January 22, 2022

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Acting Assistant Attorney General Brian C. Rabbitt Delivers Remarks at Shinshu University 2nd White Collar Crime Workshop

21 min read
<div>Good morning. It is my pleasure to be with you today, even if only through a video screen. Thank you very much to Shinshu University and my hosts for your kind invitation to join the list of distinguished speakers, panelists, and participants in today’s important event. It is my great privilege to be here today representing the women and men of the Criminal Division of the U.S. Department of Justice, and I look forward to speaking with you about some of our important work over the past year enforcing the federal criminal laws.</div>

Remarks as Prepared for Delivery

Good morning.  It is my pleasure to be with you today, even if only through a video screen.  Thank you very much to Shinshu University and my hosts for your kind invitation to join the list of distinguished speakers, panelists, and participants in today’s important event. 

It is my great privilege to be here today representing the women and men of the Criminal Division of the U.S. Department of Justice, and I look forward to speaking with you about some of our important work over the past year enforcing the federal criminal laws.

As many of you know, the Justice Department’s Criminal Division has a broad mandate that covers a wide range of criminal activity—from narcotics and dangerous drugs, to human trafficking, to organized crime and transnational criminal organizations.  But an equally large part of what we do is what you’re here to talk about today: white-collar criminal enforcement. 

Today, white-collar crime comes in a variety of forms.  Our experience has shown us that corporate criminal activity is increasingly sophisticated and also increasingly global.  Because of this, the Criminal Division has in recent years sought to leverage all the considerable resources and law enforcement tools at our disposal to tackle white-collar crime.  Equally important, we have developed and relied on strong relationships with law enforcement partners around the globe to investigate and prosecute corporate criminal misconduct no matter where it occurs. 

I particularly appreciate the opportunity to speak with you today, near the end of the calendar year, as it gives me an opportunity to reflect briefly on the Criminal Division’s white-collar enforcement efforts and accomplishments over the past year. 

As you likely are aware, our white-collar enforcement work has kept up with, and by many measurements exceeded, our pace in recent years.  For example, as of the middle of this month, the Criminal Division’s Fraud Section had publicly charged nearly 300 individuals, convicted over 180 criminal defendants, and entered into 12 corporate criminal resolutions—which, combined, have involved over $8.75 billion in global fines, penalties, restitution, and disgorgement.  In addition to our Fraud Section, the Division’s Money Laundering and Asset Recovery Section—which is an equally important part of our white-collar enforcement work—has had an incredibly productive year as well, concluding a number of significant resolutions with major U.S. and international financial institutions.  

These matters have covered the waterfront in terms of subject matter, involving everything from international bribery cases brought under the Foreign Corrupt Practices Act, to investment and consumer fraud cases, to manipulation of public U.S. financial markets, to money laundering.  Taken together, they show that the Criminal Division has been pressing forward on all fronts over the past year when it comes to white-collar criminal enforcement.   

I will also note something that, I am sure, all of you know too well: our work this year has come in the midst of an ongoing global pandemic that has significantly disrupted the legal industry along with the rest of the world.  While COVID-19 has undoubtedly impacted our work, the dedicated women and men of the Criminal Division have not let it stop them from pursuing and fulfilling our mission.  I have said many times over the past year that the Criminal Division remains “open for business.”  That remains true.  As our results show, 2020 has been an incredibly busy year for us—even with COVID-19—and we’re not done yet.

With that background, let me take a moment to highlight a few key aspects of our white-collar enforcement work over the past year. 

First are the significant, high-impact corporate prosecutions we’ve brought over the past year.  Among them are some of the most significant corporate criminal matters ever prosecuted by the Justice Department.  Indeed, 2020 was bookended by the two largest FCPA-related resolutions in history—the Airbus case, which we resolved in January, and the Goldman Sachs 1MDB case, which we announced just a few weeks ago.  Both of these matters were landmark resolutions for the Criminal Division, and they—along with our other FCPA matters—clearly demonstrate that combatting international corruption remains a priority for the Criminal Division.  Both cases also involved significant cooperation and coordination with key international partners, and they reflect our commitment to working with other law enforcement authorities around the world to tackle large-scale white-collar criminal misconduct that crosses borders. 

