U.S. Department of Justice 

Office of the Deputy Attorney General 

The Deputy Attorney General Washington, D.C. 20530 

January 20, 2003 

MEMORANDUM 

TO: Heads of Department Components 

United States Attorneys 

Deputy Attorney General FROM: Larry D. Thompson 

SUBJECT: Principles of Federal Prosecution of Business Organizations 

As the Corporate Fraud Task Force has advanced in its mission, we have confronted certain 

issues in the principles for the federal prosecution of business organizations that require revision in order 

to enhance our efforts against corporate fraud. While it will be a minority of cases in which a 

corporation or partnership is itself subjected to criminal charges, prosecutors and investigators in every 

matter involving business crimes must assess the merits of seeking the conviction of the business entity 

itself. 

Attached to this memorandum are a revised set of principles to guide Department prosecutors 

as they make the decision whether to seek charges against a business organization. These revisions 

draw heavily on the combined efforts of the Corporate Fraud Task Force and the Attorney General’s 

Advisory Committee to put the results of more than three years of experience with the principles into 

practice. 

The main focus of the revisions is increased emphasis on and scrutiny of the authenticity of a 

corporation’s cooperation. Too often business organizations, while purporting to cooperate with a 

Department investigation, in fact take steps to impede the quick and effective exposure of the complete 

scope of wrongdoing under investigation. The revisions make clear that such conduct should weigh in 

favor of a corporate prosecution. The revisions also address the efficacy of the corporate governance 

mechanisms in place within a corporation, to ensure that these measures are truly effective rather than 

mere paper programs. 

Further experience with these principles may lead to additional adjustments. I look forward to 

hearing comments about their operation in practice. Please forward any comments to Christopher 

Wray, the Principal Associate Deputy Attorney General, or to Andrew Hruska, my Senior Counsel. 
Federal Prosecution of Business Organizations [1] 

I. Charging a Corporation: General 

A. General Principle: Corporations should not be treated leniently because of their 

artificial nature nor should they be subject to harsher treatment. Vigorous enforcement of the 

criminal laws against corporate wrongdoers, where appropriate results in great benefits for law 

enforcement and the public, particularly in the area of white collar crime. Indicting corporations 

for wrongdoing enables the government to address and be a force for positive change of 

corporate culture, alter corporate behavior, and prevent, discover, and punish white collar crime. 

B. Comment: In all cases involving corporate wrongdoing, prosecutors should consider 

the factors discussed herein. First and foremost, prosecutors should be aware of the important 

public benefits that may flow from indicting a corporation in appropriate cases. For instance, 

corporations are likely to take immediate remedial steps when one is indicted for criminal 

conduct that is pervasive throughout a particular industry, and thus an indictment often provides 

a unique opportunity for deterrence on a massive scale. In addition, a corporate indictment may 

result in specific deterrence by changing the culture of the indicted corporation and the behavior 

of its employees. Finally, certain crimes that carry with them a substantial risk of great public 

harm, e.g., environmental crimes or financial frauds, are by their nature most likely to be 

committed by businesses, and there may, therefore, be a substantial federal interest in indicting 

the corporation. 

Charging a corporation, however, does not mean that individual directors, officers, 

employees, or shareholders should not also be charged. Prosecution of a corporation is not a 

substitute for the prosecution of criminally culpable individuals within or without the 

corporation. Because a corporation can act only through individuals, imposition of individual 

criminal liability may provide the strongest deterrent against future corporate wrongdoing. Only 

rarely should provable individual culpability not be pursued, even in the face of offers of 

corporate guilty pleas. 

Corporations are "legal persons," capable of suing and being sued, and capable of 

committing crimes. Under the doctrine of respondeat superior, a corporation may be held 

criminally liable for the illegal acts of its directors, officers, employees, and agents. To hold a 

corporation liable for these actions, the government must establish that the corporate agent's 

actions (i) were within the scope of his duties and (ii) were intended, at least in part, to benefit 

the corporation. In all cases involving wrongdoing by corporate agents, prosecutors should 

consider the corporation, as well as the responsible individuals, as potential criminal targets. 

While these guidelines refer to corporations, they apply to the consideration of the [1] 

prosecution of all types of business organizations, including partnerships, sole proprietorships, 

government entities, and unincorporated associations. 
Agents, however, may act for mixed reasons -- both for self-aggrandizement (both direct 

and indirect) and for the benefit of the corporation, and a corporation may be held liable as long 

as one motivation of its agent is to benefit the corporation. In United States v. Automated 

Medical Laboratories, 770 F.2d 399 (4th Cir. 1985), the court affirmed the corporation's 

conviction for the actions of a subsidiary's employee despite its claim that the employee was 

acting for his own benefit, namely his "ambitious nature and his desire to ascend the corporate 

ladder." The court stated, "Partucci was clearly acting in part to benefit AML since his 

advancement within the corporation depended on AML's well-being and its lack of difficulties 

with the FDA." Similarly, in United States v. Cincotta, 689 F.2d 238,241-42 (1st Cir. 1982), the 

court held, "criminal liability may be imposed on the corporation only where the agent is acting 

within the scope of his employment. That, in turn, requires that the agent be performing acts of 

the kind which he is authorized to perform, and those acts must be motivated -- at least in part -- 

by an intent to benefit the corporation." Applying this test, the court upheld the corporation's 

conviction, notwithstanding the substantial personal benefit reaped by its miscreant agents, 

because the fraudulent scheme required money to pass through the corporation's treasury and the 

fraudulently obtained goods were resold to the corporation's customers in the corporation's name. 

