The transition from the Obama administration to the Trump administration could mean big changes for the prosecution of white collar crimes as the focus of the Department of Justice shifts.
During the final two years of the Obama administration, fighting corporate fraud and other misconduct became a top priority for the Department of Justice (“DOJ”). Through a memo from Deputy Attorney General Sally Yates (“Yates Memo”) to all United States Attorneys, a strategy was laid out to protect the nation’s financial system in the aftermath of the financial crisis. The approach from the Yates Memo was a focus on individual accountability for corporate wrongdoing. The DOJ was focusing both civil and criminal investigations on the individuals within a corporation who actually perpetrated the wrongdoing, as opposed to the corporation itself. The goal was to incentivize a change in corporate behavior and ensure the proper parties were held responsible.
Now with Jeff Sessions at the helm, the focus of the DOJ will be drastically different. On March 8, 2017, Attorney General Sessions sent a memo (“Sessions Memo”) to all federal prosecutors directing the focus of the DOJ to the prosecution of violent crimes. He stated that “federal prosecutors should use the substantial tools at their disposal to hold [violent criminals] accountable and ensure an appropriate sanction under federal law.”
A reallocation of resources will be necessary in order to carry out the new prosecutorial focus. Attorney General Sessions has already established a Task Force on Crime Reduction and Public Safety to effectively combat violent crime in partnership with local, state, and tribal law enforcement agencies. This task force was created to carry out one of President Trump’s executive orders. If the amount and time devoted to violent crimes is going to be increasing, then those same finite resources will have to be pulled from elsewhere, including the prosecution of white collar crime.
This is also coupled with proposed budget cuts for 2018, which are an indication of the focus and priorities of the administration. The budget for the DOJ is being cut by $1.1B, which is a 4% cut. The budgets for other agencies that refer corporate crime cases to the DOJ are also being significantly cut. The most extreme example of this is the Environmental Protection Agency (“EPA”) who is seeing its budget cut by $2.5B, a 31% decrease in funding. The EPA was responsible for alerting the DOJ about the Volkswagen emissions scandal back in 2015. The DOJ later prosecuted six Volkswagen executives on behalf of the EPA. Lawsuits against individuals involved in corporate wrongdoing are time and labor intensive and require cooperation among different government agencies.
While it remains uncertain exactly how this will all shape out, one thing is certain. There is a general commitment to deregulation by the Trump administration that will have profound and widespread effects. We will continue to monitor this and provide updates as they become available.
Bethany McLean, Yahoo Finance, “Why White-Collar Crooks May be Cheering this Jeff Sessions Memo,” Mar. 21, 2017.
Deepali Srivastava, Forbes, “With Top Obama-Era Federal Prosecutors Gone, What Will Happen to the War on White-Collar Criminals,” Mar. 21, 2017.
Kim Soffen and Denise Lu, The Washington Post, “What Trump Cut in His Budget,” Mar. 16, 2017.
Memorandum from Attorney General Jeff Sessions to All Federal Prosecutors (Mar. 8, 2017).
Memorandum from Deputy Attorney General Sally Yates to All United States Attorneys (Sept. 9, 2015).
Press Release, Department of Justice, Attorney General Announces Crime Reduction and Public Safety Task Force (Feb. 28, 2017).
Sarl Horwitz, The Washington Post, “The DOJ’s $27.7 Billion Budget Reflects Jeff Sessions’ Priorities,” Mar. 16, 2017.