DEFERRED PROSECUTION: SHOULD 

CORPORATE SETTLEMENT AGREEMENTS BE 

WITHOUT GUIDELINES? 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COMMERCIAL AND ADMINISTRATIVE LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

MARCH 11, 2008 

Serial No. 110–174 

Printed for the use of the Committee on the Judiciary 

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DEFERRED PROSECUTION: 

SHOULD CORPORATE SETTLEMENT AGREEMENTS BE WITHOUT GUIDELINES? 

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DEFERRED PROSECUTION: SHOULD 

CORPORATE SETTLEMENT AGREEMENTS BE 

WITHOUT GUIDELINES? 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COMMERCIAL AND ADMINISTRATIVE LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

MARCH 11, 2008 

Serial No. 110–174 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

LINDA T. SA ́ NCHEZ, California 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BETTY SUTTON, Ohio 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ARTUR DAVIS, Alabama 

DEBBIE WASSERMAN SCHULTZ, Florida 

KEITH ELLISON, Minnesota 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

PERRY APELBAUM, Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

LINDA T. SA ́ NCHEZ, California, Chairwoman 

JOHN CONYERS, JR., Michigan 

HANK JOHNSON, Georgia 

ZOE LOFGREN, California 

WILLIAM D. DELAHUNT, Massachusetts 

MELVIN L. WATT, North Carolina 

STEVE COHEN, Tennessee 

CHRIS CANNON, Utah 

JIM JORDAN, Ohio 

RIC KELLER, Florida 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

MICHONE JOHNSON, Chief Counsel 

DANIEL FLORES, Minority Counsel 

(III) 

C O N T E N T S 

MARCH 11, 2008 

Page 

OPENING STATEMENTS 

The Honorable Linda T. Sa ́nchez, a Representative in Congress from the 

State of California, and Chairwoman, Subcommittee on Commercial and 

Administrative Law ............................................................................................. 1 

The Honorable Chris Cannon, a Representative in Congress from the State 

of Utah, and Ranking Member, Subcommittee on Commercial and Administrative Law ........................................................................................................... 3 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Chairman, Committee on the Judiciary, and Member, 

Subcommittee on Commercial and Administrative Law .................................. 17 

WITNESSES 

The Honorable John Ashcroft, The Ashcroft Group, LLC, Washington, DC 

Oral Testimony ..................................................................................................... 21 

Prepared Statement ............................................................................................. 23 

Mr. Timothy L. Dickinson, Paul, Hastings, Janofsky, & Walker, LLP, Washington, DC 

Oral Testimony ..................................................................................................... 35 

Prepared Statement ............................................................................................. 37 

The Honorable David E. Nahmias, The United States Attorney’s Office Northern District of Georgia, Atlanta, GA 

Oral Testimony ..................................................................................................... 123 

Prepared Statement ............................................................................................. 125 

The Honorable George J. Terwilliger, III, Esquire, White & Case, LLP, Washington, DC 

Oral Testimony ..................................................................................................... 134 

Prepared Statement ............................................................................................. 136 

Brandon Garrett, Professor, University of Virginia School of Law, Charlottesville, VA 

Oral Testimony ..................................................................................................... 145 

Prepared Statement ............................................................................................. 147 

The Honorable Frank Pallone, Jr., a Representative in Congress from the 

State of New Jersey 

Oral Testimony ..................................................................................................... 312 

Prepared Statement ............................................................................................. 314 

The Honorable William Pascrell, Jr., a Representative in Congress from the 

State of New Jersey 

Oral Testimony ..................................................................................................... 319 

Prepared Statement ............................................................................................. 321 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable Christopher B. Cannon, a Representative in Congress From the State of Utah, and Ranking Member, Subcommittee on Commercial and Administrative Law ......................................... 4 

Article from The Record titled ‘‘Christie’s All-Out War,’’ September 23, 2007, 

submitted by the Honorable Christopher B. Cannon, a Representative in 

Congress from the State of Utah, and Ranking Member, Subcommittee 

on Commercial and Administrative Law ........................................................... 291 

Page

IV 

Article from The American Spectator titled ‘‘First Spitzer, Now Stryker,’’ 

March 11, 2008, submitted by the Honorable Christopher B. Cannon, a 

Representative in Congress from the State of Utah, and Ranking Member, 

Subcommittee on Commercial and Administrative Law .................................. 329 

Article from The Washington Times, titled ‘‘Medical supplier Stryker probed,’’ 

March 11, 2008, submitted by the Honorable Christopher B. Cannon, a 

Representative in Congress rrom the State of Utah, and Ranking Member, 

Subcommittee on Commercial and Administrative Law .................................. 330 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Responses to Post-Hearing Questions submitted by the Honorable Linda T. 

Sa ́nchez, a Representative in Congress from the State of California, and 

Chairwoman, Subcommittee on Commercial and Administrative Law to 

the Honorable John Ashcroft, The Ashcroft Group, LLC, Washington, DC .... 338 

Responses to Post-Hearing Questions submitted by the Honorable Linda T. 

Sa ́nchez, a Representative in Congress from the State of California, and 

Chairwoman, Subcommittee on Commercial and Administrative Law to 

Timothy L. Dickinson, Paul, Hastings, Janofsky, & Walker, LLP, Washington, DC ............................................................................................................. 364 

Responses to Post-Hearing Questions submitted by the Honorable Linda T. 

Sa ́nchez, a Representative in Congress from the State of California, and 

Chairwoman, Subcommittee on Commercial and Administrative Law to 

the Honorable David E. Nahmias, The United States Attorney’s Office 

Northern District of Georgia, Atlanta, GA ......................................................... 368 

Responses to Post-Hearing Questions submitted by the Honorable Linda T. 

Sa ́nchez, a Representative in Congress from the State of California, and 

Chairwoman, Subcommittee on Commercial and Administrative Law to 

the Honorable George J. Terwilliger, III, Esquire, White & Case, LLP, 

Washington, DC ................................................................................................... 378 

Responses to Post-Hearing Questions submitted by the Honorable Linda T. 

Sa ́nchez, a Representative in Congress from the State of California, and 

Chairwoman, Subcommittee on Commercial and Administrative Law to 

Brandon Garrett, Professor, University of Virginia School of Law, Charlottesville, VA ....................................................................................................... 379 

Prepared Statement of James K. Robinson, former Assistant Attorney General for the Criminal Division, United States Department of Justice ............. 383 

Letter to the Honorable Linda T. S ́nchez from the Honorable George J. 

Terwilliger, III ...................................................................................................... 412 

(1) 

DEFERRED PROSECUTION: SHOULD 

CORPORATE SETTLEMENT AGREEMENTS BE 

WITHOUT GUIDELINES? 

TUESDAY MARCH 11, 2008 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COMMERCIAL

AND ADMINISTRATIVE LAW, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:40 a.m., in 

room 2141, Rayburn House Office Building, the Honorable Linda 

Sa ́nchez (Chairwoman of the Subcommittee) presiding. 

Present: Representatives Conyers, Sa ́nchez, Johnson, Lofgren, 

Delahunt, Cohen, Cannon, Feeney, and Franks. 

Staff present: Eric Tamarkin, Majority Counsel; Daniel Flores, 

Minority Counsel; and Adam Russell, Professional Staff Member. 

Ms. SA ́ NCHEZ. This hearing of the Committee on the Judiciary, 

Subcommittee on Commercial and Administrative Law will now 

come to order. I will now recognize myself for a brief statement. 

I have called today’s hearing to shed light on the use of pre-trial 

prosecution agreements in corporate crime cases, a growing practice that has so far been operating mostly in the shadows without 

guidelines and without oversight. Today’s hearing is not being held 

with prejudice for or against deferred prosecution and non-prosecution agreements, but rather with concern about the number of unanswered questions surrounding them. 

The concept of deferred prosecution originated as a rehabilitation 

option for non-violent juvenile and drug offenders. After prosecutors file an indictment, the prosecution is put on hold in exchange 

for commitments by the offender to reform and provide restitution. 

If the offender meets the obligations in the agreement, prosecutors 

may ask a judge to dismiss the indictment. 

In the past 6 years, the Justice Department has increasingly relied upon a similar tool for white-collar crimes, usually involving 

private corporations. In such cases, an independent corporate monitor is often hired to determine whether the target corporation has 

complied with the obligations in the deferred prosecution or nonprosecution agreement. 

Late last year, I was troubled to learn of what appeared to be 

a back room sweetheart deal where New Jersey U.S. attorney, 

Christopher Christie appointed John Ashcroft, the former attorney 

general, to serve as an independent corporate monitor and collect 

2 

fees between $28 million and $52 million. I was also concerned to 

learn from press accounts that Mr. Ashcroft was selected with no 

public notice and no bidding, and he had to use considerable time 

to prepare for the assignment and learn more about the business 

that he was contracted to monitor. 

When I continued to investigate the issue of deferred prosecution 

agreements and the appointment of independent corporate monitors, I discovered that the parties to these agreements were operating in a wild west type of environment with no laws and no Justice Department guidelines. Less than 24 hours before today’s hearing, the department sent us a memo mapping out some guidance 

with regard to the selection and use of monitors. And while I do 

believe that this may be a good start, uncertainties still remain as 

to how monitors should be selected and how these agreements 

should be structured. 

The absence of standards governing how independent corporate 

monitors are selected has resulted in a hodge-podge of approaches 

across jurisdictions. For example, in several agreements prosecutors selected the monitor, typically after consulting with the corporation. In others, the corporation selected the candidate. 

Additionally, a few agreements provide for collaboration among 

the corporation, regulators, and prosecutors in the selection. Finally, in at least three agreements, a court played a significant role 

in the monitor’s selection process. 

Furthermore, the current system lacks guidelines to direct how 

independent corporate monitors conduct oversight of the corporation once they have been selected. Most monitors are granted broad 

powers to gather information, institute polices, and oversee compliance. 

For example, in one matter, the monitor had the power to ‘‘require any personnel action, including termination regarding individuals who were engaged in or were responsible for the illegal conduct described in the information.’’ In essence, the agreement allowed the monitor to act as the prosecutor, judge, and jury for 

these employees. 

While uncertainty is common in many aspects of deferred prosecution agreements, one thing does remain certain. The government has tremendous leverage over a corporation entering into an 

agreement. Corporations facing criminal prosecution have an unfair choice. They can either risk a conviction and perhaps even dissolution after trial or be coerced into accepting the terms and the 

monitoring that a prosecutor unilaterally believes are appropriate. 

Unfortunately, because of a lack of transparency in many aspects 

of deferred prosecution agreements, we still don’t know the full 

scope of this issue. On January 10th, Chairman Conyers, Congressman Pascrell and I sent a letter to the Justice Department requesting that the department disclose all deferred prosecution agreements and the individuals selected as monitors. It has been 2 

months since our request, and we have yet to receive a response. 

While we patiently await the department’s disclosure of information, this hearing serves as a critical starting point of bringing deferred prosecution agreements and the appointment of monitors out 

from behind the shadows. Accordingly, I look forward to probing 

3 

these issues further and considering whether legislation in this 

area is appropriate. 

I would like to recognize now the Ranking Member of the full Judiciary Committee, Mr. Smith, who has joined us and has some 

opening words. 

Mr. SMITH. Thank you, Madam Chair. I really don’t have an 

opening statement. I do want to, however, welcome former Attorney General John Ashcroft to our hearing today. I know what he 

is going to say, and I agree with it. And I just appreciate his taking 

the time to be here today. 

Madam Chair, I also want to read an excerpt from an article in 

the New York Times today that speaks to the subject matter that 

we are here to discuss. And here is the exact quote from the New 

York Times article today. 

‘‘Outside lawyers who have reviewed Mr. Ashcroft’s fee schedule 

said it was not out of line.’’ Madam Chair, if you read that in the 

New York Times, that says a whole lot. And so, I just appreciate 

their commentary, and I appreciate your having this hearing today. 

With that, I will yield back. 

Ms. SA ́ NCHEZ. I thank the Ranking Member of the full Committee, Mr. Smith, and would like to recognize at this time our distinguished Ranking Member of the Subcommittee, Mr. Cannon. 

Mr. CANNON. Thank you, Madam Chair. I would ask unanimous 

consent to have my full statement entered into the record. 

Ms. SA ́ NCHEZ. Without objection, so ordered. 

[The prepared statement of Mr. Cannon follows:] 

4 

PREPARED STATEMENT OF THE HONORABLE CHRISTOPHER B. CANNON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF UTAH, AND RANKING MEMBER, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW


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Mr. CANNON. And I do that because I understand Mr. Ashcroft 

has a travel obligation he has informed the majority of and would 

need to leave at 12. And I think that he ought to have plenty of 

time to respond to the allegations that are being made. 

You made a point of Mr. Christie’s involvement. He has been a 

remarkably effective prosecutor. And to a degree that becomes an 

issue I hope that we could address that. But I would like to thank 

you, Madam Chair, for this hearing. As you know, we have talked 

about the concerns that I have with prosecutorial discretion. And 

we have a marvelous panel here for addressing that issue and in 

particular, as it relates to the matters that we have before us 

today. 

So I hope that we come out of here with a much expanded view 

of what the possibilities are for, not only helping U.S. attorneys 

handle the extraordinary burdens that they have, but also helping 

us focus on how we in Congress and particularly, this Committee 

can become much more involved in the process of where we are seeing prosecutorial discretion is handled throughout the country. So 

I want to thank you again for drawing this panel together. 

I want to thank all the panelists for being here today. I suspect 

this will be a very interesting hearing. And I hope we can clear the 

air and allow Mr. Ashcroft to have the opportunity to respond with 

particulars to the suggestions of the possibility of impropriety, referring back to what Mr. Smith has just said, when the New York 

Times suggests that things don’t seem out of line, there is probably 

a pretty good guess that they are not. 

But I think it would be very important that we have the opportunity to air both the charges that have been sort of insinuated 

against Mr. Christie and also Mr. Ashcroft and that we get beyond 

that and then start looking at the—we have a marvelous panel of 

people who actually understand these issues in great depth. And 

I hope we can plumb that understanding and learn how to do our 

job or learn what we can do here to be much better at our job. 

So thank you, Madam Chair. I yield back. 

Ms. SA ́ NCHEZ. I thank the gentleman for his statement. 

I would now like to recognize at this time Mr. Conyers, a distinguished Member of the Subcommittee and the Chairman of the full 

Judiciary Committee. Mr. Conyers? 

Mr. CONYERS. Thank you, Madam Chairwoman, for holding the 

hearing. You and Chris Cannon are to be commended. And I appreciate the constructive tone with which we are beginning these off. 

I welcome John Ashcroft as the former attorney general and likewise, all the witnesses. 

All we are doing today, sir, is exploring the Department of Justice’s use of corporate settlement agreements. We know that they 

are a useful prosecutorial tool, several aspects of their implementation that require congressional oversight and possibly legislative 

attention, as has been suggested. 

Congressional oversight of these agreements is probably essential 

to provide transparency. We understand the importance of these 

agreements as effective prosecutorial tools and respect confidentiality concerns. We, nonetheless, want to know the number of 

agreements into which the department has entered these agreeVerDate Aug 31 2005 12:33 Feb 19, 2009 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6601 H:\WORK\COMM\031108\41190.000 HJUD1 PsN: 41190
18 

ments and the details around them. I am going to ask that of the 

Department of Justice. 

How many of these kinds of agreements are floating around? And 

it is important in light of the fact that the number of these agreements have increased dramatically during the tenure of our star 

witness here, former Attorney General John Ashcroft. 

In an effort to obtain information regarding the agreement, as 

Chairwoman Sa ́nchez has indicated, we are still waiting to receive 

a response from the attorney general. Now, despite the guidance 

that the department released yesterday afternoon regarding the 

use of corporate monitors in these agreements, this guidance still 

fails to ensure uniformity in the agreements themselves. Indeed, 

some agreements require the implementation of compliance programs, restitution, and fines while others do not. 

While it may be necessary to fashion some agreements on a caseby-case basis, and we can concede that, general uniformity could 

ensure the fairest application. We hope that we will have these 

concerns addressed during the hearing today. 

We hope that the recently-released department guidelines regarding the selection of corporate monitors are successful applied 

and implemented, because otherwise there is the potential for department politicization. One such example for this potential has 

arisen in the agreement between Zimmer Holdings and the United 

States Attorney’s office in which Attorney Christopher Christie, 

who has been described here as a stellar U.S. attorney, a trial expert, but that we still have a problem with the naming of our 

former Attorney General John Ashcroft as corporate monitor. 