As the court concluded, "Mystic--not the individual defendants--was making money by selling oil 

that it had not paid for." 

Moreover, the corporation need not even necessarily profit from its agent's actions for it 

to be held liable. In Automated Medical Laboratories, the Fourth Circuit stated: 

[B]enefit is not a ''touchstone of criminal corporate liability; benefit at best is an 

evidential, not an operative, fact." Thus, whether the agent's actions ultimately 

redounded to the benefit of the corporation is less significant than whether the 

agent acted with the intent to benefit the corporation. The basic purpose of 

requiring that an agent have acted with the intent to benefit the corporation, 

however, is to insulate the corporation from criminal liability for actions of its 

agents which be inimical to the interests of the corporation or which may have 

been undertaken solely to advance the interests of that agent or of a party other 

than the corporation. 

770 F.2d at 407 (emphasis added; quoting Old Monastery Co. v. United States, 147 F.2d 905, 

908 (4" Cir.), cert. denied, 326 U.S. 734 (1945)). 

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II. Charging a Corporation: Factors to Be Considered 

A. General Principle: Generally, prosecutors should apply the same factors in determining 

whether to charge a corporation as they do with respect to individuals. See USAM § 9-27.220, et 

seq. Thus, the prosecutor should weigh all of the factors normally considered in the sound 

exercise of prosecutorial judgment: the sufficiency of the evidence; the likelihood of success at 

trial,; the probable deterrent, rehabilitative, and other consequences of conviction; and the 

adequacy of noncriminal approaches. See id. However, due to the nature of the corporate 

"person," some additional factors are present. In conducting an investigation, determining 

whether to bring charges, and negotiating plea agreements, prosecutors should consider the 

following factors in reaching a decision as to the proper treatment of a corporate target: 

1. the nature and seriousness of the offense, including the risk of harm to the 

public, and applicable policies and priorities, if any, governing the prosecution of 

corporations for particular categories of crime (see section III, infra); 

2. the pervasiveness of wrongdoing within the corporation, including the 

complicity in, or condonation of, the wrongdoing by corporate management (see section 

IV, infra); 

3. the corporation's history of similar conduct, including prior criminal, civil, and 

regulatory enforcement actions against it (see section V, infra); 

4. the corporation's timely and voluntary disclosure of wrongdoing and its 

willingness to cooperate in the investigation of its agents, including, if necessary, the 

waiver of corporate attorney-client and work product protection (see section VI, infra); 

5. the existence and adequacy of the corporation's compliance program (see 

section VII, infra); 

6. the corporation's remedial actions, including any efforts to implement an 

effective corporate compliance program or to improve an existing one, to replace 

responsible management, to discipline or terminate wrongdoers, to pay restitution, and to 

cooperate with the relevant government agencies (see section VIII, infra); 

7. collateral consequences, including disproportionate harm to shareholders, 

pension holders and employees not proven personally culpable and impact on the public 

arising from the prosecution (see section IX, infra); and 

8. the adequacy of the prosecution of individuals responsible for the corporation's 

malfeasance; 

9. the adequacy of remedies such as civil or regulatory enforcement actions (see 

[Page 3] 
section X, infra). 

B. Comment: As with the factors relevant to charging natural persons, the foregoing 

factors are intended to provide guidance rather than to mandate a particular result. The factors 

listed in this section are intended to be illustrative of those that should be considered and not a 

complete or exhaustive list. Some or all of these factors may or may not apply to specific cases, 

and in some cases one factor may override all others. The nature and seriousness of the offense 

may be such as to warrant prosecution regardless of the other factors. Further, national law 

enforcement policies in various enforcement areas may require that more or less weight be given 

to certain of these factors than to others. 

In making a decision to charge a corporation, the prosecutor generally has wide latitude in 

determining when, whom, how. and even whether to prosecute for violations of Federal criminal 

law. In exercising that discretion, prosecutors should consider the following general statements 

of principles that summarize appropriate considerations to be weighed and desirable practices to 

be followed in discharging their prosecutorial responsibilities. In doing so, prosecutors should 

ensure that the general purposes of the criminal law -- assurance of warranted punishment, 

deterrence of further criminal conduct, protection of the public from dangerous and fraudulent 

conduct, rehabilitation of offenders, and restitution for victims and affected communities -- are 

adequately met, taking into account the special nature of the corporate "person." 

