Deputy Attorney General Rod Rosenstein Delivers Remarks at the Bloomberg Law Leadership Forum:
Good afternoon. Thank you Josh for that kind introduction.
I am very happy to be with you here at the 4th annual Bloomberg Law Leadership Forum.
I was here just two weeks ago to speak to the New York City Bar Association and the American Conference Institute. It is refreshing to get out of Washington. New York may be the city that never sleeps, but it seems restful to me.
The Department of Justice ordinarily has Senate-confirmed officials leading our Criminal Division and our Civil Division, which are the Department components most responsible for overseeing federal cases involving your corporate clients and employers. Unfortunately, the distinguished nominees for those jobs, Brian Benczkowski and Jody Hunt, are still awaiting confirmation by the United States Senate. Remarkably, only two of the seven litigating components in Main Justice have Senate-confirmed leaders.
Three of our outstanding nominees have spent 12 months pending before the Senate, after spending several months completing the interview process, filling out voluminous paperwork, undergoing an FBI background investigation and withstanding an Office of Government Ethics review. It is a long runway for a job that lasts for only a few years.
Fortunately, we assembled a superb team to serve as acting leaders of the Justice Department’s key components. We will keep moving forward, although the vacancies obligate me to give more speeches than I anticipated.
The marketing blurb for this event says, “Rapid changes in policy from Washington mean outcomes are more difficult than ever to forecast.” Policies may change. But in the Department of Justice, one of our goals is to enhance the predictability and consistency of the law.
The great Justice Antonin Scalia joked that one of Emperor Nero’s worst practices was to post his edicts high on a column, so they would be harder to read and easier to transgress. That is not an ideal model for law enforcement.
President Trump issued a Law Day proclamation on May 1. The President said, “Law Day recognizes that we govern ourselves in accordance with the rule of law rather [than] according to the whims of an elite few or the dictates of collective will. Through law, we have ensured liberty.”
The rule of law is essential to commerce. It allows businesses to enter contracts, make investments, and project revenue with some assurance about the future. It establishes a mechanism to resolve disputes, and it provides protection from arbitrary government action.
Americans have always understood that government should support private enterprise. The American Revolution in 1776 was not just a political revolution. It was also an economic revolution. The movement included mercantilists, farmers, shopkeepers, and other ordinary men and women who banded together, primarily to protest excessive governmental regulation.
The colonists were angry about burdensome tax laws. They were upset about restrictions on their ability to settle and develop the western frontier. They were concerned about unfair trade policies.
Creating a favorable environment for business to flourish and spur economic growth is one of the priorities of the Trump Administration. President Trump is mindful about the importance of promoting entrepreneurialism and avoiding unnecessary regulation. And under the leadership of Attorney General Jeff Sessions, the Department of Justice is doing its part to promote an environment where businesses can thrive.
White collar crime undermines the rule of law, defrauds victims, and disrupts the marketplace. Our goal is to deter crime, and we can only do that by holding accountable the perpetrators who break the law to gain a competitive advantage.
Our Department is committed to building strong relationships with enforcement authorities and law-abiding businesses. That is reflected in a series of policies announced by the Department over the past year. You will continue to see it reflected in the faithful execution of those policies.
When I started my first supervisory job in 2001, one of the most popular management books was “Who Moved My Cheese?” It is a fable about how to manage change.
The story involves two men who live in a maze. There is a place in the maze where they can always find cheese.
But one day, the cheese stops showing up in the usual spot. One man chooses to adapt to the new challenge. He ventures through the maze in search of the cheese. The other man sticks with his routine and refuses to change.
The adaptable man learns that the cheese is always moving. He constantly explores the maze, altering his pattern to prevent complacency from setting in.
The complacent man goes hungry.
That simple lesson is a reminder about the need to evolve to meet changing circumstances. Renowned management consultant Peter Drucker put it this way: “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.” If the cheese moves, you need to move, too.
Philosopher Nassim Nicholas Taleb coined the term “anti-fragile” to describe the most successful business model. According to Taleb, the opposite of fragile is not merely “robust” or “resilient,” as most people assume. Things that are robust or resilient are non-fragile, but they merely resist breaking when placed under stress. Things that are anti-fragile grow stronger with stress, like muscles.
Risk and randomness cannot be eliminated, so Taleb recommends embracing them. Organizations that seek to avoid stress are quickly defeated when they inevitably experience unforeseeable events. Anti-fragile organizations welcome risk and are prepared to flourish when the unexpected occurs.
The point is that external factors are always changing, so whatever business you are in, you sometimes need to realign your practices to achieve your goals. The movie Moneyball, based on Michael Lewis’s book, summarizes the lesson in three words borrowed from Charles Darwin: “Adapt or die.”
At the Department of Justice, we do not change our principles, but we should regularly evaluate our policies to determine whether they accomplish our goals.
We made several recent changes to our corporate enforcement policies. One of our goals is to provide greater clarity and certainty to companies that want to do the right thing. Law enforcement efforts are most effective when we build bridges with law-abiding businesses.