Pursuant to this agreement, they have agreed to pay Mr. Ashcroft’s firm anywhere from between $28 million and $52 million. And if it is not asking too much, we would like to know exactly how much is involved here. 

Prior to the appointment of our former attorney general, there 

was neither public notice of the monitor position nor any public 

bidding for the assignment that we know of. This highlights the 

concern that brings us all here this morning. 

We must assure the public that the Department of Justice is not 

rewarding political allies in a forum where prosecutorial independence is absolutely necessary. Our investigation into the removal of 

nine U.S. attorneys has taught us, unfortunately, that the department can be politicized in a way that undermines public confidence. And so, we hope that the department guidelines released 

yesterday accomplish the goal of restoring public confidence. 

And finally, there ought to be independent judicial oversight of 

corporate settlement agreements because currently there is no 

transparency and no requirement that they be made public. Judicial oversight would help to ensure greater legitimacy of these 

agreements by providing a neutral decision-maker to prevent 

abuses and politicization as well as ensure proper completion of the 

terms of the agreements. 

And so, I hope that all of our witnesses will help throw light on 

a subject that has not been examined up until now. And that is 

why I commend this Committee and its leadership for holding this 

hearing today. 

Thank you, Madam Chair. 

19 

Ms. SA ́ NCHEZ. I thank the gentleman for his opening statement. 

And at this time, I would like to welcome two of our colleagues 

who have joined us on the dais, Mr. Pascrell and Mr. Pallone. They 

are not Members of the Subcommittee, but they will be listening 

in and providing testimony for our second panel. 

Without objection, other Members’ opening statements will be included in the record. And without objection, the Chair will be authorized to declare a recess of the hearing at any point. 

I am now pleased to introduce our witness panel for today’s hearing. Our first witness is Mr. John Ashcroft. Mr. Ashcroft serves as 

chairman of the Ashcroft Group, LLC, which provides confidential 

strategic consulting and crisis counseling to major international 

corporations. Prior to forming the Ashcroft Group, Mr. Ashcroft 

served during the first term of President George W. Bush from 

2001 until 2005 as the 79th U.S. attorney general. 

During his tenure as attorney general, the corporate fraud task 

force was established within the department to restore integrity to 

the marketplace. Prior to his appointment as attorney general, Mr. 

Ashcroft was elected to the U.S. Senate in 1994 and served on the 

Senate Judiciary, Foreign Relations, and Commerce Committees. 

From 1985 through 1993, Mr. Ashcroft served as governor of Missouri and served as chairman of the non-partisan National Governors Association in 1991 and 1992. He received awards from the 

Business Roundtable, U.S. Chamber of Commerce, and National 

Federation of Independent Businessmen for his service in the Senate. 

We want to welcome you, Mr. Ashcroft. 

Our second witness is Timothy Dickinson. Mr. Dickinson is a 

partner in the Washington, D.C. firm of Paul, Hastings, Janofsky 

& Walker, LLP. Mr. Dickinson’s practice is devoted primarily to 

international commercial matters, including all aspects of political 

risk insurance, the Foreign Corrupt Practices Act, U.S. export laws, 

and economic sanctions. Mr. Dickinson works closely with a wide 

range of industries on FCPA matters, including establishment of 

compliance programs, due diligence in acquisitions, special investigations, and defense before U.S. regulators. 

In 2005, Mr. Dickinson was appointed independent expert by 

Monsanto as part of a deferred prosecution agreement with the Department of Justice. Mr. Dickinson is currently an adjunct professor at the University of Michigan Law School where he teaches 

trans-national law and international commercial transaction. He 

has served on the board of editors of the FCPA Reporter since 1997 

and is the director of the International Law Institute course on 

government integrity and anti-corruption initiatives. 

Welcome to you, Mr. Dickinson. 

Our third witness is David Nahmias. Is that a correct pronunciation? Mr. Nahmias is the United States attorney for the Northern 

district of Georgia. He serves as the chief Federal law enforcement 

officer in that district representing the United States in all criminal and civil litigation in Federal court. 

In January of 2005, Mr. Nahmias was appointed to serve on the 

attorney general’s advisory committee of the United States attorney, which reviews and recommends policies for Federal prosecutors nationwide. The attorney general also appointed Mr. Nahmias 

20 

as chairman of the White Collar Crime Subcommittee in October 

of 2007. 

Prior to his appointment as the U.S. attorney, Mr. Nahmias 

served as a deputy assistant attorney general in the criminal division, the fraud section, the appellate section, and the capital case 

unit. Mr. Nahmias practiced with the law firm of Hogan & Hartson 

in Washington, D.C. and served as a law clerk for Judge Warren 

Silverman of the U.S. Circuit Court for the District of Columbia 

and for Justice Antonin Scalia of the Supreme Court of the United 

States. 

Welcome to you, Mr. Nahmias. 

Our fourth witness is George Terwilliger. Is that the correct pronunciation? Thank you—a partner with the law firm of White & 

Case, LLP, Mr. Terwilliger’s clients include national and international companies and prominent individuals. He has represented 

the interests of major corporations and other institutions in civil 

and criminal enforcement proceedings, including financial crimes 

and environmental, anti-trust, health care, and tax matters, among 

others. 

Prior to joining White & Case, LLP, Mr. Terwilliger served as 

the presidential appointee in two Administrations. He was the deputy attorney general in charge of all Justice Department operations, including crisis response. He also served as a presidentially 

appointed United States attorney for 5 years and for 8 years as a 

Federal prosecutor. 

Welcome again to you. 

Our final witness on our first panel is Brandon Garrett. Professor Garrett joined the University of Virginia Law School faculty 

in 2005 as an associate professor of law. His areas of research and 

publication include criminal procedure, wrongful convictions, habeas corpus, corporate crimes, civil rights, civil procedure, constitutional law, and new forms of public governance. 

Prior to joining the University of Virginia School of Law faculty, 

Professor Garrett worked as an associate in New York City at 

Cochran, Neufeld & Scheck, LLP litigating wrongful convictions, 

DNA exoneration, and police brutality cases. He clerked for the 

Honorable Pierre Leval of the U.S. Court of Appeals for the 2nd 

Circuit. 

I want to thank you all for your willingness to participate in today’s hearing. Without objection, your written statements will be 

placed into the record in their entirety. And we are going to ask 

that you please limit your oral remarks to 5 minutes. 

You will note that we have a lighting system that starts with a 

green light when your testimony time starts. At 4 minutes, you will 

get the yellow warning light that you have about a minute left to 

conclude your testimony. And then when your 5 minutes have expired, you will see the red light. 

If you are caught mid-sentence when the red light comes on, we 

will naturally allow you to finish your last thought before moving 

on to our next witness. After each witness has presented his or her 

testimony, Subcommittee Members will be permitted to ask questions subject to the 5-minute limit. 

With that, I would now invite Mr. Attorney General to please 

begin his oral testimony. 

21 

TESTIMONY OF THE HONORABLE JOHN ASHCROFT, 

THE ASHCROFT GROUP, LLC, WASHINGTON, DC 

Mr. ASHCROFT. Good morning. And, Chairman Conyers, and 

Madam Chairwoman Sa ́nchez, and other Members of the Committee, my written testimony has about eight points, which I would 

like to summarize in my oral remarks now and see if I can get that 

done in 5 minutes. 

You have covered point one, my experience. And I thank you for 

reminding folks that I served as state auditor, state attorney general, governor of the state, senator, United States senator, serving 

on Committees like Labor and Human Resources and serving as 

the attorney general of the United States. I thank you. 

Point two—the public safety effort that we rendered at the Department of Justice is one which is important and should be considered. While most Americans focused on the Department of Justice’s 

record in successfully preventing another attack after September 

11th, violent crime dropped to a 30-year low. Teen drug use 

dropped for the first time in a decade. Gun crime fell to record 

lows. 

The department won the largest health care fraud cases in the 

Nation’s history. There was a 73 percent increase in health care 

fraud recoveries totaling $4.5 billion. And after the corporate malignancies of the 1990’s surfaced, shaking worldwide confidence in 

our financial markets, we organized the corporate fraud task force, 

which reestablished a standard of integrity restoring America’s reputation for sound and secure markets. In dozens of corporate fraud 

prosecutions, over 600 corporate criminals were convicted, including 31 chief financial officers. 

Point three—deferred prosecution agreements protect the American public from corporate criminality while placing the cost of that 

protection on the corporate wrongdoers, not on the taxpayers. My 

fellow panel members have written about job loss and functional 

dislocations of traditional criminal prosecutions destroying entire 

corporations rather than addressing limited malignancies. 

In my experience, prosecutors understand that a corporate indictment can be a corporate death sentence. A deferred prosecution can 

avoid the catastrophic collateral consequences and costs that are 

associated with corporate conviction. 

Point four—as we seek to achieve with other tools in law enforcement, we should constantly seek to improve deferred prosecution 

agreements. As a result, I welcome and I support the principles announced in the additional guidelines from the Department of Justice. 

Point five—as attorney general, I instructed every U.S. attorney 

to—and I did this personally eyeball to eyeball. I had meetings 

with each of them—to be blind to the party affiliation and political 

preferences of individuals. That principle guided my endeavors, including deferred prosecution agreements. It was true then. It 

should be true now. 

Partisan consideration should be totally unwelcome in the enforcement of our Nation’s laws. I learned only last week that during my tenure more Democrats were appointed as monitors than 

were Republicans. Partisan affiliation should neither qualify nor 

disqualify a person from being selected to do public service in the 

22 

role of a monitor. The focus should be on the quality of service and 

the results that are expected. 

Point six—A monitor should be independent, should demand the 

highest quality work and the finest professional standards and be 

unwavering in the face of pressure. As you may or may not recall, 

there were plenty of people who attacked me for the way that I 

chose to defend America from terrorism. Those assaults did not 

shake my commitment to protect innocent American lives from terrorist attacks. 

Similarly, a monitor should be immune to pressure and should 

not allow attacks from whatever sources to contaminate the cause 

of justice. I will not allow external pressures to compromise my responsibilities as a monitor. 

Point seven—a monitor protects the public from further corporate 

abuse. In my case, five monitors are charged with reforming an entire industry which is mired in criminal allegations of Medicare 

fraud and kickbacks to surgeons. There are pending criminal cases 

against defendant corporations, corporations that have already paid 

$311 million in civil settlements. There is an active, ongoing criminal investigation into multi-million dollar payments to physicians 

that might have altered physicians’ judgments about which devices 

they will implant or prescribe for their patients. 

A surgeon who makes decisions based on the receipt of illegal 

kickbacks violates his responsibility to his patients, breaches the 

public trust, and breaks the law. It must be stopped. 

Point number eight—— 

Ms. SA ́ NCHEZ. Mr. Ashcroft, your time is expired. But we will 

allow you to go ahead and summarize your final points before we 

move on. 

Mr. ASHCROFT. Thank you very much. The marketplace rewards 

corporations who from the chaos of contamination bring the clarity 

of integrity. On January 29, 2008, Zimmer, for which I am the 

monitor, publicly announced that it will expand its compliance program to all product lines and all of its global operations, reforms 

that are well beyond the mandates of the deferred prosecution 

agreement. 

After the first full quarter working with our monitoring team, 

Zimmer reported adjusted net earnings of $276 million, a 28 percent increase over the previous quarter. Zimmer now projects adjusted net earnings to exceed $1 billion in 2008. Following these 

announcements, the corporation’s market capitalization increased 

$2.1 billion. 

The $2.1 billion increase is in direct contrast to the steep market 

decline in stocks generally this year. The marketplace rewards a 

commitment to corporate integrity and results. 

In summary, effective deferred prosecution agreements can protect taxpayers. They can serve the cause of justice and enhance corporate integrity. And I thank you for the additional time. 

[The prepared statement of Mr. Ashcroft follows:] 

23 

PREPARED STATEMENT OF THE HONORABLE JOHN D. ASHCROFT


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Ms. SA ́ NCHEZ. We thank you for your testimony, Mr. Ashcroft. 

Mr. Dickinson, I would invite you to provide your testimony at 

this time. 

TESTIMONY OF TIMOTHY L. DICKINSON, PAUL, HASTINGS, 

JANOFSKY, & WALKER, LLP, WASHINGTON, DC 

Mr. DICKINSON. Thank you, Madam Chairwoman and Mr. Chairman, Members of the Committee. As you noted, I am a partner in 

the law firm of Paul, Hastings, Janofsky & Walker. I also serve as 

an adjunct professor at the University of Michigan Law School and 

hold a number of bar association and other positions. 

In addition, I serve as the independent consultant for Monsanto 

Company and Delta and Pineland Company. I have been in practice for over 25 years and have counseled companies on issues relating to the Foreign Corrupt Practices Act, including DPAs for my 

entire career. I also assisted in developing the World Bank’s voluntary disclosure program, VDP, and worked with bank staff to advise a VDP participant on improving its compliance program. 

It is a great pleasure to be here today. And I should state at the 

outset that I am here in my personal capacity only and not as a 

representative of any company, client, law firm, law school, et 

cetera. 

In the interest of time, I will limit my remarks to three areas. 

First, when is a monitor an appropriate component of a deferred 

prosecution agreement? Second, in such circumstances, how should 

the monitor be appointed? And third, how should the scope of the 

monitor’s work be determined? 

To date, no guidelines have been issued outlining the appropriate 

circumstances for appointment of a monitor as a part of a DPA. 

This is troubling because of the potential inconsistency and lack of 

predictability if, in similar circumstances, certain prosecutors insist 

upon a monitor and others do not. To remedy this concern, I would 

favor guidance from the Department of Justice that would establish 

clear criteria for prosecutors to follow when considering the inclusion of a monitor in the terms of a DPA. 

I would favor the imposition of a monitor under narrow circumstances such as when a company has elected not to establish 

a comprehensive compliance program or when there has been a 

fundamental breakdown in a company’s internal controls or compliance program that the company has not adequately addressed 

itself. Such a standard would leave some flexibility to prosecutors 

but would also provide companies with the option to take aggressive remedial actions themselves in lieu of the intrusion of a corporate monitor. 

With respect to the appointment process prior to March 7, there 

were no guidelines. To date, the appointment process appears to be 

a mix of prosecutor appointments, recommendations for approvals, 

as, Madam Chair, you noted, but without any particular guidance. 

While I recognize that some flexibility in the appointment process 

may be beneficial to the government’s objectives, the lack of a defined methodology for the appointment does not, in my view, serve 

the ultimate government’s objective of ensuring compliance with 

the law. 

36 

I would propose that the appointment process follow a fairly simple formula. First, the company involved in the deferred prosecution would propose to the government its preferred candidate. Such 

candidate would be required to be clearly qualified in the substantive area of law at issue. As I am sure everyone is aware, monitors have been utilized in a number of types of cases, including securities fraud, tax issues, export violations, and my field, the Foreign Corrupt Practices Act. 

It is my view that anyone who a company would propose as its 

monitor should have the requisite demonstrated expertise such 

that the government and the public can be assured that the monitor’s duties will be carried out in an effective manner. Upon receipt of the company’s proposed candidate, I would recommend that 

the government be given a veto over such appointment should the 

government believe that the person proposed does not possess the 

requisite skills or independent integrity to ensure a successful execution of his or her duties. I should point out that this was the formula or a similar formula to that which resulted in my own 

monitorship. 

Finally, the methodology for establishing the scope of the monitor’s work is another topic that might be considered. In order, once 

again, to ensure a successful monitorship—and I am mindful that 

some critics may say that my use of the term successful is by definition an impossible result to achieve—all parties involved, including the government, should agree at the early stages of any 

monitorship as to the scope, timing, and budget of the monitor’s activities. 

Of course, adjustments may be appropriate and necessary, depending on what transpires during the monitor’s terms. And some 

flexibility must be allowed. 

This would eliminate some of the uncertainty as to cost of monitors, which need to be factored into a company’s analysis for entering into the agreement and would reduce the potential abuses of 

monitors. Thus, I would welcome guidelines to be issued by the 

Justice Department that would set out in a transparent manner 

when a monitor would be deemed necessary as well as the methodology to be followed in the appointment process and in defining the 

scope of work. 

I would be happy to elaborate on my comments. I have included 

additional comments in my written statement. And thank you very 

much. 

[The prepared statement of Mr. Dickinson follows:] 

37 

PREPARED STATEMENT OF TIMOTHY L. DICKINSON


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Ms. SA ́ NCHEZ. Thank you, Mr. Dickinson. We appreciate your testimony. And you came in right at the 5-minute mark. Very well 

done. 

