Guess Which U.S. Attorney Doesn’t Do Corporate Deferred Prosecution Agreements?
23 Corporate Crime Reporter 14, April 3, 2009

Corporate deferred prosecution agreements are all the rage.

They have effectively supplanted corporate plea agreements as the settlement method of choice for the Justice Department and corporate America.

But there is at least one holdout.

A U.S. Attorney office that refuses to enter corporate deferred prosecution agreements.

Know which one?

It’s the U.S. Attorney’s office in Philadelphia.

How do we know?

Peter Spivack is a partner at Hogan & Hartson in Washington, D.C.

He specializes in white collar health care defense.

And Philly is a hub for health care prosecutions.

Spivack said that he has been told by the office that deferred prosecution agreements won’t come out of that office.

“You can be in Philadelphia, in the Eastern District of Pennsylvania, and their articulated policy is – they don’t enter into deferred prosecution agreements,” Spivack told Corporate Crime Reporter in an interview last week. “If you go across the state line into New Jersey – they entered into five such agreements with manufacturers of orthopedic devices in 2007.”

How does Spivack know this to be the case?

“They have told me on a number of occasions that they do not do deferred prosecution agreements,” Spivack said.

Is it true?

We rang up Linda Dale Hoffa.

Hoffa is the chief of the Criminal Division at the U.S. Attorney’s office in Philadelphia.

She has been in that position since 1984.

So, why don’t you do corporate deferred prosecution agreements?

“We haven’t done them because we think it’s better to make a clear bright line decision that we are prosecuting or not prosecuting,” Hoffa said. “There is either sufficient evidence to prosecute or not to prosecute. A deferred prosecution agreement can be more of a gray area. If the crime is serious enough, and it is warranted, then we will bring a prosecution. It’s not a written policy. But it has been the practice in our office.”

Nor does her office do corporate non-prosecution agreements, Hoffa said.

“When we make a decision to not prosecute, we simply decline to prosecute and we close our file,” Hoffa said.
Hoffa says she doubts that her’s is the only office that says no to corporate deferred and non prosecution agreements.

But she can’t name another one.

Other offices are shying away from deferred and non prosecution agreements.

Some will at least demand that an empty corporate shell enter a plea agreement.

But Spivack says this shell game makes a mockery of the system.

“Schering-Plough recently entered into a settlement where its subsidiary, Schering Sales Corporation, pled to crimes and was excluded. The exclusion was limited to the subsidiary,” Spivack said.

No harm to the parent.

“And in another case, Biovail, a Canadian company, same thing,” Spivack said. “The U.S. subsidiary pled, and the U.S. sub was essentially inactive.”

“But that seems to make a bit of a mockery of the system. It allows the government to demand huge settlement payments under the threat of exclusion – whether express or implied. So, it’s just used as leverage by the government to extract money and other concessions from companies.”

By the way, Hogan & Hartson isn’t exactly known as a big white collar defense firm.

Why not?

“We’re a well kept secret,” Spivack said. “And we’re trying to make ourselves less of a secret.”

Hogan has had a white collar defense unit now for over 20 years.

And it’s white collar practice is now growing, Spivack says.

[For a complete transcript of the Interview with Peter Spivack, see 23 Corporate Crime Reporter 14(13), print edition only.]



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