Did you know that corporate crime prosecutions are on the rise? And if you’re thinking that your business is too small or too clean to ever get caught up in federal law enforcement action, well, think again.
Occupational fraud costs the United States over $300 billion per year. That’s right, you read that correctly. And the worst part is…
Most business owners have no idea how to defend themselves when law enforcement comes knocking on their door.
Here’s what you can expect:
- Understanding The Current Corporate Crime Landscape
- Why Every Business Needs A Defense Strategy In Place
- The Benefits Of Voluntary Self-Disclosure Programs
- Building The Right Defense Team
Understanding The Current Corporate Crime Landscape
Let me start off by telling you something that most business owners probably don’t know.
The Department of Justice has significantly increased its enforcement activity over the past year. Corporate prosecutions have increased by more than 20% from 2021 to 2023, and they are not slowing down anytime soon. This includes a wide range of crimes, such as:
- Fraud and embezzlement schemes
- Bribery and corruption
- Money laundering and other financial crimes
- Export control violations
- Tax evasion and other tax crimes
But what’s really interesting to note is that the government is no longer just targeting the biggest corporations for these crimes. They are casting a much wider net and going after businesses of all sizes. If your business is investigated by law enforcement, even if it was a mistake or accident, you will need experienced criminal defense lawyers who understand how federal prosecutors think and act.
Here’s a little food for thought:
When the feds come knocking on your door, you may only have minutes to make decisions that could literally determine the fate of your company. Having the right people on your side before the trouble happens is the difference between surviving an investigation and going out of business for good.
Why Every Business Needs A Defense Strategy In Place
I want you to know the absolute scariest part about corporate crime investigations. You ready for this?
Did you know that 57% of occupational fraud cases lead to a criminal referral?
That’s right, more than half of these cases don’t just end with some employee getting fired or the company paying a civil fine. Nope. They turn into criminal matters.
And when I say “criminal matters,” I mean big trouble. We’re talking about:
- Possible jail time for executives
- Huge fines that can cripple a business
- Permanent damage to a company’s reputation
- Loss of business licenses and contracts
Oh, and did I mention that the average loss per occupational fraud case? Over $1.6 million, my friends. That kind of financial hit can bring even the most successful businesses to their knees. But the damage to your reputation? That can be even worse than the money loss.
Once people find out your company is under criminal investigation, they don’t want to be associated with you. Clients disappear. Partners back away.
Your entire business can come crumbling down.
Wait until after the investigation starts is like buying fire insurance after your house is already burning down.
The Benefits Of Voluntary Self-Disclosure Programs
I know what you’re thinking. “Wait a minute. Aren’t I supposed to keep all that bad stuff under wraps? I pay you to do that, right?” Wrong.
Disclosure is actually one of the most effective defense strategies you can take. I know that sounds crazy. But voluntary self-disclosure programs have become the DOJ’s absolute favorite tool to get companies to cooperate. And the benefits are huge:
- Presumption of declination from prosecution
- Significantly reduced fines (think 50-75% below the sentencing guidelines)
- No need for a compliance monitor
- Future prosecution protection for the disclosed conduct
Here’s how it works:
When a company discovers criminal misconduct within its ranks, it can voluntarily report it to the DOJ before the government finds out on its own. If the disclosure is timely, complete, and paired with full cooperation…
The company can avoid prosecution entirely.
Now, here’s the catch. The company needs to provide the DOJ with “all relevant facts” about the misconduct, which means everything from who did what and when to providing documents and full cooperation during the investigation.
Half-measures don’t cut it.
Companies that try to disclose only part of the story or hold back key information? They end up worse off than if they’d never disclosed at all.
Building The Right Defense Team
Now let’s talk about what an effective defense team actually looks like. I mean, you can’t just hire any old attorney and cross your fingers, right?
Corporate crime defense is a specialized field that requires certain skills and experiences that not all lawyers possess. Here are the characteristics your legal team needs to have:
Federal prosecution experience: Look for attorneys who have worked for the government or in federal prosecutors’ offices. They know how the other side thinks and what they’re looking for.
Industry expertise: Healthcare fraud is not the same as securities fraud. Find lawyers who understand the ins and outs of your particular business.
Investigation management skills: Navigating a federal investigation isn’t just about court appearances. It’s about managing document productions, witness interviews, and internal controls.
Negotiation expertise: The best outcomes almost never come from trials. They come from knowing how to negotiate effectively, often long before any charges are ever filed.
And did I mention that the relationship between your business and your defense counsel needs to start before any trouble comes along?
Waiting until FBI agents show up with a search warrant is already starting from behind. Smart companies establish relationships with experienced criminal defense counsel as part of their overall risk management strategy.
And when the storm does come?
They’re ready.
Creating A Compliance Shield
Ok, here’s the thing. Defense is always better than a cure.
A robust compliance program won’t guarantee you’ll never face an investigation. But it can be the difference between a declination and a devastating prosecution.
What makes a compliance program effective?
- Regular risk assessments customized for your business
- Clear policies that employees can understand and follow
- Multiple avenues for reporting suspected misconduct
- Prompt investigation and remediation when issues are discovered
- Consistent enforcement of policies at all levels of the company
The DOJ will look at whether you have an “effective” compliance program. Not just a fancy program written in legalese on a binder on a shelf. I mean an actual system that prevents, detects, and responds to criminal conduct.
Businesses with good compliance programs will get a pass, and the companies without? They will be used for examples.
The Bottom Line
Corporate crime defense isn’t a game you play when the prosecutors come knocking at your door. It’s a strategic business decision that you make right now to protect your company tomorrow.
The landscape of corporate crime prosecutions is evolving rapidly. Enforcement is increasing. Penalties are getting bigger.
But for the businesses that take a proactive approach to corporate crime defense, the sky is the limit. Building and maintaining strong defense counsel relationships, implementing effective compliance programs, and understanding your options with voluntary self-disclosure programs are the keys to successfully navigating the minefield of corporate crime prosecutions.
Here’s what you should be doing right now:
- Assess your current compliance program honestly
- Start building a relationship with experienced criminal defense counsel
- Train your employees on proper response protocols
- Review and strengthen your internal reporting procedures
The best time to prepare for a federal investigation is yesterday. But since that ship has already sailed, the second-best time is today.
Don’t wait until the federal agents are standing in your lobby to start worrying about defense strategies. By the time they show up, your options will already be severely limited.
Take action now, and your business will thank you for it.