Mr. Nahmias, at this time I would invite you to provide your testimony. 

TESTIMONY OF THE HONORABLE DAVID E. NAHMIAS, THE 

UNITED STATES ATTORNEY’S OFFICE NORTHERN DISTRICT 

OF GEORGIA, ATLANTA, GA 

Mr. NAHMIAS. Thank you, Madam Chairwoman, Ranking Member Cannon, and other distinguished Members of the Subcommittee. I appreciate the opportunity to discuss the important 

work of the Justice Department in preventing, deterring, and punishing corporate crime. The investigation and prosecution of corporate crime has been an important priority of the Department 

since the corporate fraud crisis of 2001 and 2002 and has resulted 

in more than 1,200 convictions of individuals and entities and the 

recovery of hundreds of millions of dollars in fines, penalties, and 

restitution for victims. 

We recognize, however, that criminal conviction of a corporation 

and sometimes even the indictment of a corporation can have significant collateral consequences for innocent third parties who may 

include employees, pensioners, shareholders, creditors, customers, 

and the general public. As set forth in the Department’s Principles 

of Federal Prosecution of Business Organizations, prosecutors properly consider such collateral consequences in determining whether 

to charge the corporation. 

Prosecutors may use a variety of tools other than indictment and 

prosecution to achieve the goal of justice for victims and the public. 

These tools include deferred prosecution agreements, or DPAs, and 

non-prosecution agreements, or NPAs. Under these agreements, a 

corporation against which the government has sufficient evidence 

to file criminal charges, potentially undertakes a period of probation subject to specific conditions by agreement with the government instead of as a result of a criminal conviction that would have 

substantial collateral consequences. 

A DPA differs from an NPA in that a DPA typically includes a 

formal charging document and an agreement that is filed with the 

court, while in the NPA context, there is typically no charging document and the agreement is normally maintained by the parties. 

Deferred prosecution and non-prosecution agreements occupy an 

important middle ground in the resolution of corporate crime cases 

that may have distinct advantages over simply declining prosecution, which may allow a corporate criminal to escape without direct 

consequences, or charging and convicting a corporation and producing a result that may have calamitous collateral consequences. 

These agreements typically require the payment of restitution to 

victims, and/or fines and penalties long before such payments could 

be obtained in most cases through formal charging, protracted litigation, and inevitable appeals. 

The agreements encourage corporate cooperation in obtaining the 

evidence necessary to prosecute culpable individuals. Perhaps most 

importantly, by requiring the adoption of solid internal controls 

and ethics and compliance programs, the agreements encourage 

124 

corporations to root out illegal conduct, prevent recidivism, and ensure that they are committed to business practices that meet or exceed applicable legal and regulatory mandates. 

Thus, these agreements can help restore the integrity and preserve the financial viability of a corporation that had descended 

into criminal conduct. If the corporation satisfies the obligations 

imposed by the agreement within a defined period, usually 1 to 5 

years, then the government will not proceed with the prosecution. 

If the corporation materially fails to comply with the agreement, 

then the government retains the discretion to go forward with prosecution and in most cases, to use admissions of the corporation to 

prove the case. 

Since at least 1992, DPAs and NPAs have been used to resolve 

a variety of cases involving a wide variety of criminal offenses. But 

while the use of DPAs and NPAs to resolve such cases has expanded since the fraud crisis early in this decade, it is still a relatively limited practice. 

Even more limited in number are the DPAs and NPAs that include the use of a corporate monitor. Monitors are independent. 

They are not employees or agents of the government, and they are 

not paid with taxpayer funds. Instead, the monitor is retained by 

the corporation, which pays for the monitor along with all the other 

costs of implementing the DPA or NPA. 

The appointment of a monitor is not necessary in every case, but 

it can have distinct advantages for the public in appropriate cases. 

Monitors allow the government to verify through the work of an 

independent observer whether a corporation is fulfilling the obligations to which is has agreed. A monitor may also provide specialized expertise to oversee and ensure compliance with complex and 

technical aspects of a corporate agreement. 

We believe, as Attorney General Mukasey has previously indicated, that the issuance of additional policy guidance concerning 

the use of DPAs, NPAs, and monitors will improve consistency and 

transparency and encourage best practices. As you know, yesterday 

the Deputy Attorney General issued a set of nine principles on the 

selection and use of monitors in corporate deferred and non-prosecution agreements. 

The first of these principles sets forth a detailed policy on how 

monitors should be selected, which focuses on ensuring the selection of a respected, highly qualified monitor who is suitable for the 

particular assignment and free of any conflict of interest. 

As we go forward, we recognize that we will face new and varied 

forms of corporate crime. The Justice Department will continue its 

efforts to develop appropriate policies that provide useful guidance 

to prosecutors in this area. In doing so, we bear in mind that while 

public attention may focus on high-profile corporate fraud cases, 

DPAs, NPAs, and independent monitors have also been used creatively and successfully in other less prominent but equally meaningful corporate crime contexts. 

It is important that we avoid imposing an inflexible policy that 

fits one type of case—which may be the unusual type of case—but 

constrains the ability of Federal prosecutors to resolve other types 

of cases in the best interest of our only client, the citizens of the 

United States. Thank you. 

125 

[The prepared statement of Mr. Nahmias follows:] 

PREPARED STATEMENT OF THE HONORABLE DAVID E. NAHMIAS


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Ms. SA ́ NCHEZ. Thank you, Mr. Nahmias. We appreciate your testimony. 

At this time, I would invite Mr. Terwilliger to please proceed 

with your testimony. 

TESTIMONY OF THE HONORABLE GEORGE J. TERWILLIGER, 

III, ESQUIRE, WHITE & CASE, LLP, WASHINGTON, DC 

Mr. TERWILLIGER. Thank you. Chairwoman Sa ́nchez, Ranking 

Member Cannon, Members of the Committee, Mr. Smith, thank 

you for inviting me to appear before the Committee today. The 

proper handling of cases involving allegations of unlawful conduct 

by corporations and other businesses is a matter of vital interest 

to many who are stakeholders in those companies. That includes 

the people who own them, including the tens of millions of mutual 

fund owners and other shareholders of public companies, the millions of employees of those companies who depend on these employers for their livelihood, and the countless individuals and other 

businesses that depend on the goods and services that these companies provide. 

I appreciate the opportunity to share my views as the Committee 

considers issues concerning business crime and related policies, 

and/or guidelines which are important to achieving basic fairness 

by ensuring that like cases are treated alike. The views I offer for 

your consideration are from the perspective of 30 years of law practice, now divided almost evenly between public service and private 

practice. 

At the Justice Department I began my career as a law clerk 

while in law school and finished as the acting attorney general of 

the United States and in between dealt with many of these kinds 

of cases and these issues. I now represent businesses, including 

corporations, their boards, audit committees, and their leaders as 

they navigate their way through enforcement matters, including 

those under the jurisdiction of the Department of Justice. 

Deferred prosecution agreements provide a middle ground between a criminal and a civil disposition. The company avoids the 

appropriate and often considerable adverse collateral consequences 

that would attend to either a guilty plea to criminal violations or 

worse, a conviction after trial, while the government achieves deterrence and punishment objectives without the expenditure of the 

massive resources and the litigation risks that would be necessary 

to indict and try such a case. 

As noted, DPAs often impose an obligation on the company to 

employ at its expense an outside monitor. At its core, the function 

of an outside corporate monitor is to observe the conduct of a company relevant to its obligations under a DPA and to report the 

product of those observations, including the monitor’s judgment 

about the company’s conduct and its commitment to compliance obligations. 

Thus, to perform these functions, a monitor should be a person, 

to borrow a phrase, learned in the law, but as importantly, a person with the background, experience, proven judgment, and integrity to make keen and credible observations and reports concerning 

the compliance of a given type of business with its legal obligations. 

Consistent with the government’s duty to assure the public that 

135 

the administration of law is free of any partisan consideration, the 

process of selecting monitors with these qualifications should be 

transparent, subject to layered review, and approval at Main Justice in Washington. 

The selection of monitors should be on the basis of merit and 

enjoy input from both the government and the subject company. In 

my own view, since the monitor will be paid for with corporate 

funds and can provide value to the company in achieving its compliance objectives, the best approach is for the company to select 

a monitor from a panel of candidates, each of whom has been previously designated as acceptable by the government. I think the 

Department of Justice has taken an important and valuable step 

forward by articulating a principled basis for the selection and use 

of monitors, as it did in its memorandum of March 7. 

DPAs often describe the monitor as a compliance consultant. In 

my judgment, that is a good description of the role of the monitor 

as both a consultant to a company and as an internal observer of 

compliance who reports relevant findings to the government. Some 

go even farther and describe the monitor as being a government 

representative who is essentially given a seat at the boardroom 

table. I think this goes too far. 

Monitors should not have the power to run companies, and those 

who maintain the responsibility under the law, the management 

and directors of public corporations, should. It is equally important 

that any guidelines prescribing monitor functions not be dictated 

by the Congress. 

Under the separation of powers doctrine, neither Congress nor 

the judiciary can control the executive branch’s exercise of prosecutorial discretion. The decision whether to enter into a DPA or require some other terms in deciding whether to bring charges in the 

exercise of prosecutorial discretion belongs to the executive branch. 

I believe the legislation that the Committee has considered is not, 

therefore, well-advised. 

I thank the Chair and the Subcommittee for allowing me to be 

heard today and appreciate that my written statement will be included in the record. 

[The prepared statement of Mr. Terwilliger follows:] 

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PREPARED STATEMENT OF THE HONORABLE GEORGE J. TERWILLIGER, III 


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Ms. SA ́ NCHEZ. Thank you, Mr. Terwilliger. And we appreciate 

your testimony. 

And at this time, I would invite Professor Garrett to begin his. 

TESTIMONY OF BRANDON GARRETT, PROFESSOR, UNIVERSITY OF VIRGINIA SCHOOL OF LAW, CHARLOTTESVILLE, VA 

Mr. GARRETT. Chairwoman Sa ́nchez, Ranking Member Cannon, 

and Members of the Subcommittee, thank you for the opportunity 

to testify before you today. I am an associate professor of law at 

the University of Virginia School of Law. In 2007 I published an 

article exploring remedies in deferred and non-prosecution agreements in organizational cases. I will describe these agreements and 

then discuss two recommendations for reform, guidelines concerning their content, and judicial oversight over their adoption 

and implementation. 

First, just to describe an example, in 2007 after a lengthy investigation, the IRS referred a criminal tax case involving KPMG 

International to the U.S. attorney’s office for the Southern district 

of New York. In 2005 prosecutors announced that they had reached 

a deferred prosecution agreement with KPMG. The settlement stated that if at the end of 14 months prosecutors were satisfied that 

KPMG had complied with its terms, they would move to have the 

case dismissed. 

In the agreement, KPMG provided detailed admissions of wrongdoing. KPMG agreed to shut down its entire private tax practice 

and to cooperate fully in an investigation of current and former employees. 

KPMG also agreed to retain an independent monitor for 3 years 

in order to implement an elaborate compliance program. The monitor was paid by KPMG and had the power to recommend policy 

changes, obtain access to documents, interview employees, and to 

employ any personnel necessary. The district judge approved the 

agreement, and at the end of 14 months, prosecutors moved to dismiss the case stating the agreement had been effective. However, 

prosecutions of certain individual KPMG employees remained ongoing. 

At least 39 of these prosecution agreements were entered in the 

4 years after the Thompson memo was issued in 2003. I have gathered data from the texts of these agreements with some difficulty 

where several were not readily available. Most resembled the 

KPMG agreement and involved compliance programs and independent monitors. 

In preparation for this hearing, I also compiled updated data reflecting 43 agreements entered into 1 year and 2 months after the 

McNulty memo was issued in December of 2006. In just slightly 

more than a year, more agreements were entered than had been 

entered during the almost 4 years the Thompson memo was in effect. That represents a remarkable acceleration in the use of preindictment agreements with organizations. 

I turn now to reform proposals advanced most recently in legislation drafted by Representative Pallone and in the statement of 

principles authored by Representative Pascrell. First, while the 

McNulty memo provides useful guidance on whether a firm should 

be charged at all, scant guidance exists regarding the structure of 

146 

the remedies included in the agreements themselves or their implementation. The new Morford memo just issued by the DOJ addresses only a very limited set of issues concerning the selection 

and certain duties of monitors. Much more remains to be done. 

Several areas are particularly ripe for such guidance. Since 2003 

when the Thompson memo was signed, at least 39 agreements included the retention of monitors. Of those, only one advertised an 

open position to solicit candidates. And in only three did a court 

play any role in selecting the monitor. 

The new Morford memo procedures forbid the unilateral prosecutorial selection of monitors and provide for conflict checks and vetting of monitors by prosecutors. However, those guidelines neither 

require public notice of a monitor position nor judicial approval, 

both of which would alleviate any perception of cronyism in the selection of monitors. 

Many other questions remain. Why do some agreements not require creation of a compliance program? Why do some not include 

fines or restitution? When are non-prosecution versus deferred 

prosecution agreements appropriate? 

Additional guidelines could clarify such issues—judicial oversight 

of these agreements could provide greater legitimacy by providing 

a mutual decision-maker as well as greater transparency by making aspects of this process public. The U.S. code requires judicial 

approval of any deferral of prosecution, but does not address issues 

unique to the deferral of organizational prosecutions. 

For example, a court could be required to conduct an approval 

hearing in which the public or affected parties would have notice 

and an opportunity to comment, as is the case when certain agencies enter consent decrees. Regarding implementation, when an 

agreement ends, no information is typically released except the 

bare facts that prosecutors were satisfied it was successful. The 

court could publicly report on the monitor’s progress. 

Further, agreements provide prosecutors with unilateral authority to declare a breach and terminate an agreement. A firm may 

lack any pre-indictment remedies should a prosecutor arbitrarily 

declare a breach. Courts could be provided with the authority to 

adjudicate pre-indictment any dispute regarding a breach. 

Now that pre-indictment agreements have become the preferred 

method for resolving organization prosecutions, it is time to consider ways to improve their fairness, transparency, and effectiveness. Prosecution guidelines concerning remedies and increased judicial oversight are warranted to achieve those goals. 

I would be pleased to answer any questions that you and your 

fellow Committee Members may have. And thank you for this opportunity to speak to you. 

[The prepared statement of Mr. Garrett follows:] 

147 

PREPARED STATEMENT OF BRANDON GARRETT


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Ms. SA ́ NCHEZ. Thank you, Professor Garrett. We appreciate your 

testimony. 

We will now begin our questioning. And I will begin by recognizing myself for 5 minutes of questions. 

Mr. Ashcroft, do you know who besides yourself was considered 

for the appointment of monitor in the Zimmer case? Or are you familiar with the selection process? 

Mr. ASHCROFT. I know what the deferred prosecution agreement 

provides for in terms of the selection process. It provides that 

the—— 

Ms. SA ́ NCHEZ. With all due respect, Mr. Ashcroft, I am just asking if you know how they came to select you as a monitor. I mean, 

did you just get a phone call one day saying we would like to consider you for this or we want you to be the monitor? Can you—— 

Mr. ASHCROFT. I would like to answer your question. And so, 

that is about what I was going to do, if you don’t mind. 

Ms. SA ́ NCHEZ. Okay. 

Mr. ASHCROFT. I understand that I was selected in accordance 

with the deferred prosecution agreement after consultation with 

the company by the U.S. attorney. And I was asked then to evaluate and to monitor the company’s performance. I understand the 

corporation and the Department of Justice agreed to seek my service during the course of their discussions over the deferred prosecution agreement. So in the course of their discussion—— 

Ms. SA ́ NCHEZ. Do you know if they considered anybody else for 

the position of monitor? 

Mr. ASHCROFT. I don’t know what kinds of discussions they had. 

Ms. SA ́ NCHEZ. Okay. That is fair. 

Mr. ASHCROFT. I wasn’t part of those discussions. 

Ms. SA ́ NCHEZ. Okay. 

Mr. ASHCROFT. I learned about this after they had the discussions. 

Ms. SA ́ NCHEZ. I understand. That answers my question. Do you 

know whether there was any public notice or bidding prior to your 

appointment? 

Mr. ASHCROFT. I did not participate in any bidding. Not a single 

cent of tax dollars is spent for monitors. 

Ms. SA ́ NCHEZ. I understand that. That is not the question that 

I am asking, though. I am just trying to get to the very things 

that—— 

Mr. ASHCROFT. This hearing costs far more in tax dollars than 

my monitorship will cost in tax dollars because not a thin dime of 

public money—— 

Ms. SA ́ NCHEZ. I understand that. But the subject of the financing 

is not what I am trying to ask you. 

