Biden administration signals impending increase in white collar prosecutions

While the iconic comic strip character Dick Tracy took great pleasure in informing the villains he nabbed that "crime doesn't pay," those engaged in white collar crime over the past several years might beg to differ. By most metrics, the Trump years were boom times for white collar criminals, at least in terms of minimizing the chances that their wrongdoing would ever result in a criminal change and conviction.

The former president's two attorneys general -- Jeff Sessions and William Barr -- certainly never ranked prosecuting white collar crime high on their list of priorities. They chose instead to make prosecuting immigration-related offenses, addressing the nation's opioid epidemic, investigating threats (real and imagined) to national security, and attempting to curb violent crime much greater stated priorities than policing fraud taking place in corporate boardrooms, punishing polluters, or indicting white collar offenders engaged in acts of financial malfeasance.

And, while the message from the top of the U.S. Department of Justice reflected an indifference to prosecuting crimes occurring on Wall Street, the Trump administration simultaneously went to great lengths during its four-year grip on the executive branch to cripple some of the leading institutions responsible for investigating white collar crime.

The Internal Revenue Service experienced drastic funding and staffing cuts over the past several years, and its referrals of tax crimes to prosecutors predictably plummeted. U.S. postal inspectors, once viewed as valuable law enforcement partners in investigating complex mail and wire frauds, suffered as the former president made his bid to kill off the U.S. Postal Service. The Consumer Financial Protection Bureau, created to serve as the government's top consumer watchdog following the Great Recession, was gutted after that agency's opponents undertook a failed attempt to wipe it out entirely. And, from the moment Trump discovered that the FBI might have a number of 302s bearing his name tucked away in its files, the former president unleashed a weekly deluge of tweets to his tens of millions of followers on Twitter, assaulting the integrity of that agency -- the largest law enforcement agency responsible for investigating white collar crime.

While it has long been a fixture at Trump campaign rallies for the former president to lead his followers in chants to "lock up" his nemesis of the moment, his administration locked up those who committed crimes while wearing business attire to work with alarming infrequency.

The cold, hard numbers reflect the lack of attention that the prosecution of white collar criminals received in the Trump years.

According to data obtained and analyzed by the Transactional Record Clearinghouse at Syracuse University, pursuant to requests under the Freedom of Information Act, the number of white collar prosecutions pursued on an annual basis during the first four fiscal years overlapping the Trump presidency yielded the fewest white collar prosecutions that have been recorded over the past 35 years. Indeed, according to TRAC, the roughly 4,200 white collar prosecutions pursued across the entire spectrum of the DOJ in fiscal year 2020 amounted to far less than half of the 10,162 such prosecutions brought in fiscal year 2011. To use the former president's parlance, this marked decline in the number of white collar prosecutions initiated by his DOJ was "yuge."

While the number of white collar prosecutions initiated during the Biden administration has not skyrocketed during his first 10 months in office, there are certainly signs that the current administration plans to place a much greater focus on prosecuting white collar offenders than what this nation has seen recently.

Earlier this month, John Carlin, the principal associate attorney general, gave a speech to a large assembly of white collar criminal lawyers that signaled the best days to be a white collar criminal may soon be in the past, telling those gathered that the DOJ is intent on "redoubling" its efforts to prosecute white collar crime, and to return to the days when it was a force in this area. Carlin's speech did not offer many specifics to explain how this reversal of certain bad guys' fortunes will take place. However, he did announce a new program which will involve embedding a squad of FBI agents to work on a full-time basis with members of the DOJ's criminal fraud section to increase collaboration between prosecutors and investigators; and he revealed that the DOJ intends to rely on "big data" and data analysis to identify criminal conduct and has already hired some number crunchers to fill that role.

Carlin also hinted that the Yates memo -- which boosted the level of cooperation corporations that have engaged in bad behavior must offer in order to receive slack from the federal government -- might be making a prompt comeback; and he refreshingly stated that the top-down message being delivered at the DOJ is that prosecutors should not be deterred from bringing righteous white collar cases supported by the facts and the law, even when they involve novel areas of the law, out of a fear of losing at trial.

Translating these words into action, and upping the DOJ's game when it comes to prosecuting white collar criminals, is not going to be without its challenges, and one should not expect that the CEO perp walks that were a common feature on the nightly news in a bygone era will be making an immediate return.

While President Joe Biden's DOJ has indicated that prosecuting white collar crime will be a priority, that priority will compete with a long list of other priorities promoted since Biden rolled into office, including pursuing civil rights and Voting Rights Act cases, curbing the rise of domestic terrorism and extremism put on full display during the Jan. 6 attack on the Capitol, implementing environmental justice initiatives, reconfiguring how DOJ prioritizes and handles immigration-related crimes, and dealing more broadly with criminal justice reform as a whole.

To further complicate matters, of all the times to start a push toward more rigorous investigation and enforcement of sophisticated, labor-intensive white collar criminal matters, doing so in the immediate aftermath of a once-in-a-century global pandemic does not seem ideal if one expects prompt results from such a push. At least in the short-term, prosecutorial resources that might otherwise be available to advance new prosecutorial initiatives in the white collar arena -- such as prosecuting cases originating out of a National Cryptocurrency Enforcement Team announced by the DOJ this month -- will be affected by the huge backlog of cases that currently exists within the DOJ due to pandemic-related shutdowns and the resulting backlog of trials.

Lastly, while you should be assured that the Justice Department and its local U.S. attorneys' offices are staffed with plenty of smart and hard-working prosecutors eager for the "redoubling" of efforts to prosecute white collar cases, that eagerness will not translate to more and better white collar criminal cases if their efforts don't have the support of law enforcement partners who can investigate such cases. With the considerable attention that must necessarily remain on matters of national security, it is hard to see where those law enforcement resources will come from, or to expect that the hobbling of some of these institutions that has taken place over the past several years can be quickly undone.

Even in the face of these obstacles, there are hopeful signs that Biden's DOJ can reverse the steady decline in white collar cases that this country experienced, not only under Trump's reign, but in the latter half of Obama's presidency as well. As Carlin was quick to point out in his speech, some of the DOJ's new leaders, including Lisa Monaco, the new deputy attorney general, have extensive experience and interest in prosecuting white collar cases. (Monaco formerly co-piloted the Enron Task Force that led to the conviction of multiple executives associated with that symbol of corporate malfeasance from the early 2000s.)

Moreover, some of the DOJ's key collaborators in white collar prosecutions, including the U.S. Securities and Exchange Commission, are now helmed with aggressive new leaders who have made it clear that they also wish to reverse the downward trend when it comes to prosecuting sophisticated white collar cases.

Finally, the top-down messaging delivered by Carlin this month, at a minimum, shows the nation's white collar prosecutors some much-needed love, and sends the important signal to prosecutors and criminals alike that the current administration intends to give the prosecution of white collar crime much more prominence than it has received in recent memory, a move that would undoubtedly bring a big smile to Dick Tracy's cartoon lips.