- February 27, 2023
- Alerts
DOJ Announces Nationwide Voluntary Self-Disclosure Policy for US Attorney’s Offices
On February 22, 2023, the Department of Justice announced a new nationwide voluntary self-disclosure policy that gives companies the opportunity to receive a more favorable outcome when criminal misconduct is identified and the company chooses to voluntarily report the misconduct. The new voluntary self-disclosure policy applies to all United States Attorney’s Offices (“USAOs”) in the Country and it is effective immediately.
A company that wants to make a self-disclosure that will qualify it for favorable treatment under the new policy must meet the following requirements of a voluntary self-disclosure:
(1) Voluntary - The company must voluntarily report the misconduct. Misconduct that was already required to be reported due to a pre-existing obligation, such as a contract provision or a regulation, will not be considered voluntary.
(2) Timing - The report must be timely, meaning, the self-disclosure needs to be done prior to the misconduct becoming known to the public or known to the government, and it must be made promptly after the company becomes aware of the misconduct. The report must also be made prior to any awareness of a circumstance that is likely to result in public disclosure or imminent government action.
(3) Substance and Action - The self-disclosure must include all the relevant facts about the misconduct that the company is aware of at the time of the disclosure. The company must also act to preserve, collect and produce any documents relevant to the reported misconduct, and must provide any factual updates to the USAO.
If aggravating factors are present, a company may not be eligible for the voluntary self-disclosure, but the USAO will weigh all relevant facts and circumstances and may still allow the company some of the benefits of disclosure.
Aggravating factors include, but are not limited to, misconduct that; (1) poses a grave threat to national security, public health, or the environment; (2) is deeply pervasive throughout the company; or (3) involves current executive management of the company.
The Benefits of Voluntary Self-Disclosure
Companies who choose to participate in the voluntary self-disclosure program and meet all requirements will receive resolutions under more favorable terms than if the USAO had learned of the misconduct through other means.
Such resolutions may include the USAO declining to seek criminal penalties. Even if a criminal penalty is sought, the USAO will not impose a criminal financial penalty greater than 50% below the low end of the required fine range.
If an aggravating factor is present, it will not automatically mean that a guilty plea will be required. However, if the USAO determines that a guilty plea is required due to one or more aggravating factors, a company that has fully cooperated and timely addressed the misconduct, may still receive the benefit of a criminal penalty reduction. Additionally, if a company has already implemented and tested an effective compliance program and can show proof that it has done so, the USAO will not require the appointment of an independent compliance monitor.
In light of the USAO’s new voluntary self-disclosure policy, internal compliance policies should be reviewed to ensure companies have a process for its employees and agents to identify and report misconduct to ensure that the entity has the opportunity to make a timely voluntary self-disclosure, if the need arises.
Garfunkel Wild is available to review your current compliance program and to assist in making any revisions that may be necessary. We are also available to help create and implement compliance programs for those who do not currently have one. Finally, Garfunkel Wild has extensive experience in preparing, submitting and negotiating settlements when a disclosure is necessary.
The full DOJ release can be accessed here: https://www.justice.gov/usao-edny/pr/damian-williams-and-breon-peace-announce-new-voluntary-self-disclosure-policy-united
The USAO Voluntary Self Disclosure Policy may be accessed here: https://www.justice.gov/usao-edny/press-release/file/1569406/download
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Should you have any questions regarding the above, please contact the Garfunkel Wild attorney with whom you regularly work, or contact us at info@garfunkelwild.com.
A company that wants to make a self-disclosure that will qualify it for favorable treatment under the new policy must meet the following requirements of a voluntary self-disclosure:
(1) Voluntary - The company must voluntarily report the misconduct. Misconduct that was already required to be reported due to a pre-existing obligation, such as a contract provision or a regulation, will not be considered voluntary.
(2) Timing - The report must be timely, meaning, the self-disclosure needs to be done prior to the misconduct becoming known to the public or known to the government, and it must be made promptly after the company becomes aware of the misconduct. The report must also be made prior to any awareness of a circumstance that is likely to result in public disclosure or imminent government action.
(3) Substance and Action - The self-disclosure must include all the relevant facts about the misconduct that the company is aware of at the time of the disclosure. The company must also act to preserve, collect and produce any documents relevant to the reported misconduct, and must provide any factual updates to the USAO.
If aggravating factors are present, a company may not be eligible for the voluntary self-disclosure, but the USAO will weigh all relevant facts and circumstances and may still allow the company some of the benefits of disclosure.
Aggravating factors include, but are not limited to, misconduct that; (1) poses a grave threat to national security, public health, or the environment; (2) is deeply pervasive throughout the company; or (3) involves current executive management of the company.
The Benefits of Voluntary Self-Disclosure
Companies who choose to participate in the voluntary self-disclosure program and meet all requirements will receive resolutions under more favorable terms than if the USAO had learned of the misconduct through other means.
Such resolutions may include the USAO declining to seek criminal penalties. Even if a criminal penalty is sought, the USAO will not impose a criminal financial penalty greater than 50% below the low end of the required fine range.
If an aggravating factor is present, it will not automatically mean that a guilty plea will be required. However, if the USAO determines that a guilty plea is required due to one or more aggravating factors, a company that has fully cooperated and timely addressed the misconduct, may still receive the benefit of a criminal penalty reduction. Additionally, if a company has already implemented and tested an effective compliance program and can show proof that it has done so, the USAO will not require the appointment of an independent compliance monitor.
In light of the USAO’s new voluntary self-disclosure policy, internal compliance policies should be reviewed to ensure companies have a process for its employees and agents to identify and report misconduct to ensure that the entity has the opportunity to make a timely voluntary self-disclosure, if the need arises.
Garfunkel Wild is available to review your current compliance program and to assist in making any revisions that may be necessary. We are also available to help create and implement compliance programs for those who do not currently have one. Finally, Garfunkel Wild has extensive experience in preparing, submitting and negotiating settlements when a disclosure is necessary.
The full DOJ release can be accessed here: https://www.justice.gov/usao-edny/pr/damian-williams-and-breon-peace-announce-new-voluntary-self-disclosure-policy-united
The USAO Voluntary Self Disclosure Policy may be accessed here: https://www.justice.gov/usao-edny/press-release/file/1569406/download
* * * * *
Should you have any questions regarding the above, please contact the Garfunkel Wild attorney with whom you regularly work, or contact us at info@garfunkelwild.com.