III. Charging a Corporation: Special Policy Concerns 

A. General Principle: The nature and seriousness of the crime, including the risk of harm 

to the public from the criminal conduct, are obviously primary factors in determining whether to 

charge a corporation. In addition, corporate conduct, particularly that of national and 

multi-national corporations, necessarily intersects with federal economic, taxation, and criminal 

law enforcement policies. In applying these principles, prosecutors must consider the practices 

and policies of the appropriate Division of the Department, and must comply with those policies 

to the extent required. 

B. Comment: In determining whether to charge a corporation, prosecutors should take 

into account federal law enforcement priorities as discussed above. See USAM § 9-27-230. In 

addition, however, prosecutors must be aware of the specific policy goals and incentive programs 

established by the respective Divisions and regulatory agencies. Thus, whereas natural persons 

may be given incremental degrees of credit (ranging from immunity to lesser charges to 

sentencing considerations) for turning themselves in, making statements against their penal 

interest, and cooperating in the government's investigation of their own and others' wrongdoing, 

the same approach may not be appropriate in all circumstances with respect to corporations. As 

an example, it is entirely proper in many investigations for a prosecutor to consider the 

corporation's pre-indictment conduct, e.g.,voluntary disclosure, cooperation, remediation or 

restitution, in determining whether to seek an indictment. However, this would not necessarily be 

appropriate in an antitrust investigation, in which antitrust violations, by definition, go to the 

[Page 4] 
heart of the corporation's business and for which the Antitrust Division has therefore established 

a firm policy, understood in the business community, that credit should not be given at the 

charging stage for a compliance program and that amnesty is available only to the first 

corporation to make full disclosure to the government. As another example, the Tax Division has 

a strong preference for prosecuting responsible individuals, rather than entities, for corporate tax 

offenses. Thus, in determining whether or not to charge a corporation, prosecutors should consult 

with the Criminal, Antitrust, Tax, and Environmental and Natural Resources Divisions, if 

appropriate or required. 

IV. Charging a Corporation: Pervasiveness of Wrongdoing Within the Corporation 

A. General Principle: A corporation can only act through natural persons, and it is 

therefore held responsible for the acts of such persons fairly attributable to it. Charging a 

corporation for even minor misconduct may be appropriate where the wrongdoing was pervasive 

and was undertaken by a large number of employees or by all the employees in a particular role 

within the corporation, e.g., salesmen or procurement officers, or was condoned by upper 

management. On the other hand, in certain limited circumstances, it may not be appropriate to 

impose liability upon a corporation, particularly one with a compliance program in place, under a 

strict respondeat superior theory for the single isolated act of a rogue employee. There is, of 

course, a wide spectrum between these two extremes, and a prosecutor should exercise sound 

discretion in evaluating the pervasiveness of wrongdoing within a corporation. 

B. Comment: Of these factors, the most important is the role of management. Although 

acts of even low-level employees may result in criminal liability, a corporation is directed by its 

management and management is responsible for a corporate culture in which criminal conduct is 

either discouraged or tacitly encouraged. As stated in commentary to the Sentencing Guidelines: 

Pervasiveness [is] case specific and [will] depend on the number, and degree of 

responsibility, of individuals [with] substantial authority... who participated in, 

condoned, or were willfully ignorant of the offense. Fewer individuals need to be 

involved for a finding of pervasiveness if those individuals exercised a relatively 

high degree of authority. Pervasiveness can occur either within an organization as 

a whole or within a unit of an organization. 

USSG §8C2.5, comment. (n. 4). 

V. Charging a Corporation: The Corporation's Past History 

A. General Principle: Prosecutors may consider a corporation's history of similar 

conduct, including prior criminal, civil, and regulatory enforcement actions against it, in 

determining whether to bring criminal charges. 

[Page 5] 
B. Comment: A corporation, like a natural person, is expected to learn from its mistakes. 

A history of similar conduct may be probative of a corporate culture that encouraged, or at least 

condoned, such conduct, regardless of any compliance programs. Criminal prosecution of a 

corporation may be particularly appropriate where the corporation previously had been subject to 

non-criminal guidance, warnings, or sanctions, or previous criminal charges, and yet it either had 

not taken adequate action to prevent future unlawful conduct or had continued to engage in the 

conduct in spite of the warnings or enforcement actions taken against it. In making this 

determination, the corporate structure itself, e.g., subsidiaries or operating divisions, should be 

ignored, and enforcement actions taken against the corporation or any of its divisions, 

subsidiaries, and affiliates should be considered. See USSG § 8C2.5(c) & comment. (n. 6). 

VI. Charging a Corporation: Cooperation and Voluntary Disclosure 

A. General Principle: In determining whether to charge a corporation, that corporation's 

timely and voluntary disclosure of wrongdoing and its willingness to cooperate with the 

government's investigation may be relevant factors. In gauging the extent of the corporation's 

cooperation, the prosecutor may consider the corporation's willingness to identify the culprits 

within the corporation, including senior executives; to make witnesses available; to disclose the 

complete results of its internal investigation; and to waive attorney-client and work product 

protection. 

