On February 22, 2023, the United States Department of Justice (“DOJ”) issued a Voluntary Self-Disclosure Policy to all United States Attorney’s Offices (“USAO”), detailing significant benefits for companies that timely report misconduct before the misconduct is known to the DOJ. The Policy, a fulfillment of Deputy Attorney General Lisa Monaco’s September 2022 directive for all DOJ components to draft formal self-disclosure policies, follows the January 17, 2023 announcement of the DOJ’s Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy.
Recognizing the benefits of incentivizing self-disclosure, according to the policy, the USAO will not seek a guilty plea and may decline to impose any penalties for companies that voluntarily self-disclose misconduct, fully cooperate with the government’s investigation, timely and appropriately remediate, and pay all disgorgement, forfeiture, and/or restitution resulting from the misconduct.
The policy, which rewards close monitoring of internal corporate compliance and timely disclosing any identified malfeasance, standardizes how voluntary self-disclosures are defined. A company is considered to have made a voluntary self-disclosure under the following circumstances:
- No preexisting obligation to disclose;
- Disclosure is made within a reasonably prompt time after becoming aware of the misconduct and occurs before an imminent threat of disclosure or government investigation; and
- All relevant, non-privileged facts known to the company are disclosed.
In certain circumstances, the USAO may still seek a guilty plea from a company that has appropriately voluntarily self-disclosed misconduct if aggravating circumstances—involvement by executive management in the misconduct, significant profit to the company from the misconduct, egregiousness / pervasiveness of the misconduct in the company, or criminal recidivism—exist. These aggravating circumstances can, however, be overcome if the company has an effective compliance program and system of internal accounting controls and provides extraordinary cooperation and remediation.
In cases where a penalty is warranted for companies who make a voluntary self-disclosure—and comply with the other requirements of cooperation, remediation, and payment—the company will generally benefit from no appointment of an independent compliance monitor, and a 50% to 75% reduction off the low end of the U.S. Sentencing Guidelines fine range (except for criminal recidivists).
The new policy also provides limited credit for companies that do not voluntarily self-disclose misconduct, but later fully cooperate and remediate the misconduct. Such companies will receive up to a 50% reduction off the low end of the U.S. Sentencing Guidelines fine range (except for criminal recidivists).
Flannery Georgalis, LLC and its team of former federal prosecutors and federal agents have significant experience representing corporations and other businesses in complex investigations. Our team understands the importance of swift and deliberate action when corporate misconduct has been discovered. When your company’s future is on the line, trust F | G.