22nd National Institute on White Collar Crime, March 2008
Posted: 3 Jan 2008 Last revised: 8 Oct 2008
This article updates our prior empirical observations set forth in Devolution of Authority: the Department of Justice's Corporate Charging Policies 51 ST. LOUIS UNIV. L. REV. 1 (2006) and Third Verse Same as The First (CORP. COUNSEL, June 2007).
First, the number of corporate pre-trial agreements rose sharply from 2006 to 2007. There were thirty-five corporate pre-trial agreements in 2007, up from twenty in 2006. Despite this increase, we continued to see the prosecution of some significant corporate criminal cases by indictment and criminal information. For instance, in 2007, British Petroleum (BP) agreed to plead guilty to violating the Clean Air Act and pay a $50 million fine, which will be the largest penalty ever paid in a Clean Air Act case.
Second, the number of publicly available corporate pre-trial agreements containing attorney client privilege and work-product waivers has declined significantly. Indeed, only three deferred prosecution agreements (DPAs) contained waivers: Vetco, Reliant, and Blue Cross and Blue Shield of Rhode Island. No non-prosecution agreements (NPAs) contained waivers.
This worked out to approximately ten percent of the post-McNulty Memo agreements we were able to review (we could not locate six of the thirty-five agreements). This was a decline of nearly fifty percent from the post-Thompson Memo (2003-2006) statistics we reviewed where twenty-six out of the total of forty-four agreements (or around sixty percent) contained waivers - we were unable to locate two of the 2003-2006 agreements. A significant amount of ink was spilled this year discussing corporate monitors. We found that the percentage of corporate pre-trial agreements mandating corporate monitors and other business reforms, however, stayed roughly the same from 2003-2007.
Finally, two thirds of all agreements involved violations of either the Foreign Corrupt Practices Act (FCPA) or the federal health care laws.
Out of the thirty-five 2007 agreements, there were twelve that involved violations of the FCPA, a substantial increase over the three agreements we saw in 2006. In addition, Vetco agreed to pay the largest criminal fine to date in an FCPA case: $26 million. As a result, the Vetco DPA climbed into our top ten corporate pre-trial agreement criminal fine list for 2003-2007.
Last year we also saw ten corporate pre-trial agreements implicating the federal health care laws. This amounted to roughly a third of the thirty-five agreements. Before 2007, we had seen only two. These health care agreements involved conduct ranging from paying illegal kickbacks to felony misbranding and even some plain old fashioned health care fraud.
As reflected in our top ten corporate pre-trial agreement penalty chart appearing at the end of this article, despite the increased number of FCPA and health care agreements, fraud continues to dwarf all other agreements in terms of criminal penalties.
Keywords: deferred prosecution agreement, nonprosecution agreement, DOJ, McNulty, Thompson, Holder, attorney client priviledge, work product priviledge, U.S. Attorney, Sentencing Guidelines, Criminal Law, White Collar Crime, Foreign Corrupt Practices, Corporate Pretrial Agreement , Pretrial Diversion
Suggested Citation: Suggested Citation
Finder, Lawrence D. and McConnell, Ryan D., Annual Corporate Pre-Trial Agreement Update - 2007. 22nd National Institute on White Collar Crime, March 2008. Available at SSRN: https://ssrn.com/abstract=1080263