Mr. ASHCROFT. Sure. Go ahead and ask me something. 

Ms. SA ́ NCHEZ. I am just trying to get some very basic questions 

out of the way. 

Mr. ASHCROFT. I would like to get some very basic answers because your original remarks—— 

Ms. SA ́ NCHEZ. Okay. 

Mr. ASHCROFT [continuing]. Made a series of accusations. I would 

like to get to those so that I can answer them and clarify this situation because it deserves clarification. 

289 

Ms. SA ́ NCHEZ. Okay. Well, if you will allow me to ask my questions, we will have many other questions from the panel, I am 

sure. In your view, would the monitor selection process in the Zimmer case comply with the guidance that was issued publicly by the 

department yesterday? Or have you had a chance to review those 

guidance? 

Mr. ASHCROFT. I have reviewed them very briefly. They were 

made available to me late yesterday afternoon. I believe it would 

have been very possible that I could have been chosen under the 

kinds of guidelines. I would hope so. 

Let me say, as I said in my remarks, I don’t think there should 

be a discrimination against individuals who have had the privilege 

of public service. I don’t think there should be a discrimination 

against people on the basis of their partisan identification. And I 

would certainly hope that whatever guidelines would be promulgated by this Justice Department or encouraged by this Congress 

that they wouldn’t discriminate against individuals whose qualifications are those like mine are. 

Ms. SA ́ NCHEZ. Okay. Well, Mr. Ashcroft, on that issue, I would 

like to call your attention to the fact that the guidance issued yesterday indicated—and I am quoting from the guidance, ‘‘Government attorneys who participate in the process of selecting a monitor shall be mindful of their obligation to comply with the conflict 

of interest guidelines set forth in 18 USC, section 208 and 5CFR, 

part 2635.’’ So the question that I want to get at, which I think is 

part of the problem, and we have heard from several witnesses talk 

about no conflict of interest, is do you believe that Mr. Christie violated any laws or regulations already in the books when he appointed you, his former employer, as a monitor in the Zimmer case? 

Mr. ASHCROFT. I really don’t believe that Mr. Christie is a law 

violator. His record as a prosecutor is—— 

Ms. SA ́ NCHEZ. So you don’t believe that conflict—— 

Mr. ASHCROFT [continuing]. An outstanding record. No law that 

I know of has been violated. And I don’t think there is an even 

plausible suggestion that any has been violated. Now, Mr. Christie 

has made his reputation prosecuting—— 

Ms. SA ́ NCHEZ. You don’t believe that there is a problem—— 

Mr. ASHCROFT [continuing]. Public corruption in New Jersey. 

And for this Committee—— 

Ms. SA ́ NCHEZ. You don’t believe that there is—— 

Mr. ASHCROFT [continuing]. To attack him on political 

grounds—— 

Ms. SA ́ NCHEZ. I am not attacking his record of prosecution. 

Mr. ASHCROFT [continuing]. Is inappropriate. As a matter of 

fact—— 

Ms. SA ́ NCHEZ. I am talking specifically about the issue of—— 

Mr. ASHCROFT [continuing]. Here is Mr. Christie’s record from 

the newspapers. 

Ms. SA ́ NCHEZ [continuing]. Conflict of interest. Mr. Ashcroft, it is 

very interesting about his record. And we are not attacking his 

record of prosecution. 

Mr. ASHCROFT. No innocent verdicts. No—— 

Ms. SA ́ NCHEZ. We happen to be talking specifically about conflict 

of interest. That is a very appropriate question for this hearing. 

290 

This is what we are trying to get at the crux of the problem is either conflict of interest or at least the appearance of conflict of interest. 

And if I am hearing your testimony correctly, would it be fair to 

say that you don’t believe there is any kind of conflict of interest 

in a former employee hiring their former boss or suggesting that 

he be hired for a very lucrative contract of monitoring? You don’t 

believe that there is a conflict or a problem with an appearance of 

a conflict of interest? 

Mr. ASHCROFT. There is not a conflict. There is not an appearance of a conflict. The ability to hire individuals who have the 

qualifications to conduct monitorship should not be impeded by the 

fact that someone has at some time or another served in public life 

or public office. 

It should not be impeded based on partisan grounds. It should 

not be determined or dispositive in the Justice Department. And it 

shouldn’t be equally dispositive or determinative here in the Judiciary Committee of the United States House of Representatives. 

Ms. SA ́ NCHEZ. Very interesting answer, Mr. Ashcroft. My time 

has expired. 

At this time, I would recognize Mr. Cannon for 5 minutes of 

questioning. 

Mr. CANNON. Madam Chair, I would prefer to pass, if that is acceptable to you, but would like to introduce for the record an article 

in the record that I think Mr. Ashcroft was just referring to about 

Christie’s all-out war and which includes his rather remarkable list 

of successful prosecutions and point out that you keep referring to 

the problem. I think that we have an issue before us that we need 

to manage and develop, but I don’t think there is a problem, especially when it comes down to Mr. Ashcroft’s character and record 

on his own or Mr. Christie’s. 

Ms. SA ́ NCHEZ. Will the gentleman yield on that point? 

Mr. CANNON. Let me just defer my time, if you don’t mind. But 

I would be happy to—I think the Chair actually would control the 

time and can speak directly. 

Ms. SA ́ NCHEZ. Well, without objection, the article will be entered 

into the record. And the point that I was trying to get at is the 

public confidence in our justice system and whether or not conflicts 

of interest, actual or perceived, are a problem in terms of—a perceived problem in terms of the public’s confidence in our justice 

system. And—— 

[The information referred to follows:] 

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Mr. CANNON. If the Chair would yield? 

Ms. SA ́ NCHEZ. I will yield. 

Mr. CANNON. This is a remarkably important issue, and we have 

an amazing panel. And on that panel we have a guy who is lionized 

in America for his willful determination to not sign a memorandum 

on his, some people call it, his death bed. It certainly was a very 

ill bed. 

And to say there is a problem related to him is one that I think 

ought to be squarely confronted. I know that we have two witnesses on the next panel who are representatives from New Jersey 

who want to attack Mr. Christie. And I understand the urge to attack Mr. Ashcroft’s credibility. I find it appalling. 

Ms. SA ́ NCHEZ. Will the gentleman yield? I was not attacking Mr. 

Ashcroft’s credibility. I was simply posing a question with respect 

to a potential—— 

Mr. CANNON. You are questioning his integrity and calling it a 

problem. 

Ms. SA ́ NCHEZ. Well, if there is a conflict of interest, I would submit, that is a problem. 

Mr. CANNON. When you get the list of people who are capable of 

doing the job that needed to be done at Zimmer, I think it was a 

remarkably short list. And the people that appear on a list like 

that are going to be people that have relationships. And therefore, 

you can never get beyond the problem. 

I think the proper scope of this Committee is to actually oversee 

these monitors. I think that is an appropriate role. And I think we 

need a lot more staff in this Committee to do that. But right now 

I think we ought to be looking at policy rather than creating the 

question of a problem when you are talking about a man of such 

distinguished history and unquestioned ethics as Mr. Ashcroft. 

Ms. SA ́ NCHEZ. If the gentleman will yield back, I will recognize 

Mr. Johnson for 5 minutes of questions. 

Mr. Johnson? 

Mr. JOHNSON. Thank you, Madam Chair. And during 27 years of 

practicing law back home in Dekalb County, Georgia, I represented 

many people. And they were all just regular working class people, 

blue collar folks. And they were all subject to the maxim of you do 

the crime, you do the time. And so, now today I am hearing about 

non-prosecution agreements with corporations and also deferred 

prosecution agreements. 

And if there were any deferred prosecution, it would be something for my clients that they would have to appear in court and 

face the charge and admit to the allegations and ask the judge for 

some consideration. And the judge in his discretion, his or her discretion, would decide whether or not that person would be placed 

in a deferred prosecution program. 

And we don’t have any of those kinds of qualities that exist or 

that existed for these prosecution agreements here. But I do want 

to ask Mr. Ashcroft, while appreciating your service to the Nation, 

according to billing records that detail 5 months of work from September 2007 to January 2008, your firm has billed Zimmer, Incorporated more than $7.5 million. Over these 5 months, your total 

fees are higher than other monitors, particularly the four other 

monitors for the four other orthopedic device makers who entered 

294 

into deferred or non-prosecution agreements with the Justice Department. 

Your firm is the only one of the group that charges a set monthly fee of $750,000 on top of your hourly billing rate, which is also the 

highest of the five firms, topping out at $895 an hour. To your 

knowledge, are you aware of any monitors charging a monthly fee 

of $750,000 on top of an $895 hourly billing rate, Mr. Ashcroft? 

Mr. ASHCROFT. Well, we do not charge both an hourly fee. The 

hourly fee covers one group of workers. Other individuals are covered in the set amount. And they are not working on an hourly 

basis. 

The reason our fees are appropriate is the complexity of the case 

and the responsibilities in which we have to be involved. I have 

been required to assemble an exceptional monitoring team of about 

30 professionals, including lawyers, investigators, accountants, 

other business consultants to ensure that the deferred prosecution 

agreement is met. These professionals include former United States 

attorneys, assistant United States attorneys, former FBI members, 

former United States Department of Justice officials, intellectual 

property lawyers. 

Mr. JOHNSON. Well, you have answered my question. You have 

got a high-powered and highly-paid staff that consumes that 

monthly retainer fee. 

Now, for each monthly billing period, all that you have provided 

is a one-page bill that simply lists the total amount due and the 

bank information about where to wire the money. Whereas other 

firms would have submitted bills, detailed billing, 200 pages long, 

for instance, or 78 pages long. Why don’t you provide Zimmer with 

a detailed accounting explaining the services provided and the 

monitoring expenses? 

Mr. ASHCROFT. We believe that the quality of the services is the 

important point and that we have agreed and provided information 

about our fees in advance. 

Mr. JOHNSON. Will you provide this Committee with a detailed 

accounting of the services provided and expenses incurred in the 

Zimmer monitoring? 

Mr. ASHCROFT. I will provide this Committee with the documents 

that are required under the deferred prosecution agreement. And 

I will make available to the Committee those items which are required by that agreement. 

Mr. JOHNSON. Who is tasked with monitoring the monitor? In 

other words, who ensures that you complete all of your responsibilities under the deferred prosecution agreement? 

Mr. ASHCROFT. First of all, the company has an opportunity to 

raise issues if it finds the work of the monitor to be inappropriate, 

insufficient, of low quality or finds directions of the monitor to 

somehow be against what it considers to be the terms of the agreement, outside the scope of the agreement or otherwise inconsistent 

with the purposes of the corporation in remediating the problems 

that are faced by the corporation. The company carries those items 

to the U.S. attorney or to the office of the U.S. attorney to individuals in the office who are involved in the administration of the deferred prosecution agreement. 

Ms. SA ́ NCHEZ. The time of the gentleman has expired. 

295 

At this time, I would recognize Mr. Feeney for 5 minutes of questions. 

Mr. FEENEY. Well, thank you, Madam Chairman. 

Mr. Attorney General, it is great to see you back. The startling 

thing for me here is all of the suggestion or innuendoes, the mere 

implication of having the hearing today that there is some either 

conflict or something fundamentally wrong and we are worried 

about the costs to corporations. I have to be candid with you. The 

Congress voted overwhelmingly a few years ago for a bill that is 

commonly referred to as SOX, Sarbanes-Oxley. 

And what Sarbanes-Oxley effectively did—you know, Mr. 

Ashcroft, whose firm has been charged with monitoring a corporation where several individuals and perhaps the corporate entity 

itself may have been indicted or convicted of a crime to keep it 

alive and protect it, despite the wrongdoing. What Sarbanes-Oxley 

has done is effectively to take every innocent corporation that 

wants to go public in America and require them to spend about $6 

million annually at the requirement of Congress to pay additional 

accounting fees on top of the accountants that they already have. 

I can’t get members of the majority party to be concerned about 

the fact that Sarbanes-Oxley costs the United States economy, according to one study done by a professor from the Brookings Institute and another professor from the American Enterprise Institute—they estimate the annual costs, superfluous and unnecessary 

costs of accounting that bill costs the American economy $1.4 trillion. And that is for innocent corporations that have done no 

wrong. 

And yet when you have a corporation, some of whose leaders 

have actually committed crimes, you have a couple choices. You 

can, in effect, give that corporation the death penalty, even though 

the overwhelming majority of individual employees, partners, 

maybe even members of the board of directors and certainly the 

shareholders were totally innocent of any wrongdoing. 

So as Congress is continually battering and punishing the innocent because of the faults of the few, now we are here suggesting 

that there is something fundamentally wrong with hiring perhaps 

the most qualified individual in the country on health care and 

matters of jurisprudence from the attorney general’s perspective, 

there is something fundamentally wrong about giving a company 

and its shareholders and the innocent employees and the innocent 

members of the board and the innocent partners a second chance. 

I don’t know how many innocent people worked for Arthur Andersen when it was given the death penalty. Perhaps it was a prudent thing to do to punish all of the innocent along with a few of 

the guilty. But it didn’t help the American accounting system very 

much. 

As a consequence of Sarbanes-Oxley, we now have only four corporations in America willing to do the type of work that is required 

by Sarbanes-Oxley. And so, you have a quadropoly where they get 

to charge whatever they want to. And every corporation in America 

has to pay the price. Presumably if you are, for example, Pepsi, and 

you have an inside auditor and your major competitor, Coca-Cola, 

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side, there is only one left. And you have to do business, whatever 

the cost. 

The indirect costs have totaled, according to this one estimate, $1.4 trillion for innocent American companies. And as capital flees 

America, we are out-sourcing our 100-year lead to places like London’s stock market that advertises itself as a SOX-free zone, the 

Frankfurt market, the Hong Kong market. We have done this to 

ourselves. And we are happy about it. 

And yet, we find a situation where we are giving a company and 

the innocent people that are affiliated with it a second chance and 

most importantly, the shareholders. And we are here today battering people that are trying to save a company and giving it a second chance. I just find it remarkable. 

There is no situation in America that Congress can’t make worse. 

And I think the hearing today is a great example of that. 

With that, I don’t have any questions. I guess I have got an opinion already on this subject. But I will yield back the balance of my 

time. 

Ms. SA ́ NCHEZ. The gentleman yields back. 

And at this time, I would recognize Mr. Delahunt for 5 minutes 

of questions. 

Mr. DELAHUNT. Well, I thank my friend from Florida for the exposition of Sarbanes-Oxley. I would suggest that Enron had more 

to do with it than Sarbanes-Oxley. We are talking about confidence 

here. And I think that Congress in its wisdom, in its bipartisan 

wisdom decided that if investors were going to have confidence in 

our free market system and free enterprise that something had to 

be done in terms of accountability. 

And maybe we are seeing that again in terms of the so-called 

sub-prime crisis that has generated a tremendous magnitude, if 

you will, of economic pain as witnessed by the plummeting stock 

markets. But having said that, I am certainly not interested in discrimination against individuals who have served in government at 

whatever level. I don’t think there should be any discrimination. 

And I don’t think that, General Ashcroft, is the import of today’s 

hearing. 

Again, to echo the observations by the Chair, I think it is a question of confidence in the integrity of the system, not your personal 

integrity, not the personal integrity of anyone here at the panel because we know it does count. Because while there are no taxpayer 

dollars involved, this is, if you will, a fine being levied on a company that could have presumably been indicted. 

Really, what it occurring here is a monitorship is performing a 

public function, a function that is a key element in terms of assuring the American people that justice is being done. I am a believer 

in prosecutorial discretion and judicial discretion. That is why I 

vote against mandatory sentences. But I do believe in sentencing 

guidelines and transparency. And what I would suggest is what we 

have here is a situation that doesn’t provide the kind of transparency and raises issues and legitimately raises issues that ought 

to be addressed. 

General Ashcroft, you heard the testimony of Professor Garrett. 

Would you make any comments in terms of those policy issues that 

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countability? Because I was shocked, to be perfectly candid, that 

this company, Zimmer, was consulted about whether you were acceptable. I find that remarkable. 

There ought to be something better than receiving the imprimatur of a corporation that I would suspect was involved in significant wrongdoing and asking whether it is okay if former Attorney 

General Ashcroft leads a monitoring team. That was stunning to 

me. 

What I suggest is there ought to be a good, hard look at what 

the guidelines are, what we have in terms of transparency and accountability. I haven’t had a chance yet to read the legislation proposed by my good friends from New Jersey. But something ought 

to be done. 

