As Leslie Caldwell awaits Senate confirmation to become assistant attorney general and the new chief of the U.S. Department of Justice's Criminal Division, many are wondering what the transition will mean for the agency's enforcement priorities.
During the Obama Administration, the Criminal Division has pursued aggressive enforcement of violations of the Foreign Corrupt Practices Act, False Claims Act, and other corporate fraud, securing record fines and, some say, using unconventional tactics to pursue charges. The Justice Department has also increased collaboration with counterparts in other countries to pursue enforcement actions and relied more on whistleblowers for information. Expect those trends to continue under Caldwell.
Caldwell, a former prosecutor and currently a partner in the litigation practice of law firm Morgan Lewis, is slated to take the reins from former Assistant Attorney General Lanny Breuer, one of the longest-serving heads of the Criminal Division, who stepped down March 1 after four years at the helm to rejoin the law firm Covington & Burling. In the interim, David O'Neil, a former associate deputy attorney general, is serving as acting assistant attorney general.
“The Criminal Division over the last four or five years has really become the center of white-collar criminal enforcement,” says Breuer. He says he expects that to continue to be the case under Caldwell's leadership “both domestically and internationally.”
Another former high-ranking Justice Department official, who asked not to be identified, says not to expect any radical change in enforcement priorities. “It's more likely that we'll continue to see more of the same,” he says.
Caldwell will certainly have her hands full, wrestling with such issues as the Foreign Corrupt Practices Act, financial fraud, market manipulation cases, money laundering, cyber-crimes, and plenty more.
Those priorities could change quickly, however, following any kind of significant event, or series of events. “For example, if the tension with Russia continues to escalate, you could see the Justice Department getting more involved in sanctions violations, and bringing some criminal cases as a deterrent,” the former Justice Department official stated.
The Criminal Division could also decide to change its enforcement priorities in the event of an industry-wide scandal, or an unforeseeable incident, he adds. “They've already made noises about replicating the approach taken in the Toyota case in regard to product safety issues.” Last month the agency hit Toyota with a record $1.2 billion criminal penalty—the largest of its kind in the auto industry—for intentionally concealing and misleading the public about safety defects in its automobiles. The Justice Department used wire fraud charges to pursue the wrongdoing.
“There is always pressure on the Criminal Division to be responsive to issues that come up that seem to affect the economy or consumers in one way or another,” says Paul McNulty, former deputy attorney general, and now leader of the business crimes and investigations practice at law firm Baker & McKenzie.
“[Leslie's] the type of person who rolls up her sleeves and gets in there and gets very engaged in what is happening.”
—Paul McNulty,
Leader, Investigations Practice,
Baker & McKenzie
In addition to having to wrestle with the Division's enforcement matters, Caldwell also will have to adjust to the day-to-day challenges that come with being chief of the Criminal Division. “Dealing with a lot of different issues with a limited budget is a challenge in trying to prioritize and figure out where to put resources,” says Breuer.
Because the position by its nature is under the spotlight, that means occasionally having to deal with lots of criticism. “You have occasions where people have very strong views, and they publicly talk about what the outcomes [of cases] will be, but they don't frankly know the facts of the matter,” says Breuer. With that reality also rests the challenge of have to “protect your lawyers from criticisms, whether from the Hill or other places.”
Who Is Caldwell?
Former Justice Department prosecutors vouch both for Caldwell's character and as someone who is well-prepared for the role. “She's smart. She's very committed,” says Breuer. “In general, as a steward of the Division, she'll be tremendous. I know the Division will be in great hands.”
“She's the type of person who rolls up her sleeves and gets in there and gets very engaged in what is happening,” says McNulty. “As someone who has seen these cases from both sides, she will be in a good position to think well about what ought to be done and be reasonable and effective in what she's doing.”
Caldwell indicated as much during her confirmation hearing before the Senate Judiciary Committee in February. During that hearing, she testified that she intends to vigorously enforce criminal laws and “apply them with equal force, whether the wrongdoing occurs in a boardroom, across a computer network, or on a street corner.”
What makes Caldwell uniquely suitable for the role is her experience in both the Criminal Division and with the U.S. Attorney's Office. Since 2004, Caldwell has served as a partner at Morgan Lewis, where she has focused her practice on internal investigations and defending companies and individuals accused by the government of involvement in white-collar crime and regulatory violations.
THE TOUGH QUESTIONS
Below is a sampling of questions asked of Leslie Caldwell from the Senate Judiciary Committee Questionnaire.
1. Do you believe that there is any corporation or any corporate executive that is “too big to
jail?”ANSWER: No individual or corporation is above the law. As I said in my
statement to the committee, if confirmed, I will vigorously prosecute criminal
wrongdoing whether it occurs in a boardroom, across a computer network, or on a
street corner. Indeed, as a prosecutor I brought criminal charges against numerous
senior executives and institutions and would draw on those experiences if confirmed
as the assistant attorney general of the Criminal Division.
