United States Attorneys’ Offices Announce Voluntary Self-Disclosure Policy

Authors: Ilan T. Graff, Richard A. Powers, and Alison Goldman

On February 22, 2023, the Department of Justice (“DOJ”) announced a new voluntary self-disclosure (“VSD”) policy that will be employed by all ninety-three United States Attorneys’ Offices (“USAO”).[1] This announcement follows from Deputy Attorney General Lisa Monaco’s September 2022 call for each DOJ component that prosecutes corporate crime to review existing self-disclosure policies and implement new ones where none existed.[2] The purpose of this VSD policy, which largely tracks existing guidance in other DOJ components, is to further incentivize companies to promptly self-disclose and remediate criminal conduct, cooperate fully with the government, and to maintain effective compliance programs capable of swiftly identifying misconduct.

I.        The USAO Voluntary Self-Disclosure Policy

Under the new policy, the prosecuting USAO, when deciding the appropriate “form and substance” of any criminal resolution, will consider whether a company’s self-report was voluntary and timely together with the disclosure’s substance and accompanying remedial actions. A disclosure is voluntary so long as it is not made under a preexisting obligation to disclose (e.g., a Deferred Prosecution Agreement).[3] Disclosure is timely if it is made before the misconduct is publicly reported, otherwise known, or is being (imminently) investigated by authorities—and must be made within a “reasonably prompt” time after the company becomes aware of the misconduct.[4] The policy does not define “reasonably prompt” and gives the company the burden of demonstrating timeliness.[5]

The company must disclose all relevant facts concerning the misconduct of which it is aware at the time of the self-report and should clarify if the information is based on a preliminary investigation or assessment.[6] As any internal investigation progresses, the company must provide ongoing factual updates to the USAO.[7] The company must also move expeditiously to preserve, collect, and produce relevant documents and/or information.[8]

When the reported misconduct involves violations, and corresponding enforcement policies, supervised by particular DOJ components—such as the Criminal Division’s oversight over FCPA violations—the USAO will coordinate with or obtain approval from the relevant DOJ component when considering and finalizing a resolution.[9]

II.      Benefits For Voluntary Self-Disclosure

Where a company has voluntarily self-disclosed under this policy, fully cooperated, timely and appropriately remediated the criminal conduct,[10] and no aggravating factors are present, the USAO will not seek a guilty plea, opting instead for a declination, non-prosecution agreement, or deferred prosecution agreement.[11] Additionally, VSD policy compliance militates in favor of sharply reduced financial penalties and potentially avoiding a fine entirely.[12] Although the presence of aggravating factors increases exposure for even VSD-compliant companies,[13] they still stand to benefit from reduced fines and potential avoidance of a monitor.[14]

Conclusion

The USAO VSD policy closely tracks existing DOJ self-disclosure policies and practice in at least some USAOs. Nonetheless, the explicit extension of these policies to USAOs reflects the Department’s ongoing efforts to incentivize early self-disclosure by emphasizing the clear benefits to companies that self-report across all prosecuting components. By implementing a USAO-specific self-disclosure policy, and prominently announcing it nationwide, DOJ has also implicitly expanded the responsibility for white-collar corporate enforcement across the country in a way that leverages each district’s expertise and resources. Corporate leadership and compliance professionals should be mindful of these developments as they navigate potentially reportable conduct.