PHILADELPHIA – United States Attorney William M. McSwain was honored to speak today at the Association of Corporate Counsel of Greater Philadelphia’s Summit for General Counsel and Chief Legal Officers.  The event was held at the Loews Philadelphia Hotel.  Richard E. Coe, U.S. Attorney McSwain’s former law partner at Drinker Biddle, introduced U.S. Attorney McSwain.

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Remarks as Prepared for Delivery

          Thank you, Rick, for that kind introduction, and for inviting me to speak today to this distinguished group.

          Opportunities like this serve as an important reflection point for me; they give me a reason to set aside some time, outside of the day-to-day hustle and bustle, to pause and think about the goals and priorities that I have for the U.S. Attorney’s Office and force me to evaluate our progress.

          Obviously, my main priority, and our core function, is to uphold the rule of law.  I firmly believe that building trust between the public and my Office is critical to success in that regard.  That’s one of the reasons why I think it’s important to speak at events like this – to let community partners get a sense of who we are as prosecutors; what my Office stands for; and what our mindset is as we work every day to fulfill our mission.  And by “community partners,” I am referring today to you and the companies and clients that you work for.  You and your colleagues are the business leaders that drive economic growth in the greater Philadelphia area.

            Which brings me to the topic of my remarks: fostering cooperation and communication to promote the rule of law.  I see today’s summit as an opportunity to convey two important messages.

            First, I want to thank you.  The work that you do to promote your company’s compliance with federal law is incredibly important.  In a way, you serve a crucial law enforcement function every day by working to ensure that your companies comply with the law.  You are on the front lines of promoting the rule of law in your organizations.  And in performing that function, I want you to know that you have my support and my gratitude.

            Now, admittedly, my second message will take a little longer to communicate, even though it is related to the first.  In a nutshell, I want you to know that I value communication between your organizations and my Office and I value the cooperation of your organizations with my Office.  I want you, our region’s corporate leaders, to consider yourself as a potential partner of my Office in detecting and combatting corporate misconduct and crime. 

            Let me explain that further.

           The spirit of cooperation that I’m talking about is reflected, for example, in some of the recent policy changes implemented at the Department of Justice level.  Thanks to a series of initiatives and policy adjustments, the Department is now making white collar prosecutions and enforcement more effective and efficient.   

           There’s one area in particular that I want to emphasize today – that is, recent changes to the Department’s policies concerning cooperation credit in criminal and civil matters.  Most – if not all – of you are familiar with the Yates Memo, which was issued in September 2015 by then-Deputy Attorney General Sally Yates.  Broadly speaking, the Memo was designed to seek accountability from individuals for corporate misconduct.  As Deputy Attorney General Rod Rosenstein explained when he announced changes to the Yates Memo in November 2018, the revised policy came out of a working group comprised of Department employees, law enforcement agents, and private sector stakeholders.  So the changes were the product of collaboration between government and private sector lawyers and communication about priorities, concerns, and past experiences under the Yates Memo and the policy guidance that followed. 

            The revised policies regarding cooperation credit continue to emphasize – in both criminal and civil cases – the importance of full corporate disclosure and individual accountability.  Both are cornerstones of the Department’s approach to dealing with corporate misconduct, but the current policies reflect a more nuanced, common-sense approach to determining when cooperation credit can and should be offered.

            The Yates Memo directed DOJ attorneys to offer cooperation credit in criminal and civil matters only if corporations identified and shared with DOJ all relevant facts about the individuals involved in corporate misconduct.  Anything considered less than 100% disclosure of every person even tangentially involved and every fact about what they did disqualified the corporation from credit.  The result, as Deputy Attorney General Rosenstein acknowledged, was often prolonged, costly investigations that ultimately led to the same result as the current standard – with the government applying notions of fairness and the rule of law to hold only the most responsible parties accountable.

            The current policy now creates some flexibility where there was none before, and it reflects the reality inherent in these types of investigations: identifying every single person and every single fact relevant to alleged misconduct is not only impractical, but also unnecessary to achieve the Department’s goals.  So, under the current policy, companies can receive cooperation credit in criminal cases where the company has identified every individual “substantially involved in or responsible for the criminal conduct.” 

            The policy revisions also provide meaningful changes to DOJ’s approach to resolving civil cases.  Prior DOJ policy prohibited our civil attorneys from offering any cooperation credit to a company in the civil context unless the company complied with the all-or-nothing approach of the Yates Memo.  But now, our civil attorneys have the ability to offer partial cooperation credit in civil cases in certain circumstances, and can offer full cooperation credit when the company identifies those “substantially involved.”  As Mr. Rosenstein observed, the binary choice of full credit or no credit embodied in the Yates Memo “delayed resolution while providing little or no benefit.”  Instead of furthering the goal in civil cases of recovering money, the prior policy drained our resources and resulted in prolonged investigations.

