Acting Assistant Attorney General Brian C. Rabbitt Delivers Remarks at Shinshu University 2nd White Collar Crime Workshop

Remarks as Prepared for Delivery

Good morning.  It is my pleasure to be with you today, even if only through a video screen.  Thank you very much to Shinshu University and my hosts for your kind invitation to join the list of distinguished speakers, panelists, and participants in today’s important event. 

It is my great privilege to be here today representing the women and men of the Criminal Division of the U.S. Department of Justice, and I look forward to speaking with you about some of our important work over the past year enforcing the federal criminal laws.

As many of you know, the Justice Department’s Criminal Division has a broad mandate that covers a wide range of criminal activity—from narcotics and dangerous drugs, to human trafficking, to organized crime and transnational criminal organizations.  But an equally large part of what we do is what you’re here to talk about today: white-collar criminal enforcement. 

Today, white-collar crime comes in a variety of forms.  Our experience has shown us that corporate criminal activity is increasingly sophisticated and also increasingly global.  Because of this, the Criminal Division has in recent years sought to leverage all the considerable resources and law enforcement tools at our disposal to tackle white-collar crime.  Equally important, we have developed and relied on strong relationships with law enforcement partners around the globe to investigate and prosecute corporate criminal misconduct no matter where it occurs. 

I particularly appreciate the opportunity to speak with you today, near the end of the calendar year, as it gives me an opportunity to reflect briefly on the Criminal Division’s white-collar enforcement efforts and accomplishments over the past year. 

As you likely are aware, our white-collar enforcement work has kept up with, and by many measurements exceeded, our pace in recent years.  For example, as of the middle of this month, the Criminal Division’s Fraud Section had publicly charged nearly 300 individuals, convicted over 180 criminal defendants, and entered into 12 corporate criminal resolutions—which, combined, have involved over $8.75 billion in global fines, penalties, restitution, and disgorgement.  In addition to our Fraud Section, the Division’s Money Laundering and Asset Recovery Section—which is an equally important part of our white-collar enforcement work—has had an incredibly productive year as well, concluding a number of significant resolutions with major U.S. and international financial institutions.  

These matters have covered the waterfront in terms of subject matter, involving everything from international bribery cases brought under the Foreign Corrupt Practices Act, to investment and consumer fraud cases, to manipulation of public U.S. financial markets, to money laundering.  Taken together, they show that the Criminal Division has been pressing forward on all fronts over the past year when it comes to white-collar criminal enforcement.   

I will also note something that, I am sure, all of you know too well: our work this year has come in the midst of an ongoing global pandemic that has significantly disrupted the legal industry along with the rest of the world.  While COVID-19 has undoubtedly impacted our work, the dedicated women and men of the Criminal Division have not let it stop them from pursuing and fulfilling our mission.  I have said many times over the past year that the Criminal Division remains “open for business.”  That remains true.  As our results show, 2020 has been an incredibly busy year for us—even with COVID-19—and we’re not done yet.

With that background, let me take a moment to highlight a few key aspects of our white-collar enforcement work over the past year. 

First are the significant, high-impact corporate prosecutions we’ve brought over the past year.  Among them are some of the most significant corporate criminal matters ever prosecuted by the Justice Department.  Indeed, 2020 was bookended by the two largest FCPA-related resolutions in history—the Airbus case, which we resolved in January, and the Goldman Sachs 1MDB case, which we announced just a few weeks ago.  Both of these matters were landmark resolutions for the Criminal Division, and they—along with our other FCPA matters—clearly demonstrate that combatting international corruption remains a priority for the Criminal Division.  Both cases also involved significant cooperation and coordination with key international partners, and they reflect our commitment to working with other law enforcement authorities around the world to tackle large-scale white-collar criminal misconduct that crosses borders. 

In addition to FCPA matters, 2020 also included the Criminal Division’s resolution with the largest bank in the United States, JPMorgan Chase, based on its traders’ widespread manipulation of U.S. futures markets.  The JP Morgan resolution was just the latest in a series of cases we resolved with financial institutions in 2020 related to “spoofing” in the U.S. financial markets.  Our work in this area remains ongoing, and these matters demonstrate that the Criminal Division remains committed to policing the U.S. financial markets and keeping them free from fraudulent activity.

