Question

what is an NPA or DPA and what is your opinion of this method to resolve cases?

Answer 1

Deferred Prosecution Agreements with the Department of Justice (DPAs) have been a powerful tool of federal white-collar criminal enforcement for a number of years. At the same time, DPAs have been attacked from many sides – judges, elected officials and commentators – for being too lenient on companies and too frequently used in lieu of prosecutions of individuals, as I have discussed in recent posts ("Meet the Fokker: Continued Judicial Skepticism Toward Deferred Prosecution Agreements," and "A Plant Grows in Brooklyn: EDNY Judge Scrutinizes Deferred Prosecution Deal”; see also "Courts Push Back Against Government Deals With Companies”).

In a series of recent speeches Assistant Attorney General Leslie Caldwell has given a thoughtful defense of DPAs, explaining the basic merits of DPAs (and Non-Prosecution Agreements, or NPAs), while also responding to critics of such agreements. In speeches at the ACAMS Anti-Money Laundering & Financial Crime Conference in March and at NYU on April 14 and 17, AAG Caldwell described DPAs and NPAs as "useful enforcement tools" that allow the Justice Department to "accomplish as much as, and sometimes even more than, [it] could from a criminal conviction." She explained, "[w]e can require that the banks cooperate with our ongoing investigations, particularly in our investigations of individuals. We can require that such compliance programs and cooperation be implemented worldwide, rather than just in the United States. We can require periodic reporting to a court that oversees the agreements for its terms."

Deferred Prosecution Agreements (“DPA”) and Non-Prosecution Agreements (“NPA”).

Over the past ten years, there has been a notable increase in the U.S. Department of Justice (“DOJ”) use of alternative settlement agreements such as Deferred Prosecution Agreements (“DPA”) and Non-Prosecution Agreements (“NPA”).

A DPA is a voluntary alternative to adjudication whereby the prosecutor grants amnesty in exchange for the defendant’s agreement to provide full cooperation in the investigation and to fulfill certain requirements including the payment of fines, implementation of corporate reforms and in some cases, appointment of an independent monitor to oversee compliance. With respect to a DPA, generally the DOJ files criminal charges in court against the corporation but agrees to waive the charges once the corporation meets the terms of the DPA. The terms of a corporate DPA typically includes new or enhanced compliance and reporting measures, an agreement to cooperate with the ongoing investigation, an admission of wrongful conduct, internal reforms and restitution payments. These agreements usually span several years.

An NPA, is similar to a DPA in that the DOJ and corporate defendant enter into an agreement wherein the corporation agrees to cooperate with the government and take remedial actions to correct the wrongdoing.However, no charges are filed against the defendant so long as there is no breach in the agreement. An NPA does not typically require an admission of wrongdoing. In addition, NPAs are generally less detailed than DPAs and do not require a corporate monitor.

The move toward such agreements stemmed from the DOJ’s desire to minimize the unintended consequences and collateral damage of corporate criminal prosecution including the collapse of a company and the related impact on employees, investors, third parties and other corporate stakeholders.Arthur Andersen is the primary example of the widespread destruction resulting from DOJ corporate prosecution and conviction. Arthur Andersen, one of the top 6 accounting firms in the world, was indicted and ultimately convicted on charges of obstruction of justice in 2002.The decision was later overturned by the Supreme Court, but only after the complete collapse of what had been a $9.3 billion (in revenues) corporation with more than 85,000 employees worldwide.

Up until 2008, there was little if any DOJ guidance as to when the use of a DPA/NPA is appropriate, what behavior warrants a DPA verses and an NPA, and what terms and conditions should be included in a DPA/NPA agreement.The year 2008 saw the beginning of what appeared to be some uniformity in the terms and conditions of DPAs.In 2008, there was also increased media attention related to several DPAs, as well as congressional hearing and other legislative activity with respect to DPAs (although no formal legislation).