Jailing Individuals: What’s Next in Fraud and FCPA


More Insights from the Dow Jones Compliance Symposium:

Three things you need to know about the new trend of jailing individuals for fraud and FCPA violations:

1. Individuals are already being prosecuted at up to 400 times the rate of companies.

Key support and statistics:

-DOJ prosecuted 80,000 individuals and 200 companies, the majority for fraud. (per Dabney Friedrich, Commissioner at US Sentencing Commission)

-50% of the company prosecutions involved named high-level individuals.

-From 2004 to 2010, 37 corporations and 80 individuals were successfully prosecuted under FCPA. (per Arlen Specter, former US Senator and former Chair of the Senate Judiciary Committee)

2. Small companies are prosecuted 11 times more than larger ones. Individuals in smaller companies who believe they have flying-below-the-radar immunity are mistaken.

Key support and statistics:

-92% of DOJ court convictions were with companies less than 1000 employees. (Dabney Friedrich)

3. Fines will give way to jail terms for individuals up and down the corporate ladder.

Key support and statistics:

-“Fines are not a deterrent to future conduct like jail terms are.” (Arlen Specter)

-Prosecute the “highest-ranking official where you can prove beyond a reasonable doubt [that they] knew” of the behavior and “everyone down the line who cooperated.” (Arlen Specter)

-100% voted by hands to “go after individuals” vs. 0% who wished to limit consequences of government investigations to fines alone (attendees at Dow Jones Global Compliance Symposium 2011).

If you think this may not apply to you, ask yourself three questions:

1. Are you an individual?

2. Do you work for a company?

3. Are you doing the right thing? Would your grandmother, next door neighbor and best friend agree if they saw your behavior interpreted by a negative reporter on the front page of your local hometown news?

Food for thought.

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