Yates Memo Faces Uncertain Fate Under Trump, Attorneys Say

June 13, 2017
Federal Contracts Report

Media Coverage

A pair of Obama-era policy shifts aimed at making government contractor officials and other executives more accountable for corporate wrongdoing may be reversed by President Donald Trump's Justice Department, some attorneys are saying.

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Budget Uncertainty

Government contracts and white-collar lawyers said they typically look at the potential culpability of individual corporate executives and workers — both as a way to cooperate with prosecutors and, potentially, to steer cases away from the company as a whole. So, in that sense, the Yates memo was redundant, they said.

But now, they said, prosecutors in fraud and other corporate malfeasance cases are pushing harder to amass evidence against potential individual defendants.

“Before, you could tell DOJ, ‘This is what our investigation found, and this is what we did’ — and that would be the end of the story,” Shawn Wright, a partner with Blank Rome and chair of the firm's white-collar defense and investigations practice group in Washington, told Bloomberg BNA.

“Now, they're saying, ‘Well, we know that, but we want you now to give the evidence you found against these employees,’ ” Wright said. “‘It's not just enough that you terminated them, or engaged in some employee disciplinary action. We want to make our own decision about whether or not we should bring an individual prosecution.’”

In the same interview at Blank Rome's Washington office, Justin Chiarodo, a partner and vice chair of the firm's government contracts practice, told Bloomberg BNA that a larger issue is weighing on the debate over the Yates and Caldwell policies — the uncertain state of DOJ's budget.

Funding to the DOJ would be cut overall by $1.1 billion in Trump's proposed fiscal 2018 budget, potentially imperiling the ability of the department to take on the number and range of corporate fraud cases they might otherwise wish to.

“Something that hangs over this is that there's obviously still a lot of uncertainty in the Trump administration as far as personnel, as far as the budget, as far as how many resources will be allotted to the various [DOJ] divisions that will be responsible for these investigations,” Chiarodo said. “Even if something is referred to the criminal division, I think there's going to be some selectivity in terms of what they pursue and how aggressively they pursue it.”

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"Yates Memo Faces Uncertain Fate Under Trump, Attorneys Say," by Sam Skolnik was published in the Federal Contracts Report on June 13, 2017.