B. Comment: In investigating wrongdoing by or within a corporation, a prosecutor is 

likely to encounter several obstacles resulting from the nature of the corporation itself. It will 

often be difficult to determine which individual took which action on behalf of the corporation. 

Lines of authority and responsibility may be shared among operating divisions or departments, 

and records and personnel may be spread throughout the United States or even among several 

countries. Where the criminal conduct continued over an extended period of time, the culpable or 

knowledgeable personnel may have been promoted, transferred, or fired, or they may have quit or 

retired. Accordingly, a corporation's cooperation may be critical in identifying the culprits and 

locating relevant evidence. 

In some circumstances, therefore, granting a corporation immunity or amnesty or pretrial 

diversion may be considered in the course of the government's investigation. In such 

circumstances, prosecutors should refer to the principles governing non-prosecution agreements 

generally. See USAM § 9-27.600-650. These principles permit a non prosecution agreement in 

exchange for cooperation when a corporation's "timely cooperation appears to be necessary to the 

public interest and other means of obtaining the desired cooperation are unavailable or would not 

be effective." Prosecutors should note that in the case of national or multi-national corporations, 

multi-district or global agreements may be necessary. Such agreements may only be entered into 

with the approval of each affected district or the appropriate Department official. See USAM §9- 

27.641. 

[Page 6] 
In addition, the Department, in conjunction with regulatory agencies and other executive 

branch departments, encourages corporations, as part of their compliance programs, to conduct 

internal investigations and to disclose their findings to the appropriate authorities. Some 

agencies, such as the SEC and the EPA, as well as the Department's Environmental and Natural 

Resources Division, have formal voluntary disclosure programs in which self-reporting, coupled 

with remediation and additional criteria, may qualify the corporation for amnesty or reduced 

sanctions. [2] Even in the absence of a formal program, prosecutors may consider a corporation's 

timely and voluntary disclosure in evaluating the adequacy of the corporation's compliance 

program and its management's commitment to the compliance program. However, prosecution 

and economic policies specific to the industry or statute may require prosecution notwithstanding 

a corporation's willingness to cooperate. For example, the Antitrust Division offers amnesty only 

to the first corporation to agree to cooperate. This creates a strong incentive for corporations 

participating in anti-competitive conduct to be the first to cooperate. In addition, amnesty, 

immunity, or reduced sanctions may not be appropriate where the corporation's business is 

permeated with fraud or other crimes. 

One factor the prosecutor may weigh in assessing the adequacy of a corporation's 

cooperation is the completeness of its disclosure including, if necessary, a waiver of the 

attorney-client and work product protections, both with respect to its internal investigation and 

with respect to communications between specific officers, directors and employees and counsel. 

Such waivers permit the government to obtain statements of possible witnesses, subjects, and 

targets, without having to negotiate individual cooperation or immunity agreements. In addition, 

they are often critical in enabling the government to evaluate the completeness of a corporation's 

voluntary disclosure and cooperation. Prosecutors may, therefore, request a waiver in appropriate 

circumstances. [3] The Department does not, however, consider waiver of a corporation's attorneyclient and work product protection an absolute requirement, and prosecutors should consider the 

willingness of a corporation to waive such protection when necessary to provide timely and 

complete information as one factor in evaluating the corporation's cooperation. 

Another factor to be weighed by the prosecutor is whether the corporation appears to be 

protecting its culpable employees and agents. Thus, while cases will differ depending on the 

circumstances, a corporation's promise of support to culpable employees and agents, either 

In addition, the Sentencing Guidelines reward voluntary disclosure and cooperation with [2] 

a reduction in the corporation's offense level. See USSG §8C2.5)g). 

[3] 

contemporaneous advice given to the corporation concerning the conduct at issue. Except in 

unusual circumstances, prosecutors should not seek a waiver with respect to communications and 

work product related to advice concerning the government's criminal investigation. 

This waiver should ordinarily be limited to the factual internal investigation and any 

[Page 7] 
through the advancing of attorneys fees, [4] through retaining the employees without sanction for 

their misconduct, or through providing information to the employees about the government's 

investigation pursuant to a joint defense agreement, may be considered by the prosecutor in 

weighing the extent and value of a corporation's cooperation. By the same token, the prosecutor 

should be wary of attempts to shield corporate officers and employees from liability by a 

willingness of the corporation to plead guilty. 

Another factor to be weighed by the prosecutor is whether the corporation, while 

purporting to cooperate, has engaged in conduct that impedes the investigation (whether or not 

rising to the level of criminal obstruction). Examples of such conduct include: overly broad 

assertions of corporate representation of employees or former employees; inappropriate 

directions to employees or their counsel, such as directions not to cooperate openly and fully with 

the investigation including, for example, the direction to decline to be interviewed; making 

presentations or submissions that contain misleading assertions or omissions; incomplete or 

delayed production of records; and failure to promptly disclose illegal conduct known to the 

corporation. 

