DOJ Pursuing Aggressive Tactics Against White Collar Crime

Federal prosecutors have stepped up their efforts against white collar crime, turning to aggressive methods that have been historically used to combat drugs and organized crime. Techniques such as wiretaps and the use of informants are taking on a broader role in white collar criminal investigations and prosecutions. For example, wiretaps were a significant part in the criminal prosecution of former Galleon Management LP founder Raj Rajaratnam. “Broadly speaking, we’ll use more aggressive techniques where there is an identified need,” said Christopher Garcia, chief of the Securities and Commodities Fraud Task Force in the U.S. Attorney’s Office for the Southern District of New York.

White collar criminal prosecutions can be more difficult to develop compared to traditional street crime because they are built on circumstantial evidence and may involve complex financial data. Garcia said that the use of wiretaps has been a “game changer” for the DOJ’s investigations into insider trading at hedge funds. Receiving approval for a wiretap, however, isn’t always easy. Garcia said that the government usually must prove to a judge that it has unsuccessfully tried to gather evidence through other means before it obtains permission to use a wiretap.

Nevertheless, expect the use of aggressive techniques to expand in the white collar arena and the penalties for violations to grow more severe. For example, legislation has been reintroduced in the U.S. Congress (the Overseas Contractor Reform Act, H.R. 3588), which would automatically debar federal contractors convicted of violating the Foreign Corrupt Practices Act. Debarment means losing the ability to do business directly or indirectly with the government. Additionally, debarment may adversely affect any government or agency license required to do business. Debarment penalties also may apply to violations of other so-called “white collar” criminal statutes. Any company that contracts with the federal government must take immediate steps to ensure that its business is in compliance with all applicable rules and regulations as debarment or even the potential of debarment, may cause severe disruption to the company’s business.

Dykema’s White Collar Crime Practice Group can assist you in assessing whether your company, institution or practice is in compliance with federal and state laws and regulations. For more information, please contact James S. Brady (leader of Dykema’s White Collar Crime Group) at 616-776-7550. 

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