United States Attorney’s Offices across the country have announced the implementation of a new Voluntary Self-Disclosure Policy to standardize how voluntary self-disclosure (VSD) of misconduct is defined and credited by USAOs nationwide. The policy aims to incentivize companies to maintain effective compliance programs capable of identifying misconduct and to cooperate fully with the government in corporate criminal investigations.
The policy was developed pursuant to the Deputy Attorney General’s Sept. 15, 2022, memorandum. Under the new policy, a company is considered to have made a voluntary self-disclosure if it becomes aware of misconduct by employees or agents before that misconduct is publicly reported or otherwise known to the DOJ, and discloses all relevant facts known to the company about the misconduct to a USAO in a timely fashion prior to an imminent threat of disclosure or government investigation.
A company that voluntarily self-discloses as defined and fully meets the other requirements of the policy, will receive significant benefits by fully cooperating and timely and appropriately remediating the criminal conduct. For example, the USAO will not seek a guilty plea, may choose not to impose any criminal penalty, and in any event, may not impose a criminal penalty that is greater than 50% below the low end of the U.S. Sentencing Guidelines fine range. It also will not seek the appointment of an independent compliance monitor if the company demonstrates it has implemented and tested an effective compliance program.
The policy identifies three aggravating factors that may cause a USAO to seek a guilty plea against a company even if the other requirements of the VSD policy are met: (1) if the misconduct poses a grave threat to national security, public health, or the environment; (2) if the misconduct is deeply pervasive throughout the company; or (3) if the misconduct involved current executive management of the company. The presence of an aggravating factor does not necessarily mean that a guilty plea will be required; instead, the USAO will assess the relevant facts and circumstances of each case and determine the appropriate resolution. If the guilty plea is ultimately required, the company will still receive the other benefits of the VSD policy.
Click to read the full guidance from the Biden Justice Department.
Partner Terry Flynn, leader of our Government Compliance and Investigations Group, is the former U.S. Attorney for the Western District of New York. Associate Bryant Gordon is a former Assistant District Attorney for Kings County (Brooklyn.)
This alert is not a substitute for advice of counsel on specific legal issues.
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