House Democrats Introduce Legislation to Reform Secretive Deferred Prosecution Agreement Process

Statement

HOUSE DEMOCRATS INTRODUCE LEGISLATION TO REFORM SECRETIVE DEFERRED PROSECUTION AGREEMENT PROCESS

U.S. Rep. Bill Pascrell, Jr. (D-NJ-08), U.S. Rep. Frank Pallone (D-NJ-06) and House Judiciary Subcommittee on Commercial and Administrative Law Chairwoman Linda Sánchez (D-CA-39) today announced the introduction of comprehensive legislation designed to regulate the process by which the Justice Department allows U.S. Attorneys to engage in pre-trial agreements with corporate offenders and award federal monitoring contracts.

"This legislation is both comprehensive and balanced," stated Pascrell, the legislation's author. "It allows federal prosecutors to retain use of deferred prosecution agreements but insists on the oversight, accountability and public disclosure that are the hallmarks of our justice system. This legislation completely reforms the selection of federal monitors by creating an open, competitive process. It is my hope to end the unmitigated power that federal prosecutors hold to serve as judge, jury and sentencer in the deferred prosecution process."

"Our legislation, which mirrors many of the reforms outlined in legislation I introduced in January, brings accountability and a regulatory framework to the process of distributing federal monitor contracts," Pallone said. "Allowing an unelected official unfettered leverage against companies and corporations who have potentially engaged in criminal behavior invites the very type of abuse our judicial system is designed to prevent. With this legislation, we eliminate no-bid contracts and bring transparency to a process that has been deeply rooted in politics and favoritism for years."

"I have been troubled by the Justice Department's increased use of deferred and non-prosecution agreements because they have been shielded from public scrutiny and oversight," stated Judiciary Chairman John Conyers. "When the Department enters into one of these agreements and appoints an independent monitor, the public should be assured that the interests of justice are being served rather than the lining of pockets of well-connected cronies. This legislation will bring sunshine to a process that has thus far operated in the dark. It will also provide much-needed uniformity and clarity for all parties involved in theses agreements."

"Through hearings and investigation, we have learned that the system of deferred and non-prosecution agreements is ripe for abuse," said Congresswoman Sánchez. "This legislation will require the Justice Department to issue guidelines that will ensure that corporate monitorships are used to serve the public interest rather than to award sweetheart deals to favored individuals."

The comprehensive legislation arrives eight months after the details of a lucrative contract awarded to former U.S. Attorney General John Ashcroft by U.S. Attorney Christopher Christie were revealed in a Securities Exchange Commission filing that raised questions in Congress.

The Honorable John Ashcroft and U.S. Attorney David Nahmais appeared before the Judiciary Committee in March to testify in defense of the process used to award federal monitoring contracts, but failed to fully satisfy a number of critical flaws highlighted by Committee members.

Following the hearing, Reps. Pascrell and Pallone joined the House and Senate Judiciary Committee leadership in requesting full disclosure of 85 deferred and non-prosecution agreements and a list of corporate monitors selected in 41 of the agreements. The Justice Department shared some of the information with Congress in a May 2008 letter, but the details of several other agreements remain outstanding. A report by the New York Times found that the Justice Department had appointed at least 30 former prosecutors and other government officials as well-paid corporate monitors in these deferred prosecution agreements.

Congressional concerns over the secretive nature and increased use of pre-trial agreements were validated in a report conducted by Lawrence Finder a former U.S. Attorney, and Ryan McConnell an Assistant U.S. Attorney that found a dramatic rise in the number of corporate pre-trial agreements in 2007 and a drop off in public transparency.

The legislation, which has been drafted with the Judiciary Committee, is modeled after the Statement of Principles on Deferred Prosecution Agreements that Rep. Pascrell laid out in December of 2007 and legislation introduced by Rep Pallone in January 2008. The legislation would make the following reforms:

1) Provides Real Guidelines on Deferred Prosecution Agreements- Requires the Attorney General to provide public written guidelines for deferred prosecution agreements and nonprosecution agreements in order to promote uniformity and to assist prosecutors and organizations as they negotiate and implement deferred prosecution agreements and nonprosecution agreements.

2) Restore Judicial Oversight of Deferred Prosecution Agreements- Requires government prosecutors to file each and every deferred prosecution agreement in an appropriate United States district court, which must then approve the actual agreement between the parties.

3) Take the Selection of Federal Monitors Out of the Hands of U.S. Attorneys- Sets forth rules for an open, public, and competitive process for the selection of such monitors through the creation of a national list of organizations and individuals who have the expertise and specialized skills necessary to serve as independent monitors.

4) Require Full Disclosure of Deferred Prosecution Agreements- Requires the Attorney General to place the text of these agreements on the public website of the Department of Justice, together with all the terms and conditions of any agreement or understanding between an independent monitor appointed pursuant to that agreement and the organization monitored.

"Make no mistake about it, corporate offenders should be fully punished for defrauding consumers, shareholders, and in many cases their own employees," stated Pascrell. "But the punishment for these offenses should not translate into an opportunity for federal prosecutors to award undisclosed, multi-million dollar contracts. The Department of Justice and the U.S. Attorneys Office should be fighting fraud, cronyism, and abuse. The power they hold over undisclosed deferred prosecution agreements hints towards an unnecessary perception of impropriety," concluded Pascrell.

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