            All told, these and other revisions reflect a measured approach that balances the competing interests at stake.  And yes – these policies can promote collaboration and communication between our organizations.  How so?  Because they afford companies a more realistic path towards receiving credit and allow DOJ attorneys to focus efforts on identifying targets who are the true wrongdoers – those who committed, directed or supervised the underlying misconduct and who warrant punishment.  And they restore a measure of discretion to DOJ attorneys in deciding what information they must obtain during an investigation. 

            These policies promote the sort of deterrence that the Department and my Office want to see in the corporate community.  The most effective way to deter corporate misconduct is to punish those individuals who are actually responsible for it – most seriously, those individuals who actually committed a crime.  Within your organization, I want you to focus your attention on that and help me and my Office get to the bottom of the issue, as quickly as possible.

            As these new policies are applied on a case-by-case basis, rest assured that my Office welcomes an open dialogue with you and your clients as we perform our core function – to enforce the rule of law and ensure that individuals substantially involved in corporate wrongdoing are identified, prosecuted, and punished.  I understand that most companies want to do the right thing.  And I understand that the people in this room – highly educated and successful legal professionals who take your ethical responsibilities seriously and have taken an oath to uphold the law – certainly want to do the right thing.  As Deputy Attorney General Rosenstein has stated: “companies that self-report, cooperate, and remediate the harm they caused will be rewarded.  Companies that condone or ignore misconduct will pay the price.”  In large part, the choice is up to you, and I hope and expect that you will make the right choice, should you find yourself confronted with it.

            The benefits that can flow from open lines of communication and a cooperative approach are clear if your client is the target of a criminal or civil investigation.  But these benefits are not limited to that situation.  Indeed, I want you to think of my Office as an important ally when your business has been victimized – say, for example, by employees or customers who are stealing from your company.  Unfortunately, these situations are all too common.  And when they occur, it’s important to view my Office as a critical resource – as a partner whose interests are aligned with yours.

            Here are a few examples of what I mean.  This past year, my Office prosecuted high-level GlaxoSmithKline employees, scientists who were Chinese nationals, for conspiracy to steal trade secrets from the company.  These employees were helping to develop biopharmaceutical products – assets that typically cost in excess of $1 billion to research and develop – and then stealing them from GSK and sending them to China.  In doing so, these criminals were attempting to destroy the lifeblood of the company – stealing its intellectual property and engaging in economic warfare. 

            GSK was an excellent partner with my Office, working shoulder-to-shoulder with our prosecutors and cooperating so that we could collect the necessary information to hold the responsible individuals accountable.  And we did just that.  Dr. Tao Li, Dr. Yu Xue, and Dr. Yan Mei, were prosecuted for their crimes; all have pled guilty and await sentencing.  

            Another example of this collaborative approach is found in the insider trading case involving former Philadelphia Eagle, Mychal Kendricks, and his friend, Damilare Sonoiki.  Mr. Sonoiki worked at a global investment firm and used material, non-public information to turn an illegal profit, and provided such information to Mr. Kendricks to do the same.  Mr. Sonoiki’s former corporate employer fully cooperated with my Office and with the Securities and Exchange Commission during our investigation into this unlawful conduct.  The company’s cooperation allowed us to uncover key information, and quickly identify and prosecute the wrongdoers.  Mr. Kendricks and Mr. Sonoiki have pleaded guilty and await sentencing.

            A good example of a recent crime prevention initiative is our public service campaign to deter Hobbs Act robberies in the Eastern District of Pennsylvania.  Our Office is working with local and national convenience stores, drugstores, and fast food chains to alert the public (and criminals) that if you walk into a business and attempt to rob it, we can prosecute that crime federally – and the potential penalties are steep, especially if the crime involves a gun.  This partnership is crucial to communicating a unified, powerful deterrent message – that “a federal crime means federal prison time” for the perpetrators.  We will continue to work with our corporate partners to create public service announcements and promotional materials that highlight our commitment to keeping our streets and storefronts safe.

            In conclusion, we at the U.S. Attorney’s Office take very seriously our responsibility to investigate and prosecute criminals who commit corporate misconduct.  As I have pledged from day one, my Office will enforce the law in a fair and non-partisan manner, regardless of who you are, where you come from, or how much power or influence you have.  We will apply that neutral principle to corporations and senior leaders who commit crimes or direct others to do so.

            But the other takeaway from my remarks today, I hope, is that my Office and I are also here to help you do your job.  As I said previously, most companies and their leaders want to do the right thing.  Fostering communication and cooperation will only help us get to the right result – which is to hold wrongdoers accountable and to deter misconduct. 

            Again, I appreciate the opportunity to be with you today.  Thank you for your attention, and thank you for your commitment to the rule of law.