The U.S. Department of Justice (DOJ) has introduced new internal guidance to prioritize victim compensation in corporate criminal resolutions. This directive, issued on June 5 by Matthew Galeotti, Head of DOJ’s Criminal Division, is designed to enhance the focus on compensating victims when determining penalties in multi-agency and multi-jurisdictional cases.
The guidance outlines factors for prosecutors in coordinating corporate penalties across various proceedings, whether criminal, civil, regulatory, or administrative, and both domestic and foreign. While it does not replace the existing Policy on Coordination of Corporate Resolution Penalties from the Trump administration, known as the “anti-piling-on policy,” it introduces complexities to its application. The DOJ emphasizes prioritizing victim compensation over avoiding stacked penalties.
A key instruction is that payments supporting victim compensation should not be credited unless a foreign authority offers a more effective mechanism than the DOJ for direct victim compensation. For general victim support issues, prosecutors must balance several interests including those of jurisdictions where misconduct occurred and other department goals.
Companies are required to make meaningful attempts to coordinate resolutions; otherwise, their resolution payments will not be credited by prosecutors.
Questions remain about the guidance’s practical impact and its implementation scope. Notably, less than 15% of DOJ corporate resolutions since 2016 have involved provisions for compensating victims.
The guidance may lead to higher costs for companies due to potential duplicative resolution payments if crediting is deemed inappropriate. It also interacts with existing DOJ policies like the Corporate Enforcement and Voluntary Self-Disclosure Policy.
Gibson Dunn’s White Collar Defense and Investigations Practice Group continues to monitor these developments closely.