2022: The Year in Corporate Crime
After a Year Marked by Missed Opportunities, Possibilities for Progress Remain
In 2022, Public Citizen highlighted declining corporate enforcement and advocated for strengthening enforcement against corporate lawbreaking, including urging the Department of Justice to drop policies that let corporate lawbreakers avoid prosecution and enjoy significantly reduced penalties. The year delivered a mixed bag – both disappointments and highlights – and opportunities to build momentum for progress in 2023.
The Federal Trade Commission and Consumer Financial Protection Bureau are among the agencies leading the Biden administration’s charge against corporate lawbreaking. Both announced plans to strengthen enforcement against repeat offenders – and both faced a backlash against their efforts by the biggest corporate lobbying group in Washington, D.C., the U.S. Chamber of Commerce. Public Citizen research highlighted that the Chamber’s corporate members have paid $154 billion in penalties, including for criminal violations, antitrust offenses, and wage theft, highlighting the industry group’s self interest in opposing strengthened enforcement. Undeterred, the FTC and CFPB proceeded to bring some of the year’s toughest enforcement actions against corporate wrongdoers.
Attorney General Garland added momentum to corporate crime enforcement efforts in March, signaling a major shift toward strengthened corporate crime enforcement. "As a prosecutor, defense attorney and judge, I have also seen the Justice Department's interest in prosecuting corporate crime wax and wane over time,” he told the audience of white-collar defense attorneys. “Today it is waxing again." Garland described the DOJ’s corporate crime enforcement efforts as ramping up, noting in particular the increase in activity from the DOJ divisions devoted to enforcing antitrust and environmental law. “We expect that our enforcement activity will only accelerate as we come out of the pandemic,” he added. Garland’s speech followed Deputy Attorney General Lisa Monaco’s 2021 speech decrying corporate recidivism, reasserting the need for corporate accountability, and announcing a Corporate Crime Advisory Group to inform new policy changes. Top antitrust prosecutors in particular emphasized the department’s new direction, announcing the revival of criminal antimonopoly cases against monopolists – the same type of case that resulted in the 1911 breakup of Standard Oil – an authority that haid lain dormant for decades.
But U.S. Sentencing Commission data released in the spring revealed how far a hill federal authorities had to climb in order to turn back the decimation of corporate crime enforcement, the erosion of which preceded and was accelerated by the Trump administration. The data revealed that in Biden’s first year, the number of federal corporate prosecutions had fallen to a record low of 90 – down to less than a third of their peak of nearly 300 in 2000. “Enforcement Abyss,” Public Citizen’s report analyzing the data, found that the simultaneous trends of declining corporate prosecutions and the DOJ’s increased reliance on corporate leniency agreements meant the agreements not to prosecute made up over a quarter of the government’s criminal cases against corporate misconduct. Without a significant policy shift away from the DOJ’s overreliance on leniency deals, the enforcement decline can be expected to continue.
The DOJ finally announced its updated corporate crime enforcement policies in the fall. In contrast to the agency’s prior rhetoric about “outrageous” corporate misconduct urging prosecutors to “be bold” when bringing cases, the policy memo offered only modest improvements, such as “disfavoring” – but not banning – leniency deals for corporate repeat offenders. And in spite of Deputy Attorney General Monaco conceding “we cannot ignore the data showing overall decline in corporate criminal prosecutions over the last decade,” the DOJ adopted a policy that could worsen this trend. The new policy places so much excessive faith in voluntary self-disclosure that the DOJ essentially promises corporations that come forward and confess their crimes that they won’t be prosecuted. The policy all but guarantees that corporations that confess will receive leniency deals – a policy that might well increase their use, when their well-known failure to deter corporate wrongdoing mean they should be abandoned entirely.
The recent reintroduction of corporate crime-fighting legislation in Congress offers a brighter note to the end of 2022. One bill, the Corporate Crime Database Act, introduced by Rep. Mary Gay Scanlon (D-Pa.), Sen. Dick Durbin (D-Ill.), and Sen. Richard Blumenthal (D-Conn.), directs the DOJ to publish a public database of corporate lawbreaking and to release annual reports on corporate crime. Another, the Hide No Harm Act, also introduced by Rep. Scanlon and Sen. Blumenthal with Sen. Bob Casey (D-Pa.), would impose criminal penalties directly on high-level corporate executives, including potentially jail time, when they knowingly hide dangers to consumers and workers that result in death or injury. Either bill by itself would represent a meaningful progress for deterring corporate crime and holding corporate criminals accountable. Together, they could be a game changer – and we anticipate both will gain momentum in 2023.
