CORPORATE CRIME REPORTER
Patton
Boggs’ Demaurice Smith Adds a New Twist to Deferred Prosecution Agreements
21 Corporate Crime Reporter 33, August 23, 2007
It used to be that a corporation in trouble with federal prosecutors would face
an ugly outcome – plead guilty, pay the fine and move on.
Then came the rise of the deferred prosecution agreement.
Now, no longer does a corporation face the inevitability of a guilty plea.
Under a deferred prosecution agreement, the corporation is charged with a crime, but the prosecution is deferred.
If the corporation behaves well during the period of the deferment, the charges will be dropped.
Now comes DeMaurice Smith, a partner at Patton Boggs in Washington, D.C.
Last month, Smith had a corporate client, Maximus, facing serious criminal Medicaid fraud charges.
Smith hammered out a deferred prosecution with a twist – no charges would be filed.
So, what is being deferred?
“In this case, they deferred even the filing of those charges,” Smith told Corporate Crime Reporter in an interview earlier this week.
Indeed, under the Maximus agreement, the Justice Department agrees to defer “filing of the information” for 24 months.
If Maximus abides by the agreement, then the Justice Department will “decline to file the information.”
If the company engages in criminal activity over the next 24 months, the Justice Department can go in and file the information.
Smith said it was the first deferred prosecution agreement he knew of where there was no filing of charges.
In previous corporate deferred prosecution agreements, charges are filed, but prosecution of the charges is deferred for a period of time.
“It was the right law enforcement decision,” Smith said of the Maximus agreement. “If prosecutors can nonetheless come back later on – if they believe the corporation has not remained a good corporate citizen – and then file charges, well, in that situation, hasn’t the law enforcement objective been obtained? I would hope that in the future prosecutors would look at this scenario where they don’t even file charges. Any company out there knows that even the filing of a criminal charge against them – even if it is under a deferred prosecution agreement – can have negative corporate and employee and investor impacts.”
Smith prosecuted many street crime cases when he was with the U.S. Attorney’s office in the District of Columbia.
And he likened the deferred prosecution agreements he cut with 17-year-old drug offenders to the corporate agreements he’s cutting now.
“In D.C., they started a drug court many years ago,” Smith said. “The idea was to do something to monitor the person’s behavior, to take a reasoned analysis as to whether or not the person has engaged in criminal conduct that should be punished by a conviction. And many times, prosecutors made a decision that if a person is willing to subject themselves to monitoring, to make sure they don’t offend again – that really was the best use of prosecutorial resources.”
“And corporate deferred prosecution agreements are an extension of that thinking,” Smith said. “After the Arthur Andersen case, where you saw the most serious ramifications of a guilty plea or a conviction, prosecutors did step back and said to themselves – okay, what are our goals? Our goals are to ensure that corporations and the individuals within them comply with the laws. It is to ensure prospectively that they are good corporate citizens. But at the same time, does it make sense in every case to charge a company or indict a company or convict a company where the ramifications could be that other employees who did not have any sort of connection with the alleged wrongdoing are punished? With the rise of deferred prosecution agreements you are seeing prosecutors saying – we can still achieve all of our law enforcement ends without necessarily convicting the company.”
[For a complete transcript of the Interview with DeMaurice Smith, see 21 Corporate Crime Reporter 33 (12), August 27, 2007, print edition only]
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