2. How much deference should the department give a regulator's advice concerning the
collateral effects of a criminal prosecution or conviction on an institution's viability or
the broader economy in weighing criminal charges against that institution? ANSWER: The department has long-established guidelines that must be considered when weighing whether to bring criminal charges against an institution. One of several factors to be considered is what, if any, collateral consequences a criminal charge might have on innocent third parties. In considering claims by a prospective defendant institution that a criminal charge could have negative effects on the company or beyond, it would be prudent for the department to consult with appropriate regulators to obtain their advice on the likelihood that the claimed consequences actually would come to pass. However, the department alone would make the ultimate decision whether to bring a criminal charge in a particular case.
3. You certainly have extensive experience in prosecuting these types of cases. As a federal
prosecutor, did you ever consult with an outside expert or with a regulator on the effects a
criminal charge against a company or an individual could have on the economy or financial markets? If so, what factors did you and the department consider before making a charging decision?ANSWER: In my experience as a federal prosecutor, I never consulted with an outside expert on the effects that a criminal charge against a company or individual could have on the economy or financial markets. Nor did I ever consult with a regulator regarding the possible financial or economic effects of a charge against an individual. I can recall two occasions when I consulted with regulators regarding the possible collateral financial impacts of a potential corporate criminal prosecution. In one case, involving the prosecution of a national nursing home chain for Medicare fraud, I consulted and worked with the Department of Health and Human Services to ensure that residents of the homes would not be displaced or their care disrupted as a result of the prosecution. In the other case, I and others in the Department consulted with the Securities and Exchange Commission to determine whether a criminal charge against an accounting firm could be disruptive to the markets they regulate. In both cases, after weighing all the factors listed in the department's guidelines for federal prosecution of business organizations, criminal charges were filed.
4. What factors should the department consider relevant when a regulator expresses
concerns over a potential criminal prosecution?ANSWER: The department has a long history of working collaboratively with a
broad array of regulators who serve as valuable partners in the department's law
enforcement mission. Given that these regulators often have significant subject
matter expertise, the department may seek their input when appropriate in
weighing whether to bring a criminal prosecution. As noted above in response to
Question 2, however, a regulator's view as to the potential collateral consequences of
a possible prosecution is just one factor the department considers in deciding
whether to file a criminal charge. The decision whether to bring a criminal charge
in any given case rests solely with the department, and if confirmed, I would make
such decisions after consulting the factors enumerated in the United States
Attorney's Manual.
Source: Senate Judiciary Committee.
Caldwell joined Morgan Lewis from the Justice Department, where she famously led a special task force that was created to investigate the collapse of Enron. As director of the Enron Task Force from 2002 until 2004, she oversaw all aspects of the investigation, resulting in the prosecution of more than 30 individuals.
Before moving to the Justice Department, Caldwell served from 1999 to 2002, in the U.S. Attorney's Office for the Northern District of California, where she was chief of both the Criminal Division and the Securities Fraud Section. She was also an assistant U.S. attorney in the Eastern District of New York.
Collaborative Efforts
During the Senate Judiciary Committee's confirmation hearing, Caldwell shared her perspective on the importance of the working relationship between the Criminal Division and U.S. Attorneys General offices. “The United States Attorneys' General offices are really the front lines of most federal criminal prosecutions,” she said.
“The Criminal Division has a very important role in supporting those offices, particularly the smaller offices that may not have the resources to do certain kinds of cases,” Caldwell added. “It's going to be very important to continue working together.”
The dynamic between the Criminal Division and the U.S. Attorneys General offices is “very important, and I'm quite confident it's never been stronger,” agrees Breuer. From the districts of New York to California to Florida, and all across the country, “we worked on many cases with them,” he says. “We were not at all at loggerheads.”
As more countries increase their anti-corruption enforcement efforts, the question then becomes how the United States will work with those countries moving forward—whether they'll defer to those countries in their enforcement efforts, or piggyback on those cases and bring U.S. penalties, says McNulty. “International cooperation is a very significant priority for the Criminal Division, and it keeps getting more significant year after year,” he says.
Whistleblowers also will continue to play a crucial role in the Criminal Division's efforts in prosecuting cases. In response to questions posed to her by Senate Judiciary Committee ranking member Chuck Grassley, R-Iowa, regarding the value that whistleblowers play in federal law enforcement efforts, Caldwell agreed that “whistleblowers are often very important sources of information,” and that anti-retaliation protections are essential.
Caldwell further agreed that providing financial incentives to whistleblowers helps in enforcing whistleblower laws. “I do think those financial incentives have contributed to whistleblowers coming forward,” she said.
Once confirmed by the Senate as chief of the Criminal Division, Caldwell will have to first learn the ropes, above all else. “My first priority will be to understand what exactly is being done currently,” she said, “and try to align that with what the Division's responsibilities, perhaps, should be.”
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