Big Business Blotter News Roundup
TOP NEWS
The federal Controlled Substances Act requires pharmaceutical distributors to monitor their customer orders and notify federal officials of any that may be of unusual size or ordering patterns that could suggest the drugs are being diverted for illegal uses. During nearly a decade, between 2014 and 2022, the suit alleges, the Pennsylvania-based company did not report hundreds of thousands of suspicious drug orders.
Trump Organization Was Held in Contempt After Secret Trial Last Year - NYT
The document, a judicial order released Tuesday, showed that in October 2021, a one-day contempt trial was held after prosecutors with the Manhattan district attorney’s office requested that the company be punished for “willfully disobeying” four grand jury subpoenas and three court orders enforcing compliance.
BANKS
Capital One To Pay $2 Million To Settle Debt Collection Lawsuit - Canyon News
Starting in March 2015, Capital One made calls with unreasonably excessive frequency and persisted in calling wrong numbers in an effort to collect their debts, both in violation of California’s Rosenthal Act and the Federal Debt Collection Practices Act.
CORRUPTION
US military families sue after French company pleads guilty to supporting terrorism - ABC News
"Lafarge has already pled guilty to federal crimes and admitted to paying millions of dollars to ISIS. This lawsuit is intended to hold it accountable to the military families devastated by its heinous and unlawful conduct. We expect more families to join the lawsuit and we look forward to bringing the case to trial before a jury of New Yorkers," said Lee Wolosky, Partner at Jenner & Block LLP, lawyer for the plaintiffs, in a statement.
Pursuant to the DPA, Honeywell UOP will pay a criminal penalty of approximately $79 million. The department has agreed to credit up to approximately $39.6 million of that criminal penalty against amounts the company has agreed to pay to authorities in Brazil in connection with related proceedings to resolve an investigation by the Controladoria-Geral da União (CGU), the Ministério Público Federal (MPF), and the Advocacia-Geral de União (Attorney General’s Office). In addition, Honeywell UOP will pay approximately $81 million in disgorgement and prejudgment interest as part of the resolution of a parallel investigation by the SEC.
POLLUTION
$698M deal to end Monsanto PCB pollution lawsuit in Oregon - AP
Bayer, the German pharmaceutical and biotechnology company, will pay Oregon $698 million to end a lawsuit over PCB pollution associated with products made by Monsanto, the agriculture giant it now owns, the state’s attorney general announced Thursday. The move makes Oregon the latest U.S. state to receive millions of dollars in damages from the company for pollution allegedly caused by the chemicals.
Alabama plant owned by W.V. governor's family fined $925,000 - AP
The plant, which is more than a century old, has been shut down since October 2021. At that time, the health department declined to renew its operating permit after finding that the oven doors were leaking toxic chemicals, as well as citing other maintenance failures. The agency sued for damages, calling the plant “a menace to public health.”
ANTITRUST
FTC, attorneys general file lawsuit against two pesticide producers - NBC
Two of the largest pesticide manufacturers in the world are being sued over an alleged “conspiracy to shut out generic versions of their products,” driving up costs for smaller farmers and food prices. The Federal Trade Commission partnered with a dozen attorneys general to file the antitrust lawsuit against Syngenta Crop Protection and Corteva, Inc., according to a press release from the Washington State Office of the Attorney General.
Google Paying $29.5 Million To Settle Lawsuits Over User Location Tracking - HuffPost
Google has agreed to pay a total of $29.5 million to settle two lawsuits over the company’s tracking of customer locations. Google used location data from Indiana consumers to build detailed user profiles and target ads — but misled users about those practices since at least 2014, said Indiana Attorney General Todd Rokita (R), whose state filed a suit against the company along with Washington, D.C.
Google, YouTube content providers must face U.S. children's privacy lawsuit - Reuters
A U.S. appeals court on Wednesday revived a lawsuit accusing Alphabet Inc's Google and several other companies of violating the privacy of children under age 13 by tracking their YouTube activity without parental consent, in order to send them targeted advertising.
MORE TECH
The Federal Trade Commission has secured agreements requiring Epic Games, Inc., creator of the popular video game Fortnite, to pay a total of $520 million in relief over allegations the company violated the Children’s Online Privacy Protection Act (COPPA) and deployed design tricks, known as dark patterns, to dupe millions of players into making unintentional purchases.
