Is the center of the corporate crime universe shifting from New York to Washington, D.C. and northern Virginia?

Neil MacBride says yes.

He’s the former U.S. Attorney in Alexandria and current partner at Davis Polk in Washington, D.C.

“It definitely has shifted from New York to DC and northern Virginia,” MacBride told Corporate Crime Reporter in an interview last week.

“On the morning of 9/11, I was standing with Senator Biden on the steps of the Capitol,” MacBride said. “And we heard the news that the second tower had been struck. And he turned to me and said something like — your job description just changed. I wasn’t sure exactly what he meant.”

“But it soon became clear. He saw that the fact the U.S. had been struck in this asymmetrical bravado act of terrorism meant that the U.S. was going to have to fundamentally change the way it did business to respond to the threat.”

“There was this paradigm change that happened almost overnight. In the old days, government agencies were being siloed, the information was being stovepiped, one side of the agency didn’t know what the other side was doing. The 9/11 report showed that the FBI and CIA both had information that if shared with one another potentially could have stopped those attacks.”

“The Patriot Act and other statutes were all about tearing down artificial walls, sharing information between entities in the national security apparatus, to detect and disrupt threats, to stop them before they happened.”

“This paradigm shift that occurred in the national security area spilled over into the enforcement and regulatory space. You had agencies that in the past were ad hoc or opportunistic when they shared information now doing so formally, either as a matter of statute or as a matter of a memoranda of understanding between agencies.”

“The result has been a consolidation of enforcement authority in Washington. You have this proliferation of regulatory and enforcement agencies that just didn’t exist a decade ago.”

“It happened at first with Sarbanes Oxley, that created the Public Company Accounting Oversight Board.”

“Dodd Frank created the Consumer Financial Protection Bureau. There are other agencies that have been stood up in the last decade at the both the national and international level. Regulators and enforcers — state, federal, local — are sharing information in unprecedented ways both across state and national borders.”

“You have any number of investigations you can look at that now involve federal, state and local regulators.”

“When I was U.S. Attorney, I created the Virginia Financial Securities Fraud Task Force. That brought together criminal law enforcement agencies like the FBI, the Postal Inspection Service, the IRS on the one side. And then we brought in civil regulators like the SEC, the CFTC, state securities commissions. We brought them together in a way that allowed them to share information with the goal of detecting and disrupting financial frauds when they were relatively small, before they ballooned into Madoff style billion dollar ponzi schemes.”

“We stole the playbook from the national security counterterrorism side and have now applied it in the financial fraud and regulatory space. Companies increasingly have a sense that the locus of power has shifted from New York to Washington and northern Virginia. The regulators and enforcers here are much more active and will soon, if they haven’t already, eclipse New York as being the center of the U.S. government’s efforts against financial fraud.”

Why is the U.S. Attorney’s office in Alexandria so much more powerful than other U.S. Attorney’s offices? Is it just the proximity to DC?

“The Eastern District of Virginia is about one third of the geography of the state, but about two thirds of its population,” MacBride says.

“It’s home to about six million people. It stretches from Alexandria in the north, down through Richmond and then on down to the Tidewater area. It’s home to the largest footprint of the U.S. government of any district in the country.”

“It’s home to the CIA. It’s home to the Pentagon. It’s home to the FDIC and the SEC’s Edgar servers. It’s home to the Federal Reserve Bank of Richmond. Every bank on the east coast that wires funds on a daily basis, most of those funds transit through Richmond.”

“Norfolk is home to the world’s largest naval base and one of the world’s largest seaports. There are five international airports in the district.”

“Much of the global backbone of the Internet sits in northern Virginia in the form of servers and infrastructure. The NSA has said publically that most e-mails in the world transit through switches or fiber optic cables that sit somewhere in northern Virginia.”

“The district is also home to what has been dubbed the rocket docket. The rocket docket is the result of rules unique to the district out of the 93 federal districts in the country. These are rules that speed cases on both the civil and criminal side.”

“Every year the federal judiciary puts out a report on the relative time it takes for cases to go to trial or to be resolved in all 93 federal districts around the country. Every year, the eastern district of Virginia is ranked number one. It’s the fastest time to trial. On the civil side, it’s between nine or ten months between when a case is filed and when it goes to trial. There are other districts in the country where it can take years for a case to go to trial.”

“The old adage is — justice delayed is justice denied. That means if you are law enforcement agency or a regulator that wants to see a case resolved with fairness and dispatch, you are going to try and find venue in that district. All of these things combined with an experienced federal bench has translated nicely in the corporate crime context.”

MacBride also sees the pendulum swinging back from deferred and non prosecution agreements toward more guilty pleas in corporate crime cases.

“Now you have the pendulum swinging back toward the Arthur Andersen end of the spectrum,” MacBride said. “But the government is doing what it can to manage collateral consequences so that innocent employees are not punished. But let me tell you — it’s still a big deal for a company to be a convicted felon or even to plead guilty to a misdemeanor. Let’s not kid ourselves. That is something that no company wants even when the collateral consequences can be managed in a way that doesn’t put the company out of business.”

“My own view is that it is a positive social good when the Justice Department can impact the behavior and DNA of companies by having more tools in their enforcement tool kit instead of simply having the choice of prosecuting and potentially putting a company out of business or simply walk away and decline,” MacBride said. “The Department now has the ability to reach more ambiguous conduct where it might be more difficult to prove a criminal conviction in court. A company recognizes — we did something wrong, we want to set it right. That’s fair game for the Justice Department.”

“Companies that have developed a culture of self-disclosure are more comfortable doing so because they know that they are not facing a criminal indictment in every instance. And there are more incentives to self-disclose when a company knows it screwed up. There are nine factors in the U.S. Attorneys’ Manual that the government considers in deciding whether to bring a criminal case against a company. And a couple of those factors are self disclosure and willingness to bring remedial action.”

“So, a company may come in and say — some consultant of ours in a far flung corner of the globe crossed a line, we think, in terms of the FCPA. And we want to disclose it, we want to clean shop, we want to get that bad apple out of the barrel. And here are the steps we are putting in place to make sure it doesn’t happen again.”

“In case after case, in the FCPA context anyway, that good corporate citizen behavior was rewarded in my district by getting a deferred or a non prosecution agreement. In the old days, the Department would say — we can either walk away from it entirely, or we can indict this company. Do you really want to use a hammer when a fly swatter is a more nuanced and appropriate tool? A deferred or a non prosecution agreement is the appropriate resolution for a minor but real violation of the FCPA.”

“I don’t know that every case should resolve with a criminal prosecution of the company.”

[For the complete transcript of the Interview with Neil MacBride, see 28 Corporate Crime Reporter 28(12), July 14, 2014, print edition only.]