General? 

Mr. ASHCROFT. Well, thank you very much. First of all, I don’t 

believe that the monitorship is a fine. I think the monitorship is 

a way to say that because there is an agreed upon area where the 

law has not been respected in the way that the system believes it 

should be, that there should be a way to remediate that. And trusting the person who has been a wrongdoer to remediate that on his 

own is inappropriate. 

In our case—and this is public information because I am not here 

to discuss things that aren’t public about the case or to telegraph 

where the investigation may go or not go. And there are real serious problems with having open hearings about ongoing criminal investigations. And this is an ongoing criminal investigation that relates not just to one—— 

Mr. DELAHUNT. I understand that, General. But—— 

Mr. ASHCROFT [continuing]. But to five different companies that 

comprise 95 percent of the orthopedic joint replacement industry. 

But in the industry, consulting contracts were used as a cover for 

kickbacks to doctors. So a doctor implanting a device like an artificial knee or hip might have his decision clouded by the fact that 

if he implanted one, it would be in the interest of his wallet, whereas if he implanted another, it would in the interest of the patient. 

Mr. DELAHUNT. General, with all due respect, my question went 

to the recommendations. 

Mr. ASHCROFT. Yes. 

Mr. DELAHUNT. And maybe you didn’t have an opportunity to 

hear them closely. 

Mr. ASHCROFT. Well, what I am saying is—— 

Mr. DELAHUNT. Because what I suspect in terms of how appointments are made, when reports ought to be filed, when things ought 

to be made public would fall within appropriate discretions of a 

court, of maybe a probation service. Because I think that there 

could be a way to achieve the goals of those members who have expressed concern about this in a public—I mean, the reality is you 

are the former Attorney General. In some ways that is helpful. In 

some ways it is a burden that you will always carry. 

I was a former district attorney, and I have 70 former assistants 

that are currently serving on the Massachusetts bench. I know that 

half of them would recuse themselves if I simply came before them 

and argued a case. Although there is no conflict. But appearances 

do count. And I think that has got to be factored into the equation. 

298 

Mr. ASHCROFT. May I—— 

Ms. SA ́ NCHEZ. The time of the gentleman has expired. 

At this time, I would invite—— 

Mr. CANNON. Is the Chair going to let the attorney general respond? 

Ms. SA ́ NCHEZ. Briefly. 

Mr. ASHCROFT. I would just say I have read a number of the professor’s articles. He is a prolific author and a valuable contributor 

in raising the questions that ought to be discussed. I was attentive 

to Counselor Terwilliger’s remarks that raised the issues that relate to the separation of powers. And I think that the decisions, as 

a former prosecutor you would agree, to prosecute or not to prosecute are appropriated vested in a way in a separate branch of government. 

The idea that you might have people in the judicial branch making decisions about whether or not to prosecute cases that they 

later sit in judgment on has serious—there are serious drawbacks 

to that. I noted that when the professor has addressed these items 

he has tried to avoid those kinds of problems with separation of 

powers. And any approach to this ought to be very tenderly undertaken with a view to respect, of not having the judge and the prosecutor be sourced in the same part of the governmental system. 

Now, I need to give my thanks to the Committee. When you 

scheduled this, I indicated to you that I had a speaking responsibility in Central Florida this evening and that I had a 12:50 flight 

at Dulles. And so, I intend to leave in accordance with our previously agreed to scheduling. And I thank you for your understanding of that. I am grateful to you. 

And I want to thank each of these thoughtful individuals who 

has participated. And I think in my absence your ability to discuss 

the real issues here and not to be bogged down in this specific case, 

which would be inappropriate in any event, will be enhanced. 

Thank you very much. 

Ms. SA ́ NCHEZ. Thank you for your testimony, Mr. Ashcroft. We 

appreciate you coming today. And we wish you luck in catching 

your flight. You are excused. 

Mr. FRANKS. Madam Chair? Madam Chair? 

Ms. SA ́ NCHEZ. I don’t know that congressional immunity actually 

exists for anything. If it does, I am not aware of it. 

Who seeks recognition? 

Mr. Franks? 

Mr. FRANKS. Yes, Madam Chair, General Ashcroft is leaving. I 

guess I wish that he could have been here for my own comments 

just related to the gentleman’s reputation in this country for personal integrity. I think that he represents the kind of public servant that a lot of us would like to be when we grow up, other than 

a few partisan Members of Congress. 

It occurs to me that what is at stake here to this company, to 

Zimmer—one of the reasons I think they wanted someone like Mr. 

Ashcroft to be involved in this agreement was simply because they 

knew that his reputation was such that if indeed he entered into 

it that he would do so and would expand that commitment to integrity to their company. 

299 

And, you know, in all respect to Mr. Delahunt’s concerns, if I 

were on the board of this company and the guilty members had 

been expunged from the company, I was doing everything that I 

could to restore this company, not only to profitability, but to coming in compliance with the law and being a company that the 

stockholders could aspire to, I would do everything I could to bring 

a man like General Ashcroft into the equation. It makes all the 

sense in the world to me. 

And certainly, the result in the company’s profitability and in 

their credibility, the change that took place in this company, I 

think, is partly something that we can lay at Mr. Ashcroft’s feet. 

And I just—— 

Mr. DELAHUNT. Well, if the gentleman would yield? 

Mr. FRANKS. Certainly. 

Mr. DELAHUNT. He referenced me. I think that we have a larger 

obligation. I am not in any way questioning the credentials of the 

former attorney general. But I dare say there are major law firms 

all over this country that could perform the kind of services necessary, that have people of high profile with bona fides that are impeccable. 

But when you have a potential wrongdoer, which is the corporate 

entity, requesting or signing off on who is going to monitor compliance with the agreement, I would suggest that the public says 

what is going on. 

Mr. FRANKS. Well, reclaiming my time, keep in mind there is two 

parties to the agreement. That is the company and the prosecutors. 

And they are trying to find someone who can be acceptable to both 

of them and to present to the public a credible image. And I think 

General Ashcroft does that in a way that very few people can. 

I mean, this gentleman has been the attorney general of Missouri, Missouri’s chief auditor. Let me finish. I am about out of 

time—it is chief auditor, the governor of Missouri, U.S. senator 

from Missouri, the attorney general of the United States. And I 

don’t know how you could find someone that more personifies the 

perfect example of what someone in this capacity—what qualifications they should have. 

Mr. DELAHUNT. If again my friend would yield for just a moment, 

I think that we all approve, as the Ranking Member indicated, of 

the former attorney general’s courage in the face of the pressures 

that came from the White House in the form of Mr. Card and—— 

Mr. FRANKS. Well, reclaiming my time, reclaiming my time, 

Madam Chair. 

Mr. DELAHUNT [continuing]. Former Attorney General Gonzalez 

to get him to—— 

Mr. FRANKS. Reclaiming my time, Madam Chair. 

Mr. DELAHUNT. Well, I will yield back. 

Ms. SA ́ NCHEZ. Pardon me. The time belongs to the gentleman 

from Arizona. 

Mr. FRANKS. Yes, Madam Chair, I mean, if we are going to deviate into these other situations—if Mr. Ashcroft is an example here 

of what is wrong with the system, where is Mr. Toricelli? Where 

is Mr. Stryker? If we are going to deviate off here, this is a bad 

example to use someone like General Ashcroft as to what is wrong 

300 

with the system. And I think that that has been done here to a degree. 

And I just wonder, you know, if the public realizes that he had 

nothing to do with the prescribed DPA or he didn’t negotiate the 

terms with the company in any way. And the fee arrangements he 

didn’t negotiate with the company in any way. 

And yet these things have been previously not released publicly. 

And I am wondering how the fee arrangements were made public 

in this situation. And I am about out of time, so I will now yield 

back to Mr. Delahunt. 

Mr. DELAHUNT. Well, I thank my friend. 

Ms. SA ́ NCHEZ. The gentleman yields back his time. 

Mr. DELAHUNT. Yes, I know. There is still some time on the clock 

I see, Madam Chair. But I wanted—— 

Ms. SA ́ NCHEZ. Yes, but the gentleman has yielded. 

Mr. DELAHUNT [continuing]. To respond that I wasn’t being—— 

Ms. SA ́ NCHEZ. Does the gentleman seek unanimous consent for 

30 seconds to respond? 

Mr. FRANKS. Madam Chair, I have yielded my time to the gentleman. 

Ms. SA ́ NCHEZ. You have yielded your time? I am sorry. I misunderstood. The gentleman from Arizona has yielded the remainder of his time to Mr. Delahunt. Mr. Delahunt is recognized. 

Mr. DELAHUNT. Thank you, Madam Chair. I wasn’t deviating. I 

was making a point that was brought up by Mr. Cannon, the Ranking Member, about the credentials, the credentials in terms of his 

political courage to stand up against the White House, against the 

then counsel to the White House, Mr. Gonzalez, and to support Mr. 

Colmey in what I consider an act of political courage. 

But my point is it is about appearances and the confidence of the 

American people in the system. No one here is questioning his morals, his ethics. It is what about the perception of a fee that, I am 

just reading, ranges from $28 million to $57 million. That is a lot 

of money. 

Now, I am all in favor of lawyers making money. That is something that I have fought for all my life. And I have to tell you I 

am glad to hear that we can agree on that, because in the past, 

it has been the then majority, now minority that have argued for 

capping lawyers’ fees when it came to class action suits. So I am 

glad that we have adjusted our sights and are now moving forward. 

And I thank my friend for yielding and yield back. 

Ms. SA ́ NCHEZ. The time of the gentleman has expired. 

At this time, I would recognize Mr. Cannon, who chose to pass, 

for 3 minutes of time. 

Mr. Cannon? 

Mr. CANNON. Thank you, Madam Chair. And I expect to ask 

unanimous consent for an additional 2 when we get to that point. 

But I am a little confused by this last exchange. We are talking 

about the courage of a man and his willingness to stand up and 

do the right thing, but somehow making a distinction between his 

courage and his credentials. I think that there is probably not a 

lawyer in America who has the credentials that Mr. Ashcroft has. 

The amazing thing about this hearing so far is we have this really incredible panel that could inform us on where we need to go, 

301 

and virtually every single question on the Democratic side has been 

about raising the question of the problem of the perception of a 

conflict of interest. 

Ms. SA ́ NCHEZ. Will the gentleman yield? 

Mr. CANNON. Yes, I will briefly. 

Ms. SA ́ NCHEZ. And you will be granted time, I assure you. We 

will be moving on to a second round of questions. And I assure you 

there will be many questions that we will have for our remaining 

witnesses. I think our asking Mr. Ashcroft questions first was due 

to the time constraints. We knew he would not be here for the remainder of the hearing. 

Mr. CANNON. Reclaiming my time, these are not questions the 

majority was asking Mr. Ashcroft. These were veiled charges. This 

is all about innuendo. 

The fact is did we do—did this Committee do an open bidding 

process for Mr. Irv Nathan’s services, for instance? The fact is—and 

as the Chair knows, I have been a big supporter of Mr. Nathan in 

his current job. But we didn’t do it with a bidding process for a 

very good reason. And I think that we have sort of exhausted 

that—— 

Ms. SA ́ NCHEZ. Will the gentleman yield? 

Mr. CANNON. No. I think we have sort of exhausted that issue 

with the attorney general. Now, if I might, I would like to actually 

turn to the panel and see if we can rekindle the discussion, which 

I think is absolutely fascinating. And so, I am going to ask two general questions that I would like the panel to respond to. 

Mr. Garrett said something to the effect of much more remains 

to be done with respect to guidelines. We have memos, three 

memos now. We have some guidelines that have been developed. 

And if I can just give these two questions to the panel, I won’t ask 

for additional time, Madam Chair. But first of all, where do we go? 

Are we done with these guidelines? I think the answer is no. But 

where do we go with new guidelines? 

And then could each of you also address that and then secondarily, address the issue of oversight? Should courts oversee monitors? Or should Congress oversee monitors? We have a vast issue 

of separation of powers, and I would very much like to have your 

opinions on those two issues. 

We may start with Mr. Dickinson. 

Ms. SA ́ NCHEZ. Mr. Dickinson? 

Mr. DICKINSON. Thank you. On your first point, where are we 

going, I think I would certainly hope that we are going with more 

guidelines from the Justice Department. I think we have a very, 

very good start with the guidelines that came out yesterday on the 

appointment process. 

I would still like to see, as I said in my remarks, the criteria in 

which a monitor should be appointed. That is an area where we 

still do not have any guidelines. And I think the work scope was 

the third area that I mentioned and one that perhaps should also 

be considered. But I think we definitely need some guidance as to 

when a monitor will or will not be incorporated into a DPA. 

With respect to the oversight, it is my view that the oversight 

should come from Department of Justice in conjunction with the 

DPA and the prosecutor and the entities involved with the negoVerDate Aug 31 2005 12:33 Feb 19, 2009 Jkt 000000 PO 00000 Frm 00307 Fmt 6633 Sfmt 6601 H:\WORK\COMM\031108\41190.000 HJUD1 PsN: 41190
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tiated DPA itself. And I think that I have proposed that there 

should be periodic meetings. There should be a discussion between 

both the government, the monitor, and the company involved, all 

three of them, throughout the monitorship period, which would 

allow all parties to discuss and understand the status of the 

monitorship, issues that arise, and how anything that has arisen 

should be resolved. 

And remember that these are not just for the typical criminal 

things that we are talking about today. These issues arise in the 

tax fora, in export laws. There are a variety of issues that may require a monitorship. So I think that the government expertise in 

this area should also be brought to bear in the oversight. 

Mr. CANNON. So justice continues to do oversight, and this Committee oversees justice? 

Mr. DICKINSON. Correct. 

Ms. SA ́ NCHEZ. Mr. Nahmias? 

Pardon me. And if the witnesses could please keep their answers 

brief because we are running long. 

Mr. NAHMIAS. Well, I think it is useful to understand that we 

started really around the 5-year anniversary of the President’s Corporate Fraud Task Force to realize that we had accumulated 

enough of an experience base with these types of agreements across 

the country and at Main Justice to start developing the type of best 

practices and guidance that we recognize is important in this area. 

There is some guidance, and we have started this process with the 

issuance of the criteria on selection and use of monitors that came 

out on the 7th. 

One of the things that has struck me in working on developing 

this guidance is I had a perspective from my time at Main Justice 

seeing many of these large corporate fraud, Fortune 500-type cases. 

You have a very different perspective when you are in the field 

where a lot of the cases that involve these issues are not of that 

type, do not involve those types of offenses. And even more so when 

I talk to my colleagues as we develop policy and find out from 

them, yes, what appears to be a good policy will need an exception 

or some recognition of the fact that there are very legitimate prosecutorial reasons in another case that need to be taken into account. 

I think it is our view that this is an area that we need to continue to study. We are interested in input, obviously, from all 

sources, including the Congress. And we will take that into account 

as we go forward. We would like to have a chance to see how these 

guidelines that have come out work. 

On the issue of when a monitor should be used, while that is not 

fully spelled out, there are indications in the policy that came out 

this week that of the types of considerations that should be taken 

into account in deciding whether a monitor should be used. And 

there are also some guidance in the principles on the type of scope 

of work that a monitor should be considered for. 

With regard to the issue of oversight, it is important to distinguish between deferred prosecution agreements, which are filed 

with a court, both the charging document and the agreement is 

taken to a magistrate judge or a district judge who has to approve 

the deferral. And so, there is court approval of that deferral. 

303 

As Mr. Ashcroft was saying, there are concerns about the court 

getting more enmeshed in the details of approving these agreements, which are agreements not to seek an indictment and final 

conviction of a corporation. Courts generally do not get involved in 

that area. I think Professor Garrett has talked about some court 

involvement. That is in the civil settlement context of consent decrees. In the criminal prosecution discretion area, the prosecutorial 

discretion is very important, and the concern about intrusion by 

the other branches of government is, I think, heightened. 

With regard to congressional involvement, the same issues arise. 

The principles for our exercise of prosecutorial discretion have typically been developed within the Justice Department often seeking 

input from various sources. But those are kind of core prosecutorial 

discretion functions. And I think there would be some fairly significant separation of powers issues if one of the other branches of government was too enmeshed in the exercise of who should be 

charged. 

Ms. SA ́ NCHEZ. Mr. Terwilliger—and I hate to do this to you, the 

last two witnesses. But considerable amount of time was given in 

the first two witnesses’ response to these two questions. I would 

please encourage you to be brief in your answers to the two questions Mr. Cannon posed. 