A second highlight of our work over the past year has been our continued focus on ensuring meaningful individual accountability for white-collar criminal wrongdoing.  Earlier, I mentioned the hundreds of individuals whom we have publicly charged this year.  It is important to note that many of these individuals were charged in connection with some of our most-significant corporate cases.  For example, in the Goldman Sachs 1MDB case that I mentioned a short while ago, a senior banker has pleaded guilty, another is awaiting trial, and a third individual has been indicted and remains a fugitive.  We have similarly charged a significant number of individuals in connection with our spoofing matters.

Why do we focus on individual accountability in addition to pursuing corporations?  Because we understand that corporations necessarily act through their officers and employees, and that to have a truly meaningful deterrent effect, our work must focus on not only entities, but also individuals where appropriate.  As our individual prosecutions over the last year show, the Criminal Division will continue to hold culpable individuals accountable for their roles corporate criminal wrongdoing in appropriate circumstances, even where doing so requires us to pursue an organization’s senior personnel. 

In addition to our traditional white-collar case work, 2020 has also seen the Criminal Division adapt and respond to new and evolving challenges with innovative tools and solutions.

For example, the Division has increasingly used data analytics to identify suspicious activity by individuals and entities in a number of areas, including the healthcare and financial services industries.  The spoofing matters that I mentioned just a few minutes ago, for example, were an outgrowth of the Division’s pioneering use of data analytics to detect and investigate sophisticated criminal activity in the financial markets.  While we still rely on traditional investigative tools to develop and prove our cases, data analytics can help us spot and respond to suspicious trends that might otherwise go unnoticed.  In other words, it can help us find the proverbial “needle in the haystack.”  Data analysis is a powerful tool that we first developed through our work in the healthcare fraud space before adapting it for other areas, such as the financial markets, and I expect that it will play an increasingly important role in our work in the years ahead.

In 2020, the Criminal Division was also at the forefront of the Department’s efforts to respond to the COVID-19 crisis.  When Congress enacted the Paycheck Protection Program, or PPP, in the spring, we quickly realized the potential for fraud and developed a program to respond.  We worked proactively with other U.S. government and private sector partners to identify and investigate suspicious conduct—again drawing on our ability to spot trends in large amounts of data.  In less than a year, as a result of this initiative, the Criminal Division has publicly charged well over 80 individuals in states across the country with attempting to steal over $260 million from the PPP—money that Congress intended as a lifeline to struggling American businesses, not as a handout to fraudsters.  We have many active PPP investigations in the pipeline, and I expect that we will bring many more of these cases in future months.

In addition to our work prosecuting corporate criminal misconduct, the Department’s Criminal Division has also focused in recent years on developing and implementing a number of policies intended to ensure transparency and predictability on our approach to white-collar criminal enforcement.  This past year—in which we revised and updated two key Criminal Division policies—was no exception.

First, this summer, we announced key updates to the Division’s Evaluation of Corporate Compliance Programs guidance. Corporate compliance programs have become increasingly important in recent years, and they can have a significant impact on how we evaluate and resolve cases involving corporate defendants.  This summer’s updates provide the Criminal Division’s latest thinking on this important topic.  When considering whether and how to resolve corporate criminal cases, we will consider the state of a corporate defendant’s compliance program at the time of the offense and at the time of the proposed resolution.  The updates that we released earlier this year built on our prior guidance and emphasized, among other things, that in the Division’s view, corporate compliance programs need to be both well designed and well implemented.   As we explain, it is not enough for a company to simply have a good compliance program on paper.  The program must also be adequately resourced and function effectively in practice. 

This year, we also published an updated and revised edition of our Resource Guide to the Foreign Corrupt Practices Act.  This joint DOJ-SEC publication has become a key resource for DOJ attorneys and FCPA practitioners worldwide, and it provides a comprehensive overview of the Criminal Division’s approach to FCPA enforcement.  This year’s revisions addressed a number of changes in the FCPA space that have occurred since we first published the Guide in 2012.