Twitter Must Notify Laid-Off Workers of Pending Lawsuit, Judge Rules - Reuters
U.S. District Judge James Donato in a three-page order on Wednesday said that before asking workers to sign severance agreements waiving their ability to sue the company, Twitter must give them “a succinct and plainly worded notice” of the lawsuit filed last month. Twitter laid off roughly 3,700 employees in early November in a cost-cutting measure by Musk, the world’s richest person, and hundreds more subsequently resigned.
A $1.6 billion lawsuit alleges Facebook's inaction fueled violence in Ethiopia - NPR
Two Ethiopian researchers and a Kenyan constitutional rights group are behind the legal action, which was filed this week in a High Court in Nairobi, Kenya. The city houses Facebook's East African content moderation hub, which opened in 2019. The hub was too little, too late for the region, the lawsuit says.
EPSTEIN
U.S. Virgin Islands Sues JPMorgan Over Epstein Sex-Trafficking Scheme - NYT
The attorney general of the U.S. Virgin Islands is accusing JPMorgan Chase of helping Jeffrey Epstein illegally exploit women and girls, according to a lawsuit filed Tuesday in federal court in Manhattan. The suit says JPMorgan provided banking services to Mr. Epstein after he had been convicted of sex charges and failed to report his suspicious activities. The lawsuit said the bank should have known about Mr. Epstein’s illegal activities at a villa on Little St. James Island, an island he owned in the territory, and should have reported them to the authorities as part of its adherence to anti-money-laundering laws.
US Virgin Islands fires attorney general in Epstein cases - ABC News
The governor of the U.S. Virgin Islands has fired the attorney general of the U.S. territory who pursued various cases against disgraced financier Jeffrey Epstein, including a lengthy legal fight that resulted in a $105 million settlement. The removal of Denise George comes just days after she filed a lawsuit against JPMorgan Chase in New York and accused the company of helping Epstein finance the illegal exploitation of women and children in the U.S. Virgin Islands and beyond. Gov. Albert Bryan Jr. did not provide a reason for relieving George of her duties in a statement Sunday, saying only that she would be replaced by Assistant Attorney General Carol Thomas-Jacobs.
JPMorgan, Deutsche Bank seek dismissal of lawsuits by Jeffrey Epstein accusers - Reuters
Epstein was a JPMorgan client from about 2000 to 2013, and a Deutsche Bank client from 2013 to 2018, court papers show. The JPMorgan plaintiff is a former ballet dancer who said Epstein abused and trafficked her from 2006 to 2013, while the Deutsche Bank plaintiff said she suffered from similar misconduct between 2003 and 2018. Both said numerous cash payments from the banks were used to pay Epstein's victims. New York state's financial regulator in July 2020 fined Deutsche Bank $150 million over its relationship with Epstein.
MORE FROM THE STATES
Coinbase Reaches $100 Million Settlement With New York Regulators - New York Times
Coinbase, a publicly traded cryptocurrency trading exchange based in the United States, agreed to pay a $50 million fine after financial regulators found that it let customers open accounts without conducting sufficient background checks, in violation of anti-money-laundering laws.
Hochul Passes Carlos’s Law, Raising Criminal Fines for Construction Deaths - Observer
Carlos’s Law was first introduced by Francisco Moya, a New York City council member representing Corona Queens, in 2017 when Moya was a state assemblymember. The law takes its name from Carlos Moncayo, a 22-year-old Ecuadorian worker who died in 2015 when a Manhattan construction site collapsed on him, and was passed by the state legislature in June. The contractor found responsible for Moncayo’s death paid only $10,000 in corporate penalties at the time, the maximum fine at the time under New York state law. With Hochul’s passage of Carlos’s Law, fines for companies found responsible for the death or injury of an employee will now reach up to $500,000.
Republican Florida Gov. Ron DeSantis has asked the Florida Supreme Court to appoint a statewide grand jury to investigate “criminal or wrongful activity” related to the development and promotion of COVID-19 vaccines. The petition, filed Dec. 13, says grand jurors should consider whether the pharmaceutical industry engaged in “fraudulent practices” by promoting the effectiveness of vaccines for financial gain.
Avon hit with $40 million verdict in California talc lawsuit - Bloomberg
Avon Products Inc. was ordered by a California jury to pay $10.3 million in punitive damages to a woman who blamed her cancer on talc in its cosmetics, in the first such case the company has lost in U.S. litigation. The Los Angeles Superior Court jury that punished Avon Friday for hiding the risks that some of its talc-based powders can cause cancer had already awarded Rita Chapman $40 million in actual damages, bringing the total in the case to more than $50 million, according to court filings. The $40 million award was intended to cover Chapman’s pain and medical costs tied to her battle with mesothelioma, a cancer specifically tied to asbestos exposure.