Is the Obama Administration's Extraction of $30 Billion From Private Business Actual Justice?

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"The prosecutor," observed Attorney General Robert H. Jackson in 1940, "has more control over life, liberty, and reputation than any other person in America." It's no surprise, then, that a growing trend in federal prosecutions threatens the structural checks and balances that protect Americans from an overzealous government.

According to a recent report by the Law & Economics Center at George Mason University School of Law, the Obama administration has dramatically increased federal use of non-prosecution agreements and deferred-prosecution agreements, which are out-of-court deals that resemble plea bargains. Yet as researchers Cindy R. Alexander and Mark A. Cohen show, the widespread use of these agreements has not reduced the burden on courts or businesses, but rather increased regulatory control without approval by either Congress or the courts.

Businesses enter such agreements for many reasons. Managers sometimes discover employee wrongdoing and report it to the government in the hopes of avoiding embarrassment, even if the acts were unauthorized and no employee is ever actually prosecuted. They agree to let the government make certain types of management decisions, appoint outside monitors, and spend company resources. In exchange for these forms of government control, the agreements insulate the company from criminal liability.

Such agreements have existed since 1993, but the report reveals a marked increase in their use since President Obama took office in 2009. In the last six years alone, in fact, the government has used them to extract more than $30 billion from private companies.

The power to use out-of-court agreements as a substitute for due process has proven irresistible. Just last year, for instance, Assistant Attorney General Leslie R. Caldwell admitted: "Companies cannot be sent to jail, so all a court can do is say you will pay ‘x.' We can say: ‘you will also have a monitor and will do all sorts of other things for the next five years, and if you don't do them for the next five years then you can still be prosecuted.' . . . In the United States system, at least, [these agreements are] a more powerful tool than actually going to trial."

In other words: Look how much the government can do when it doesn't have to worry about trials by jury or judicial review.

The government's eagerness to avoid judicial scrutiny is perhaps the most concerning aspect of the trend. The Department of Justice's official position is that courts have no power to supervise the out-of-court agreements.

But this tends to be a one-sided arrangement: As Alexander and Cohen's research reveals, the government exacts better deals for itself when it doesn't have to prove anything in court. This is probably because a criminal conviction for a corporation can result in the "corporate death penalty," with significant loss to employees and shareholders.

Without so much at stake for defendants, and with no congressionally-established limits or judicial review, prosecutors have practically infinite leverage. More than 80 percent of the agreements give up the right to contradict the government's version of the facts, compared to less than 20 percent of court-supervised plea agreements.

Could a prosecutor cut a deal with the New York Times, foregoing prosecution in exchange for slanted coverage in favor of the administration? How about insisting that a company donate to favored political or religious causes? A defendant could give up her constitutional rights to a speedy jury trial and against self-incrimination in a plea bargain, so why not rights of free speech, religion, and press?

In short, out-of-court agreements are a poor substitute for the usual tools of criminal law, which are designed to protect defendants from unfair prosecutions. They turn prosecutors, who are supposed to be courtroom pugilists, into business managers.

They turn investigators, who are supposed to be tenacious seekers of truth, into compliance officers. They also sideline enforcement agencies that have real subject matter expertise by centralizing power in the Department of Justice.

Wouldn't it be better to save criminal law's most potent weapons for people who actually commit the serious crimes, not just targets who can be embarrassed into surrendering?

Jonathan Keim is Counsel at the Judicial Crisis Network.  

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