At a time when critics have accused the Obama administration of not being tougher on Wall Street, a top Department of Justice official publicly defended the increasing use of deferred-prosecution agreements for white-collar criminals. These agreements allow corporations and their executives who have committed fraud to avoid criminal charges in exchange for admitting wrongdoing and paying fines.

Lanny Breuer, chief of the Justice Department’s criminal division, said in a speech before the New York City Bar Association on September 13 that the agreements have had “a transformative effect on particular companies and, more generally, on corporate culture across the globe.”

Breuer acknowledged that the prosecutorial tool has “become a mainstay of white-collar criminal law enforcement” since the 1990s, before which prosecutors had only two choices with corporate executives accused of breaking the law: “indict, or walk away.” The Supreme Court ruled in 1909 that corporations can be charged with criminal offenses in the case of New York Central and Hudson River Railroad Company v. United States.

Critics of deferred prosecution claim that in practice it is just an easy for corporate executives to avoid personal responsibility for the actions of the companies they run.

Prior to joining the government, Breuer was co-chairman of the white-collar defense and investigations practice group at Covington & Burling LLP, representing such clients as Halliburton/KBR and, during the Enron scandal, Moody’s Investor Service. Later he represented President Bill Clinton during his impeachment hearings.

-Noel Brinkerhoff, David Wallechinsky

To Learn More:

Breuer Defends Deferred Prosecutions (Corporate Crime Reporter)