Finally, a corporation's offer of cooperation does not automatically entitle it to immunity 

from prosecution. A corporation should not be able to escape liability merely by offering up its 

directors, officers, employees, or agents as in lieu of its own prosecution. Thus, a corporation's 

willingness to cooperate is merely one relevant factor, that needs to be considered in conjunction 

with the other factors, particularly those relating to the corporation's past history and the role of 

management in the wrongdoing. 

VII. Charging a Corporation: Corporate Compliance Programs 

A. General Principle: Compliance programs are established by corporate management to 

prevent and to detect misconduct and to ensure that corporate activities are conducted in 

accordance with all applicable criminal and civil laws, regulations, and rules. The Department 

encourages such corporate self-policing, including voluntary disclosures to the government of 

any problems that a corporation discovers on its own. However, the existence of a compliance 

program is not sufficient, in and of itself, to justify not charging a corporation for criminal 

conduct undertaken by its officers, directors, employees, or agents. Indeed, the commission of 

such crimes in the face of a compliance program may suggest that the corporate management is 

not adequately enforcing its program. In addition, the nature of some crimes, e.g., antitrust 

violations, may be such that national law enforcement policies mandate prosecutions of 

corporations notwithstanding the existence of a compliance program. 

Some states require corporations to pay the legal fees of officers under investigation prior [4] 

to a formal determination of their guilt. Obviously, a corporation's compliance with governing 

law should not be considered a failure to cooperate. 

[Page 8] 
B. Comment: A corporate compliance program, even one specifically prohibiting the 

very conduct in question, does not absolve the corporation from criminal liability under the 

doctrine of respondeat superior. See United States v. Basic Construction Co., 711 F.2d 570 (4th 

Cir. 1983) ("a corporation may be held criminally responsible for antitrust violations committed 

by its employees if they were acting within the scope of their authority, or apparent authority, and 

for the benefit of the corporation, even if...such acts were against corporate policy or express 

instructions."). In United States v. Hilton Hotels Corp., 467 F.2d 1000 (9" Cir. 1972), cert. 

denied, 409 U.S. 1125 (1973), the Ninth Circuit affirmed antitrust liability based upon a 

purchasing agent for a single hotel threatening a single supplier with a boycott unless it paid dues 

to a local marketing association, even though the agent's actions were contrary to corporate 

policy and directly against express instructions from his superiors. The court reasoned that 

Congress, in enacting the Sherman Antitrust Act, "intended to impose liability upon business 

entities for the acts of those to whom they choose to delegate the conduct of their affairs, thus 

stimulating a maximum effort by owners and managers to assure adherence by such agents to the 

requirements of the Act."' It concluded that "general policy statements" and even direct 

instructions from the agent's superiors were not sufficient; "Appellant could not gain exculpation 

by issuing general instructions without undertaking to enforce those instructions by means 

commensurate with the obvious risks.'' See also United States v. Beusch, 596 F.2d 871,878 (9th 

Cir. 1979) ("[A] corporation may be liable for the acts of its employees done contrary to express 

instructions and policies, but...the existence of such instructions and policies may be considered 

in determining whether the employee in fact acted to benefit the corporation."); United States v. 

American Radiator & Standard Sanitary Corp., 433 F.2d 174 (3rd Cir. 1970) (affirming 

conviction of corporation based upon its officer's participation in price-fixing scheme, despite 

corporation's defense that officer’s conduct violated its "rigid anti-fraternization policy" against 

any socialization (and exchange of price information) with its competitors; "When the act of the 

agent is within the scope of his employment or his apparent authority, the corporation is held 

legally responsible for it, although what he did may be contrary to his actual instructions and may 

be unlawful."). 

While the Department recognizes that no compliance program can ever prevent all 

criminal activity by a corporation's employees, the critical factors in evaluating any program are 

whether the program is adequately designed for maximum effectiveness in preventing and 

detecting wrongdoing by employees and whether corporate management is enforcing the program 

Although this case and Basic Construction are both antitrust cases, their reasoning applies [5] 

to other criminal violations. In the Hilton case, for instance, the Ninth Circuit noted that 

Sherman Act violations are commercial offenses "usually motivated by a desire to enhance 

profits," thus, bringing the case within the normal rule that a "purpose to benefit the corporation 

is necessary to bring the agent's acts within the scope of his employment." 467 F.2d at 1006 & 

n4. In addition, in United States v. Automated Medical Laboratories, 770 F.2d 399,406 n.5 (4" 

Cir. 1985), the Fourth Circuit stated "that Basic Construction states a generally applicable rule on 

corporate criminal liability despite the fact that it addresses violations of the antitrust laws." 