In addition to FCPA matters, 2020 also included the Criminal Division’s resolution with the largest bank in the United States, JPMorgan Chase, based on its traders’ widespread manipulation of U.S. futures markets.  The JP Morgan resolution was just the latest in a series of cases we resolved with financial institutions in 2020 related to “spoofing” in the U.S. financial markets.  Our work in this area remains ongoing, and these matters demonstrate that the Criminal Division remains committed to policing the U.S. financial markets and keeping them free from fraudulent activity.

A second highlight of our work over the past year has been our continued focus on ensuring meaningful individual accountability for white-collar criminal wrongdoing.  Earlier, I mentioned the hundreds of individuals whom we have publicly charged this year.  It is important to note that many of these individuals were charged in connection with some of our most-significant corporate cases.  For example, in the Goldman Sachs 1MDB case that I mentioned a short while ago, a senior banker has pleaded guilty, another is awaiting trial, and a third individual has been indicted and remains a fugitive.  We have similarly charged a significant number of individuals in connection with our spoofing matters.

Why do we focus on individual accountability in addition to pursuing corporations?  Because we understand that corporations necessarily act through their officers and employees, and that to have a truly meaningful deterrent effect, our work must focus on not only entities, but also individuals where appropriate.  As our individual prosecutions over the last year show, the Criminal Division will continue to hold culpable individuals accountable for their roles corporate criminal wrongdoing in appropriate circumstances, even where doing so requires us to pursue an organization’s senior personnel. 

In addition to our traditional white-collar case work, 2020 has also seen the Criminal Division adapt and respond to new and evolving challenges with innovative tools and solutions.

For example, the Division has increasingly used data analytics to identify suspicious activity by individuals and entities in a number of areas, including the healthcare and financial services industries.  The spoofing matters that I mentioned just a few minutes ago, for example, were an outgrowth of the Division’s pioneering use of data analytics to detect and investigate sophisticated criminal activity in the financial markets.  While we still rely on traditional investigative tools to develop and prove our cases, data analytics can help us spot and respond to suspicious trends that might otherwise go unnoticed.  In other words, it can help us find the proverbial “needle in the haystack.”  Data analysis is a powerful tool that we first developed through our work in the healthcare fraud space before adapting it for other areas, such as the financial markets, and I expect that it will play an increasingly important role in our work in the years ahead.

In 2020, the Criminal Division was also at the forefront of the Department’s efforts to respond to the COVID-19 crisis.  When Congress enacted the Paycheck Protection Program, or PPP, in the spring, we quickly realized the potential for fraud and developed a program to respond.  We worked proactively with other U.S. government and private sector partners to identify and investigate suspicious conduct—again drawing on our ability to spot trends in large amounts of data.  In less than a year, as a result of this initiative, the Criminal Division has publicly charged well over 80 individuals in states across the country with attempting to steal over $260 million from the PPP—money that Congress intended as a lifeline to struggling American businesses, not as a handout to fraudsters.  We have many active PPP investigations in the pipeline, and I expect that we will bring many more of these cases in future months.

In addition to our work prosecuting corporate criminal misconduct, the Department’s Criminal Division has also focused in recent years on developing and implementing a number of policies intended to ensure transparency and predictability on our approach to white-collar criminal enforcement.  This past year—in which we revised and updated two key Criminal Division policies—was no exception.

First, this summer, we announced key updates to the Division’s Evaluation of Corporate Compliance Programs guidance. Corporate compliance programs have become increasingly important in recent years, and they can have a significant impact on how we evaluate and resolve cases involving corporate defendants.  This summer’s updates provide the Criminal Division’s latest thinking on this important topic.  When considering whether and how to resolve corporate criminal cases, we will consider the state of a corporate defendant’s compliance program at the time of the offense and at the time of the proposed resolution.  The updates that we released earlier this year built on our prior guidance and emphasized, among other things, that in the Division’s view, corporate compliance programs need to be both well designed and well implemented.   As we explain, it is not enough for a company to simply have a good compliance program on paper.  The program must also be adequately resourced and function effectively in practice. 

This year, we also published an updated and revised edition of our Resource Guide to the Foreign Corrupt Practices Act.  This joint DOJ-SEC publication has become a key resource for DOJ attorneys and FCPA practitioners worldwide, and it provides a comprehensive overview of the Criminal Division’s approach to FCPA enforcement.  This year’s revisions addressed a number of changes in the FCPA space that have occurred since we first published the Guide in 2012.

