Dallas Federal Criminal Defense Lawyer | David Finn

Federal Deferred, Nonprosecution Deals Fall by 60%

2009-02-05T13:02:00.000-08:00

NACDL Update – Feb. 5, 2009

FORTHCOMING STUDY: Deferred and Non-Prosecution Agreements Decline 60%

The National Law Journal reports, according to a forthcoming study conducted by Lawrence D. Finder, Ryan D. McConnell, and Scott L. Mitchell, that the number of deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs) between the Department of Justice and corporations has declined by 60% in 2008. This is a sharp drop from a historic high of 40 DPAs and NPAs in 2007 to only 16 DPAs and NPAs in 2008. The study also reports a significant decline in the inclusion of privilege-waiver provisions in DPA/NPAs.

The study sets out some significant findings including, but not limited to, the following:

· FCPA violations were the subject 7 of the 16 DPA/NPAs entered into in 2008

· Immigration work-site enforcement investigations had their DPA/NPA debut in 2008

o 3 of the 16 DPA/NPAs dealt with immigration work-site enforcement investigations

o All 3 contained some type of corporate compliance reform provision

· Decline in privilege-waiver provisions:

o In 2008 – 2 DPA/NPAs contained waiver provisions

o In 2007 – 3 DPA/NPAs contained waiver provisions

o From 2003-06 – About half of the 47 DPA/NPAs contained waiver provisions

· Three-year upward trend in remedial compliance measures:

o Of the 75 DPA/NPAs over the last three years, more than 75% contain such measures

o In 2006 – 13 DPA/NPAs contained remedial compliance measures

o In 2007 – 29 DPA/NPAs contained remedial compliance measures

o In 2008 – 16 DPA/NPAs – i.e. 100% – contained remedial compliance measures

February 9, 2009
National Law Journal

By Marcia Coyle

WASHINGTON — The number of deferred and nonprosecution agreements between the U.S. Department of Justice and corporations declined by 60% in 2008 — from a historic high of 40 in 2007 to 16 last year, according to a forthcoming study.

Despite the lower numbers, violations of the Foreign Corrupt Practices Act continued to dominate the subject of those corporate pretrial agreements, with seven of the 16 agreements last year resolving FCPA violations.

The study, "Betting the Corporation: Compliance or Defiance?," was done by Lawrence D. Finder, a partner in the Houston office of Dallas-based Haynes and Boone; Ryan D. McConnell, a Houston assistant U.S. attorney; and Scott L. Mitchell, the chairman of Open Compliance and Ethics Group, a nonprofit think tank. It is scheduled to be published in May in the Corporate Counsel Review of the South Texas College of Law.

Deferred prosecution agreements (DPAs) and nonprosecution agreements (NPAs) are deals between the Department of Justice (DOJ) and a corporate entity to conclude a corporate criminal investigation. The appropriate label depends on whether a charging instrument is filed.

Two years ago, Finder and McConnell, who is representing only his personal views and analysis, published a study of each pretrial agreement by the department since 1992. Their latest study reports that there now have been a total of 112 corporate pretrial agreements from 1993 to 2008.

In 2008, the authors noted, DOJ entered into its first corporate pretrial agreements resolving immigration work-site enforcement investigations — a total of three. And, they reported, every pre-trial agreement contained some type of corporate compliance reform provision — a continuation of a trend seen during the past few years.

Declines in privilege waivers

The study also found that the 2008 and 2007 agreements represented significant declines in provisions requiring waiver of attorney-client or work-product protections compared to the 2003 to 2006 period.

There were two privilege waiver provisions in 2008:

"In the Willbros DPA, which resolved a lengthy FCPA investigation, the agreement provided for a 'limited waiver of attorney/client privilege with respect to certain subject matters important to DOJ understanding of the internal investigation.' In the Jackson Country Club DPA, which resolved a immigration work-site enforcement investigation, the Country Club 'agree[d] not to assert, in relation to any request of the United States, a claim of privilege (such as attorney-client privilege) or immunity from disclosure (such as work product) as to any documents or information request by the United States.' "

There were three such privilege waivers in 2007. During the "post-Thompson Memo" period of 2003 to 2006, when the corporate community claimed that waiver of attorney-client privilege was demanded by DOJ as evidence of cooperation, roughly half of the 47 agreements contained privilege waivers.

Haynes and Boone's Finder said he does not know the reason why the number of DPAs and NPAs declined so significantly in 2008. But he suggested that department resources may have been partly responsible.