[Page 9] 
or is tacitly encouraging or pressuring employees to engage in misconduct to achieve business 

objectives. The Department has no formal guidelines for corporate compliance programs. The 

fundamental questions any prosecutor should ask are: "Is the corporation's compliance program 

well designed?" and "Does the corporation's compliance program work?" In answering these 

questions, the prosecutor should consider the comprehensiveness of the compliance program; the 

extent and pervasiveness of the criminal conduct; the number and level of the corporate 

employees involved; the seriousness, duration, and frequency of the misconduct; and any 

remedial actions taken by the corporation, including restitution, disciplinary action, and revisions 

to corporate compliance programs. [6] Prosecutors should also consider the promptness of any 

disclosure of wrongdoing to the government and the corporation's cooperation in the 

government's investigation. In evaluating compliance programs, prosecutors may consider 

whether the corporation has established corporate governance mechanisms that can effectively 

detect and prevent misconduct. For example, do the corporation's directors exercise independent 

review over proposed corporate actions rather than unquestioningly ratifying officers' 

recommendations; are the directors provided with information sufficient to enable the exercise of 

independent judgment, are internal audit functions conducted at a level sufficient to ensure their 

independence and accuracy and have the directors established an information and reporting 

system in the organization reasonable designed to provide management and the board of directors 

with timely and accurate information sufficient to allow them to reach an informed decision 

regarding the organization's compliance with the law. In re: Caremark, 698 A.2d 959 (Del. Ct. 

Chan. 1996). 

Prosecutors should therefore attempt to determine whether a corporation's compliance 

program is merely a "paper program" or whether it was designed and implemented in an effective 

manner. In addition, prosecutors should determine whether the corporation has provided for a 

staff sufficient to audit, document, analyze, and utilize the results of the corporation's compliance 

efforts. In addition, prosecutors should determine whether the corporation's employees are 

adequately informed about the compliance program and are convinced of the corporation's 

commitment to it. This will enable the prosecutor to make an informed decision as to whether the 

corporation has adopted and implemented a truly effective compliance program that, when 

consistent with other federal law enforcement policies, may result in a decision to charge only the 

corporation's employees and agents. 

Compliance programs should be designed to detect the particular types of misconduct 

most likely to occur in a particular corporation's line of business. Many corporations operate in 

complex regulatory environments outside the normal experience of criminal prosecutors. 

Accordingly, prosecutors should consult with relevant federal and state agencies with the 

expertise to evaluate the adequacy of a program's design and implementation. For instance, state 

and federal banking, insurance, and medical boards, the Department of Defense, the Department 

For a detailed review of these and other factors concerning corporate compliance [6] 

programs, see United States Sentencing Commission, GUIDELINES MANUAL, §8A1.2, 

comment. (n.3(k)) (Nov. 1997). See also USSG §8C2.5(f) 

[Page 10] 
of Health and Human Services, the Environmental Protection Agency, and the Securities and 

Exchange Commission have considerable experience with compliance programs and can be very 

helpful to a prosecutor in evaluating such programs. In addition, the Fraud Section of the 

Criminal Division, the Commercial Litigation Branch of the Civil Division, and the 

Environmental Crimes Section of the Environment and Natural Resources Division can assist 

US. Attorneys' Offices in finding the appropriate agency office and in providing copies of 

compliance programs that were developed in previous cases. 

VIII. Charging a Corporation: Restitution and Remediation 

A. General Principle: Although neither a corporation nor an individual target may avoid 

prosecution merely by paying a sum of money, a prosecutor may consider the corporation's 

willingness to make restitution and steps already taken to do so. A prosecutor may also consider 

other remedial actions, such as implementing an effective corporate compliance program, 

improving an existing compliance program, and disciplining wrongdoers, in determining whether 

to charge the corporation. 

B. Comment: In determining whether or not a corporation should be prosecuted, a 

prosecutor may consider whether meaningful remedial measures have been taken, including 

employee discipline and full restitution. [7] A corporation's response to misconduct says much 

about its willingness to ensure that such misconduct does not recur. Thus, corporations that fully 

recognize the seriousness of their misconduct and accept responsibility for it should be taking 

steps to implement the personnel, operational, and organizational changes necessary to establish 

an awareness among employees that criminal conduct will not be tolerated. Among the factors 

prosecutors should consider and weigh are whether the corporation appropriately disciplined the 

wrongdoers and disclosed information concerning their illegal conduct to the government. 

Employee discipline is a difficult task for many corporations because of the human 

element involved and sometimes because of the seniority of the employees concerned. While 

corporations need to be fair to their employees, they must also be unequivocally committed, at all 

levels of the corporation, to the highest standards of legal and ethical behavior. Effective internal 

discipline can be a powerful deterrent against improper behavior by a corporation's employees. In 

evaluating a corporation's response to wrongdoing, prosecutors may evaluate the willingness of 

the corporation to discipline culpable employees of all ranks and the adequacy of the discipline 

imposed. The prosecutor should be satisfied that the corporation's focus is on the integrity and 

credibility of its remedial and disciplinary measures rather than on the protection of the 

wrongdoers. 