Mr. TERWILLIGER. Thank you. In terms of where it goes from 

here, I want to commend the Committee for having this hearing, 

at least in so far as the focus is on the use of these kinds of agreements because from my clients’ perspective, that is the business 

community, some focus on these issues is critically important. 

The guidelines the department issued, I think, are a very, very 

positive step forward in bringing some level of policy guidance and 

structure to the use of DPAs and, in turn, the use of monitor arrangements within DPAs. I do think, however, just based on the 

comments that have come from the Members at this hearing today, 

there is not yet a common understanding of what purpose a monitor serves and what purpose a monitor serves within the larger 

context of a DPA and what the use of DPA is in terms of an alternative disposition method. And I think it would be well-worth the 

time of the Committee to continue to look at that and look at that 

as an oversight matter in terms of how the Justice Department approaches that. 

In terms of oversight, courts have not proven to be very adept 

at running prisons, running school systems. And I don’t think they 

would be very adept at running corporations through monitors. So 

while the courts have a role, it is a limited role in a criminal disposition involving any defendant, including a corporation. 

The responsibility for seeing to it that DPAs achieve their remedial purposes, vis a vis, corporate behavior, rests with the Justice 

Department. And this Committee clearly has a role in oversight to 

determine that the Justice Department is, in turn, meeting that responsibility. 

Ms. SA ́ NCHEZ. Thank you. 

Professor Garrett? 

Mr. GARRETT. Just briefly, as—— 

Ms. SA ́ NCHEZ. Please turn your microphone on. 

304 

Mr. GARRETT. I am sorry. So I think it is a wonderful development that the department is exploring best practices in this area. 

And there is a sufficient body of agreements and experience with 

them that I think this is an important time to be doing that. 

It is hard for outsiders like a law professor to study these agreements with so little information available. It is hard to even get the 

text of some of them. I think at minimum for the public to be able 

to evaluate what is going on we would need to know who are these 

monitors. It is hard to find out their names, much less the terms 

of their retention. 

A court could at minimum, even if it is not engaged in intrusive 

review of the work of a monitor, could ensure some transparency 

so that we know what the reports are or some version of what the 

implementation is. I think it is important to distinguish between 

the remedies and the implementation of these agreements from the 

charging discretion of the prosecutors. 

Courts could be involved in the implementation of the agreements or in just minimally approving the remedies, as they do now 

under the U.S. code if it is a deferred prosecution agreement. I 

think we should be more concerned about non-prosecution agreements in which the court has no role. I think it is troubling to proceed in that fashion, and many practitioners have complained that 

there is little difference between the sorts of situations in which a 

non-prosecution agreement is entered versus a deferred prosecution 

agreement. 

I would just finally just point out that if a company is convicted 

and is placed in corporate probation, a court could very much supervise compliance or supervise a monitor. It is not unheard of. It 

is something that the sentencing guidelines provide for. So this is 

not a new role for courts. And it is something worth thinking 

about. 

Ms. SA ́ NCHEZ. Thank you. 

Mr. CANNON. Thank you, Madam Chair. And I yield back. 

Ms. SA ́ NCHEZ. I thank the gentleman for yielding back time 

which he does not possess. 

There is sufficient interest in a second round of questions, so I 

hope the witnesses will bear with us. These are sort of clean-up 

questions that hopefully will enlighten us further before we move 

on to our second panel. So I will recognize myself for 5 minutes of 

questions. And I will begin with Mr. Dickinson. 

I am interested in knowing, in your opinion or in your professional experience, to whom do you think that independent monitors 

owe duty. Are they owed to the prosecutor? Are they owed to the 

corporation? Can you enlighten us a little bit on that? 

Mr. DICKINSON. It is a very good question, and I think a very difficult one to respond to. I notice in the Justice Department guidelines they state that the monitor does not have a responsibility to 

shareholders. I believe that the monitor really has a responsibility 

to all the parties involved and indeed is appointed for their independent expertise and their independent capability to assess both 

sides of the coin. 

They are brought into a matter after a problem has occurred. 

They are given a mandate. I would hope that the written structure 

of the DPA would actually inform the monitor as to those duties. 

305 

Some monitors may, in fact, be required to report to the Justice 

Department. Some are not. Some are actually instructed to report 

on additional issues that arise. Some are not. These are the types 

of things that Mr. Nahmias has pointed out I think the Justice Department is getting better at and needs to refine more, as a short 

answer. 

Ms. SA ́ NCHEZ. Thank you. And I am interested in asking you, according to the Washington Post, Mr. Ashcroft had to use considerable time to prepare for the assignment and learn more about the 

business before he became the monitor in the Zimmer case. And I 

notice that both you and Professor Garrett emphasized in your testimony that the person selected have the requisite background, expertise, skills, and integrity in order to fulfill that role. 

In your view, should a monitor have to use considerable time to 

prepare for a monitoring assignment? Or do you think that they 

should essentially be ready to hit the ground running when they 

are appointed? 

Mr. DICKINSON. I think they should be ready to hit the ground 

with respect to the substantive law at issue. I think it is only appropriate to appoint a monitor that has substantive expertise in 

the issue that has arisen that is the underlying issue of the problem. 

With respect to the business, however, I think it is very fair and 

vital that the monitor come in and understand both the background of the problem and the industry in which the monitor is to 

work. 

Mr. TERWILLIGER. Madam Chair, may I address that just briefly? 

Ms. SA ́ NCHEZ. Certainly. 

Mr. TERWILLIGER. My law firm, my practice group has conducted 

worldwide compliance reviews for companies looking—where they 

go voluntarily to look at their own conduct and ascertain the level 

of compliance that exists in their international operations. It is absolutely essential, and really expensive, that the lawyers spend the 

time on the front end of that process understanding exactly what 

that business is and how it is conducted because otherwise, you 

don’t know where to look for where the problems might be. 

Ms. SA ́ NCHEZ. Certainly, but you would also agree, would you 

not, with Mr. Dickinson that the selected monitor should have the 

requisite experience in that field of law that they can hit the 

ground running, so to speak? 

Mr. TERWILLIGER. Yes. Certainly in that field of law. But my 

point is slightly different. 

Ms. SA ́ NCHEZ. I understand. There are two different types of—— 

Mr. TERWILLIGER. And that is that understanding the business 

is important. 

Ms. SA ́ NCHEZ. Absolutely. There are two different types of experience one would hope that the monitor would have. And both are 

important. 

I am interested in asking Mr. Nahmias—in the agreement deferring prosecution of Bristol-Myers Squibb, U.S. Attorney Christopher Christie inserted a provision requiring Bristol-Myers Squibb 

to endow a chair in business ethics at Mr. Christie’s alma mater, 

Seton Hall. I am interested in knowing why was that provision inserted into the Bristol-Myers Squibb’s agreement? And do you 

306 

think it is an appropriate type of thing to include into a deferred 

prosecution agreement? I am a little puzzled by that, to be honest 

with you. 

Mr. NAHMIAS. Well, this is an area that some people refer to as 

extraordinary restitution, the payment by a defendant or putative 

defendant to a third party. It is not an unusual occurrence for defendants, individuals or corporations, to do that in an effort to seek 

leniency with a court. And the issues arise when the government 

has some involvement in it. It is actually an area that is worthy 

of further consideration by the Department. 

With regard to the matter you are referring to in the BristolMyers Squibb case, my understanding is that that idea was actually raised by counsel for Bristol-Myers Squibb, not by the U.S. attorney’s office. 

Ms. SA ́ NCHEZ. But would that not be a way to sort of curry favor 

with the prosecutor who is deciding whether or not they want to 

charge this defendant? I mean, don’t you think that that creates 

this either conflict or potential conflict? 

Mr. NAHMIAS. Well, when it was raised, the only request by the 

U.S. attorney’s office is that it be at a law school in New Jersey 

where the district is. My understanding is that Bristol-Myers 

Squibb initially approached Rutgers Law School, which is not Mr. 

Christie’s alma mater, and found out they already had a chair in 

business ethics. And only after they determined that they weren’t 

going to go to Rutgers did they go to Seton Hall. 

These arrangements—— 

Ms. SA ́ NCHEZ. But do you think that those types of extraordinary 

measures that get inserted there probably should be some kind of 

guidance? 

Mr. NAHMIAS. This is an area, I believe, is worthy of further 

guidance. And I think the Department is committed to looking into 

that area, hopefully, in the near future to establish some guidelines. Again, it is the kind of area that has occurred in both individual cases and corporate cases across the country for years, and 

we are reaching a point that we think we have the experience and 

the best practices to form the kind of policy guidance that could be 

useful. 

Ms. SA ́ NCHEZ. I think it would be well-advised to actually develop 

that guidance. My time is expired. 

Mr. Cannon is recognized for 5 minutes. 

Mr. CANNON. Thank you, Madam Chair. This has been interesting. And I appreciate the discussion we have had about deferred 

prosecution agreements and in particular, your answers on who 

should oversee that process. And I think that we have a consensus 

on the panel that that should be done at DOJ, the Department of 

Justice, with oversight by Congress, which would mean this Committee, the Committee on Commercial and Administrative Law, 

which has the jurisdiction within the Judiciary Committee of the 

House to oversee the U.S. attorneys. 

I would like to expand the idea of oversight of prosecutorial discretion a little bit and give you a couple of quick cases and then 

get your response to what ought to happen. We had a very famous 

case in Salt Lake City over the Olympic Committee when the first 

organizers of the Salt Lake Olympic Committee were charged with 

307 

a crime. I just couldn’t understand the simple country lawyer who 

actually didn’t do much criminal law. But I couldn’t figure out 

where the crime would be. 

And then after 5 years and a tortuous time and millions of dollars in defense fees—and by the way, in the middle of all that, the 

judge had dropped a number of the charges. And that was an appropriate time, I thought, to ask the Department of Justice to review the case. But there is really no other place where a congressman or a senator or anyone could actually suggest to a prosecutor 

that maybe there wasn’t substance to the case. 

And then ultimately the case was presented. And we heard a pathetic plea by the prosecutor to the judge who was on his own motion going to dismiss the case, that the prosecutors plea was to the 

judge to let the jury inform the judge’s conscience. And the judge 

says you can’t—the jury can’t inform my conscience as a matter of 

law, you didn’t make your case, and dismissed the case. 

We had another similar case where in Utah the FTC had prosecuted a guy. And during the whole course of the prosecution, they 

demanded his financial statements. He said my financial situation 

is sort of complex. If I give you my financial statements and then 

the reality turns out to be different and I have signed those financial statements, then you will prosecute me for lying. And they said 

yes. 

So he said why don’t we just decide what the penalty is that you 

want and I will pay the penalty. And they said, no, we want your 

financial statements because we are going to determine the penalty 

based upon your financial statements. But the guy could never get 

out of liability. So he went to trial. He was given 500 names of potential witnesses, had to interview those 500 names at a very high 

cost in lawyer fees per hour. 

When they got to trial, two witnesses were called. Both of them 

exonerated the fellow. And the case was dismissed, again, on, I 

guess in that case, on the motion by the defendant. 

The problem I am posing to you here is that there is no way for 

anybody to look at those kinds of cases. Now, in the case of the 

FTC, I know there is a review process. In the case of the Justice 

Department there is a review process. But basically political appointees are not ever going to want to get involved in the details 

of a case. So to the degree that you have got an official at the Justice Department or any other agency that can bring a criminal 

prosecution, there is very little that can be done to oversee that 

process. And yet we get a tendency for many reasons to prosecute 

people in ways that those two examples demonstrate. 

It seems to me that we need somewhere to have oversight that 

becomes effective. In other words, a new Administration takes over. 

New political people come in. They are loathe to go in and say show 

me the details of your case. In other words, I don’t think the real 

world works like law and order works where you have got a brilliant prosecuting attorney who tells the cops why their case doesn’t 

work or why it does work and is deeply involved in every detail. 

That just doesn’t happen, I think, in our system. 

What do we do to create a process—and I am going to ask the 

whole panel, but I am going to start with you, Mr. Nahmias because of your particular experience, but also because we have very 

308 

different views on this. But if we start here and go through the 

panel and come back to Mr. Dickinson, I would appreciate that. Because I would like to know what we can do. 

Do we have a select committee like the Select Intelligence Committee where people—we have guidelines in Congress and we have 

the ability to go in and look at particular cases? Do you set that 

up as a separate panel, an outside agency of some sort? Or do we 

just do it in this Committee with more oversight staff? 

Ms. SA ́ NCHEZ. The time of the gentleman is about to expire. I will 

allow each of the witnesses to give a very brief answer, 30 second 

or less, please. 

Mr. CANNON. Actually, I do believe it is in the interest of the 

Chair to have a long answer because this goes to the very core of 

the jurisdiction of this Committee, which I think we would like to 

expand. 

Ms. SA ́ NCHEZ. I understand we were very generous in the last 

round of questioning with the amount of time that went over. I am 

just asking the witnesses to please pare down your answers to the 

essential points that you would like to make. 

Mr. NAHMIAS. I will try to be brief. I am not familiar with the 

cases you discussed, obviously. But, you know, I think the system 

is set up in lots of ways to provide accountability for the types of 

decisions that are made in cases, both through, I think, are very 

high-quality career assistant U.S. attorneys, U.S. attorneys who 

are confirmed by the Senate, and by the adversarial system and 

the other party’s abilities to fight through the system with review 

by the court and ultimately by juries. There is obviously a proper 

role of oversight by this Committee or the Congress generally—— 

Ms. SA ́ NCHEZ. Mr. Nahmias, I am sorry. 

Mr. NAHMIAS. The only concern I have is that it not happen 

while cases are pending because of the risk of injecting political influences into what should always and invariably be nonpartisan 

and non-political prosecutorial decision-making. 

Ms. SA ́ NCHEZ. Mr. Dickinson? 

Mr. DICKINSON. Justice should be the first stop. And this Committee should be the second stop. I am quite familiar with the IOC 

case, if you want to talk about it. 

Ms. SA ́ NCHEZ. Thank you, Mr. Dickinson. I appreciate your brevity. 

Mr. Terwilliger? Sorry, it is a tongue twister. 

Mr. TERWILLIGER. Thank you, Madam Chair. 

Mr. Cannon, you have raised so many important and in-depth 

issues that couldn’t possibly be responded to in 30 seconds or 120 

seconds. But I would be happy to submit some thoughts on the 

questions you raised for the record subsequently. I will say this. 

When I served as a presidentially-appointed United States attorney in the field, I thought the idea of oversight of my decision-making and exercise of prosecutorial discretion by the Department of 

Justice was extremely ill-advised. When I served as deputy attorney general supervising the Nation’s 93 United States attorneys 

and saw some examples of some of the kinds of things you are talking about, I formed a very different view. 

But I do think the responsibility in the first instance has to be 

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gress ought to have oversight on that to ensure that there are not 

improper factors and so forth, but also should exercise that oversight after the fact, after Mr. Nahmias suggests, and with a very 

light hand. 

Ms. SA ́ NCHEZ. Mr. Garrett? 

Mr. GARRETT. Yes. Briefly I would say that—— 

Ms. SA ́ NCHEZ. Could you please turn your microphone on? 

Mr. GARRETT. I keep forgetting. As to prosecutorial discretion regarding charging, which I think was mostly what you were talking 

about, you know, prosecutors have wide discretion for separation of 

powers reasons. Courts review that discretion very deferentially, 

for good reasons. 

And the DOJ has promulgated the Thompson memo and the 

McNulty memo to provide guidance to organizations on how they 

go about making those charging decisions. So, you know, I think 

it makes more sense to focus instead on what happens after a 

charging decision is made and then there is the question of what 

does that agreement look like, how is it entered, how is it implemented, what remedies are included in it. 

Ms. SA ́ NCHEZ. Thank you, Professor Garrett. I think that that 

was the main crux of today’s hearing. 

I would like to get through the final Member who would like to 

question because we have been summoned for votes across the 

street. And after Mr. Johnson is allowed to ask questions, I think 

we will be able to dismiss our first panel. 

Mr. Johnson is recognized for 5 minutes. 

Mr. JOHNSON. Yes, thank you, Madam Chair. 

Professor Garrett, in the case of a non-prosecution agreement, 

there is no charging document that is filed. How can there be oversight on those cases where there is nothing filed with the court, 

there is no public record, it is a secret process? 

Mr. GARRETT. I think those agreements are troubling. And one 

possibility would be if the department issued a guideline recommending against the use of such agreements. I don’t see, unless 

there is some legislation, you know, which I am not sure how that 

would operate, that forbade the use of such agreements. Perhaps 

the guidance would have to come first from the department. 

