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Justice Department targets corporate fraud

| Wednesday, Sept. 9, 2015, 10:03 p.m.

WASHINGTON — The Justice Department issued new guidance to its prosecutors on Wednesday, aimed at encouraging more white-collar criminal cases against corporate executives.

The new policies arise amid persistent criticism that the Justice Department, even while negotiating multi-billion-dollar settlements with large banks, has not been aggressive in prosecuting individuals for financial misconduct — including after the mortgage crisis that devastated the economy.

The policy changes were outlined in a memo issued to Justice Department attorneys and to the FBI, and Deputy Attorney General Sally Yates was expected to discuss the issue in a speech Thursday at New York University's law school.

Though it's not clear whether the policies will result in additional prosecutions, they reflect concerns that the department could be doing more to hold individual, high-level executives accountable.

“Regardless of how challenging it may be to make a case against individuals in a corporate fraud case, it's our responsibility at the Department of Justice to overcome these challenges and do everything we can to develop the evidence and bring these cases,” Yates will say in her speech, according to excerpts provided by the Justice Department. “The public expects and demands this accountability. Americans should never believe, even incorrectly, that one's criminal activity will go unpunished simply because it was committed on behalf of a corporation.”

The new guidance — issued in the first year of Attorney General Loretta Lynch's tenure — mandates that corporations turn over evidence against individuals if they want credit for cooperating with the government. In addition, the department is directing its civil and criminal lawyers to work together in all corporate matters, and says corporate investigations must begin with a focus on individuals.

Attorney General Eric Holder ended his tenure with a series of civil and criminal cases against banks. But the department's signature criminal case — an $8.9 billion penalty against French bank BNP Paribas for sanctions violations — did not result in criminal charges against individual executives.

The memo issued to prosecutors concedes the challenges of prosecuting individuals for white-collar crimes, including in cases involving millions of pages of documents and where high-level executives are insulated from day-to-day activities. But, Yates said, individual accountability is essential in promoting “the public's confidence in our justice system.”

“Corporations can only commit crimes through flesh-and-blood people,” Yates told The New York Times. “It's only fair that the people who are responsible for committing those crimes be held accountable. The public needs to have confidence that there is one system of justice, and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom.”

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