Congressman Cohen Introduces Reforms to Deferred Prosecutions

The bill, entitled "The Accountability In Deferred Prosecution Act of 2009," would regulate the process employed by the Justice Department that now allows U.S. Attorneys "unyielding and absolute" power in determining when to use deferred prosecutions, the terms and conditions of the agreements and the selection of outside monitors for lucrative contracts.

In addition to Congressman Cohen, who serves as Chairman of the House Judiciary Subcommittee on Commercial and Administrative Law, the legislation is cosponsored by U. S. Rep. Linda Sanchez of California, the former chair of the subcommittee.

"The prosecution of corporate crime should not be accomplished in backroom deals, allowing those who have broken the law to avoid public disclosure," said Congressman Cohen. "Such special treatment, not available to all citizens, is ripe for abuse. Our judicial system is founded on the idea that justice is blind, showing favoritism neither for position or power. Although we have often fallen short, we must always strive to achieve that lofty goal. While deferred prosecution may be an effective tool for prosecutors if it is used judiciously, we must be diligent in ensuring that its use is appropriate and fair and that there is transparency in the process."

The use of deferred corporate prosecutions has proliferated in recent years, from an estimated two a year before 2003 to as many as 35 in 2007. Exact figures aren't readily available because there is no requirement for public disclosure.

“Deferring a prosecution should never be an excuse for a federal prosecutor to defer justice,” stated Congressman Pascrell. “As federal prosecutors have dramatically increased the use deferred corporate prosecutions in recent years, it is necessary that Congress have the oversight authority to ensure all legal arrangements are being made above the board. This legislation takes a comprehensive and balanced approach that will ensure deferred prosecution agreements are entered into with the oversight, accountability and public disclosure that are the hallmarks of our justice system. It is my hope to end the unmitigated power that federal prosecutors hold to serve as the judge and jury in deferred prosecution cases.”

The reforms would set guidelines and fee schedules consistent with responsible legal practices and procedures.

"Deferred prosecutions can be useful tools for law enforcement but they should not be misused for political or financial favoritism," Congressman Pallone said. "In the battle against white-collar crime we need to set standards of legal responsibility and accountability that eliminate no-bid contracts and replace the secretive nature of past agreements with more transparency. One of the more important reforms would be transferring the authority to select corporate monitors from prosecutors to judges."

With no guidelines in place, the manner in which the agreements have been executed and the provisions of the agreements, including the selection process for monitors and their compensation rates, have varied in different jurisdictions under different prosecutors. The absence of transparency prevents a full accounting of the practice, the bill sponsors said.

A report last year by Lawrence Finder, a former U.S. Attorney, and Ryan McConnell an Assistant U.S. Attorney, found the increase in the use of corporate pre-trial agreements in 2007 actually corresponded with a decrease in public disclosure of the decision-making process and the terms of the agreements. The New York Times reported that the Justice Department had appointed at least 30 former prosecutors and other government officials as well-paid monitors in these agreements.

The national legislation was spurred in part by the disclosure of lucrative contracts awarded by U. S. Attorney Christopher Christie in New Jersey, including one to his former boss, former Attorney General John Ashcroft.

Mr. Ashcroft and U.S. Attorney David Nahmias appeared before the Judiciary Committee last March to defend the current process, but failed to fully satisfy a number of critical flaws highlighted by the Judiciary Committee. The committee asked the Justice Department for details about 85 deferred and non-prosecution agreements and 41 monitors but received incomplete information.

The legislation includes the following reforms:

• Have The Attorney General Issue Guidelines For When U.S. Attorneys Should Use Deferred Prosecutions - Specifically, it requires the Attorney General to provide public written guidelines for deferred prosecution agreements and non-prosecution agreements in order to promote uniformity and to assist prosecutors as they negotiate and implement the consent agreements. They would take into consideration the impact on employees and shareholders.
• Take the Selection of Federal Monitors Out of the Hands of U.S. Attorneys - Monitors would be selected by district court judges from a pool of pre-qualified firms with the qualifications in the respective field. They would be paid according to a fair, pre-determined fee schedule.
• Require Full Disclosure of Agreements, Including Compensation - Requires the Attorney General to place the text of these agreements on the public website of the Department of Justice, including terms and conditions of the contract and other understandings between the monitor and the company.
• Establish Judicial Oversight & Require Status Reports - Requires government prosecutors to file each and every deferred prosecution agreement with a district court for approval. Quarterly status reports would be required for submission to the court and for public disclosure.