One of America's best crime-fighting weapons is the ingenuity and integrity of its people. Good corporate citizens play a critical role in upholding the rule of law.
The Department should reward companies that try in good faith to deter crime. That means developing corporate compliance programs that help to prevent problems, and that detect any wrongdoing quickly. It also means investigating misconduct, voluntarily reporting it, cooperating fully in investigations, and implementing appropriate remedies.
One of our significant changes is a process point. For many decades, former Deputy Attorneys General have lived on through corporate fraud memoranda bearing their names. We followed the Holder Memo, the Thompson Memo, the McNulty memo, the Filip Memo, and the Yates Memo, to name a few. One of my goals in taking this job was to make sure there would be no Rosenstein memo.
It is difficult to keep track of all the Department of Justice memos, particularly for busy prosecutors. By formally incorporating our policies into our U.S. Attorneys’ Manual, we make it clear that the policies apply to everyone in the Department, we make them more accessible to employees, we provide greater transparency for stakeholders, and we promote greater consistency in federal investigations.
As part of the effort to consolidate and streamline our policies, we initiated a comprehensive review and update to the manual, for the first time in at least 20 years. We are reviewing the entire manual, a total of approximately 11,000 pages. Our goals are to identify redundancies, clarify ambiguities, eliminate surplusage, and incorporate constructive additions.
I hope these efforts will encourage future Department leaders to write fewer memos, and instead to put policy changes directly into the manual.
Last June, Attorney General Sessions announced that the Department would end the practice of directing third-party settlement payments to non-governmental entities that were not harmed by a defendant’s conduct.
In November, the Attorney General announced a new policy to prohibit improper reliance on agency guidance documents.
Also in November, we announced the Department’s Foreign Corrupt Practices Act Corporate Enforcement Policy. It promotes greater clarity and consistency in FCPA enforcement efforts, and it provides stronger incentives for companies to voluntarily disclose misconduct, fully cooperate, and remediate any harm.
We announced the first corporate declination under the new FCPA Policy last month. The company demonstrated responsible corporate conduct after discovering a violation. It satisfied the rigorous requirements of our policy, and the Department gave the company credit for its disgorgement in a related SEC administrative proceeding.
Two weeks ago, we announced a new Department policy that encourages coordination with Department components and other enforcement agencies when imposing multiple penalties for the same conduct.
Our new policy discourages “piling on” by instructing Department components to appropriately coordinate with one another and with other enforcement agencies seeking to impose penalties on a company for the same misconduct.
Let me pause to make a confession. When I announced the new policy a few weeks ago, I explained that the term “piling on” refers to a football player jumping on a pile of other players after the opponent is already tackled. I played football about 40 years ago, so I used that metaphor.
But last night, I learned that the Merriam-Webster dictionary uses a different meaning. The dictionary defines “piling on” as joining other people in criticizing someone, usually in an unfair way. I also have experience with that. So I am definitely against piling on, no matter what definition you use.
The goal of our new policy is to enhance relationships with our law enforcement partners in the United States and abroad, while avoiding unfair duplicative penalties.
It is important for us to be aggressive in pursuing wrongdoers. But we should discourage disproportionate enforcement of laws by multiple authorities.
The conference organizers sent me some of your questions. Many of them relate to the new coordination policy. The questions ask how the Department will calculate penalties and offsets, and how we will interact with other entities in determining penalties.
Our policy encourages Department attorneys to coordinate with any federal, state, local, and foreign enforcement authorities that want to settle with a company for the same misconduct. I cannot offer a mechanical formula that will apply in every instance. And I am always careful to point out that our internal policies are not legally enforceable. You cannot challenge them in court. But putting this policy into the U.S. Attorneys’ Manual has consequences. It will guide our attorneys and supervisors.
Last month, the Department’s Criminal Division and the FBI announced a deferred prosecution agreement with the subsidiary of a multinational electronics company. The company made improper payments to consultants and sales agents in the Middle East and Asia.
The Department accepted a criminal penalty of more than $137 million, and recognized that the company had agreed to pay $143 million to the SEC to disgorge ill-gotten gains from the same misconduct. The SEC agreed to forgo penalties, given the company’s penalty payment to the Department.
Under the new FCPA policy, the company received a 20 percent discount off the low end of the Sentencing Guidelines fine range because of its cooperation and remediation.
In another case, in February, the Criminal Division and the U.S. Attorney’s Office for the Southern District of California worked with Immigration and Customs Enforcement and the IRS, in parallel with the Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network. We charged an international bank for concealing deficiencies in its anti-money laundering program and obstructing the OCC’s examination. The Department accepted a plea agreement in which the bank agreed to forfeit almost $370 million, and stipulated that $50 million of that obligation was satisfied by the payment of civil penalties to the OCC in a separate administrative action.
I want to caution you that cooperating with a different agency or a foreign government is not a substitute for cooperating with the Department of Justice. And companies that make partial disclosures or secure lenient penalties from other agencies or foreign governments before consulting the Department of Justice may not qualify. Companies that are candid and cooperative, however, will be eligible for greater leniency.