Since their original issuance, these policies have become critical tools for the Division, corporate actors, and counsel.  In updating them this year, we sought to stay current with developments in the law and provide guidance where appropriate, all with the overarching aim of ensuring consistency and transparency—and, ultimately, fairness—in our enforcement efforts.        

In conclusion, I hope you’ve enjoyed hearing about some of the Criminal Division’s white-collar enforcement work over the past year—a year that has been unique—and uniquely challenging—for many reasons.

I would like to thank my hosts very much for the opportunity to share with you the important work that the Criminal Division has done over the last year.  My remarks today provide only a snapshot of the many great things that the dedicated women and men of the Criminal Division have accomplished. 

Although the end of the year is almost upon us, and increased social distancing restrictions will inevitably mean more challenges for our enforcement efforts, I can assure you that we here in the Criminal Division are not slowing down.  In the coming weeks, months, and years, you will continue to see us working tirelessly to ensure accountability for white-collar criminal wrongdoing, and—critically—doing so in a way that is fair, transparent, and consistent. 

Thank you again for the opportunity to speak with you this morning, and I wish you well with the remainder of your conference. 

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GAO recommends that FDA (1) ensure that inspection plans for future fiscal years identify, analyze, and respond to the issues presented by the backlog of inspections that could jeopardize its goal of risk-driven inspections, and (2) fully assess the agency’s alternative inspection tools and consider whether these tools or others could provide the information needed to supplement regular inspection activities or help meet the agency’s drug oversight objectives when inspections are not possible in the future. FDA concurred with both recommendations. Number of FDA-Conducted Domestic and Foreign Drug Manufacturing Establishment Inspections, Fiscal Years 2019–2020, by Month Federal Contracting Federal agencies are using other transaction agreements to respond to the pandemic, which are contracting mechanisms that can enable agencies to negotiate terms and conditions specific to a project. 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Specifically, the Occupational Safety and Health Administration (OSHA) has adapted its enforcement methods for COVID-19 to help protect agency employees from the virus and address resource constraints, such as by permitting remote inspections in place of on-site inspections of workplaces. However, gaps in OSHA’s oversight and tracking of its adapted enforcement methods prevent the agency from assessing the effectiveness of its enforcement methods during the pandemic, ensuring that its adapted enforcement methods do not miss violations, and ensuring that employers are addressing certain identified violations. To improve its oversight, GAO recommends that OSHA (1) develop a plan, with time frames, to implement the agency’s oversight processes for COVID-19-adapted enforcement methods, and (2) ensure that its data system includes comprehensive information on use of these enforcement methods to inform these processes. The agency neither agreed nor disagreed with these recommendations. Additionally, OSHA’s data do not include comprehensive information on workplace exposure to COVID-19. For example, OSHA does not receive employer reports of all work-related hospitalizations related to COVID-19, as disease symptoms do not appear within the required reporting time frames. Employers may also face challenges determining whether COVID-19 hospitalizations or fatalities are work-related because of COVID-19’s incubation period and the difficulties in tracking the source of exposure. GAO recommends that OSHA determine what additional datamay be neededfrom employers or other sources to better target the agency’s COVID-19 enforcement efforts. The agency neither agreed nor disagreed with this recommendation. Assistance for Fishery Participants The CARES Act appropriated $300 million in March 2020 to the Department of Commerce (Commerce) to assist eligible tribal, subsistence, commercial, and charter fishery participants affected by COVID-19, which may include direct relief payments. After administrative fees were assessed, $298 million of the $300 million appropriated was obligated for fishery participants.Widespread restaurant closures in the spring of 2020 led to a decrease in demand for seafood, adversely affecting the fisheries industry. As of December 4, 2020, all funds had been obligated and only about 18 percent ($53.9 million) of the CARES Act funding obligated for fishery participants had been disbursed, which is inconsistent with Office of Management and Budget guidance on the importance of agencies distributing CARES Act funds in an expedient manner. Commerce’s