A Deferred Prosecution Agreement (DPA) is a valuable legal tool in corporate criminal enforcement. It allows the federal government to hold companies accountable for criminal conduct while avoiding the potentially devastating consequences of a criminal conviction, such as significant financial penalties, loss of reputation, and even closure of the business.
For businesses under suspicion of federal crimes, the strategic use of a DPA could be the difference between survival and collapse, offering a ray of hope in a challenging situation.
A DPA is a contractual arrangement between a US government agency, such as the Department of Justice (DOJ) or the Securities and Exchange Commission (SEC)) and a company or an individual facing a criminal or civil investigation.
Under a DPA, the agency files a charging document with the court. Still, it simultaneously requests that the prosecution be postponed to allow the defendant to demonstrate good conduct, which could include full cooperation with the investigation, implementing robust compliance measures, and taking steps to remedy the harm caused by the misconduct.
In exchange, DPAs generally require the defendant to agree to pay a fine, waive the statute of limitations, cooperate with the government, admit the relevant facts, and commit to compliance and remediation, potentially including a corporate compliance monitor.
Notably, DPAs typically describe the defendant's conduct, cooperation, and remediation, if any, and calculate the fine under the United States Sentencing Guidelines, which provide a framework for determining the appropriate penalty based on the severity of the offense and the defendant's cooperation and remediation efforts.
Unlike a non-prosecution agreement (NPA), DPAs typically require court approval, which is normally granted due to the court's limited scope of review.
Suppose a defendant complies with the terms of the DPA. In that case, the agency moves to dismiss the filed charges. Suppose a defendant breaches the agreement. In that case, the DPA typically permits federal prosecutors to resume the case and use the defendant's admissions in subsequent proceedings.
In simple terms, a deferred prosecution agreement (DPA) is a voluntary agreement between a defendant and a prosecutor in which the prosecutor agrees to drop charges if the defendant meets certain conditions, such as paying fines, compensating victims, and implementing reforms. DPAs can help reduce incarceration rates and criminal justice involvement while still keeping the public safe.
Understanding Deferred Prosecution Agreements
A Deferred Prosecution Agreement is a formal agreement between the government (typically federal prosecutors) and a business entity accused of wrongdoing. Under a DPA, the company will be formally charged with a crime.
Still, prosecutors agree to delay or "defer" criminal charges against the company as long as it fulfills certain conditions. As noted, these conditions usually include terms such as the following:
- Paying fines,
- Implementing compliance measures,
- Cooperating with ongoing investigations, and
- Addressing the underlying conduct that led to the investigation.
Once the conditions are met, the charges against the company are dismissed.
DPAs are frequently used in cases involving corporate fraud, bribery, antitrust violations, environmental violations, and other crimes related to business operations. The purpose is to hold companies accountable while avoiding the severe economic and social consequences of a criminal conviction.
DPAs are a common tool in the U.S. and are becoming more prevalent in Europe and other countries. Companies can learn from DPAs to improve their compliance policies and prevent criminal activity.
How is DPA Different from Probation?
In many respects, a DPA for a company mimics elements of plea agreements and probation for individual defendants, combining penalties with rehabilitative efforts.
However, probation is a form of sentencing, and in a DPA, the company is not convicted of a crime. In some respects, a DPA is similar to a diversionary agreement for individuals, except that penalties, such as fines and restitution, are usually imposed.
When and Why Are DPAs Used?
DPAs are typically employed in cases where prosecutors believe that punishing a company through criminal prosecution would result in undue harm to innocent parties, such as employees, shareholders, or communities that depend on the business. The government may opt for a DPA if:
- The company cooperates: If a business cooperates fully with investigators and takes steps to address misconduct, a DPA may be considered.
- The misconduct is isolated: If the wrongdoing appears limited to a few bad actors rather than a systemic issue, prosecutors may be inclined to offer a DPA.
- The business has remedied the situation: Companies that have demonstrated a commitment to compliance and ethical behavior, such as by firing culpable employees and implementing stronger internal controls, are more likely to receive a DPA.
Prosecutors often weigh the public interest against the potential harm of a prosecution. For instance, the collapse of a major corporation due to a criminal conviction could lead to significant job losses and economic disruption. A DPA provides a mechanism to penalize the company without causing collateral harm to innocent parties.
Who Is Eligible for a DPA?
DPAs are designed for organizations, not individuals. This means that businesses, whether privately held or publicly traded-are eligible for DPAs, but individual executives or employees accused of wrongdoing may still face personal criminal charges.
Eligibility for a DPA is not automatic. Prosecutors evaluate each case individually, considering factors such as the severity of the misconduct, the company's history of compliance, and its willingness to cooperate. While DPAs can offer a lifeline to businesses, they require extensive negotiation and careful adherence to strict terms.
How Does a DPA Work?
When a company and the government enter into a DPA, the agreement generally outlines:
- The Conduct in Question: The DPA will specify the alleged wrongdoing, often in detailed terms.
- The Terms and Conditions: These may include financial penalties, which could range from a significant monetary fine to the forfeiture of ill-gotten gains, restitution to victims, mandatory compliance measures, or corporate restructuring.
- Monitoring Requirements: Many DPAs require the company to retain an independent monitor to ensure compliance with the agreement. This monitor, often a third-party expert in corporate compliance, will regularly assess the company's adherence to the DPA's terms and report to the government.
- The Duration: DPAs typically last between one and three years, during which the company must meet all specified conditions.
Once the DPA is finalized, the government agrees to suspend criminal penalties. If the company complies with the terms throughout the DPA's duration, the charges are dismissed at the end of the agreement period. However, failure to comply can result in the reinstatement of charges and potential prosecution.
The Role of Experienced Federal Criminal Defense Attorney
Negotiating a DPA is complex and requires skilled legal advocacy. Federal prosecutors have significant discretion in determining whether to offer a DPA and what terms to include.
Our experienced federal criminal defense attorneys can be invaluable in negotiating the terms of a DPA. We can ensure that the conditions are fair and achievable for the company and provide a sense of security in the process.
We also play a critical role in advising the company on compliance measures and helping it fulfill the DPA's requirements, providing guidance and support.
Our guidance can be instrumental in achieving a favorable outcome, ultimately leading to the dismissal of charges and the preservation of the company's standing. For more information, contact Eisner Gorin LLP, a federal criminal defense law firm based in Los Angeles, California.
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