The new coordination policy rewards good conduct, builds partnerships with other enforcement authorities, and promotes finality for companies.
This is another step towards greater transparency and consistency in corporate enforcement. To reduce white collar crime, we need to encourage companies to report suspected wrongdoing to law enforcement and to resolve their liability expeditiously.
Every corporate fraud policy change we make will reflect our resolve to hold individuals accountable for corporate wrongdoing. That commitment is evident in many of our recent cases.
Last month, an executive at one of the world’s largest financial institutions was sentenced in the Eastern District of New York to serve 24 months in prison for participating in a “front-running” scheme. The executive fraudulently used confidential client information to benefit his employer at the expense of the client.
Last July, we announced the largest health care fraud enforcement action in history, with charges against 412 individual defendants. One hundred twenty of them were prosecuted for unlawfully distributing opioids and other narcotics. Fifteen were charged in federal courts here in New York.
In another example, last week, the U.S. Attorney’s Office here in the Southern District of New York announced an indictment charging three individuals for a securities fraud scheme. They allegedly persuaded victims to invest millions of dollars of digital funds to purchase fraudulent digital currency tokens.
Our prosecutors and civil enforcement attorneys encouraged us to adopt a formal coordination policy and seek to achieve reasonable and proportionate outcomes in major corporate investigations. Our attorneys prize the Department’s reputation for fairness. They understand the importance of protecting our brand.
Speaking of our brand, I visited the FBI’s New York Field Office this morning. One of the things that sometimes gets lost in the endless commentary about law enforcement is that some of the most patriotic and public-spirited American citizens work in the Department of Justice.
Our agents and attorneys possess superb academic credentials and demonstrate exceptional character. They pass rigorous screening interviews and face thorough background checks every few years. Our agents even take polygraph examinations.
We instill a culture of ethical conduct from the first day employees take the oath of office – an oath to support and defend the Constitution, to bear true faith and allegiance, and to well and faithfully execute the duties of their office.
If you walk into any branch of the Department of Justice anywhere in the country, you will find some of the most decent, ethical, honorable and admirable people you could ever hope to meet. As Attorney General John Ashcroft used to say, our name represents a moral value, and we aspire to live up to it.
That is not to say that everybody in our Department is flawless. No organization with 115,000 employees is error-free. But we are committed to correcting mistakes and punishing wrongdoers.
We have a Professional Responsibility Advisory Office at Main Justice, to provide nationwide guidance to our attorneys about their ethical responsibilities, and we designate at least one Professional Responsibility Officer in every U.S. Attorney’s Office. Everybody in the Department participates in many hours of annual training, including ethics training.
We also have serious, professional, nonpartisan internal watchdogs. There are Offices of Professional Responsibility in Main Justice and each of our law enforcement agencies, and an Office of the Inspector General (OIG) with 475 employees and jurisdiction over the entire department.
The Inspector General’s federal agents, attorneys, and other officials are governed by executive branch confidentiality rules. Federal statutes allow them to review material that is not appropriate for disclosure outside the Department and prohibit them from leaking.
The Inspector General has criminal investigative authority – equivalent to the FBI – as well as administrative authority. If an investigation involving any past or present Department employee requires criminal process, the Inspector General’s sworn and armed federal agents work with U.S. Attorneys to obtain grand jury subpoenas and search warrants, just like FBI agents.
Unlike the FBI, the Inspector General produces public reports about wrongdoing and makes programmatic recommendations to deter waste, fraud and abuse. The office is led by a Senate-confirmed presidential appointee.
Most importantly, as you know well, Department of Justice employees develop the discipline required by the need, when we make an allegation of wrongdoing, to prove it beyond any reasonable doubt to a judge and jury with credible, admissible evidence. That gives us a very powerful incentive to seek the truth, and only the truth, wherever it may lead us.
Robert Jackson was one of our nation’s most respected Attorneys General. In a 1940 speech, Jackson said that a prosecutor should seek the truth, serve the law, and always stay humble and kind.
Our exercise of discretion is always guided by our overriding commitment to the rule of law. In 1942, amidst the uncertainty of World War II, Jackson described law as “something that manages to serve both the stability of our society and its capacity for improvement.”
Jackson told a story about three stonecutters who were asked to describe their work. “The first workman gave the uninspiring, but very practical reply, ‘I am earning a living’; the second workman, without lifting his eyes from his immediate work, said, ‘I am cutting this stone’; but the face of the third lighted up as he said, ‘I am building a cathedral.’”
The point of the parable is that you should focus not just on how best to perform individual tasks, but also on the collective legacy you are helping to create.
Jackson concluded his speech with this advice for lawyers: “We, too, whether or not we are aware of it, do more than earn livings; we do more than carry on particular cases. We are building the legal structure that will protect the altars of human liberty – the structure that will express man’s faith in his worthiness and capacity to be free.”
At the Department of Justice, our employees understand that we are building a cathedral. It is not always an easy task, but each generation must strive to protect the cathedral of justice and leave it stronger than we found it.
I hope you will do your part to help.