National Oceanic and Atmospheric Administration (NOAA) officials said they expect that the vast majority of funds will be disbursed to fisheries participants by early 2021. However, the agency does not have the needed information centralized to help ensure that funds are being disbursed expeditiously and efficiently. GAO recommends that NOAA develop a mechanism to track the progress of states, tribes, and territories in meeting established timelines to disburse funds in an expedited and efficient manner. NOAA concurred with this recommendation. Program Integrity GAO continues to identify areas to improve program integrity and reduce the risk of improper payments for programs funded by the COVID-19 relief laws now that federal agencies have obligated a total of $1.9 trillion and expended $1.7 trillion of the $2.7 trillion appropriated for response and recovery efforts as of November 30, 2020. Federal relief programs remain vulnerable to significant risk of fraudulent activities because of the need to quickly provide funds and other assistance to those affected by COVID-19 and its economic effects. In this report, GAO identifies concerns about overpayments and potential fraud in the unemployment insurance (UI) system, specifically in the federally funded Pandemic Unemployment Assistance (PUA) program, which provides UI benefits to individuals not otherwise eligible for these benefits, such as self-employed and certain gig economy workers. As of January 11, 2021, states that had submitted data to DOL reported more than $1.1 billion in PUA overpayments from March through December 2020. While DOL requires states to report data on PUA overpayments, as of the beginning of 2021, the agency was not tracking the amount of overpayments recovered, limiting insight into the effectiveness of states’ efforts to recoup federal funds. To better track the recovery of federal funds, GAO recommends that DOL collect data from states on the amount of PUA overpayments recovered. DOL concurred with this recommendation, and has taken the first step toward implementing it by issuing new guidance and updated instructions for states to report PUA overpayment recovery data. GAO also remains concerned about SBA’s management of internal controls and fraud risks in the Economic Injury Disaster Loans (EIDL) program. COVID-19 relief laws made qualifying small businesses and nonprofit organizations adversely affected by COVID-19 eligible for financial assistance from the EIDL program. Some approval requirements were also relaxed, such as requiring each applicant to demonstrate that it could not obtain credit elsewhere, through December 31, 2021. As of December 31, 2020, SBA officials said they had approved about 3.7 million applications for loans related to COVID-19, totaling about $200 billion. SBA rapidly processed loans and advances to millions of small businesses affected by COVID-19. GAO’s analysis of SBA data shows that the agency approved EIDL loans and advances for potentially ineligible businesses. For example, SBA approved at least 3,000 loans totaling about $156 million to potentially ineligible businesses in industries that SBA policies state were ineligible for the EIDL program, such as insurance and real estate development, as of September 30, 2020. GAO recommends that SBA develop and implement portfolio-level data analytics across EIDL loans and advances made in response to COVID-19 as a means to detect potentially ineligible and fraudulent applications. SBA neither agreed nor disagreed with this recommendation. As of January 15, 2021, the U.S. had about 23 million cumulative reported cases of COVID-19 and more than 387,000 reported deaths, according to the Centers for Disease Control and Prevention. The country also continues to experience serious economic repercussions. Four relief laws, including the CARES Act, were enacted as of November 2020 to provide appropriations to address the public health and economic threats posed by COVID-19. As of November 30, 2020, of the $2.7 trillion appropriated by these four laws, the federal government had obligated a total of $1.9 trillion and expended $1.7 trillion of the COVID-19 relief funds, as reported by federal agencies. In December 2020, the Consolidated Appropriations Act, 2021, provided additional federal assistance for the ongoing response and recovery. The CARES Act includes a provision for GAO to report on its ongoing monitoring and oversight efforts related to the COVID-19 pandemic. This report examines the federal government’s continued efforts to respond to and recover from the COVID-19 pandemic. GAO reviewed data, documents, and guidance from federal agencies about their activities and interviewed federal and state officials and stakeholders. GAO completed its audit work on January 15, 2021. GAO is making 13 new recommendations for agencies that are detailed in this Highlights and in the report. For more information, contact A. Nicole Clowers at (202) 512-7114 or clowersa@gao.gov.
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