Why Not Them? The Fundamental Misuse of Deferred Prosecution Agreements
Prosecutors and criminal defendants have a plethora of options in order to avoid the costly and sometimes risky proposition of trial. They range from standard pleas all the way to complex diversion programs for defendants. Although pleas make up an overwhelming majority of criminal dispositions, there are several options that enable defendants to avoid the long-term implications of a guilty plea. These options are typically only offered at the discretion of the prosecutor.
One of those options in the federal system is a deferred prosecution agreement (DPA). Deferred prosecutions operate by offering a defendant the chance to correct the behavior and pay any restitution or fees while waiving certain rights as they would with a guilty plea. This option was created by the Speedy Trial Act of 1974 which contained several exclusions to the speedy trial requirement of the Sixth Amendment. Section 3161(h)(2) to allows for “[a]ny period of delay during which prosecution is deferred by the attorney for the Government pursuant to written agreement with the defendant, with the approval of the court, for the purpose of allowing the defendant to demonstrate his good conduct.”
Unfortunately, these DPAs have been used almost exclusively for corporations and corporate officers. When congress passed § 3161, the language referred only to “defendants” and there was no explicit language about corporations; but, the clear intent of the statute was for individual criminal defendants. The legislative history reflects that when the act was passed, the intent was to provide a rehabilitative option for the criminally accused individuals—not for corporations.
Although there are many valves of relief for criminal defendants that fall short of going to trial, the many options that include guilty pleas are far less palatable than deferred prosecution. But for some unknown policy reason, the Department of Justice has offered these sweetheart deals to corporations instead of traditional non-white-collar defendants. These deals allow corporations to avoid the stigma and negative attention that a criminal conviction brings. Essentially, corporations who are accused of massive financial crimes and other forms of fraud are given a slap on the wrist and an opportunity to correct the behavior. Although many DPAs come with monetary sanctions and substantial amounts of oversight and reform, the penalties and collateral consequences are far fewer than they would be for a guilty plea.
The use of DPAs has continued even after September 9, 2015 when Sally Yates, Deputy Attorney General, issued the notorious “Yates Memo,” which stressed individual accountability for corporate crime. “Americans should never believe, even incorrectly, that one’s criminal activity will go unpunished simply because it was committed on behalf of a corporation.” Yet, under a deferred prosecution, a corporation and its officers are allowed to continue their enterprise with a promise to clean up their act. Even the Securities and Exchange Commission began using DPAs in 2011, with the goal of increasing cooperation with investigators.
After the 2008 mortgage crisis, the public became increasingly aware of how corporate malfeasance could have a direct impact on the lives of every-day people. But, startlingly few corporate and individual prosecutions arose from the crisis. While DPAs existed before the financial crisis, their use became part of the DOJ’s guidelines for corporate investigation and prosecution after 2008.
While the failure to prosecute financial and corporate crime did gain some national attention, the use of DPAs has garnered little attention outside of the legal profession. There has been some increased skepticism among judges and other commentators that is leading to a debate on the intended use of DPAs. Clearly, the initial legislative intent to offer rehabilitation to individuals has been overlooked. By all appearances the DOJ has gone to the other extreme, making these agreements at the sole benefit of corporations. Judge Emmet G. Sullivan denounced a DPA with Barclays and stated that the average American citizen caught robbing a bank would not get a DPA, but would instead be prosecuted and jailed. Judge Sullivan also wrote an 84-page opinion to describe the role of the Judiciary in DPAs and denounce their use for corporations and not individuals. “The court is disappointed that deferred-prosecution agreements or other similar tools are not being used to provide the same opportunity to individual defendants to demonstrate their rehabilitation without triggering the devastating collateral consequences of a criminal conviction.”
Judge Sullivan’s criticism is echoed by other scholars and judges with one judge even rejecting to accept the terms of a DPA. While there has been growing sentiment toward using DPAs for individuals, the DOJ seems entrenched in its policy of using DPAs for corporations only. The new administration has not signaled a shift away from the Yates guidance, but something more needs to be done to affect the policy that offers corporations sweetheart deals while individuals are stuck with criminal records.