Corporate compliance, legal and risk professionals got a warning from a top Justice Department official, along with some advice on how to keep the companies they work for out of trouble.

Acting deputy attorney general Gary Grindler made it clear that the agency is taking a no holds barred approach to cracking down on corporate fraud.

Speaking at Compliance Week's annual conference this week in Washington D.C, Grindler summed up the message simply, telling attendees, "We will be aggressive, but fair, and we will use every tool at our disposal to ferret out and prosecute corporate crime."

He highlighted three DoJ enforcement priorities: the Financial Fraud Enforcement Task Force, healthcare fraud, and the Department's new Intellectual Property Enforcement Task Force.

The Financial Fraud Enforcement Task Force, established last November and comprised of representatives from more than 20 federal, state and local agencies, is a coordinated effort to share information to crack down on all types of financial fraud, including bank, mortgage, and lending fraud; securities and commodities fraud; money laundering and False Claims Act violations, to name a few.

With hundreds of billions of federal dollars pouring into government programs like Medicaid and Medicare, the DOJ is also stepping up efforts to prosecute healthcare fraud.

A joint task force, known as HEAT, or the Health Care Fraud Prevention and Enforcement Action Team, devotes new resources and technology to prevent and combat fraud and abuse. Grindler shared some statistics that show they mean business: Since HEAT's formation roughly year ago, Medicare Fraud Strike Force prosecutors have filed over 60 cases, negotiated more than 50 guilty pleas, and obtained six convictions. During fiscal 2009, he said federal prosecutors filed criminal charges in 481 healthcare fraud cases, obtained 583 convictions and opened 1,014 new criminal healthcare fraud investigations.

He also reminded pharmaceutical companies to expect closer DoJ scrutiny. As drug companies do more business overseas, where much of the healthcare business is government-run, he said opportunities for FCPA violations abound.

Grindler said DoJ will use "every tool at our disposal to investigate and prosecute corrupt practices in the pharmaceutical industry," and "will not hesitate to charge pharmaceutical companies and their senior executives under the FCPA...to root out foreign bribery."

Moreover, the recent healthcare reform legislation gives the government broad new tools and powers to combat healthcare fraud. Among other things, the law requires providers and suppliers to establish compliance plans to enroll in Medicare or Medicaid; provides increased oversight, including mandatory licensure checks; authorizes withholding of payments for claims under investigation for fraud allegations; requires the self-reporting and return of overpayments within 60 days, and clarifies that anti-kickback statute violations constitute FCA violations.

Another top priority where DoJ is coordinating enforcement efforts both inside and outside of the agency is in the area of intellectual property crimes, including online piracy of movies and software and sales of counterfeit electronics. A new Intellectual Property Enforcement Task Force, led by Grindler, will monitor enforcement efforts, increase the focus on international enforcement and expand civil enforcement efforts.

As public backlash against corporate America grows amid the financial crisis, Grindler said the role of corporate compliance and legal professionals in making sure companies act as "responsible corporate citizens is essential." To that end, he offered some tips for helping companies stay out of prosecutors' cross hairs.

1. Robust, effective compliance programs and internal controls. Grindler stressed that a company's compliance program "continues to be one of the most important factors" DoJ considers in weighing whether to charge a company.

During a Q&A session, he rebuffed a complaint by some corporate executives who lament that an effective compliance program doesn't really count for much if a company finds itself in the cross-hairs of a federal prosecutor.

"Having an effective compliance program will be taken under consideration when you talk to the government about a criminal violation," he said. "We take it seriously and it will have positive impact on negotiations."

Grindler said recent amendments to the U.S. Federal Sentencing Guidelines, effective in November unless Congress acts to undo them, reinforce the point that having a robust program is critical "not only to preventing misconduct in the first place, but also how your organization will be treated in the event criminal conduct does take place."

2. Partner with DOJ. DOJ has been reaching out to private sector anti-fraud professionals to share information about fraud schemes and improvements in data analysis. Likewise, he said, if the private sector sees "new fraud schemes or ways in which we can prevent fraud, that is something you should share with us."

3. Early, voluntary disclosure of misconduct. It's not only usually in a company's best interest, but in some cases, failure to make timely voluntary disclosure after the discovery of a criminal violation can be a violation itself, he noted.

4. Take meaningful remedial measures in response to criminal wrongdoing, such as the payment of restitution and disciplining or terminating culpable employees, officers, or directors.

Topics