NYU Law’s Center on the Administration of Criminal Law has pointed out that, with more than 90 percent of criminal cases ending in plea bargaining or charge bargaining before going to trial, prosecutors often wield enormous power as adjudicators in the criminal justice system. That fact, coupled with the government’s and the public’s keen interest in the corporate malfeasance that contributed to the current global economic crisis, made the theme of the center’s May 8 inaugural conference, “Regulation by Prosecutors,” particularly timely.
Video from this conference is available below on this page.
The Sword of Prosecution
Keynote speaker James B. Comey, former U.S. deputy attorney general and chair of the president’s corporate crime task force during the George W. Bush administration, recalled that period of his career and his time as U.S. attorney for the Southern District of New York during what he called the “Enron era,” when the pursuit of white-collar crime came squarely into the limelight. While a U.S. attorney, Comey oversaw the prosecution of such high-profile defendants as WorldCom, Adelphia, ImClone, and Martha Stewart. “The public storm of the Enron era, that period of 2001 to 2004 or 2005, was a mere breeze compared to the gale in which white-collar prosecutors and defense lawyers and all the rest of us now live,” he said.
As a prosecutor of corporate crimes, Comey was always faced with a thorny question: “Once we’ve made the cases against the bad guys, what do we do with the place, what do we do with the corporation?... The sword of prosecution that hangs over an institution focuses the mind of that institution from the board all the way down on making sure that, when you have that conversation someday with the prosecutor, you’re able to talk about bad apples and good barrels.” But, he added, the collateral damage involved in the potential failure of a company always occupied his thoughts when making a prosecutorial decision. Sometimes, he said, prosecutors can best meet their goals through deferred prosecution agreements and non-prosecution agreements.
At the conclusion of his keynote, Comey joined the conference’s first panel, which gave an overview of the issue of regulation by prosecutors. Raymond J. Lohier Jr. '91, deputy chief of the Securities and Commodities Task Force in the U.S. Attorney’s Office for the Southern District of New York, felt that prosecutors generally were not operating as regulators, and asserted that the rules of corporate behavior were set by organizations like the Securities and Exchange Commission and the Commodity Futures Trading Commission: “Invariably, what I am looking for, and I think what most federal prosecutors look for, is a clear violation of a rule or regulation that’s set by the SEC or the CFTC.”
Regarding deferred prosecution agreements, Jennifer Arlen, Norma Z. Paige Professor of Law, said it was important for prosecutors to focus less on the direct regulation of the nature of the compliance program set out by an agreement and more on using the threat of prosecution to compel firms to cooperate in bringing individual wrongdoers to justice. “Individual liability is vitally important, and it’s the only way you can truly deter corporate crime,” Arlen said. “People who do wrongs must think they will go to jail and be severely punished, and prosecutors can only do that if they focus the full weight of that threat on cooperation and self-reporting.” Prosecutors who focus too much on compliance, she said, move into the realm of fundamental decisions about how best to structure a business organization, which should be left to civil regulators rather than criminal prosecutors. More coordination between the civil and criminal sides, she added, would be beneficial.
Expressing deep reservations about allowing the prosecutor to decide whether a company has breached a deferred prosecution agreement, Richard Epstein, currently James Parker Hall Distinguished Service Professor of Law at the University of Chicago and a permanent NYU Law faculty member beginning in 2010, explained, “They’re going to decide whether or not you’ve been in breach of that agreement when they can throw the sword of Damocles on you. What that does subtly is it takes the prosecutorial function and makes it into an adjudicative function.” Epstein advocated the involvement of an outside magistrate judge in such instances, and shared Arlen’s preference for a focus on individual rather than corporate-entity prosecutions.
Eric Corngold, executive deputy attorney general for economic justice in the Office of the New York Attorney General, spoke about deferred prosecution agreements and non-prosecution agreements as one of the final stages in a journey toward compliance that begins with the launching of the prosecutor’s investigation. “You’re the parent driving to Disney World, and your kids are fighting in the back and you say, ‘If you kids don’t stop fighting, I’m going to turn the car around,’” Corngold said by way of an illustration. “You know you’re not going to turn the car around, they know you’re not going to turn the car around, but they still tend to stop fighting.”
Seeking a Prosecutorial Balance
In a later panel delving more deeply into the issues, Theodore V. Wells Jr., a partner at Paul, Weiss, Rifkind, Wharton & Garrison, referred to the “death penalty” threat carried even by a company’s indictment as an example of the immense power prosecutors hold. “There’s not a lot of checks and balances going on,” Wells said. “Prosecutors act like they’re doing you a favor to give you the deferred prosecution agreement; when you’re using the old rule you probably shouldn’t have been indicted in the first place. Prosecutors know we’re just groveling as defense lawyers.”
Samuel W. Buell ’92, an associate professor of law at Washington University and former special attorney for the Enron Task Force, weighed in on the consideration of an indicted firm’s reputation. “When you look at the menu of sanctions that are available, obviously we can’t imprison a firm,” Buell said. “What criminal adds to civil is a reputational sanction, and that’s something that I think we’re deeply ambivalent about.... It leads to concerns about not being able to control what happens as the result of a criminal case.”
As a current partner at Debevoise & Plimpton and a former U.S. attorney for the Southern District of New York, Mary Jo White spoke to both sides of these cases, saying that, while it can be a necessary tool in certain instances, corporate criminal liability is sometimes overused by prosecutors. “I think prosecutors are at their best when they prosecute or they don’t,” she said, “and if you stray very far from there you’re on a very slippery slope.”
Part 1: Introductory remarks by Dean Richard Revesz and Anthony Barkow; keynote speech by James B. Comey; the panel "Regulation by Prosecutors: An Introduction" (1 hr, 36 min)
Part 2: The panel "Regulation by Prosecutors: A Closer Look" (1 hr, 14 min)
Part 3: The panel "Regulation by Prosecutors: Competing Regulators" (1 hr, 4 min)
Part 4: The panel "Regulation by Prosecutors: Monitoring and Compliance Oversight" (1 hr, 9 min)