"The department has through the FBI and its U.S. attorney offices, as well as components of the Criminal Division, put a lot of emphasis on anti-terrorism and national security," he said. "Some resources have been transferred to those areas to keep us safe."

But even those areas, such as immigration and export violations, are beginning to show DPAs, Finder said.

"Investigations take a long time," he said. "There's always lag time between the misconduct and the conduct of the investigation and the prosecution."

A DOJ spokesman said the department does not routinely track the number of DPAs and NPAs and could not comment on why the number declined last year.

The study also noted that new corporate charging policies implemented by DOJ last year now make it "absolutely clear" that waiver of attorney-client and work-product protections is not a prerequisite for a corporation to be viewed as cooperative.

"The waiver language has gone way down," said Finder. "I think the organized bar was very responsible and responsive to what they perceived as an endangerment of the attorney-client privilege. The department, rather than have Congress legislate in this area, took the responsibility of reviewing its own policies and procedures and implementing remedial measures where necessary."

Finally, the study reported a three-year trend: business reforms in DPAs and NPAs. During the past three years, there have been 75 DPAs and NPAs, and more than 75% contain remedial compliance measures — 13 in 2006, 29 in 2007 and all 16 agreements in 2008.

Tiffany M. Joslyn, Esq.

Research Counsel, White Collar Crime Project

National Association of Criminal Defense Lawyers (NACDL)

1660 L Street, NW, Suite 1200

Washington, DC 20036

Phone: (202) 872-8600 ext. 260

Fax: (202) 872-8690

David Finn

U.S. Supreme Court has had it with District Courts

2009-01-27T10:28:00.000-08:00

For the second time in less than a week, the Supreme Court has summarily reversed a federal appeals court for failing to strictly follow post-Booker sentencing law.

In Nelson v. United States, __ S.Ct. __, 2009 WL 160585 (Jan. 26, 2009), the Court took the Fourth Circuit to task for affirming a within-guidelines sentence despite the judge's statements at sentencing that "the Guidelines are considered presumptively reasonable" and that "unless there's a good reason in the [3553(a)] factors . . ., the Guideline sentence is the reasonable sentence."

Key quote from the Supreme Court:
The Guidelines are not only not mandatory on sentencing courts; they
are also not to be presumed reasonable. We think it plain from the
comments of the sentencing judge that he did apply a presumption of
reasonableness to Nelson's Guidelines range. Under our recent
precedents, that constitutes error.

And, yes, the italics were in the original opinion.

Justices Breyer and Alito concurred in the judgment; they would simply have GVR'd the case given the fact that the Soliciter General conceded the statements constituted reversable error. Once again, though, it looks like a majority of the Court has had it with appellate courts that refuse to embrace Booker, Rita, Gall, and Kimbrough.

You can use Nelson to remind your district court judges that the guidelines cannot be given any priority at sentencing, and use the Deconstructing the Guidelines resources on fd.org's Sentencing Resource page to show why they ought not to be followed at all.

To read the opinion: http://www.supremecourtus.gov/opinions/08pdf/08-5657.pdf

David Finn

Attorney-Client Privilege Reform Needed

2009-01-15T09:13:00.000-08:00

COALITION TO PRESERVE THE ATTORNEY-CLIENT PRIVILEGE
American Chemistry Council
American Civil Liberties Union
Association of Corporate Counsel
Business Civil Liberties, Inc.
Business Roundtable
The Financial Services Roundtable
Frontiers of Freedom
Lawyers for Civil Justice
National Association of Criminal Defense Lawyers
National Association of Manufacturers
Retail Industry Leaders Association
U.S. Chamber of Commerce

COMPREHENSIVE REFORM STILL CRITICALLY NEEDED TO PROTECT
ATTORNEY-CLIENT PRIVILEGE AND EMPLOYEE LEGAL RIGHTS
In response to growing concerns raised by Congressional leaders, former Justice Department officials, and many in the legal and business communities, the Department of Justice replaced the 2006 “McNulty Memorandum” in August 2008 with new corporate charging guidelines that direct U.S. Attorneys and Assistant U.S. Attorneys not to coerce companies and other organizations to waive their attorney-client
privilege or work product protections, or to pressure their individual employees to waive their own legal and constitutional rights during investigations in return for cooperation credit. The Securities and Exchange Commission subsequently issued a new Enforcement Manual in October 2008 that provides additional guidance on its privilege waiver policy outlined in the 2001 “Seaboard Report.” Though helpful,
the SEC’s new language still contains numerous loopholes and does not provide adequate protection for the privilege and employee legal rights.

