DOJ Considers Guidance on Corporate Claims of Inability to Pay

On September 12, 2019, Deputy Assistant Attorney General Matthew Miner signaled that the Department of Justice may provide further guidance to prosecutors—and companies—on how to evaluate claims of corporate poverty.  In a speech at the University of Texas School of Law’s 6th Annual Government Enforcement Institute,  Miner stated that the DOJ has been considering the issuance of “concrete guidance or factors to consider” to assist prosecutors in their evaluation of companies who claim that they are unable to pay DOJ-assessed fines and penalties for their misconduct.  Miner linked this to an ongoing effort by DOJ to “craft policies and guidance that are clear and speak to those dilemmas” faced by companies and their counsel.

Currently, prosecutors use the federal sentencing guidelines to calculate and assess fines for companies accused of misconduct.   The sentencing guidelines provide for a range of penalties based on a number of factors, including the amount of profits the company gained through the misconduct, whether the misconduct was pervasive, and the involvement of high-level executives.  Prosecutors have broad discretion to either increase or decrease the assessed fine by analyzing still other factors, one of which is a company’s ability to pay the proposed fine.  Specifically, the guidelines state that a prosecutor’s contemplated reduction “shall not be more than necessary to avoid substantially jeopardizing the continued viability of the organization.”  Unsurprisingly, this language fails to provide actual guidance to prosecutors evaluating claims of corporate poverty.

What this new guidance might look like remains unclear.  That said, it’s a hopeful harbinger of things to come that DOJ appreciates the challenge of assessing such claims.  And beyond providing clarity to prosecutors, this guidance should be useful to companies looking to evaluate the limits on their ability to pay.

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