Organizational Sentencing Statistics

Available statistics on the United States Sentencing Commission's Web site show that between 1995 and 1999, 961 companies were sentenced using the Guidelines. Of the 528 companies where the offense could have been prevented or detected by an "effective program to prevent and detect violations of law," only two companies had such a plan in place. Two out of 528 is 0.3% of the companies indicted.

Do these numbers mean that nearly all of the companies did not have a compliance plan in place? Probably not. The key words to keep in mind in terms of the Sentencing Guidelines are "effective program." Most likely many of the 526 companies did have some sort of plan in place, but its effectiveness was not good enough to warrant a reduction in the sentence.

This point was noted in a June 16, 1999 memorandum sent to all U.S. Attorneys by U.S. Deputy Attorney General Eric H. Holder, Jr.

In his memorandum, entitled, "Justice Department Guidance on Prosecutions of Corporations," Holder wrote, "Compliance programs are established by corporate management to prevent and to detect misconduct and to ensure that corporate activities are conducted in accordance with all applicable criminal and civil laws, regulations and rules. The Department encourages such corporate self-policing, including voluntary disclosures to the government of any problems that a corporation discovers on its own. However, the existence of a compliance program is not sufficient, in and of itself, to justify not charging a corporation for criminal conduct undertaken by its officers, directors, employees or agents. Indeed, the commission of such crimes in the face of a compliance program may suggest that the corporate management is not adequately enforcing its program."

The memorandum continued, "A corporate compliance program, even one specifically prohibiting the very conduct in question, does not absolve the corporation from criminal liability under the doctrine of respondeat superior."

Holder's memorandum added, "The Department has no formal guidelines for corporate compliance programs. The fundamental questions any prosecutor should ask are: 'Is the corporation's compliance program well designed?' and 'Does the corporation's compliance program work?' In answering these questions, the prosecutor should consider the comprehensiveness of the compliance program, the extent and pervasiveness of the criminal conduct, the number and level of the corporate employees involved, the seriousness, duration, and frequency of the misconduct, and any remedial actions taken by the corporation, including restitution, disciplinary action, and revisions to corporate compliance programs.

"Prosecutors should therefore attempt to determine whether a corporation's compliance program is merely a 'paper program' or whether it was designed and implemented in an effective manner."

Although earlier in his memorandum Holder noted that the Justice Department has no formal guidelines for what a corporate compliance program should look like, later in his memorandum he did provide this description: "Compliance programs should be designed to detect the particular types of misconduct most likely to occur in a particular corporation's line of business."

Holder continued by advising U.S. Attorneys to consult with relevant federal and state agencies when trying to evaluate the adequacy of a corporation's compliance program. Holder's memorandum specifically mentioned that U.S. Attorneys should consult with federal and state agencies that regulate insurance, among other businesses, as examples of where attorneys can turn to for advice.

Return to Index

The materials on this Web site are provided as a service to the customers of Business Information Group. The site and its contents are designed solely for informational purposes, and should not be inferred or understood as legal advice or binding case law. Persons in need of legal assistance should seek the advice of competent legal counsel. Although care has been taken in this Web site’s preparation, Business Information Group cannot guarantee the accuracy, currency, or completeness of the information, text, links or other items contained within it. Anyone using this information does so at his or her own risk.