District attorney unveils new voluntary self-disclosure policy for companies
The U.S. Attorney’s Office for the District of Puerto Rico has implemented a pair of new policies to enable companies to voluntarily disclose corporate misconduct that could come with benefits in cases of federal investigations.
The new “United States Attorney’s Offices’ Voluntary Self-Disclosure Policy” (the “VSD Policy,” for short) and the “United States Attorney’s Offices’ Monitor Selection for Corporate Criminal Enforcement Policy” are effective immediately, said U.S. Attorney W. Stephen Muldrow, head of the U.S. Attorney’s Office for the District of Puerto Rico.
The VSD Policy details the circumstances under which a company will be considered to have made a voluntary self-disclosure (VSD) of misconduct to a U.S. Attorney’s Office (USAO) and provides transparency and predictability to companies and the defense bar concerning the concrete benefits and potential outcomes in cases where companies voluntarily self-disclose misconduct, fully cooperate and timely and appropriately remediate.
He said the goal of the VSD policy is to standardize how VSDs are defined and credited by USAOs nationwide, and to incentivize companies to maintain effective compliance programs capable of identifying misconduct, to disclose and remediate misconduct and to cooperate fully with the government in corporate criminal investigations expeditiously and voluntarily.
The VSD policy was developed pursuant to the Deputy Attorney General’s Sept. 15, 2022, memorandum, which directed each Department of Justice office that prosecutes corporate crime to review its policies on corporate voluntary self-disclosure and, if there was no formal written policy to incentivize self-disclosure, draft and publicly share such a policy.
Under the new VSD Policy, a company is considered to have made a VSD if it becomes aware of misconduct by employees or agents before that misconduct is publicly reported or otherwise known to the DOJ, and discloses all relevant facts known to the company about the misconduct to a USAO in a timely fashion prior to an imminent threat of disclosure or government investigation.
A company that voluntarily self-discloses as defined in the policy and fully meets the other requirements of the policy, by — in the absence of any aggravating factor — fully cooperating and timely and appropriately remediating the criminal conduct will receive “significant benefits, including that the USAO will not seek a guilty plea; may choose not to impose any criminal penalty, and in any event will not impose a criminal penalty that is greater than 50% below the low end of the United States Sentencing Guidelines fine range; and will not seek the imposition of an independent compliance monitor if the company demonstrates that it has implemented and tested an effective compliance program,” the agency confirmed.
The VSD Policy identifies three aggravating factors that may warrant a USAO seeking a guilty plea even if the other requirements of the VSD policy are met: (1) if the misconduct poses a grave threat to national security, public health or the environment; (2) if the misconduct is deeply pervasive throughout the company; or (3) if the misconduct involved current executive management of the company.
“The presence of an aggravating factor does not necessarily mean that a guilty plea will be required; instead, the USAO will assess the relevant facts and circumstances to determine the appropriate resolution,” the agency explained.
“If a guilty plea is ultimately required, the company will still receive the other benefits under the VSD policy, including that the USAO will recommend a criminal penalty of at least a 50% and up to a 75% reduction off the low end of the USSG fine range, and that the USAO will not require the appointment of a monitor if the company has implemented and tested an effective compliance program,” it stated.