In November 2007, the House overwhelmingly approved comprehensive legislation known as the “Attorney-Client Privilege Protection Act” (H.R. 3013). Many of the bill’s reforms were later adopted by the Justice Department in its new corporate charging guidelines. But unlike the limited scope of the DOJ policy, the reforms in the House bill—sponsored by Representatives John Conyers (D-MI), Bobby Scott (D-VA), and Lamar Smith (R-TX)—would apply to all federal agencies. A Senate companion bill, S.
3217, sponsored by Senators Arlen Specter (R-PA), (Vice President-elect) Joseph Biden (D-DE) and 12 other Senators from both parties, was also introduced in the 110th Congress but failed to receive a vote.

While the new Justice Department policy is a welcome and important improvement over its previous policy outlined in the McNulty Memorandum, a comprehensive solution to the ever-widening problem of government-coerced waiver is still critically needed. Therefore, the Coalition strongly supports the adoption of a Presidential Executive Order to all federal agencies requiring them to adopt effective DOJ-type reforms or the enactment of comprehensive federal legislation like the Attorney-Client
Privilege Protection Act (ACPPA) for the following reasons:

• The new DOJ policy, standing alone, does not provide a comprehensive solution to the problem of government-coerced waiver. Under the Justice Department’s new policy, companies will be required to provide all relevant facts to government investigators in order to receive full cooperation credit, but they cannot be asked or required to waive their attorney-client privilege or work product protections. In addition, where DOJ is the only investigating agency, the policy specifically bars prosecutors from pressuring companies, as a condition for receiving cooperation credit, not to pay their employees’attorneys fees or to take other unfair actions to undermine their employees’ rights and ability to mount a legal defense. Although these reforms are promising and constitute a significant improvement over DOJ’s previous policy, the new policy is limited to just the Department’s prosecutors and does not alter the
harmful waiver policies adopted by the SEC, the EPA, HUD, and many other agencies.

• The new SEC Enforcement Manual also contains many loopholes and fails to solve the governmentcoerced waiver problem. Although Section 4.3 of the SEC Manual states that agency staff should not directly ask companies to waive the attorney-client privilege or work product, it permits the staff to demand waiver if approved by a supervisor. The SEC Manual also pressures companies to “voluntarily” waive the privilege—and to take punitive actions against employees who decline to waive their legal rights—in return for full cooperation credit. Thus, the new Manual cannot be viewed as a substantialdeparture from past SEC policies and practices that have led to widespread government-coerced waiver.

• Government-coerced waiver has become a multi-agency problem that requires a multi-agency solution. In addition to the SEC, many other federal agencies have adopted policies that erode the attorney-client privilege, the work product doctrine, and employee legal rights. For example, the EPA’s “Audit Policy,” like the Justice Department’s previous McNulty Memorandum, authorizes agency officials to pressure companies to waive their attorney-client privilege and work product protections
during investigations. In addition, HUD and the Treasury Department’s Office of Foreign Asset Control(OFAC) have adopted policies that threaten to erode not only the attorney-client privilege and the work product doctrine, but also employees’ Sixth Amendment right to counsel and Fifth Amendment right against self-incrimination. As more and more federal agencies adopt similar waiver policies, broad
administrative or legislative reform is still needed to protect these fundamental rights and reverse the “culture of waiver.”

• A Presidential Executive Order applying reforms like the Justice Department’s recent reforms to all federal agencies—or new comprehensive legislation like ACPPA—would protect fundamental attorney-client privilege, work product, and employee constitutional rights during investigations. By applying the new DOJ reforms to the SEC, HUD, the EPA, and all other federal agencies, a Presidential executive order should prevent the agencies from pressuring companies to waive their attorney-client privilege and work product protections in order to receive full cooperation credit during investigations. Such an order also would help protect employees’ Sixth Amendment right to counsel and Fifth Amendment right against self-incrimination by preventing federal prosecutors from pressuring companies not to pay employees’ legal fees during investigations, to fire employees for not waiving their rights, or to take other punitive measures against the employees before their guilt has been established under law. Enactment of comprehensive legislation like S. 3217 and H.R. 3013 would offer similar benefits to a Presidential order, with the added advantage of making these critical reforms permanent and enforceable in a court of law.

• A Presidential executive order or comprehensive legislation would both strike the proper balance between effective law enforcement and the preservation of essential attorney-client privilege, work product and employee legal protections. Adoption of the Presidential order—or passage of legislation like the ACPPA—would prevent all agencies from forcing companies and employees to waive their fundamental legal rights while preserving the ability of prosecutors and other agency officials to obtain the important, non-privileged factual materials they need to punish wrongdoers and enforce the law.

David Finn