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On February 22, 2023, United States Attorneys for the Southern and Eastern District of New York announced a new, nationwide United States Attorneys’ Offices Voluntary Self-Disclosure (“VSD”) Policy. The policy applies to all United States Attorney’s Offices and is effective immediately. The implementation of the policy follows Deputy Attorney General Monaco’s September 15, 2022 memorandum instructing each component of the Department of Justice that prosecutes corporate crime to review, or draft and publicly share its policies on corporate voluntary self-disclosure and Assistant Attorney General Kenneth A. Polite, Jr’s remarks on revisions to the Criminal Division’s Corporate Enforcement Policy. The VSD policy incentivizes companies to voluntarily disclose misconduct and offers significant benefits for timely disclosure.

Voluntary Self-Disclosure Standards

In order to receive any benefits under the VSD policy, a company must (1) voluntarily self-disclose the misconduct; (2) fully cooperate with the government’s investigation; and (3) timely remediate the criminal conduct (e.g., pay all disgorgement, forfeiture, and restitution).

In order for the disclosure to be considered a voluntary self-disclosure under the policy, three factors must be met. First, the disclosure has to be voluntary—the company cannot have a preexisting obligation to disclose the conduct pursuant to law or a prior resolution with DOJ. Second, the disclosure must be timely. The disclosure must be made before the misconduct is public, known by DOJ, or even under “an imminent threat of disclosure.” The company will also be required to demonstrate that the disclosure was made “within a reasonably prompt time” after discovery of the misconduct. Third, the company must disclose all relevant facts concerning the misconduct that are known to the company at the time of disclosure. As part of this requirement, the company will be expected to preserve, collect, and produce relevant documents and information and provide timely updates to the USAO. The decision on whether a disclosure meets the requirements outlined in the VSD policy will be within the sole discretion of the USAO.

Voluntary Self-Disclosure Benefits

The benefits received in return for voluntarily self-disclosing depends on the existence of aggravating factors. The VSD policy includes a non-exhaustive list of aggravating factors that could affect the benefits a company receives. The examples include 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.

In the absence of any aggravating factors, the policy dictates that the USAO will not seek a guilty plea. Additionally, the USAO will not impose a criminal penalty that is greater than 50% below the low-end of the U.S. Sentencing Guidelines fine range and could choose not to impose a criminal penalty at all.

If the presence of one or more aggravating factors warrants a guilty plea from a company who has otherwise complied with the requirements of the VSD policy, the USAO will recommend a sentence that includes a 50-75% reduction off the low-end of the U.S. Sentencing Guidelines fine range. The policy notes that the presence of an aggravating factor does not necessarily mean that a guilty plea will be required, adding that the USAO will assess the relevant circumstances to determine the appropriate resolution.

Under either scenario, the VSD policy seeks to reward companies with a robust compliance program. The policy notes that if the company demonstrates that it has implemented and tested an effective compliance program, the USAO will not require a compliance monitor.

Takeaways

DOJ has long rewarded companies for implementing robust compliance practices, self-reporting misconduct, and cooperating with the government’s investigation. However, prior to this policy, DOJ did not have uniform voluntary self-disclosure rules for all United States Attorney’s Offices. The VSD policy now provides uniform, transparent metrics tied to specific benefits that address the uncertainty that can accompany cooperating with USAO-led investigations. Companies with robust compliance programs, regardless of their history of misconduct, now understand that they have a real opportunity at a better outcome. Companies should continue to closely examine the systems they have in place for detecting and reporting misconduct to ensure they will be able to comply with the VSD policy should such an incident arise.

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Photo of Agustin D. Orozco Agustin D. Orozco

Agustin D. Orozco is a partner in the Los Angeles office and is a member of the firm’s White Collar & Regulatory Enforcement and Government Contracts groups. As a former federal prosecutor, Agustin is a skilled trial lawyer focused on directing complex white…

Agustin D. Orozco is a partner in the Los Angeles office and is a member of the firm’s White Collar & Regulatory Enforcement and Government Contracts groups. As a former federal prosecutor, Agustin is a skilled trial lawyer focused on directing complex white collar cases and investigations, handling contentious and sophisticated pretrial litigation, and successfully proving highly difficult cases at trial. Agustin’s background as a federal prosecutor and government contracts attorney leaves him uniquely situated to help clients where government contracts and white collar intersect.

Agustin represents clients in criminal and civil government investigations and enforcement actions. He also represents and counsels clients on matters involving federal, state, and local government contracts. Agustin has litigated civil False Claims Act (FCA) matters and other government contracts issues, such as disputes, claims, and terminations. He is also experienced in matters involving the Foreign Corrupt Practices Act (FCPA), including conducting investigations abroad and counseling clients on compliance issues.

