DOJ spokesman Matt Lloyd said the Criminal Division’s Fraud Section, which focuses on white collar crime, “has achieved record numbers of individual and corporate criminal cases and resolutions over the past three years,” including a 59% increase in individuals charged between 2016 and 2019 and a jump of more than a quarter in those convicted. He didn’t comment specifically on the 26% decline reflected in the data published by the U.S. attorney offices nationwide, which cover a much larger set of white collar prosecutions, but called the Fraud Section’s achievements “a key indicator of the department’s commitment” to the issue.
Prosecutions have been declining for the past decade but have never been so low.
The Justice Department under Trump has shifted its focus from traditional white collar cases, like big securities prosecutions, to immigration and the sort of corporate espionage targeted by the DOJ’s China Initiative, said Robert Anello, a white collar defense lawyer in New York. Immigration-related offenses accounted for more than half of federal prosecutions in fiscal 2018, Anello said.
A crackdown on financial fraud starting decades ago spurred reforms and increased corporate compliance, which became “one of the trademarks of American companies abroad,” Anello said. He warned that could now fade with waning vigilance.
The change is clear, according to seven ex-prosecutors who handled securities fraud and asked not to be identified in discussing their former offices’ work. Veterans of the DOJ’s antitrust and fraud divisions have left, and younger lawyers need time to learn how to build a complicated case, they said.
The Internal Revenue Service, too, has suffered from attrition over the years, although it got a budget increase last year. Its Criminal Investigation division helps send people to prison for crimes such as tax evasion, money laundering and identity theft. The agency saw a 36% decrease in new criminal investigations from fiscal 2015 to 2019, IRS records show.
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Former deputy attorney general Sally Yates Photographer: Andrew Harrer/Bloomberg
One factor in the decline in traditional white collar prosecutions is an important change to what’s known as the Yates memo.
In 2015, under Obama, Deputy Attorney General Sally Yates required companies seeking leniency to help develop evidence against their employees and turn over possible suspects. In 2018, under Trump, the Justice Department softened the criteria. For instance, in the Yates memo, a company in a price-fixing case had to be the first to cooperate. Now it doesn’t, said Columbia Law’s Coffee.
“The old rule was, we’re gonna be really tough,” he said. “You can get off, and your officers can get off, if you turn the co-conspirators in and confess.” Now, Coffee said, companies are getting “tremendous sentencing credits” simply for having a corporate compliance plan.
“Those things just require a good lawyer to spend two nights writing one up,” he said.