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Fraud, Investigation, Suspension and Debarment in Government ContractingFrederic M. Levy, Partner, Covington & Burling LLP

©2015 PubKLearning. All rights reserved.

DOJ GUIDANCE ON “INDIVIDUAL ACCOUNTABILITY FOR CORPORATE WRONGDOING”

• Issued September 9, 2015 by U.S. Deputy Attorney General Yates

• New initiative to target and pursue “accountability” from individuals “who perpetrate corporate wrongdoing”

• Identifies six steps in pursuit of individuals engaged in corporate wrongdoing

o To qualify for cooperation credit, corporations must provide DOJ with “all relevant facts” relating to individuals responsible for misconduct

o Criminal and civil corporate investigations should focus on individuals from outset

o Criminal and civil attorneys handling corporate investigations should be in routine contact to effectively pursue individuals

o DOJ will not agree to corporate resolutions that release individuals from liability, including civil liability

o Corporate cases will not be resolved without a plan to resolve individuals’ cases, and declinations must be approved by the relevant U.S. Attorney or Assistant Attorney General

o Decision whether to bring civil suit will focus on an individual’s conduct, and not ability to pay

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Fraud, Investigation, Suspension and Debarment in Government ContractingFrederic M. Levy, Partner, Covington & Burling LLP

©2015 PubKLearning. All rights reserved.

IMPLICATIONS - FALSE CLAIMS ACT AND INTERNAL INVESTIGATIONS

• More likely to affect civil matters - criminal prosecutions already focus on individuals

• Individuals may be less likely to report suspected improprieties

• Civil FCA matters and internal investigations will become more like criminal matters

o Individuals could face significant financial liability

o Individuals could be stigmatized

• Corporation and employees will have disparate interests

o Employees less likely to cooperate

o Employees more likely to demand (and have the right to) own counsel

o Government may prohibit indemnification in settlement documents

• Settlements with corporations may be complicated, while individuals rush to reach settlement and cooperate

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Fraud, Investigation, Suspension and Debarment in Government ContractingFrederic M. Levy, Partner, Covington & Burling LLP

©2015 PubKLearning. All rights reserved.

IMPLICATIONS - SUSPENSION AND DEBARMENT• Further increase suspension and debarment actions against individuals

• Increased litigation challenging suspension and debarment actions

• Heightens standards for demonstrating corporate present responsibility

o “Cooperation” may be more difficult to demonstrate

o Reduced flexibility to determine appropriate disciplinary measures

• Resolution of corporate suspension and debarment actions may be complicated by pending investigations against employees