Debevoise Partner Eggleston on FCPA, False Claims and Corporate Monitors
25 Corporate Crime Reporter 21, May 25, 2011

Debevoise partner W. Neil Eggleston has been around since the beginning.

When he was a youngster at the U.S. Attorney’s office in Manhattan, he brought one of the first corporate criminal prosecutions in the mid-1980s.

“I remember asking my colleagues for sample jury charges,” Eggleston told Corporate Crime Reporter last week. “And I remember people looking at me blankly. No one could remember ever having a prosecution against a company.”

“The whole issue of corporate criminal liability arose when the penalties were minuscule,” Eggleston said. “Then in the early 1980s, Congress amended penalty statutes which put enormous penalties on corporations. That made it advantageous for a prosecutor to bring corporate criminal liability cases.”

“And then the corporate sentencing guidelines came along – all of which changed the way of thinking about this.”

Back then, when a big corporate law firm needed a criminal defense lawyer, they would have to seek out a specialist.

Now, like Eggleston, they are embedded in big firms.

“Obviously, there has been more attention generally to white collar prosecutions,” Eggleston said. “You are seeing many more people like me at established firms that do this kind of work.”

“In the past, this kind of work would be referred out. But in those days, the defendants were much more typically individuals and not big companies. Companies were not particularly pursued.”

“There is a bigger network of enforcement now. When we see cases now, there is a Department of Justice investigation, an SEC investigation, maybe a state Attorney General investigation. That’s much more common now.”

Eggleston has seen the rise of deferred and non prosecution agreements.

“Deferred prosecution and non prosecution agreements have a significant role to play,” Eggleston said. “I worry that they will become a substitute for a prosecutor deciding – this is not an appropriate case to bring – there is no reason to subject this corporation to corporate criminal liability.”

“In the old days, they would have dropped the case. Now, they have the back up of seeking a deferred or non prosecution agreement, when in fact the case should not have been pursued at all.”

“That’s what I’m worried about – an easy out.”

Eggleston represented the outside directors of Enron.

“If you remember, right around that time there was Enron, Worldcom and Tyco,” Eggleston said.

“The high profile securities fraud cases that used to be heavily within the domain of the SEC now quite frequently have the Department of Justice involved.”

“Prior to Enron that happened periodically. It happened in the insider trading cases and the like. But the basic accounting fraud cases – like Enron – that was a new development with Enron and has accelerated since then.”

“So, there has been much more cooperation between the SEC and the Department of Justice. And in a high profile matter, it’s much more likely that you will have the Department of Justice involved than in the pre-Enron days.”

Eggleston says that the Justice Department is taking a more active oversight role when it comes to monitors.

“The most common area where there have been monitors is in the Foreign Corrupt Practices Act (FCPA) area,” Eggleston said. “The monitor is put in and then there could be a difference of opinion between the company and the monitor over the scope of the duties.”

“Does the monitor have the power to attend board meetings?”

“Do they have the power to attend meetings of the senior executives?”

“Do they have the power to look at accounting issues that are completely unrelated to FCPA issues?”

“You can imagine various power and scope disputes that come up.”

“And what the Department has recently said – if those disputes come up, they will be willing to engage and mediate whether the company is right and the monitor has gone beyond the anticipated scope of powers, or whether the monitor is behaving just the way the Department of Justice wanted them to.”

Eggleston pointed to the False Claims Act as the major tool in combating health care fraud.

“If what you really want is essentially disgorgement of profits, disgorgement of enough of a penalty to make the company think – this was not worth doing and we should not do it again – attention from the board of directors and the highest levels of the company, implementation of compliance programs to try and change the culture – then the civil False Claims Act is the way to go,” Eggleston said.

“You don’t really get that much more out of a criminal prosecution. And yet you run enormous risks of collateral consequences, some of which may even be unanticipated.”

[For a complete transcript of the Interview with W. Neil Eggleston, see 25 Corporate Crime Reporter 21(12), May 23, 2011, print edition only.]



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