Since their original issuance, these policies have become critical tools for the Division, corporate actors, and counsel.  In updating them this year, we sought to stay current with developments in the law and provide guidance where appropriate, all with the overarching aim of ensuring consistency and transparency—and, ultimately, fairness—in our enforcement efforts.        

In conclusion, I hope you’ve enjoyed hearing about some of the Criminal Division’s white-collar enforcement work over the past year—a year that has been unique—and uniquely challenging—for many reasons.

I would like to thank my hosts very much for the opportunity to share with you the important work that the Criminal Division has done over the last year.  My remarks today provide only a snapshot of the many great things that the dedicated women and men of the Criminal Division have accomplished. 

Although the end of the year is almost upon us, and increased social distancing restrictions will inevitably mean more challenges for our enforcement efforts, I can assure you that we here in the Criminal Division are not slowing down.  In the coming weeks, months, and years, you will continue to see us working tirelessly to ensure accountability for white-collar criminal wrongdoing, and—critically—doing so in a way that is fair, transparent, and consistent. 

Thank you again for the opportunity to speak with you this morning, and I wish you well with the remainder of your conference. 

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  • Defense Real Property: DOD-Wide Strategy Needed to Address Control Issues and Improve Reliability of Records
    In U.S GAO News
    As required by the National Defense Authorization Act for Fiscal Year 2018, the Department of Defense (DOD) for fiscal year 2019 underwent a financial statement audit. In the military services' full financial statement audit reports for fiscal year 2019, the independent public accountants reported serious control issues related to events that occur during the life cycle of real property, consisting of adding, disposing, reconciling, valuing, and performing physical inventory counts. These control issues affect not only the reliability of financial statement reporting but also the quality of property record data that DOD officials need to make decisions for budget and mission planning, space management, and buying versus leasing options. Further, with DOD having almost half of the government's buildings, better data could help the federal government identify opportunities to dispose of unneeded buildings and reduce lease costs, thus potentially saving it millions of dollars. DOD has not yet developed a comprehensive, department-wide strategy—an element of leading practices for enterprise-wide real property management—to address the reported real property issues. Instead, each of the military services is independently developing corrective actions to address control issues, without applying common solutions among the services or department-wide. A department-wide strategy for remediating control issues would better position DOD to develop sustainable, routine processes that help ensure accurate real property records and, ultimately, auditable information for financial reporting for the department. Additionally, a DOD-wide strategy could help the military services more effectively and efficiently address reported control issues, particularly for those categorized as DOD-wide issues. The Acting Secretary, noting that the services had not accurately accounted for DOD's buildings and structures, required existence and completeness (E&C) verifications to be performed for all real property for fiscal year 2019. Given the lack of department-wide instructions for how to carry out the requirement, the military services independently developed approaches for performing the E&C verifications. Their approaches differed in both scope (what assets were verified) and methodology (how the assets were verified), including the extent to which instructions were written. Reporting and monitoring of the results by service and department-level management also differed. Without department-wide instructions for performing the fiscal year 2019 E&C verifications, the results were not comparable among the military services. Further, DOD and the military services did not obtain the complete and consistent information needed to create a DOD real property baseline or to help ensure that the department's real property records are reliable. DOD-wide instructions would help DOD obtain complete and comparable E&C verifications results, which would help DOD achieve an auditable real property baseline and, ultimately, its objective of an unmodified (“clean”) audit opinion. DOD manages one of the federal government's largest portfolios of real property. This engagement was initiated in connection with the statutory requirement for GAO to audit the U.S. government's consolidated financial statements. DOD's uncorrected deficiencies, including those affecting real property, prevent DOD from having auditable financial statements, one of the three major impediments preventing GAO from expressing an opinion on the accrual-based consolidated financial statements of the U.S. government. This report (1) identifies the real property control issues that independent public accountants reported that may affect the ability of the military services to establish and maintain accurate and complete real property records, (2) examines the extent to which DOD had a strategy to address the control issues, and (3) assesses the extent to which DOD provided guidance for the required E&C verifications during fiscal year 2019 and how each military service implemented the directive. GAO analyzed fiscal year 2019 audit findings, reviewed key DOD documents, and interviewed DOD and military service officials. GAO is recommending that DOD (1) develop and implement an enterprise-wide strategy to remediate real property control issues and (2) issue DOD-wide instructions for the E&C verifications. DOD concurred with GAO's recommendations. For more information, contact Kristen Kociolek at (202) 512-2989 or kociolekk@gao.gov.
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