Photo of Rebecca Ricigliano Rebecca Ricigliano

Rebecca Monck Ricigliano, an accomplished litigator and former federal prosecutor, is the co-chair of Crowell & Moring’s White Collar & Regulatory Enforcement Group and a member of the firm’s Financial Services and Investigations practices. Rebecca is an experienced trial and investigations lawyer…

Rebecca Monck Ricigliano, an accomplished litigator and former federal prosecutor, is the co-chair of Crowell & Moring’s White Collar & Regulatory Enforcement Group and a member of the firm’s Financial Services and Investigations practices. Rebecca is an experienced trial and investigations lawyer, serving nearly a decade as an Assistant U.S. Attorney in the U.S. Attorney’s Office for the Southern District of New York (SDNY) and then as the First Assistant Attorney General of New Jersey. Rebecca is regarded as a leading white collar attorney by Chambers USA, and is called on by both individuals and companies to handle sensitive criminal allegations and regulatory investigations, including those with international elements. Chambers describes her as “a tremendous lawyer who has extensive relationships with the government” and “an excellent lawyer.”

Photo of Daniel Zelenko Daniel Zelenko

Daniel L. Zelenko is a partner in the New York office of Crowell & Moring and serves as co-chair of the firm’s nationally recognized White Collar & Regulatory Enforcement Group. Dan is a former federal prosecutor and senior enforcement lawyer at the U.S.

Daniel L. Zelenko is a partner in the New York office of Crowell & Moring and serves as co-chair of the firm’s nationally recognized White Collar & Regulatory Enforcement Group. Dan is a former federal prosecutor and senior enforcement lawyer at the U.S. Securities and Exchange Commission (SEC). He has been recognized as a leader in the white collar and regulatory enforcement bar by Chambers USA since 2016 and is held in high regard for his U.S. Department of Justice (DOJ) and SEC experience and his antitrust and securities enforcement experience. Chambers USA described Dan as a “tremendous talent” who “tries cases really impressively before the government,” noting that he “is a very effective advocate who sees the whole picture,” is “thoroughly knowledgeable about the legal and regulatory landscape,” and that “he knows his way around the street, and knows how to work with people in difficult situations.” Dan has been quoted as a leading authority on white collar defense and government investigations in numerous media outlets including The Wall Street Journal, The New York Times, Bloomberg and Reuters and has appeared on CNN.

Photo of Glen McGorty Glen McGorty

Glen G. McGorty is a member of the White Collar & Regulatory Enforcement Group and the Financial Services Practice, managing partner of Crowell & Moring’s New York office. He is also a member of the firm’s Management Board and Executive Committee. Glen is…

Glen G. McGorty is a member of the White Collar & Regulatory Enforcement Group and the Financial Services Practice, managing partner of Crowell & Moring’s New York office. He is also a member of the firm’s Management Board and Executive Committee. Glen is an experienced trial lawyer who served almost 15 years as a federal prosecutor in the U.S. Attorney’s Office for the Southern District of New York (SDNY) and the U.S. Department of Justice (DOJ) in Washington, D.C.

Glen represents corporate entities and individuals in federal and state criminal and regulatory matters, and in investigations conducted by grand juries, congressional committees, independent and special counsel, and domestic and international law enforcement and regulatory agencies including the DOJ, Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Financial Industry Regulatory Authority (FINRA), the New York State Department of Financial Services (DFS), and various State Attorneys General. Glen has also led internal investigations for many corporate clients including multiple international financial institutions, major defense contractors, a global technology company, a global communications company, an international energy company, and a Fortune 100 multinational engineering conglomerate. Glen has also served as a Court-appointed federal monitor, serving since 2014 as the Independent Monitor of the New York City District Council of Carpenters and related Taft-Hartley benefit funds. In 2021, he served as part of the monitor team, overseeing the United Autoworkers’ union-wide referendum election.

Glen has been recognized as a leader in the white collar and regulatory enforcement bar by Chambers USA since 2016. Glen is also Chambers ranked in white collar & government investigations where comments about him note, “Glen is a wonderful lawyer and a natural leader who inspires confidence.” As Chambers describes: “not only does [Glen] deliver at a high level, but he also has an excellent bedside manner with clients,” he is “in his own category in terms of knowing how to deal with clients, opposing counsel and judges,” and he is “very polished, very good on his feet and well respected.” Glen has also been named a top-rated white collar criminal attorney by Super Lawyers magazine for the Metro New York area since 2017. In 2019, Glen was recognized as a Distinguished Leader by the New York Law Journal, and City & State New York named Glen to its 2020 and 2021 Law Power 100 List of New York’s “100 most politically powerful lawyers.”

Photo of Kelly T. Currie Kelly T. Currie

Kelly Currie is a partner in Crowell & Moring’s nationally-recognized White Collar & Regulatory Enforcement Group and a member of the firm’s Investigations Practice.

He is a former federal prosecutor and an experienced trial lawyer who defends companies and individuals in government investigations…

Kelly Currie is a partner in Crowell & Moring’s nationally-recognized White Collar & Regulatory Enforcement Group and a member of the firm’s Investigations Practice.

He is a former federal prosecutor and an experienced trial lawyer who defends companies and individuals in government investigations, white collar criminal defense matters, regulatory enforcement actions, and corporate internal investigations. Kelly has been recognized as a leader in the white collar and government investigations bar by Chambers USA. According to Chambers, he “brings a wealth of expertise handling all manner of domestic and cross-border criminal proceedings, as well as government and internal investigations.” “He is a terrific, talented attorney.” Kelly was also named as a top-rated white collar criminal defense attorney by The Best Lawyers in America and Super Lawyers magazine.