self-disclosure are laid out in black and white in DOJ component policies that are publicly available on the DOJ website.
Early returns demonstrate that the Department’s transparent and predictable VSD policies are yielding the intended results.
Just last month, the Department announced charges against an executive at the Florida health care company HealthSun, which detected and then voluntarily self-disclosed the misconduct. HealthSun remediated, cooperated, disgorged ill-gotten gains, and received a declination. And now the former company executive faces wire and health care fraud charges, carrying maximum penalties of up to 20 years in prison.
We see other examples in the FCPA space. Earlier this year, Corsa Coal Corporation timely and voluntarily self-disclosed bribes paid by a third-party intermediary to secure $143 million in coal contracts from an Egyptian state-owned company. In addition to remediating, cooperating, and disgorging profits to the extent of its capability, the company provided information about individual wrongdoers, enabling the prosecution of two company vice presidents. Because the company stepped up and owned up, it received a declination of prosecution, one former executive pleaded guilty, and the other is facing FCPA, money laundering, and wire fraud charges.
Policy changes like these take time to bear fruit, so it’s premature for a full assessment. But we’ve seen multiple companies voluntarily self-report in connection with a wide range of misconduct, with resulting investigations under way. So, stay tuned.
The value proposition of voluntary self-disclosure extends with particular force to the mergers and acquisitions (M&A) space, where the disclosing company is essentially operating as a corporate whistleblower, diming out illegal conduct that took place at a different entity – the M&A target. The Deputy Attorney General recently announced the core elements of the Department’s policy on M&A-related voluntary disclosure, which provides transparency and consistency and standardizes across the Department an approach already taken by components like the Criminal Division.
This Justice Department, through our Antitrust Division, has elevated and prioritized competition-promoting enforcement, including in the mergers and acquisitions space, more than any DOJ in recent memory. And nothing in the VSD policy for mergers and acquisitions changes that – in fact, the policy will make that clear in black and white. As the Deputy Attorney General has clearly stated, the policy will have no impact on civil merger enforcement.
Every component that receives an M&A-related self-disclosure will coordinate with our Antitrust and National Security Divisions – both at the time of initial disclosure and before a charging decision – to ensure nothing runs counter to antitrust or CFIUS enforcement efforts.
And since the policy only applies to bona fide, arm’s length transactions, our prosecutors will be scrutinizing every disclosure. Not only would a sham transaction not qualify, but it may even subject the disclosing company to additional criminal liability. For example, if we find out that a company improperly structured a transaction to avoid applicable reporting obligations, it would not qualify for the protections of the policy.
What we expect the VSD policy will do is incentivize corporate whistleblowing – where a company not involved in criminal conduct spills the beans on corporate executives that were – all so that we can continue to target our efforts at holding the most culpable individuals accountable for their white-collar crimes.
Another way that we have continued to promote and incentivize commitment to compliance is through our approach to corporate compensation programs.
The Department expects companies to use compensation systems to align their executives’ financial interests with the company’s overall interest in good corporate citizenship. So, when Department prosecutors evaluate the strength of a compliance program, a key consideration will be whether the company’s compensation system effectively incentivizes good behavior and deters wrongdoing.
And to raise the stakes, the Deputy Attorney General directed the Criminal Division to adopt a two-part pilot program to shift the burden of corporate misconduct away from uninvolved shareholders and onto those directly responsible.
First, every corporate resolution involving the Criminal Division now includes a requirement that the resolving company develop and implement compliance-promoting criteria within its compensation and bonus systems. And second, companies that withhold or seek to claw back compensation from corporate wrongdoers can obtain a reduction of financial penalties by the amount of the clawback. In the Department’s recent FCPA resolution with Albemarle, for example, the company received a fine reduction for bonuses it withheld from culpable executives.
Corporate leaders and board members have a responsibility to take note. Existing clawback capabilities should be regularly deployed; a paper policy not acted upon is really no better than having no policy at all. Companies should review compensation policies, clawback provisions, and employment contracts to ensure they are fit for purpose – and that review needs to take place long before a company discovers misconduct, so it’s well positioned to get the best result for its shareholders.
Now, I don’t have to tell this international audience that employment laws vary from country to country, or that legal regimes in some jurisdictions don’t permit clawbacks. Our prosecutors recognize that and will not hold companies to an unattainable standard. But wherever they’re located, companies must think creatively about how to structure incentive compensation to promote compliance in a lawful manner. It’s the best way to protect shareholders; it’s the right thing to do; and it will stand companies in good stead if the Department of Justice comes knocking on your door.
I want to end where I started, by highlighting the importance of collaboration, both across nations and between the private and public sectors. As we look at today’s threat landscape, the Department of Justice is placing a premium on such collaboration.
When it comes to national security, we are prioritizing dynamic threat disruption and placing victims at the center of our work. This includes increasing our outreach to the private sector about national security compliance risks. With threats shifting and risks morphing, it is critical that we work together – government and industry – to identify and share information about new risk streams and threat actors. For its part, the Department is now issuing joint advisories with interagency partners, like the Commerce, State, and Treasury Departments, to address a wide range of national security risks, enforcement trends, and compliance expectations.
On the cyber- and crypto-enabled crime front, the Department of Justice is working more closely with companies than ever before. We need prompt victim reporting about ransomware attacks and other cyber incidents so we can identify and arrest attackers, seize their crypto assets, disable their tools and techniques, and dismantle their infrastructure – all of which helps us prevent the next set of victims.
In the FCPA space, we are leaning into the Department’s role of promoting good corporate citizenship. The Department has long worked with our partners at the SEC to publish guidance for the private sector in the form of our FCPA Resource Guide. And in 2022 and 2023, the Criminal Division published three advisory FCPA opinions – on topics ranging from payments to liberate detained personnel to provision of training to foreign officials – after a relatively dormant period where only one opinion was issued over seven years.
At the Department of Justice, corporate criminal enforcement is a top priority. More and more frequently, the cases we investigate and charge are international in nature and impact our collective security. We are working every day not only to conduct robust enforcement and hold white-collar criminal actors accountable, but to do so with transparency, consistency, and predictability so we can empower and incentivize companies to detect, deter, and report corporate misconduct.
Thank you for your time – and I look forward to answering questions.