[7] 

corporation [make] restitution to injured parties....” 

For example, the Antitrust Division's amnesty policy requires that "[w]here possible, the 

[Page 11] 
In addition to employee discipline, two other factors used in evaluating a corporation's 

remedial efforts are restitution and reform. As with natural persons, the decision whether or not 

to prosecute should not depend upon the target's ability to pay restitution. A corporation's efforts 

to pay restitution even in advance of any court order is, however, evidence of its "acceptance of 

responsibility" and, consistent with the practices and policies of the appropriate Division of the 

Department entrusted with enforcing specific criminal laws, may be considered in determining 

whether to bring criminal charges. Similarly, although the inadequacy of a corporate compliance 

program is a factor to consider when deciding whether to charge a corporation, that corporation's 

quick recognition of the flaws in the program and its efforts to improve the program are also 

factors to consider. 

IX. Charging a Corporation: Collateral Consequences 

A. General Principle: Prosecutors may consider the collateral consequences of a 

corporate criminal conviction in determining whether to charge the corporation with a criminal 

offense. 

B. Comment: One of the factors in determining whether to charge a natural person or a 

corporation is whether the likely punishment is appropriate given the nature and seriousness of 

the crime. In the corporate context, prosecutors may take into account the possibly substantial 

consequences to a corporation's officers, directors, employees, and shareholders, many of whom 

may, depending on the size and nature (e.g., publicly vs. closely held) of the corporation and their 

role in its operations, have played no role in the criminal conduct, have been completely unaware 

of it, or have been wholly unable to prevent it. Prosecutors should also be aware of non-penal 

sanctions that may accompany a criminal charge, such as potential suspension or debarment from 

eligibility for government contracts or federal funded programs such as health care. Whether or 

not such non-penal sanctions are appropriate or required in a particular case is the responsibility 

of the relevant agency, a decision that will be made based on the applicable statutes, regulations, 

and policies. 

Virtually every conviction of a corporation, like virtually every conviction of an 

individual, will have an impact on innocent third parties, and the mere existence of such an effect 

is not sufficient to preclude prosecution of the corporation. Therefore, in evaluating the severity 

of collateral consequences, various factors already discussed, such as the pervasiveness of the 

criminal conduct and the adequacy of the corporation's compliance programs, should be 

considered in determining the weight to be given to this factor. For instance, the balance may tip 

in favor of prosecuting corporations in situations where the scope of the misconduct in a case is 

widespread and sustained within a corporate division (or spread throughout pockets of the 

corporate organization). In such cases, the possible unfairness of visiting punishment for the 

corporation's crimes upon shareholders may be of much less concern where those shareholders 

have substantially profited, even unknowingly, from widespread or pervasive criminal activity. 

Similarly, where the top layers of the corporation's management or the shareholders of a 

closely-held corporation were engaged in or aware of the wrongdoing and the conduct at issue 

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was accepted as a way of doing business for an extended period, debarment may be deemed not 

collateral, but a direct and entirely appropriate consequence of the corporation's wrongdoing. 

The appropriateness of considering such collateral consequences and the weight to be 

given them may depend on the special policy concerns discussed in section III, supra. 

X. Charging a Corporation: Non-Criminal Alternatives 

A. General Principle: Although non-criminal alternatives to prosecution often exist, 

prosecutors may consider whether such sanctions would adequately deter, punish, and 

rehabilitate a corporation that has engaged in wrongful conduct. In evaluating the adequacy of 

non-criminal alternatives to prosecution, e.g., civil or regulatory enforcement actions, the 

prosecutor may consider all relevant factors, including: 

1. the sanctions available under the alternative means of disposition; 

2. the likelihood that an effective sanction will be imposed; and 

3. the effect of non-criminal disposition on Federal law enforcement interests. 

B. Comment: The primary goals of criminal law are deterrence, punishment, and 

rehabilitation. Non-criminal sanctions may not be an appropriate response to an egregious 

violation, a pattern of wrongdoing, or a history of non-criminal sanctions without proper 

remediation. In other cases, however, these goals may be satisfied without the necessity of 

instituting criminal proceedings. In determining whether federal criminal charges are appropriate, 

the prosecutor should consider the same factors (modified appropriately for the regulatory 

context) considered when determining whether to leave prosecution of a natural person to 

another jurisdiction or to seek non-criminal alternatives to prosecution. These factors include: 

the strength of the regulatory authority's interest; the regulatory authority's ability and willingness 

to take effective enforcement action; the probable sanction if the regulatory authority's 

enforcement action is upheld; and the effect of a non-criminal disposition on Federal law 

enforcement interests. See USAM §§ 9-27.240,9-27.250. 

XI. Charging a Corporation: Selecting Charges 

A. General Principle: Once a prosecutor has decided to charge a corporation, the 

prosecutor should charge, or should recommend that the grand jury charge, the most serious 

offense that is consistent with the nature of the defendant's conduct and that is likely to result in a 

sustainable conviction. 

