Corporate Crime Gets a Hearing

Corporate crime finally got a hearing in Congress. 

The Senate Judiciary Committee held the hearing, which it titled – Cleaning Up the C-Suite: Ensuring Accountability for Corporate Criminals.

Senate Crime Investigating Committee members. Left to right: Senator Charles Tobey, Senator Herbert O’Conor, Rudolph Halley, Senator Estes Kefauver, and Senator Alexander Wiley.

That’s according to a front page article in the February/March 2024 edition of the Capitol Hill Citizen.

In recent months, public interest groups had been lobbying Democrats in Congress to do a deep dive into the problem of corporate crime – which the FBI estimates costs the nation $300 billion a year compared to $16 billion for street crime. 

And while the less than two-and-a-half hour hearing actually was held on December 12, 2023, it was not exactly what you would call a deep dive by the Democrats. It was more pro forma, let’s get this baby over and done with and move on kind of a hearing.

There was a time when Congress held deep dives into issues of public importance – like, for example, organized interstate criminality. 

Remember the Kefauver hearings of the early 1950s? 

Congress set up a special committee – and budgeted $150,000 – to look into organized crime. The committee was chaired by Senator Estes Kefauver (DTennessee). During the course of the 15-month investigation, the committee met in 14 major U.S. cities and interviewed hundreds of witnesses in open and executive sessions. An estimated 30 million Americans tuned in to watch the live proceedings in March 1951. 

“Corporate crime deserves the same treatment and a deep dive into corporate crime would be equally popular with the American people,” the Citizen reported. “So why wouldn’t the Democrats want to do it? The answer is as obvious as the campaign finance reports in the Open Secrets database. You wouldn’t want that much of a focus on a problem where the Democrats in Congress are deeply complicit in what you might call a corporate crime protection racket – taking millions in campaign funding from the corporate criminals and then turning around and protecting a Biden Justice Department that has brought fewer major corporate crime cases than any of their predecessors – yes, even fewer than Donald Trump’s Justice Department.”  

None of that, of course, was mentioned during the hearing, not by the Democrats, of course, and not even by the Republicans, who are usually looking to embarrass their rivals. But alas, the corporate crime protection racket is bipartisan. 

The Republicans on the committee, when they spoke, for the most part ignored the topic of the hearing – corporate crime – and turned their focus to inner city street crime. One Republican Senator, Thom Tillis (R-North Carolina), in a neat little rhetorical twist, did in fact mention corporate crime in his remarks. But only after redefining the term.

“If we understand Senator Tillis properly,” the Citizen wrote, “it’s the black inner city kids who are the corporate criminals. 

Tillis was questioning Nicole Argentieri, the acting chief of the Justice Department’s Criminal Division. 

“Do you know what GTA IRL stands for?” Tillis asked Argentieri, referring to the popular video game. “Grand Theft Auto In Real Life.” “We have minors in Washington, D.C. thinking they are playing a video game holding people at gunpoint and stealing ten cars,” Tillis said. “We have organized crime rings. I think these 15-year-olds need to be held accountable and hopefully we can save them from a life in prison.” Tillis said he considered these children “to be corporate criminals – people organizing, whether it is organized retail theft, a real problem that will create shopping deserts in troubled communities.” Similarly, Senator Marsha Blackburn (R-Tennessee) ignored the issue of actual corporate crime altogether and only asked about inner city street crime – in Washington, D.C. and in Memphis, Tennessee. 

But the promise of a Kefauver- like nationwide series of corporate crime hearings was momentarily on display in the Senate Judiciary Committee hearing room in the person of Ryan Hampton, a recovering 43-year old opioid addict. 

Hampton was the only victim of corporate crime who testified at the hearing and portrayed a two-tiered system of justice. 

