According to recent news reports, there is a short list for the job of U.S. Attorney in Brooklyn.
And on the short list is James McGovern, who headed the office’s Criminal Division and is now a partner at Hogan Lovells in New York.
McGovern doesn’t want to talk about the speculation.
But he did weigh in on corporate crime practice in the age of Donald Trump – and in particular prosecutions under the Foreign Corrupt Practices Act (FCPA).
“In the FCPA area, I don’t think it’s going to change,” McGovern told Corporate Crime Reporter in an interview last week. “FCPA enforcement represents a strong revenue stream for the Department of Justice. FCPA enforcement is consistent with the President’s message of leveling the playing field around the world. And I can’t think of any better way to level the playing field than to make it illegal for all companies to be engaged in bribery or corruption.”
But President Trump has said in the past that he doesn’t like the FCPA.
“In the past. I don’t know when he said it, but the global environment has evolved since that time. There are anti-corruption laws being passed all around the world. What we put in motion in the early 2000s has taken off around the world. There is an interest by foreign countries to do it because they know they can’t attract foreign investment if they don’t get their corruption act together. Will it change under the current President? No. It’s entirely consistent with his message of leveling the playing field.”
You were a prosecutor for most of your professional career. What happened to the prosecutor for life?
“It has to do with the evolving view of what a prosecutor is and the increase in federal prosecutions,” McGovern said.
“If you remained in a local jurisdiction, you could be a prosecutor for life and be very happy. You could survive, you would be one of the better paid people in town and you could do your job and do what you love for your entire career.”
“Many people in local prosecutor offices have comfortable lives and you can do that for a long time.”
“When you get into the federal prosecution business, which has increased significantly over the years, in places like New York and Washington and Chicago and Boston and northern California, you have a lot of movement in these offices. They are transient offices. And now because the Department of Justice has such a strong role in enforcing the securities laws and the FCPA, many prosecutors in these major metropolitan areas are seeing opportunities that maybe didn’t exist in the past.”
“White collar defense is on the rise in major law firms. There is a market for people coming out of federal offices to go to these types of international law firms. There is a market for them.”
“People cycle in and out of these big federal offices pretty routinely. The average lifespan of a prosecutor in EDNY is seven or eight years. When all of your peers are leaving to do other things, you as an individual get a sense that you might want to do something else. And the private sector certainly provides those opportunities. And the private sector pays you better than the government too. And also, it’s very expensive to live in places like Boston and New York and Washington, DC and Los Angeles. The great salary that the Department of Justice is paying is often not enough to give your family the life you want to give them.”
Is there anyway to slow the revolving door between the Justice Department and the big corporate defense law firms? And should we?
“The expectation for federal prosecutors in places like the Southern District of New York is that they are going to be the best and the brightest of lawyers in this country,” McGovern said. “And you don’t want in any way to limit the opportunities to get the best and the brightest and the most enthusiastic people. There are some who would say — the people who have been around for a long time might be better because they are more senior and they have seen the world. And I understand that.”
“But at the same time, the offices understand that you want to bring in the people who are hungry, the people who will put the time and work in to bring those big cases. I don’t have any problem with the idea that these folks go on to do other types of work after they are prosecutors. In fact, it’s a good thing. It opens the door for other young, enthusiastic right minded people to get involved in that business. That’s a good thing. Having people who are as savvy as the people operating on Wall Street is a good thing. Having young prosecutors who know how to operate in social media, how to operate in the modern times is a good thing. Their enthusiasm is a good thing.”
“The longer I did the job, on some tiny level, I used to resent them. I’d look back and think — God I wish I was still like that. I remember the first day I said I was representing the United States, and I got a thrill out of it, too.”
“That’s who you want on those cases. You want the best and the brightest looking at these issues because folks like you and people in the media will be judging it later and ask — was this the best case to bring at that time? Was this the smartest move to make? Why would you ever want to limit the opportunity to get those people in those positions to look at those important matters?”
You don’t see a downside to this revolving door?
“The people who have that view are taking a rather simplistic view of things. Working in a U.S. Attorney’s office is an amazing training ground. It will pay dividends to them in any type of work they do thereafter. The fact that they switch from one side to another just shows that they are talented.”
The majority of FCPA cases are self-disclosure cases from law firms and companies to the Justice Department. The role of a corporate crime defense attorney is a blend of defense and prosecution. What about the idea that you are still policing or being an private attorney general? Are you still wearing your prosecutor hat?
“The FCPA example is an interesting one. In many ways, you are right. As a criminal defense lawyer, you are being retained by a company that says — something happened here. We think it might be bad and bad for our company going forward. We need you to find out what happened and advise us on whether it happened, what is the extent of it and what is it we need to do going forward to make this right so that we can get back to the business of doing business.”
“Is that prosecuting? It is certainly investigating. As you see in my law firm, we have an entire practice area dedicated to investigations. And that is what we do.”
“Do we have to have prosecutor hats on to do that? No, we just have to be people who are interested in finding out what the truth is.”
“It’s true we do self reports to the government. But those are business decisions in many instances. If you don’t self report and you get busted, you are in a much worse position than you would be if you would have self-reported. In this day and age where whistleblowers are so heavily incentivized to come forward with information, to investigate acts of bribery and corruption and your company does nothing about them puts you in a precarious position going forward if somebody else in the company finds out about it and decides to go to the authorities with it.”
A couple of weeks ago we interviewed Bart Schwartz of Guidepost Solutions. He’s a monitor in a number of these corporate cases, most recently in General Motors. He was with Rudolph Giuliani when Giuliani was prosecuting white collar cases in the Southern District.
“Prosecutors realized they could recover large fines,” Schwartz said. “That became a large part of prosecution. In the early years, that was not a factor. In the office I was in, in the Southern District of New York, we were focused on individuals, not as much on corporations. When you are thinking more about money and financial recoveries, you are more likely to go after corporations and not just the individuals. That impacts the investigative and prosecution side as well as the defense side.”
Where do you come down on individuals versus corporations?
“Thirty years ago it was all about individuals,” McGovern said. “I don’t think the government understood how much they could recover. The law and Department of Justice policies have changed. There has been a much larger push to get larger financial recoveries from these cases.
That said, I don’t think much has changed as far as the interests of prosecutors to pursue individuals. I didn’t see the Yates Memo to be the groundbreaking event that the media reported it to be. It was in fact a restatement of prior policies — from the Holder Memo to the McNulty Memo to the Filip Memo. They all make references to holding individuals accountable for their wrongdoing as part of any corporate resolution.”
“That has been part of Department of Justice policy for quite a long time. When Sally Yates made that pronouncement of the Yates Memo at NYU Law School a couple of Septembers ago, the people who were in the business, the prosecutors who were there didn’t see it as this big of an event.”
“They said — okay, we are pursuing individuals now? Isn’t that what we always did? It’s very difficult to incarcerate corporations. Prosecutors have been forever looking at individuals. And it has been part of Department of Justice policy to pursue individuals.”
“Many people have become cynical as a result of the inability of the Department of Justice to hold individuals accountable in the wake of the financial crisis. But that was a unique situation where proving criminal intent in many of those cases was a difficult undertaking and the Department was just unable to do it.”
“I don’t think anything has changed. The prosecutors still prosecute wrongdoers. And if they can get to them they get to them.”
[For the complete q/a format Interview with James McGovern, see page 31 Corporate Crime Reporter 15(12), Monday April 10, 2017, print edition only.]