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Prosecutorial Discretion

We (Bob Thomas and Suzanne Durrell) were both federal prosecutors in our not so distant past, and we work with federal prosecutors every day.  One of the least understood aspects of criminal law is prosecutorial discretion, the leeway given to prosecutors to make judgment calls that have huge impacts on the lives of people and companies.  On the criminal side, they (prosecutors) get to decide whom to charge with what offense, whom not to charge, whom to immunize, whom to seek the death penalty against, and so forth.

 

On the civil side, where we now operate more frequently with our False Claims Act whistleblower practice, they get to decide whether to intervene in a case, which theories of liability to run with and which to jettison, which individuals to pursue civilly and which to let slip, what amount of money to settle a case for, which companies and individuals to try to exclude from future participation in the Medicare and Medicaid programs, and so forth.

 

The list of areas where prosecutorial discretion surfaces is quite long.  And in fact, it is hard to imagine a job that a person could have in their late twenties or early thirties where he or she could have so much discretionary power over other people’s lives.  It’s one of the reasons young lawyers love being Assistant U.S. Attorneys:  they get to have relevant professional lives that have real impact, at a relatively early stage of their careers.

 

But the dark side of this reality is that prosecutors can do enormous damage in the exercise of their discretion, which is essentially unreviewable.  This New York Times piece yesterday gave a good example.  On the criminal side of the house, the use of the Section 851 mandatory minimum sentencing enhancements can give prosecutors enormous leverage to force defendants to plead guilty when they would otherwise go to trial.  Sometimes the use of this leverage is inoffensive; other times it can be deeply troubling and lead to unjust results.

 

We now incarcerate a higher percentage of our population than any other industrialized nation in the world, with disproportionate numbers of the prison population being people of color.  Congress, in its zeal to show how tough it could be on drug crime, passed many sentencing “enhancement” laws in the 1980’s that caused sentences to go well beyond the structured sentencing schemes put in place by the federal Sentencing Commission and the guidelines it promulgated.  Section 851 was one of those “enhancements,” and one that should be re-evaluated.

 

On the civil side of the house, an area of fertile debate is the government’s discretionary power to settle large cases against companies for monetary fines and civil damages only, without going after the individuals behind the corporate schemes. In the Pfizer case, for example, the then-record $2.3 billion settlement was impressive indeed, but the judge overseeing the case went out of his way to question prosecutors how $2.3 billion worth of fraud could not result in any individuals being held accountable.  Judge Rakoff in the Southern District of New York has also been a frequent critic of these corporate deals, in one instance rejecting a proposed settlement reached between the government and a bank defendant as too friendly to the bank and lacking in any actual admissions of wrong-doing.

 

So prosecutorial discretion is one of the things that makes the job of a prosecutor challenging and fun. But the wide latitude it gives individual lawyers, with relatively little oversight, can also lead to bad outcomes, or results that leave many questions still to be answered.

U.S. Scores Big Win Against Bank of America and Countrywide for Bank Fraud

The U.S. District Court Judge has ordered that Bank of America, Countrywide and one individual pay a bank fraud penalty of $1.3.  In his opinion, Judge Rakoff adopted the United States’ interpretation (see brief 1 and brief 2) of the penalty provisions of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, 12 U.S.C. § 1833a  (“FIRREA”), and rejected the argument by defendants.  FIRREA is a powerful weapon passed by Congress in response to the savings and loan crisis of the 1980’s. Using a tip from a whistleblower, prosecutors dusted off the law and used it to great success in this case.  Under FIRREA, a successful whistleblower shall be entitled to a reward of “20 percent to 30 percent of any recovery up to the first $1,000,000 recovered, 10 percent to 20 percent of the next $4,000,000 recovered, and 5 percent to 10 percent of the next $5,000,000 recovered.” 12 U.S.C. § 4205.  In calculating that award, the Attorney General may consider the size of the overall recovery and the usefulness of the information provided by the whistleblower. Id.  This means that in this case, the whistleblower is entitled to an award of between $850,000 to $1.6 million of the government’s $1.3 billion recovery. Unlike the False Claims Act, FIRREA caps the whistleblower’s reward; in other words, he or she only shares in the first $10 million of any recovery.  Presumably the defendants will appeal the jury verdict on liability and the judge’s order on penalty so this saga is not yet over.