“The story of my opioid addiction is not unique,” Hampton told the Committee. “Millions upon millions of Americans have experienced the very same pain and misery I have at the hands of corporate criminals. I just happen to be one of the lucky few who survived.” “My painful, near-death experience at the hands of pharmaceutical companies illustrates how dire this problem is. From the 1990s to the 2010s, a tidal wave of pharmaceutical opioids crashed down on this country, drowning thousands of communities in an unprecedented volume of pills that caused dependence, addiction, and death.” 

“Like so many, I had to learn this the hard way. I was prescribed an absurd dose for an absurd amount of time by licensed doctors who made scant mention of serious sideeffects. After I became addicted, doctors continued re-filling my prescriptions – until one day they didn’t.” 

“At my most sick and desperate, I was cut-off and left to fend for myself, without any referral for treatment. Instead of being seen as a patient who needed help, I was now treated as a liability, and faced with prejudice and shame.” 

“What truly stuns me is that while all of this was going on, federal prosecutors at the Department of Justice had already opened multiple investigations into several pharmaceutical companies, from Purdue Pharma, which manufactured the medications, to McKesson, which distributed the medications, and pharmacies like Wal-Mart, which dispensed the medications–medications that were approved by the FDA under false and deceptive pretenses.”

“Though numerous pharmaceutical companies have pled guilty to major federal crimes, and settled multi-billion-dollar lawsuits, justice has still not materialized for victims,” Hampton told the Committee. “The simple fact is this – the more opioids flooded communities, the richer they became. Without enforcement and deterrence, these executives had zero incentive to change their business model.” 

“People at corporations made the decision to break the law, and many remain unapologetic and openly defiant. The Sackler family (the owners of Purdue Pharma), for example, could not give a clear answer on whether they feel responsibility or even whether they’re sorry for their actions. It seems that the wealthy get off scot-free or with a slap on the wrist, offered sweetheart deals and offered non-prosecution agreements.” 

“The most they expect is a measly fine, in what amounts to rounding errors in their enormous profits, chalked up as the cost of doing business. These powerful companies knowingly defrauded the government and misinformed the public. Senators, these are felonies. Where I’m from, if you commit a felony, you get punished for it.” 

“But if you run a big pharma corporation, it appears that wealth and power grant your entry into a parallel system of justice. This parallel system for the wealthy and powerful generates cynicism and erodes faith in our institutions,” Hampton told the Senators. 

“A society that does not own and face up to its crimes is doomed to repeat them. That is why families like the Sacklers must be fully investigated, indicted, and prosecuted, with transparency by the Department of Justice, to the full extent of federal law – for the lives they cut short, the communities they tore apart, and the families they destroyed.”

Judiciary Committee chair Dick Durbin (D-Illinois) asked the chief of the Criminal Division, Nicole Argentieri – “Why was no criminal action brought against the Sacklers?”

“Pursuant to long-standing government policy I cannot speak to how we make charging decisions, but I can say we follow the facts and the law and we apply the principles of federal prosecution,” Argentieri said. “I’m glad to hear that, but when the Sackler family ends up with billions of dollars and walks away from the devastation it created, it’s unacceptable,” Durbin said. “The message is basically if you have enough money you can game the system and walk away with plenty of billions left over. Don’t you see that?” “We share your concern about the opioid epidemic. The criminal division was not involved in the 2020 agreement,” she said. 

Why didn’t they bring their own accusation against the Sacklers? Durbin asked. “We follow the facts and the law, but as to why no one else was prosecuted, I cannot go further,” Argentieri said. 

“That is the heart of this hearing,” Durbin said. “The problem that you see here is that these people lawyered up and put themselves in a political position where the family basically escaped liability.” 

What neither Argentieri nor Durbin mentioned was a more than 100-page prosecution memo that federal prosecutors in Virginia drew up in 2006 laying out the case against Purdue Pharma. The memo was featured in a New York Times mini documentary titled – A Secret Memo that Could Have Slowed an Epidemic. 