Mr. JOHNSON. Mr. Nahmias, I see you shaking your head. 

Mr. DICKINSON. Could I make a comment on that? I would disagree with Professor on that statement. As with Mr. Terwilliger, I 

have been working in this area for 25 years. I have represented 

companies doing this type of work all over the world. I think a nonpros agreement is a highly appropriate remedy in certain circumstances. There may be cases where companies are willing to 

make voluntary undertakings and provide certification. 

Mr. JOHNSON. But it is done in secret, though. 

Mr. DICKINSON. I am not sure I would use the term secret. 

Mr. JOHNSON. No public record. 

Mr. DICKINSON. There may be a public record, yes. 

Mr. JOHNSON. Well, no requirement that there be a public record 

or—— 

Mr. DICKINSON. I am not sure about the requirement, but I have 

personally engaged in non-pros agreements where there have been 

310 

public documents so citing. I think Mr. Nahmias can explain further. 

Mr. NAHMIAS. I think non-prosecution agreements are really at 

the core of the prosecutorial discretion not to bring charges. Those 

decisions by prosecutors not to bring charges against either individuals or companies have traditionally not been made public. 

Mr. JOHNSON. They involve the use of monitors, correct? 

Mr. NAHMIAS. Some of them involve the use of monitors. Many 

of them don’t. Many of the ones involving individuals involve conditions but do not involve monitors, obviously. 

One of the things is in the area of publicly-traded—— 

Mr. JOHNSON. But it is a secret process? 

Mr. NAHMIAS. Well, in the area of publicly-traded companies and 

others who have regulatory disclosure obligations, very often these 

agreements are made public by the effected entity. This is another 

area the Department has considered. But it is important that we 

be careful to guard the rights of people who are not charged in 

prosecutions. And the fact that they are corporations versus individuals may or may not make a difference in an appropriate case. 

Mr. JOHNSON. Thank you. 

Mr. Dickinson, the Ashcroft Group will reportedly receive fees of 

approximately $52 million for 18 months of monitoring in the Zimmer case. Furthermore, the Ashcroft Group gets a monthly fee of 

$750,000 against an hourly billing rate which tops out at $895 an 

hour. In your experience, is this reasonable compensation for monitoring Zimmer? 

Mr. DICKINSON. I am sorry to say it is impossible to answer that 

in terms of the reasonableness factor. Every monitorship is different. Every monitorship has a different scope of work. Certainly, 

that hourly rate would not be unusual for a very senior person 

such as the attorney general. And depending upon the scope and 

the required activities, that may or may not be a reasonable 

amount. 

Mr. JOHNSON. Mr. Nahmias, U.S. Attorney Christopher Christie 

spearheaded the prosecution and the decision to enter a deferred 

prosecution agreement or an agreement with the five medical device companies who were engaged in the largest Medicare fraud 

case in recent history. This was a national case which affected 

thousands of Americans and involved hundreds of millions of dollars. 

How was Mr. Christie as the U.S. attorney for New Jersey able 

to obtain the right to prosecute this case instead of other U.S. attorneys? And was the decision as to which office or which U.S. attorney would prosecute the case—was that decision reached from 

Washington at the Department of Justice? Or was Mr. Christie just 

faster in asserting a claim to the prosecution in this national case? 

Mr. NAHMIAS. I don’t know the direct answer to that. I believe 

that some of these companies had extensive activities in New Jersey. New Jersey’s U.S. attorney’s office has been a leader in a lot 

of the major health care fraud cases in the country. 

Mr. JOHNSON. All right. Okay. Thank you. 

Mr. NAHMIAS. Under Department policy, it is often the U.S. attorney who acts first and best that takes the case. 

Mr. JOHNSON. Okay, thank you. All right. Thank you. 

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Professor Garrett, do you have any idea of how many non-prosecution agreements and deferred prosecution agreements have been 

entered into by the Justice Department since 2003? 

Mr. GARRETT. Yes, it is over 80. 

Ms. SA ́ NCHEZ. Please use your microphone. 

And the time of the gentleman has expired. I will allow the witness to answer. 

Mr. GARRETT. It is over 80 agreements, at least those that we 

have able to locate. 

Mr. JOHNSON. I am sorry. Say that again. 

Mr. GARRETT. We have been able to locate more than 80 agreements. There may be others that haven’t been made public. I don’t 

know about those, of course. 

Ms. SA ́ NCHEZ. The time of the gentleman has expired. 

Does Mr. Cannon wish to be recognized for 30 seconds? 

Mr. CANNON. Thank you, Madam Chair. I want to again thank 

the panel for being here today. And as the Chair knows, I am deeply concerned about abuses of prosecutorial discretion and arbitrary 

prosecution in particular, prosecution by the Department of Homeland Security of groups that haven’t committed crimes but maybe 

harboring or may have on their payroll, without being able to tell 

who they are, people who are illegal aliens. That would include the 

Swift prosecution or the raid of the Swift Company and the raids 

of various dairies and other groups around the country where there 

seems to be no consistent thought behind how it is done except to 

terrorize industries. 

And that, I think, is one of the issues that this Committee should 

clearly have jurisdiction for. I want to thank the panel for their 

opinions in informing us on what the nature of that jurisdiction 

should be as it relates both the deferred prosecution and also to 

prosecutorial discretion. 

And thank you, Madam Chair. 

Ms. SA ́ NCHEZ. I thank the gentleman. And issues of prosecutorial 

discretion are something that I think is sort of tangential to what 

the crux of today’s hearing is. And I have enjoyed the discussion. 

I want to thank the first panel for their testimony. I am going 

to excuse you now so that Members can go across the street to vote. 

And we will remain in recess. 

[Recess.] 

Ms. SA ́ NCHEZ. I am now pleased to introduce the witnesses for 

our second panel for today’s hearing. Our first witness is Congressman Frank Pallone, Jr., of the 6th District of New Jersey. First 

elected to Congress on November 8, 1988, Mr. Pallone serves as a 

senior member of the House Energy and Commerce Committee. 

And in January 2007 he became the Chairman of the Energy and 

Commerce Committee Subcommittee on Health. 

Mr. Pallone also serves on the House Natural Resources Committee. Additionally, Mr. Pallone authored H.R. 5086, legislation to 

require the attorney general to issue guidelines regarding deferred 

prosecution agreements. 

We want to welcome you and thank you for your patience, Mr. 

Pallone. 

Our second witness is Congressman Bill Pascrell representing 

the 8th District of New Jersey. Elected to Congress in November 

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1996, Mr. Pascrell serves on the Ways and Means Committee and 

on the House Committee on Homeland Security. 

I want to welcome you both. I appreciate your patience in waiting until we could actually have you guys here to testify. 

And with that, I would invite Mr. Pallone to proceed with his testimony. 

TESTIMONY OF THE HONORABLE WILLIAM PASCRELL, JR., A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW 

JERSEY 

Mr. PALLONE. Thank you. I want to thank the Subcommittee for 

holding this very important hearing on the process for appointing 

Federal monitors in deferred prosecution agreements and particularly, thank the Chairwoman, Linda Sa ́nchez, for inviting me to 

testify today. 

Recently it has come to light that certain Federal prosecutors are 

using their powerful positions to steer no-bid contracts to former 

employers and other influential people with which they have close 

ties. And I find it troubling that Federal prosecutors have such tremendous discretion in appointing these corporate monitors. Allowing an unelected official unfettered leverage against companies and 

corporations who have potentially engaged in criminal behavior invites the type of abuse our judicial system is designed to prevent. 

Specifically, in my home state of New Jersey, a consulting firm 

led by former Attorney General John Ashcroft received a contract 

from U.S. Attorney Chris Christie, his former employee. The fact 

that there was no competitive bidding and no public input in this 

process is problematic. 

It seems that every U.S. attorney handles the process of appointing corporate monitors differently. Some, like Christie, literally dictated the choice. Others provided a short list to the company accused of criminal activity or simply reserved the right to veto a 

company’s selection. 

With little say over which firm is appointed as the corporate 

monitor, companies are strong-armed into complying with the will 

of the U.S. attorney. And this essentially amounts to corporate 

blackmail on the part of the U.S. attorneys, in my opinion. 

Yesterday the Justice Department released in internal memo 

outlining a set of guidelines for the use of Federal monitors in connection with deferred prosecution agreements. While it is encouraging that the Justice Department considered some of the reforms 

included in that legislation I have introduced, the new guidelines 

are far too weak. I believe that the only way to ensure that politics 

and favoritism are completely removed from this process is to have 

someone independent of the Justice Department, like a U.S. district court judge, involved in the process. 

And that is why I have introduced H.R. 5086, which would establish safeguards and eliminate the culture of favoritism and political 

interference that permeates these corporate monitor agreements. 

My legislation would direct Attorney General Michael Mukasey to 

issue guidelines delineating when U.S. attorneys should utilize corporate monitors. 

While the Justice Department touches upon this in its memo, the 

guidelines the Department outlines still give too much latitude to 

313 

U.S. attorneys. My legislation requires that a corporate monitor be 

selected and approved by a third party district court judge or other 

magistrate from a pool of pre-qualified firms. These monitors would 

then be paid according to a pre-determined fee schedule set by the 

district court. 

The legislation also sets out criteria for consideration in the determination of whether to enter into deferred prosecution agreements. The Justice Department guidelines do not provide sufficient 

guidance as to when these agreements are appropriate. My legislation recommends that the Justice Department consider the impact 

an agreement will have on employees and shareholders. 

Additionally, the Department should consider remedial action 

taken by the corporation in response to wrongdoing and possible alternative punishments available. Having a uniform set of criteria 

available for when to enter into these agreements will be essential 

in eliminating abuse. 

Another important aspect of my bill mandates that all corporate 

monitors submit reports to the appropriate U.S. attorney and U.S. 

district court. The Department guidelines vaguely state that ‘‘it 

may be appropriate for the monitor to make periodic written reports to the government and the corporation.’’ But this needs to be 

a requirement. 

It is essential to these monitors to keep the Department and all 

involved parties appraised of the progress being made on the agreement. And this will also ensure that the corporate monitor is properly performing all of the duties mandated in the agreement. 

Now, Madam Chairwoman, I would suggest to the Subcommittee 

that the separation of powers issue is a red herring coming from 

the Justice Department in an effort to avoid congressional action. 

Mr. Nahmias said there was no problem with the court approval 

of the deferral. So why would the guidance as to when to defer be 

a problem? Why would court approval of the monitor or the other 

transparency provisions in my bill create any constitutional problems? I don’t see them. 

The use of deferred prosecution agreements and corporate monitors has increased exponentially from five in 2003 to 35 such 

agreements last year. I believe that the reforms offered in my bill 

are essential in rooting out any possible corruption or wrongdoing 

in the process of distributing these monitor arrangements. We can’t 

allow U.S. attorneys or the Justice Department to have unyielding 

and absolute powers in this process. 

And once again, I just want to thank you, Madam Chairwoman 

and the Subcommittee for inviting me here and Congressman 

Pascrell to testify. It is my hope that we can work together to have 

further hearings on the issue so that constructive reform to the 

process of deferred prosecution agreements can be brought about. 

Thank you. 

[The prepared statement of Mr. Pallone follows:] 

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PREPARED STATEMENT OF THE HONORABLE FRANK PALLONE, JR., A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF NEW JERSEY


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Ms. SA ́ NCHEZ. Thank you, Mr. Pallone. We appreciate your testimony, specifically about the legislation that you have introduced. 

At this time, I would invite Mr. Pascrell to give his oral testimony. 

TESTIMONY OF THE HONORABLE WILLIAM PASCRELL, JR., A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW 

JERSEY 

Mr. PASCRELL. I want to thank full Committee Chairman Conyers and Subcommittee Chairwoman Sa ́nchez and Ranking Member Cannon for allowing me to testify today. On November the 26th 

of last year, I wrote to Chairman Conyers and Chairwoman 

Sa ́nchez calling for hearings on this critical issue. So I appreciate 

how far we have come in such a short period of time. 

My attention was first brought to this issue of deferred prosecution agreements because of the published reports that the U.S. attorney for the district of New Jersey, Christopher Christie had 

reached a $311 million settlement to end an investigation into kickbacks being made by leading manufacturers of knee and hip replacements. The fact that Mr. Nahmias has admitted that he has 

no idea why Mr. Christie got prosecution of this case is exactly why 

this whole process needs real oversight. 

And if I might add, Madam Chairwoman, it is the only reason 

why we are here today, is because Zimmer Holdings filed an SEC 

report. So we were in the dark up until that particular point about 

all of these procedures. 

Let us not kid ourselves. Let us cut to the chase here as to what 

we are talking about. 

This agreement raised questions about the discretion of the U.S. 

attorney’s office to select Federal monitors since Mr. Christie had 

selected Ashcroft Group Consulting Services, which according to reports, stands to collect as much as $52 million in 18 months from 

its monitoring of Zimmer Holdings of Indiana. I am disappointed 

that Mr. Christie is not appearing before this Subcommittee today. 

Mr. Christie is at the center of this investigation and has thus far 

failed to enlighten Members of Congress or the general public 

about the process by which he concluded this deferred prosecution 

agreement. 

Mr. Christie is needed in this hearing in part because he awarded a $10 million monitorship contract to a former public official 

that served in the Morris County board of freeholders. A contract 

that was paid by UMDNJ, a public education entity, meaning that 

taxpayers footed the bill. 

Now, I want to make it very clear that throughout this process 

I have not made any accusations of corruption on the part of Mr. 

Christie. Indeed, in his examination of corruption in New Jersey, 

I have publicly and privately spoken out and applauded him for all 

of his efforts on a nonpartisan basis. 

So let us get that. Somebody said up there we were attacking 

him. That is absolutely absurd. 

There are a number of indisputable facts in this case that raise 

very troubling questions that have yet to be answered. First and 

foremost is the fact that Mr. Christie selected Former Attorney 

320 

General John Ashcroft, his own former superior, for a highly lucrative Federal monitoring contract. No conflict of interest? 

In addition, he selected four other Federal monitors under this 

deferred prosecution agreement. In every instance, Mr. Christie selected former Justice Department associates to monitor these medical device manufacturers under highly lucrative monitoring contracts. This was seemingly done without any negotiation of fees, 

any consideration of selecting monitors with whom he was not 

closely associated with. 

In my mind, these monitoring agreements clearly amount to nobid Federal contracts that are ripe for political considerations. I 

want to be clear in saying that the selection of close associates by 

a Federal law officer to take on highly lucrative contracts which 

are never negotiated and in which outside contractors are never 

considered is the essence of political favoritism. 

I am pleased that the former U.S. attorney general agreed to testify before this Subcommittee, as is necessary to understand the 

process or lack of it of which he was selected as the monitor for 

Zimmer Holdings. In the end I am troubled by the fact that as Attorney General, Mr. Ashcroft literally created the process of deferred prosecution agreements, a process that he now benefits from 

handsomely. 

As I delved deeper into this case involving U.S. Attorney Christie 

and former Attorney General Ashcroft, I came to the realization 

that this case of deferred prosecution agreements encompasses an 

even larger issue of corporate prosecutions in the post-Enron era. 

In researching the history, I discovered that the practice of deferred prosecution agreements was made legal through the Speedy 

Trials Act of 1974 and that this remedy was rarely used by government prosecutors, except in small-scale drug cases involving diversion programs usually for marijuana-related offenses. 

Almost 20 years later in 1993, the Department of Justice somehow interpreted this narrow statute used for small-time crimes to 

now be used to fight large-scale corporate corruption. It is my contention that the legislative intent of the Speedy Trials Act of 1974 

was never meant to adjudicate large corporations. And it seems 

clear that the Department of Justice in recent years has consistently worked to shield its practice from oversight by Congress and 

the courts. 

I myself have not yet introduced legislation on this significant 

issue because I believe that this issue must first be investigated by 

this Committee. This is appropriate. 

In December of last year in lieu of legislation, I sent to the Committee my statement of principles on deferred prosecution agreements. These four principles laid out a comprehensive approach to 

reforming deferred prosecution agreements. 

I cannot, in conclusion, stress more strongly the need for comprehensive legislation to reform a deferred prosecution process that 

has been created by the DOJ to generate unmitigated power for 

Federal prosecutors without the necessary oversight. There is no 

oversight. 

