Peter Reilly on Banning Deferred Prosecution Agreements for Corporate Crimes That Result in Death

In the beginning, deferred prosecution agreements were used to clear state and local courts of minor non-violent street crimes.

With these agreements, prosecutors said to the defendant – okay, we’ll charge you with a crime, but if you are a good boy or good girl and don’t do it again, we’ll drop the charges after a period of time – usually a year or two. 

Then came the Speedy Trial Act of 1974. 

It had a provision that extended deferred prosecution agreements to federal courts. 

These agreements were never intended for major corporate crime cases.

Then came Mary Jo White, the former U.S. Attorney in Manhattan, now a partner at the corporate criminal defense firm of Debevoise.

In 2005, we interviewed White and in that interview, White claimed to be the mother of the corporate criminal deferred prosecution agreement.

In 1994, it was then U.S. Attorney White who introduced deferred prosecution agreements to major corporate crime cases in a case involving Prudential Securities.

Now, deferred and non prosecution agreements are the default method of settling major corporate crime cases.

Texas A&M law professor Peter Reilly, who in the past has called for outlawing all corporate criminal deferred prosecution agreements, now says we should at least not allow them when the corporate crime results in death. 

His most recent article is titled – Outlawing Corporate Prosecution Deals When People Have Died.

“These deferred prosecution agreements at the federal level were created with the passage of the Speedy Trial Act in 1974,” Reilly told Corporate Crime Reporter in an interview last month. “The debate on the Senate floor focused on all of these states who were using deferred prosecution tools. Senators were saying – in the states for low level offenders and sex workers and for some of these drug crimes, they were getting rid of these cases through deferred prosecutions.”

“It was very clear in the Congressional debate that they were designed for these petty crimes and first time offenders. But then twenty years later in the Southern District of New York, Prudential Securities was involved in a case. And the prosecutors said – let’s use a deferred prosecution agreement for that.” 

“That was twenty years after the Speedy Trial Act was passed. And if you had said to those behind the passage of the law – could you use these agreements for huge corporate criminal cases? – they would have laughed and said – of course not. That’s not our intention at all.”

“But as courts have pointed out since then, in writing the language of the act, they didn’t say anything about limiting deferred prosecutions to individuals. And they didn’t say anything about specific crimes.”

“So in 1994, when the case was brought against Prudential Securities, it was used. And since then, corporations have been in the driver’s seat. But in my latest paper, I argue – you have to draw a line. If somebody dies in these cases, you shouldn’t be able to use deferred prosecution agreements to settle the cases.”

“I point out in the GM faulty ignition switch case in 2015, 174 people died, and they used a deferred prosecution agreement to settle the case. A federal judge said that the GM matter and its resolution represents ‘a shocking example of potentially culpable individuals not being criminally charged.’”

“And then of course, a deferred prosecution agreement was used to settle the Boeing cases. In that case, there were 346 dead. Congress knows this is a problem. Two bills were introduced to address this situation – The Accountability and Deferred Prosecution Act and the Too Big to Jail Act. Both were introduced in the past ten years. And both got no traction in Congress whatsoever.”

What would those bills have done?

“Both of them took on that core question of judicial oversight. You have the Fokker decision, which essentially says that the judge cannot look at the terms of the agreement. That essentially means there is no judicial review. Several judges since Fokker have said – because of Fokker, my hands are tied – I have to approve this agreement.”

“Both of those bills said – this is wrong, judges should have real judicial oversight of these agreements. Judges should be able to reject an agreement if it is unfair or goes against the public interest. But neither of those bills got any traction in Congress.”

“In this paper I argue that there has to be some line. And the lowest possible standard is – let’s not allow a deferred prosecution agreement when people get killed. Can’t we all agree on that?”

“I don’t know whether anybody in Congress will pick up on this idea. But it’s a pretty minimal standard that everybody can agree on.”

In September 2014 you wrote an article titled Justice Deferred is Justice Denied. In that article, you argue that these agreements should not be used for corporate criminal cases. Are you backing off from that?

“A decade has filled me with more realism. My thinking has evolved. There probably are some cases that are very complex and would be very expensive to try. If all the players are sophisticated and have great counsel and in the end some highly sophisticated people who were basically gambling with money lose out on some money, maybe I don’t have a problem using a deferred prosecution. But when you have these agreements being used in cases that result in death, where people are killed, and they are not highly sophisticated corporate people on each side of the case, as a justice system, we owe it to the families of the people killed to find out what really happened.”

“Deferred prosecutions are largely a mechanism to prevent all of the facts from coming out. And we should use a vehicle that ensures that more facts come out. And that vehicle would be a trial.”

Reilly is a consultant to the Boeing victim families. 

“There were two Boeing crashes and 346 people died altogether. They used a deferred prosecution to settle the case. And it wasn’t a regular deferred prosecution agreement. Under a normal deferred prosecution, they say – okay, you have to admit wrongdoing, you have to cooperate with the government, and you have to pay a fine.” 

“They added something to this Boeing agreement that I did not see in any other such agreement. They immunized top level people – senior management – in Boeing. They didn’t identify what they meant by senior management.” 

“I thought the agreement went to extraordinary levels to protect certain executives from prosecutions. And I thought that was unfair. That just hasn’t been a part of previous agreements.”

“The Justice Department was going further to protect corporate interests than they have in the past. They also didn’t include a corporate monitor.”

“What would have happened in the case if they couldn’t use a deferred prosecution?” “They would have had a more thorough investigation.”

“They would not have granted that immunity to senior management. They would have had an outside compliance monitor.”

“They would have gone to trial. In the end they probably would have had some sort of plea agreement. But that would have provided far greater justice. In the end the company would have had to plead guilty. There would have been a guilty plea. And the judge would have to look at the agreement to make sure it was fair.”

“There is an ethos that has evolved over time that has put corporations into the driver’s seat,” Reilly said at the end of our interview. “We are not funding the Department of Justice like we should be. They don’t have the money to bring these cases. There is a question whether there is an expertise within the department.” 

“Third is the revolving door. There are many people at the Department of Justice who would really like these jobs at these top law firms that pay far more money and have more prestige. If they are angling for these jobs, does that change their behavior when they are sitting at the Department of Justice. Some people are suggesting yes – it changes their behavior. It makes them softer on the companies.”

“It seems to be a situation that is getting worse over time. The people who are paying the price for this are the members of the general public. In the end, the Department of Justice is supposed to provide justice for the public.” 

[For the complete q/a format Interview with Peter Reilly, see 37 Corporate Crime Reporter 46(14), November 27, 2023, print edition only.]

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