Follow Patrick Linkedin Twitter Facebook
Email Patrick Email
Legal Issues
Sep 1, 2015

Deferred Prosecution Agreements, Part 2: Potential Collateral Consequences

Sponsored Content provided by Patrick Mincey - Criminal Defense Attorney, Cranfill Sumner & Hartzog LLP

In my last Insights, I introduced the concept of the deferred prosecution agreement (DPA) which has become a standard tool of the U.S. Department of Justice in dealing with white collar crime. A DPA is a contract between the DOJ and the target of an investigation – often a corporation or business entity – that resolves a federal criminal investigation short of a formal prosecution or guilty plea. It provides the DOJ with a middle ground between closing an investigation without further prosecutorial pursuit and indicting a corporation, which can have adverse collateral consequences to the corporation’s employees, investors, suppliers and customers. For its part, the corporation avoids full prosecution. To do so, it typically must acknowledge wrongdoing, admit to specific facts that support the government’s theory of wrongdoing, refrain from breaking laws under the threat of resuming the prosecution, pay a monetary penalty and sometimes permit a government-appointed monitor inside the corporation for a set period of time. The DOJ often publicly files a formal charging document setting forth the necessary elements of the alleged crime.
 
The effects of the DPA can include much more than merely large penalties and fines, the potential media coverage, and life with an inside monitor. The DPA can have a formidable role in ongoing or subsequent civil and regulatory proceedings, which require corporate counsel to navigate sensitive, uncharted waters. Here are two collateral consequences companies should take into consideration when evaluating whether to enter into these agreements with the government.
 
Noncontradiction Clauses. Many corporations facing DOJ criminal investigation are also wrapped up in related private civil actions or investigations at the state level. While the standard terms of the DPA permit the corporation to assert a defense in such other proceedings, they typically preclude the company from contesting or contradicting the DPA’s representations or statement of facts. If the DOJ subjectively determines that the corporation has done so, it may demand an immediate and loud retraction by the corporation or unilaterally declare a breach of the DPA. These restrictions might eliminate case strategies while allowing opponents in parallel litigation to explore the DPA’s factual underpinnings to obtain settlement leverage. The restriction also presents the practical dilemma of handling witness testimony that is inconsistent with the DPA and its statement of facts. While most DPA typically provide some safe-harbor language permitting witnesses to testify truthfully, the practical application creates testimonial obstacles in future civil litigation. This is particularly the case as to witnesses testifying as corporate representative under the Federal Rules of Civil Procedure. In that scenario, because the deposition testimony may bind the company, sensitivity to the factual representations in the DPA is crucial.
 
Civil Discovery. Once the DPA becomes publicly known, plaintiffs in parallel litigation undoubtedly will seek information regarding the DPA through civil discovery. While this is an evolving area of litigation, courts often have rejected attempts to obtain deposition testimony of corporate executives regarding plea agreements, consent decrees and settlement agreements, including the negotiations and events leading to them. Nevertheless, nonprivileged written evidence relating to the DPA may be more difficult to protect than testimony. Corporations and their boards must be mindful of how the DPA and accompanying discussions with the DOJ may be made available to opposing parties in other litigation.
 
Patrick Mincey is a trial lawyer in Wilmington, where he founded the Criminal Defense Group at Cranfill Sumner & Hartzog LLP. His criminal practice ranges from representing individuals and corporate clients who are targets, subjects or witnesses in federal and state white collar proceedings to “blue collar” defendants charged with murder, drug conspiracies and assaults. To contact Patrick Mincey, call (910) 777-6017 or email him at p[email protected].

Wbj insights revised 0510 61715110749
Ico insights

INSIGHTS

SPONSORS' CONTENT
Mc2 56882

Innovation & Housing Panel Discussion

Scott Byers - Majestic Kitchen & Bath Creations
Morton300x300

What Small Businesses Can Do Now

Jim Morton - Cape Fear Community College
Headshot2 3182020512

Strategies For Combating Coronavirus In Indoor Air Environments

Chris Jones - Green Dot Heating & Air

Trending News

OPENBIZ: April 2 Business Closures, Services, New Hours In Response To Virus

Johanna Cano - Apr 2, 2020

SBA Lenders Prepare For A Wave Of Relief Program Applications

Jenny Callison - Apr 2, 2020

Entrepreneurs Plan Space For Coworking, Community, More In Downtown Wilmington

Cece Nunn - Apr 3, 2020

Luxury Home Sales High In March But Show Signs Of Fizzling

Cece Nunn - Apr 2, 2020

GE Hitachi To Move Employees Under One Nuclear Service Vendor

Christina Haley O'Neal - Apr 1, 2020

In The Current Issue

Flurry In The Wake Of Fed Moves

As the Federal Reserve took action in mid-March to re­store public confidence in the U.S. economic system, two local financial advisers prov...


Regional Rift

To the federal government 20 years ago, the Wilmington area truly was the tri-county region. But in 2013 that changed....


Survey Seeks Workforce Info

Businesses around a six-county region are being encouraged to participate in an analysis of the workforce and employment challenges in South...

Book On Business

The 2020 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2019 Health Care Heroes
August 26, 2019 Power Breakfast: A Healthy Sale?
2019 WILMA Leadership Accelerator
2019 WilmingtonBiz Expo Keynote Lunch - CEO, nCino, Pierre Naude`