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Oct312009

Why did the DOJ amend its guidelines on corporate cooperation? 

In a written summary of a recent seminar on white collar defense, Peter Hardy, a guest blogger for the White Collar Crime Prof Blog, included the following statement concerning the federal government’s decision to amend the so-called Thompson Memo, the federal memorandum that had delineated the federal government’s guidelines on corporate cooperation:

The DOJ has changed what it has said about what constitutes cooperation by a corporation.  Knowing or feeling that it has all the power, DOJ has imposed great demands upon corporations and its employees, and threatened the corporation with its own destruction.  (emphasis added). 

It is tough to ascertain what Mr. Hardy means in the highlighted section.  Is Mr. Hardy implying that the DOJ changed its policy on corporate cooperation because it wanted to level the playing field given its knowledge of its own power?  If so, he is wrong.  The DOJ leveled the playing field (i.e. it modified the Thompson Memo) after Judge Kaplan, a federal judge sitting in the District Court for the Southern District of New York, dismissed the indictments against a number of former KMPG employees who were indicted for allegedly setting up illegal tax shelters and, in the process, castigated the actions of at least two Assistant United States Attorneys for the Southern District of New York.  This was an unprecedented decision and a great blow to the federal government. 

According to Judge Kaplan, the federal government had violated the defendant’s right to counsel under the Sixth Amendment when it utilized the Thompson Memo to pressure KPMG into cutting off its payment of legal funds to these former employees.  After the Second Circuit affirmed Kaplan’s decision, the federal government had to change something, so it modified some aspects of the government’s ability to encourage a company to “cooperate.”  In addition to the Kaplan decision, some members of Congress had started to introduce legislation that would limit the government’s ability to force corporations to cooperate when it was targeting some of the corporation’s employees.  It was the ripple effect of the Kaplan bomb shell that forced the federal government to reconsider its cooperation guidelines; it had nothing to do with the DOJ’s concern about its own power. 

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Reader Comments (3)

well i think he is not thinking about the consequences

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July 31, 2010 | Unregistered Commenterembadoagose

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September 23, 2010 | Unregistered CommenterErik
(CRS ) Lochen

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