Had the prosecutors been allowed to move on their memo and bring felony charges against key Purdue Pharma executives and proceeded in a full out prosecution of the company and its high ranking executives and owners, the epidemic could have been limited, saving tens of thousands of American lives. 

But high powered corporate criminal defense attorneys went over the heads of line prosecutors to high ranking officials at Main Justice and limited the range and scope of the prosecution. Those line prosecutors in Virginia were doing old school prosecutorial work. 

They wanted to bring the criminal prosecution – and either force guilty pleas and jail sentences – or not bring the case. But that’s not the way Main Justice handles major corporate crime prosecutions these days. It’s all – settlement, settlement, settlement, deferred prosecution, non prosecution, declination with disgorgement. No plea. No jail time for executives. (Again, we’re talking about major U.S. corporate crime cases. Often, when the Justice Department boasts about jail time for corporate executives or guilty pleas by corporations, they are talking about smaller companies or foreign multinationals. Those are the usual exceptions to the rule of corporate impunity.) 

During the hearing, there was much discussion about reforming the corporate crime settlement practice. Duke Law Professor Brandon Garrett gave the Senators four reform ideas – more comprehensive public data collection on corporate crime, amend the Speedy Trial Act to allow for more careful judicial scrutiny of corporate criminal settlements, more enforcement resources to tackle corporate crime and violence, and legislation to emphasize the need for effective compliance. 

But there is another, albeit minority, view that wasn’t aired during the hearing – severely limit the use of these major corporate crime settlements. Deferred prosecution agreements, the primary tool used to dispose of major corporate crime cases, were intended only to rid the courts of minor individual cases – they were never intended for major corporate crime cases. 

Then, in the early 1990s, came Mary Jo White, the former U.S. Attorney in Manhattan, now a partner at the corporate criminal defense firm of Debevoise & Plimpton. In 2005, Corporate Crime Reporter interviewed White and in that interview, White claimed to be the mother of the corporate criminal deferred prosecution agreement. White said that in 1994, she 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. Perhaps we should scale way back on their use in major corporate crime cases. 

At a conference held in 2013 by Corporate Crime Reporter at the National Press Club, then University of Michigan Law Professor David Uhlmann, now head of the Environmental Protection Agency’s enforcement unit, argued that the Justice Department should stop using deferred and non prosecution agreements to settle corporate crime cases. 

“If the law and the facts justify prosecution, charges should be brought – they should not be sacrificed to deferred prosecution or non-prosecution agreements,” Uhlmann said. “If the conduct does not rise to the level that warrants criminal prosecution, the matter should be declined,” he said. 

“Deferred and non-prosecution agreements, if they occur at all, should be limited to relatively minor cases where civil or administrative enforcement is not available.” 

The December Senate Judiciary Committee hearing was focused on the Purdue Pharma corporate crime and the failure of justice in that case. But it is remarkable that given the prominence of the Boeing corporate crime that killed 347 people in two major crashes, Boeing was not mentioned once during the hearing – especially since the Boeing deferred prosecution agreement was perhaps, as Columbia Law Professor John Coffee put it, one of the worst deferred prosecution agreements ever and is emblematic of everything that is wrong with these types of settlements. 

The three-year Boeing deferred prosecution agreement expired on January 7, 2024. Now the Justice Department has sixty days to ask a federal judge in Texas to dismiss the criminal charges. And if it does move to dismiss, the victims’ families and aviation activists will be there in the courtroom arguing that Boeing violated the terms of the agreement and that the criminal case should be reopened. 

Democratic party partisans, like David Sirota, argue that since the Boeing deferred prosecution agreement was cut in the last days of Donald Trump’s administration in January 2021, President Biden could score political points by rescinding it and reopening the case against Boeing. But that’s a long shot, given the track record of how the Biden’s Justice Department has treated the Boeing victims to this point. 

[For the complete story, get the print edition of the Capitol Hill Citizen.]

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