A federal judge, disgusted by cushy deals that allow lawbreaking corporate bosses to avoid jail time, used a ruling in a little-known corruption case to tear into Department of Justice prosecutors this week.
In an 84-page opinion Wednesday approving a deferred prosecution agreement for ex-Army contractors indicted in a bribery and kickback scheme, U.S. District Judge Emmet Sullivan, of the District of Columbia, slammed federal prosecutors for striking a similar deal with General Motors last month.
Faulty ignition switches in GM vehicles killed at least 169 people. The company, accused of concealing the defect from regulators and lying about it to customers, agreed to pay a $900 million fine as part of a deferred prosecution settlement. No individual GM executive or employee has been prosecuted.
In his opinion in the case of the former Army contractors, Sullivan called the Justice Department's deal with GM "a shocking example of potentially culpable individuals not being criminally charged."
“Despite the fact that the reprehensible conduct of [GM's] employees resulted in the deaths of many people, the agreement merely ‘imposes on GM an independent monitor to review and assess policies, practices, and procedures relating to GM’s safety-related public statements, sharing of engineering data, and recall processes' plus the payment of a $900 million fine," Sullivan wrote.
Charges against GM will be dropped in as few as three years. The deal was criticized as a slap on the wrist -- the fine amounted to less than one-third of the automaker's 2014 profit. As USA Today noted in an editorial last month:
"Individuals are deterred from wrongdoing by the prospect of going to jail, much more so than by the prospect of seeing the corporate treasurer pay money to the government."
Days before the settlement with GM, the Justice Department released an internal memo pledging to prosecute individual corporate employees for white-collar crime, rather than just the institutions that employ them. That memo came after years of harsh criticism that the department had failed to successfully jail even a single top finance executive in the 2008 financial crisis.
Deferred prosecution agreements are intended to give defendants a chance to clean up their act and rehabilitate. If they comply (and pay fines), the charges are dropped.
Increasingly, Sullivan wrote, such offers are extended to corporations accused of criminal misconduct.
From 2000 to 2005, the government made "just over four" deferred prosecution agreements a year, Sullivan wrote. That number "increased dramatically" since, with a record number this year, the judge said.
Sullivan called the Justice Department's reliance on deferred prosecution deals for corporations "disappointing" and said the department should grant the same lenience to individuals.
"People are no less prone to rehabilitation than corporations," Sullivan wrote. "Drug conspiracy defendants are no less deserving of a second-chance than bribery conspiracy defendants. And society is harmed at least as much by the devastating effect that felony convictions have on the lives of its citizens as it is by the effect of criminal convictions on corporations."
H/T: National Law Journal
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