These deferred prosecution agreements lack any checks and balances within the system as power is almost entirely concentrated 

in the hands of Federal prosecutors alone. No one here, including 

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myself, is in a position of defending corporate corruptions or arguing against their full prosecution by the law. In this instance, we 

are left with a deferred prosecution system that gives Federal prosecutors unmitigated power to be the judge, the jury, and the 

sentencer. 

Truly it was never the intent of our justice system to concentrate 

such power in the hands of the few. We must not allowed deferred 

prosecution to become a form of deferring justice. 

Thank you, Madam Chairwoman. 

[The prepared statement of Mr. Pascrell follows:] 

PREPARED STATEMENT OF THE HONORABLE WILLIAM J. ‘‘BILL’’ PASCRELL, JR., A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY


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Ms. SA ́ NCHEZ. Thank you, Mr. Pascrell, for your testimony. I 

want to thank this panel for their testimony. And unless we have 

any questions for this panel, they will be excused. 

Mr. CANNON. Madam Chair, I would love to question this panel. 

Ms. SA ́ NCHEZ. The gentleman seeks recognition. The gentleman 

is recognized for 5 minutes of questioning. 

Mr. CANNON. Thank you. And we don’t look to you as experts on 

an issue that I think is very, very important. In fact, Mr. Pascrell 

and I had a discussion yesterday about the importance of this 

issue. I want to get some information out. 

And I know this is a relatively emotional issue, but as you are 

looking at this, both of you talked about courts reviewing the process. It seems to me that we are much better off if you have an administration process, that is DOJ, which I think you would both 

say is inadequate. But if that were complemented by an external 

review in Congress, which would probably be this Committee. Is 

that consistent with what you both are thinking about this? 

Ms. SA ́ NCHEZ. Mr. Pallone? 

Mr. PALLONE. It is not in the sense that I am concerned that if 

the only review is—I mean, I should say if the process continues 

to be internal within the Justice Department and there is no court 

approval or court appointing of the monitor, then I do think that 

the potential for abuse continues. And so, a hallmark—— 

Mr. CANNON. Why are we better off with a court or various 

courts approving monitors as opposed to having a process internal 

to justice with some advances that they have recently made and a 

series of memos that have helped verify or helped qualify the problems? Why would you want a court or courts around the country 

to do it instead of having one sort of central review place like Congress? 

Mr. PALLONE. Well, I will answer your question consider the 

three-step process. I don’t mean to suggest that the Justice Department in putting forth something isn’t moving, you know, in a progressive way. But I do have the problem with three things. 

First of all, they don’t really delineate what criteria would be 

looked at. 

Mr. CANNON. Let me cut to it. We agree that the current guidelines are not sufficient. Everybody on the prior panel agreed that 

they are a work in progress, we need to advance it. So no question 

about that. 

Mr. PALLONE. Well, I—— 

Mr. CANNON. But the first place you have to go is you have to 

have better guidelines. 

Mr. PALLONE. Right. 

Mr. CANNON. But ultimately as you develop those guidelines and 

as this Committee oversees those guidelines, aren’t we better off retaining oversight here in Congress than letting—— 

Mr. PALLONE. Well, you still have oversight. But the problem is 

even if you have guidelines and criteria for when you should have 

deferred prosecution agreements, which we have in my legislation, 

even if the Justice Department went that far and did that on their 

own, which I would hope they would, but, you know, even if they 

did that, and they haven’t, if you don’t have a third, you know, 

independent party, third party, in this case, a judge or a district 

328 

court judge, which is what I suggest in the legislation, then I think 

the potential for abuse and the conflicts that we talk about could 

still be out there because it is still within the Justice Department. 

And then you also need the transparency of, you know, having, you 

know, the courts look at the agreement, how much the person is 

being paid. 

Mr. CANNON. Given the shortness of time, I think Mr. Pascrell 

has something he wants to say. And then I want to pose what I 

think is the dilemma that this all creates. 

Yes? 

Mr. PASCRELL. Mr. Cannon, the first thing I would do is make 

sure we have full disclosure. We do not have this now. 

Mr. CANNON. To the world or to—— 

Mr. PASCRELL [continuing]. Exaggerating—— 

Mr. CANNON. To the world or to a judge or to this Committee? 

Who would you do full disclosure to? 

Mr. PASCRELL. Well, I incorporated in my recommendations the 

chief judge of the district court should be monitoring the situation. 

Every quarter he should get a report from both the prosecutor and 

the company so that somebody knows and somebody has some 

oversight. This Committee in no manner, shape or form should be 

minimized in that process. It is an attempt basically to have a 

checks and balance system. 

But you need to have full disclosure. We have no disclosure right 

now. And the only reason why we discussed that—I don’t think I 

was exaggerating using an hyperbole—is because Zimmer Holdings 

had to file with the—or did file with the SEC. That is how we got 

to know what was going on. And the reports came out. Newspaper 

reported it. And I was shocked to find that nobody knew what was 

going on. 

In fact, we just learned that some corporations—— 

Mr. CANNON. Pardon me, Mr. Pascrell, I see that I only have a 

minute. And there are just a couple of things I want to do. And I 

appreciate the intensity and the lack of transparency, which we 

really need to focus on. 

But let me suggest that the problem here is that we are now 

lambasting a lot of people’s reputation. And so, I would like to submit for the record two articles from the Washington Times, one 

dated March 11th, ‘‘A Medical Supplier Stryker Probe,’’ the other 

dated also the 11th, ‘‘First Spitzer, Now Stryker,’’ is the title. 

Ms. SA ́ NCHEZ. Without objection, so ordered. 

[The information referred to follows:] 

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Mr. CANNON. These things have wild allegations in them. $17 

million directed, according to this article, toward Democratic candidates over the years. And that is directed at John Conyers and 

quoting an aid to Nancy Pelosi talking about—let us see, ‘‘You have 

more than an appearance of a conflict of interest. You have a conflict of interest,’’ says the leadership aid to Pelosi. ‘‘In our current 

environment we can’t afford to have many more of these situations.’’ 

Ms. SA ́ NCHEZ. The time of the gentleman has expired. 

Mr. CANNON. The fact is as we continue to pound on people’s 

public reputations, you two guys are both from New Jersey and 

were all tied into people slamming people’s reputations where I 

don’t think, at least in the case of Mr. Ashcroft, there is a shred 

of evidence that he has done anything improper—— 

Ms. SA ́ NCHEZ. The time of the gentleman has—— 

Mr. PASCRELL. Whose reputation are we slamming? 

Mr. CANNON. Well—— 

Ms. SA ́ NCHEZ. The time of the gentleman has expired. 

Mr. CANNON. Mr. Christie’s and Mr. Ashcroft’s. 

Ms. SA ́ NCHEZ. The time of the gentleman has expired. I think I 

have been more than lenient today with time to the gentleman. 

Does Mr. Johnson have any questions that he would like to ask 

of this panel? 

Mr. JOHNSON. I would just say that this legislation appears to be 

reasonable in its scope and its intent. And I think it is something 

that I certainly look forward to supporting. And I do appreciate the 

heads up given to this Committee by Mr. Pascrell about the need 

for hearings. And my hat is off to the Chairlady for calling this 

hearing. 

And I am concerned about the outsourcing of justice in white collar criminal cases to private industry, i.e., insiders of prosecutors. 

And it is a system that begs for oversight. Something else in addition to what I have heard about you do the crime, you do the time 

is that there is two types of crime. One is legal crime, the other 

is illegal crime. 

The illegal crime is blue collar. And the legal crime is white collar. And society should definitely—American society—we should 

have full confidence in our justice system that justice is fair and 

is blind. And so, if we have every corporation that gets in trouble 

being able to take advantage of a deferred prosecution agreement 

and in some cases, a non-prosecution agreement and there being no 

oversight, no guidelines, in fact, no information about it that is 

available to the public, that is a disservice to the ideals that this 

country was built upon. 

And so, we must consider this legislation that has been introduced. I want to thank you. 

Mr. CANNON. Would the gentleman yield? 

Ms. SA ́ NCHEZ. Does the gentleman yield back? 

Mr. CANNON. Would the gentleman yield just for a moment? 

Mr. JOHNSON. Before I yield, I will ask Mr. Pallone to respond. 

Mr. PALLONE. Well, I just wanted to say that I appreciate the 

fact that the gentleman is talking or focusing on whether and when 

we should even have these agreements because I think that, you 

know, a lot of the focus today was on the monitor and the process. 

333 

But I really think that the Committee needs to focus on, you know, 

whether or not these agreements should even be out there and how 

often they should be used. And that is why in the legislation I also 

have criteria that would be met before they would even proceed. 

Because I do think that there are too many of them and that it 

is a problem in itself separate and apart from the issue of the monitor and the conflict of interest and the abuses that Mr. Pascrell 

and I have talked about. I think that that larger issue needs to be 

looked at. 

Mr. JOHNSON. Thank you. 

Mr. CANNON. Would the gentleman yield? 

Mr. JOHNSON. I will yield. 

Mr. CANNON. Because I know that Mr. Pascrell wanted to make 

a comment. I don’t want to be offensive here. This whole hearing 

has largely been about Mr. Ashcroft and Mr. Christie. Their reputations have been put on the line. But I didn’t want to see you 

cut off, Mr. Pascrell. And I didn’t want to make that an accusation. 

But we are now in the middle of a lot of reporting about things 

that are problematic for many people’s reputations. So with that, 

Mr. Pascrell, I know that you wanted to comment. 

Mr. JOHNSON. Reclaiming the balance of my time and asking for 

Mr. Pascrell’s response. 

Mr. PASCRELL. Thank you. I just wanted to make this very clear, 

again, Mr. Cannon, that I was one of the few people from my party 

that praised Mr. Christie’s work. That does not give me a pass on 

what I believe is a significant area to look into and investigate. I 

personally believe that this Committee, not only has the wherewithal and the responsibility to do such. 

When you look at the term conflict of interest, it is at the basis 

of practically every corruption case. Now, there are 44 of these deferred agreements that I have looked at for the knowledge that I 

have and for the information available. Because in sum, we have 

no knowledge. We have absolutely no knowledge. 

I think that you have a right, and I have a right, the public has 

a right, particularly when 10 of the 44 deal with health matters. 

And a lot of the others deal with international funneling of money. 

I think we have a right to ask the questions, particularly at a time 

when we are examining Medicare fraud. Because this is increasing 

the price and the costs of what products are sold to our senior citizens. 

These doctors bribe—you use whatever term you wish—were 

bribed by the company to push the product. I think that is pretty 

serious business. 

Mr. CANNON. I think that is not just a right, but a responsibility 

that we have in this Committee. 

Mr. PASCRELL. Absolutely. 

Ms. SA ́ NCHEZ. The time of the gentleman has expired. And I just 

would like to take my 5 minutes to thank you both for testifying 

today, for following with such passion the developments of these 

deferred prosecutions, Mr. Pallone, the thoughtfulness of your legislation. 

And just to pick up on a couple of things, I think the reason why 

this Subcommittee was interested in holding this hearing is because there are a number of problems that we have identified. 

334 

Number one, the discretion to use these deferred prosecution agreements, the fact that there aren’t real concrete guidelines as to 

when they are used and who is making the decision and why are 

certain corporations allowed to enter these and others are prosecuted criminally. I think certainly it is a first step in the analysis 

that needs to be thoroughly done. 

I think once deferred prosecutions are entered into, how the monitor is selected is a very relevant question for this Committee to 

ask. And I think that we need to look to potential solutions that 

would take away any conflicts of interest or potential conflicts of 

interest that might exist. 

Now, I know Mr. Delahunt was particularly concerned with the 

fact that corporations sometimes in these deferred prosecution 

agreements get to choose who they want to have monitoring them. 

And I think we heard from our first panel of witnesses, all experts 

or have familiarity of these deferred prosecution agreements, that 

whoever is selected needs to meet some basic criteria and needs to 

have, not just a well-established knowledge in the area of law in 

which these corporations have fallen short, but also an understanding of how some of these businesses run so that they can do 

their job effectively. 

And I don’t think that it would harm the system to have some 

kind of entity that can oversee the monitors because right now, it 

doesn’t appear that anybody is monitoring the monitors. There was 

some debate as to who does the monitor owe a duty to. Is it the 

corporation? Is it the shareholders? Is it the U.S. government? Is 

it, you know, the taxpayer? 

I mean, it seems like there are some of these conflicting ideas 

about to whom the monitor owes a duty to do their job and the fact 

that there isn’t the kind of oversight available to go back and look 

at, you know, how are they billing the corporation for their time, 

what exactly are they doing to receive, in some cases, some very 

lucrative contracts. And I am not suggesting that the fees are wildly inappropriate, depending on whether or not there has been adequate work that justifies those fees. 

And I don’t think it is asking a lot to require some detailed billing statements. We have seen some examples where some monitors 

have submitted 200 pages of very detailed billing statements delineating who did what work and for how long. 

And then we have got others’ billing statements that are just a 

couple pages long, and they are sending out a monthly fee to the 

corporation. We don’t know what the monitor is doing to earn those 

fees. And I think that is a very troubling area of this issue for me. 

So again, I want to thank both of my colleagues from New Jersey 

for their interest in this and their time and last of which was their 

patience in waiting until we got to this panel. I know typically we 

allow Members the courtesy of testifying first. But because Mr. 

Ashcroft could not stay for the whole hearing period, we did want 

to give an opportunity for him to testify and Members to ask questions. So—— 

Mr. CANNON. Would the gentlelady yield? 

Ms. SA ́ NCHEZ. I will yield briefly to the gentleman. I don’t have 

much time. 

335 

Mr. CANNON. I only need to be brief. But I just wanted to say 

that I agree entirely with your summary of the hearing and what 

faces this Committee. But I think, frankly, Mr. Pallone and Mr. 

Pascrell have helped us focus on that. And I wanted to thank them 

as well. 

Ms. SA ́ NCHEZ. Great. 

I would like to thank you, again, for your testimony today. And 

without objection, Members will have 5 legislative days to submit 

any additional written questions, which we will have forwarded to 

the witnesses and ask that you answer as promptly as you can so 

that they can be made a part of the record. 

Without objection, the record will remain open for 5 legislative 

days for the submission of any additional materials. Again, I thank 

everybody for their time today. And this hearing on the Subcommittee on Commercial and Administrative Law is adjourned. 

[Whereupon, at 1:35 p.m., the Subcommittee was adjourned.] 

(337) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

338 

RESPONSES TO POST-HEARING QUESTIONS SUBMITTED BY THE HONORABLE LINDA T. 

SA ́ NCHEZ, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND

CHAIRWOMAN, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW TO THE

HONORABLE JOHN ASHCROFT, THE ASHCROFT GROUP, LLC, WASHINGTON, DC 


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RESPONSES TO POST-HEARING QUESTIONS SUBMITTED BY THE HONORABLE LINDA T. 

SA ́ NCHEZ, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND

CHAIRWOMAN, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW TO TIMOTHY L. DICKINSON, PAUL, HASTINGS, JANOFSKY, & WALKER, LLP, WASHINGTON, 

DC 


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RESPONSES TO POST-HEARING QUESTIONS SUBMITTED BY THE HONORABLE LINDA T. 

SA ́ NCHEZ, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND

CHAIRWOMAN, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW TO THE

HONORABLE DAVID E. NAHMIAS, THE UNITED STATES ATTORNEY’S OFFICE NORTHERN DISTRICT OF GEORGIA, ATLANTA, GA 


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RESPONSES TO POST-HEARING QUESTIONS SUBMITTED BY THE HONORABLE LINDA T. 

SA ́ NCHEZ, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND

CHAIRWOMAN, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW TO THE

HONORABLE GEORGE J. TERWILLIGER, III, ESQUIRE, WHITE & CASE, LLP, WASHINGTON, DC 

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RESPONSES TO POST-HEARING QUESTIONS SUBMITTED BY THE HONORABLE LINDA T. 

SA ́ NCHEZ, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND

CHAIRWOMAN, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW TO

BRANDON GARRETT, PROFESSOR, UNIVERSITY OF VIRGINIA SCHOOL OF LAW, CHARLOTTESVILLE, VA 


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PREPARED STATEMENT OF JAMES K. ROBINSON, FORMER ASSISTANT ATTORNEY

GENERAL FOR THE CRIMINAL DIVISION, UNITED STATES DEPARTMENT OF JUSTICE


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ATTACHMENT 


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LETTER TO THE HONORABLE LINDA T. S ́ NCHEZ FROM THE HONORABLE GEORGE J. 

TERWILLIGER, III, ESQUIRE, WHITE & CASE, LLP, WASHINGTON, DC 


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Æ 


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