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B. Comment: Once the decision to charge is made, the same rules as govern charging 

natural persons apply. These rules require ''a faithful and honest application of the Sentencing 

Guidelines" and an "individualized assessment of the extent to which particular charges fit the 

specific circumstances of the case, are consistent with the purposes of the Federal criminal code, 

and maximize the impact of Federal resources on crime." See USAM § 9-27.300. In making this 

determination, "it is appropriate that the attorney for the government consider, inter alia, such 

factors as the sentencing guideline range yielded by the charge, whether the penalty yielded by 

such sentencing range...is proportional to the seriousness of the defendant's conduct, and 

whether the charge achieves such purposes of the criminal law as punishment, protection of the 

public, specific and general deterrence, and rehabilitation." See Attorney General's 

Memorandum, dated October 12, 1993. 

XII. Plea Agreements with Corporations 

A. General Principle: In negotiating plea agreements with corporations, prosecutors 

should seek a plea to the most serious, readily provable offense charged. In addition, the terms of 

the plea agreement should contain appropriate provisions to ensure punishment, deterrence, 

rehabilitation, and compliance with the plea agreement in the corporate context. Although special 

circumstances may mandate a different conclusion, prosecutors generally should not agree to 

accept a corporate guilty plea in exchange for non-prosecution or dismissal of charges against 

individual officers and employees. 

B. Comment: Prosecutors may enter into plea agreements with corporations for the same 

reasons and under the same constraints as apply to plea agreements with natural persons. See 

USAM §§ 9-27.400-500. This means, inter alia, that the corporation should be required to plead 

guilty to the most serious, readily provable offense charged. As is the case with individuals, the 

attorney making this determination should do so "on the basis of an individualized assessment of 

the extent to which particular charges fit the specific circumstances of the case, are consistent 

with the purposes of the federal criminal code, and maximize the impact of federal resources on 

crime. In making this determination, the attorney for the government considers, inter alia, such 

factors as the sentencing guideline range yielded by the charge, whether the penalty yielded by 

such sentencing range...is proportional to the seriousness of the defendant's conduct, and 

whether the charge achieves such purposes of the criminal law as punishment, protection of the 

public, specific and general deterrence, and rehabilitation." See Attorney General's 

Memorandum, dated October 12, 1993. In addition, any negotiated departures from the 

Sentencing Guidelines must be justifiable under the Guidelines and must be disclosed to the 

sentencing court. A corporation should be made to realize that pleading guilty to criminal 

charges constitutes an admission of guilt and not merely a resolution of an inconvenient 

distraction from its business. As with natural persons, pleas should be structured so that the 

corporation may not later "proclaim lack of culpability or even complete innocence." See USAM 

§§ 9-27.420(b)(4), 9-27.440,9-27.500. Thus, for instance, there should be placed upon the record 

a sufficient factual basis for the plea to prevent later corporate assertions of innocence. 

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A corporate plea agreement should also contain provisions that recognize the nature of 

the corporate "person" and ensure that the principles of punishment, deterrence, and 

rehabilitation are met. In the corporate context, punishment and deterrence are generally 

accomplished by substantial fines, mandatory restitution, and institution of appropriate 

compliance measures, including, if necessary, continued judicial oversight or the use of special 

masters. See USSG §§ 8B1.1, 8C2.1, et seq. In addition, where the corporation is a government 

contractor, permanent or temporary debarment may be appropriate. Where the corporation was 

engaged in government contracting fraud, a prosecutor may not negotiate away an agency's right 

to debar or to list the corporate defendant. 

In negotiating a plea agreement, prosecutors should also consider the deterrent value of 

prosecutions of individuals within the corporation. Therefore, one factor that a prosecutor may 

consider in determining whether to enter into a plea agreement is whether the corporation is 

seeking immunity for its employees and officers or whether the corporation is willing to 

cooperate in the investigation of culpable individuals. Prosecutors should rarely negotiate away 

individual criminal liability in a corporate plea. 

Rehabilitation, of course, requires that the corporation undertake to be law-abiding in the 

future. It is, therefore, appropriate to require the corporation, as a condition of probation, to 

implement a compliance program or to reform an existing one. As discussed above, prosecutors 

may consult with the appropriate state and federal agencies and components of the Justice 

Department to ensure that a proposed compliance program is adequate and meets industry 

standards and best practices. See section VII, supra. 

In plea agreements in which the corporation agrees to cooperate, the prosecutor should 

ensure that the cooperation is complete and truthful. To do so, the prosecutor may request that 

the corporation waive attorney-client and work product protection, make employees and agents 

available for debriefing, disclose the results of its internal investigation, file appropriate certified 

financial statements, agree to governmental or third-party audits, and take whatever other steps 

are necessary to ensure that the full scope of the corporate wrongdoing is disclosed and that the 

responsible culprits are identified and, if appropriate, prosecuted. See generally section VIII, 

supra. 

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