New Book Predicts Increasing Prosecutions of Individuals Part 2

A review of Michael Volkov's “A Return to Common Sense”

New Book Predicts Increasing Prosecutions of Individuals Part 2

When trying to make a point, Michael Volkov’s new book A Return to Common Sense resorts to statistics rather than to unsubstantiated opinions. When the author discusses the trend of Deferred- and Non-Prosecution Agreements in criminal cases of corporations, he has plenty of examples to back up his views; roughly half of all criminal cases are resolved with a DPA or an NPA each year.

Likewise, the author has a wealth of serious violations by top corporations to list when it comes to adding a name to those DPAs and NPAs. From government bribery to mortgage fraud and tax evasion, and virtually every corporate crime under the sun, it would seem that DPAs and NPAs can solve it all, or can’t they?

In an interesting chapter entitled The Courts Begin to Respond, Volkov refers to the emblematic case of DC Judge Richard Leon, who rejected a DPA in a case against Fokker Services involving the  illegal shipment of  aircraft parts to Burma, Sudan, and Iran. In his ruling, Judge Leon cited the fact that the (rather profitable) illegal transactions had been carried out with the blessing of Fokker Services’ senior management.

The fact that the individuals involved in the misconduct were still employed with Fokker Services also played a role in the court’s decision. For Volkov, Judge Leon’s ruling has set an important precedent, fostering increasingly skeptical views of the Justice Department’s use of DPAs.

Michael Volkov’s Predictions for the Future

Based on his experience as an Assistant U.S. Attorney in Washington, D.C.,Volkov believes that the Yates Memo will continue to have an impact on the work of prosecutors all over the country. The author appears certain that prosecutors will begin to devote more time and resources to building cases against individuals.

He believes that the idea of “success” will change; a large settlement will not be considered a success anymore; instead, success will be defined as “a corporate settlement with appropriate individual prosecutions of culpable individuals.”

Volkov foresees that prosecutors will face many challenges as they try to juggle building a strong case against companies and trying to indict individuals. For Volkov, the Yates Memorandum is much more than a political move aimed at attracting media favor. He presents strong arguments as to the potential  increase of the prosecution of individuals in cases of health care and financial fraud, environmental violations, false claims, antitrust legislation violations, food safety, and the like.

For Volkov, the impact of these shifting trends over deterrence and overall compliance may be huge, and the DOJ will have to be held accountable if it fails to transform the Yates Memo into a valuable tool to increase the number of individuals prosecuted.

According to the author, if the General Motors case was being investigated today, after the Yates Memo, GM executives would most likely be prosecuted. Volkov is persuasive, but he always presents solid data to back up his assertions.

He has represented top corporations and succeeded in bringing them to full compliance with government regulations, even in cases that seemed insurmountable for the most competent professionals. And it is this experience that is evident throughout the book, making it both engaging and invaluable for anyone interested in the current state of this high visibility corner of the U.S. judicial system.

The Most Powerful Deterrent

In a chapter entitled The Antitrust Division Model, Volkov raises some interesting points in drawing a parallel with the Antitrust Division’s Leniency Program, analyzing whether or not the DOJ might begin to offer immunity to self-reporting companies. He believes that the key to such tendencies lies in the problem of what is the most powerful deterrent.

Volkov makes a strong case for prosecuting individuals, arguing that “Common sense tells us that deterrence results from punishing culpable individuals.”He also cites Brent Snyder, head of the Antitrust Division’s criminal cartel prosecutions, who has expressed that a multi-million dollar fine plus some top executive convictions is the most powerful deterrent for corporate misconduct. “The [Antitrust] Division has long touted prison time for individuals as the single-most effective deterrent to the temptation to cheat the system and profit from collusion,” Volkov quotes Snyder as saying.

In another chapter, entitled Voluntary Disclosures and Incentives, Volkov analyzes the impact of the Yates Memorandum and the new prosecution trends on self-reporting from company insiders, offering interesting perspectives on how the Memorandum might impact self-reporting.

The book’s last two chapters, Revising FCPA Prosecution Strategies and The Compliance Defense, delve deeply into the most technical aspects of the problems at hand, yet always maintaining an easily understood, engaging tone. To qualify the author, Volkov is one of the country’s leading experts on compliance issues and an influential blogger at Corporate Compliance Insights.

Seen as a whole, the book seems optimistic, while remaining cautious. According to Volkov, it would seem that the DOJ’s intentions seem to be pointing in the right direction. The question is whether it will achieve the goals established in the Yates Memorandum in practice. Perhaps we will find out in Volkov’s next book, I, for one, cannot wait, as A Return to Common Sense was an enlightening read and time well spent.

You can download the free ebook here.