In Positive Turn, Justice Department Prosecuting Wrongdoers Rather Than Cutting Deals to Win Fines
John-Michael Seibler /
Federal prosecutors have accused a group of U.S. postal workers servicing the Atlanta area of taking bribes in exchange for delivering shipments of illegal drugs.
U.S. Attorney John Horn said, “For cash in their pockets they were willing to endanger themselves and the residents on their routes and bring harmful drugs into the community.”
Contrast this approach—prosecuting individual deliverymen who violated the law—to how the Justice Department has handled similar cases in recent years.
In 2013, Justice Department officials alleged that employees of UPS were violating federal law by shipping illegal drugs on behalf of online pharmacies. But instead of investigating and prosecuting any individual wrongdoers, the Justice Department intimidated UPS into paying a $40 million penalty in order to avoid criminal charges.
Then in 2014, the Justice Department accused FedEx Corp. of 15 federal offenses centered on allegations of conspiracy to distribute controlled substances on behalf of online pharmacies.
Department officials argued that FedEx employees were delivering packages to vacant buildings and other sketchy locations, characterizing the global logistics giant as a thinly disguised “drug courier.”
FedEx spokesman Patrick Fitzgerald said in a press release, “We are a transportation company—we are not law enforcement. … We continue to stand ready and willing to support and assist law enforcement.”
The press release continued: “We cannot, however, do the job of law enforcement ourselves.”
In 2015, lawyers for FedEx moved to dismiss all of those charges. They argued that as a common carrier, FedEx was excused from liability because “transporters for the public at large … cannot reasonably be expected to police whether any of the millions of packages tendered for shipment each day encloses a commodity that might somehow violate one among the thicket of federal, state, and local laws and regulations that might apply to the shipment or shipper.”
In March 2016, Judge Charles Breyer, a senior judge on the District Court for the Northern District of California, dismissed 14 charges against FedEx because prosecutors failed to name the correct defendant.
Then the case abruptly ended in June 2016, when prosecutors moved to dismiss the remaining charge against FedEx. They gave no public explanation for their decision.
Fitzgerald said on behalf of FedEx that government officials “should take a very hard look at how they made the tremendously poor decision to file these charges. … Many companies would not have had the courage or the resources to defend themselves against false charges.”
Cristina C. Arguedas, a criminal defense lawyer who represented FedEx, spoke about the case at a Federalist Society event last December. Despite the fact that all charges were dropped, Arguedas said things “did not end happily.” She continued:
This was a disaster … FedEx spent millions of dollars defending this case, untold hours of its employees’ time, risked reputational damage, and … the government alleged that their punishment should be a fine … of $1.6 billion … when FedEx took all of the steps that it should have taken to prevent this debacle from occurring.
The Obama Justice Department had pledged to hold individuals accountable for corporate misconduct, but instead the reverse was frequently true: It often opted to sue a corporate entity for individual wrongdoing and settle for large sums of money.
That practice was unfair to the innocent employees, retirees, stockholders, and their families, who were punished for someone else’s crimes.
The Justice Department should extend to all corporations the same justice it is now showing the U.S. Postal Service by holding only the few employees who violated the law accountable for their crimes.
At Attorney General Jeff Sessions’ confirmation hearing in January, Sen. Mazie Hirono, D-Hawaii, asked Sessions if he would hold “individual corporate office holders” accountable for white-collar misconduct.
Sessions said that “corporations are subject as an entity to fines and punishment for violating the law, and so are the corporate officers. And sometimes it seems to me … that the corporate officers who caused a problem should be subjected to more severe punishment than the stockholders of the company who didn’t know anything about it.”
Hirono replied, “I couldn’t agree with you more.”
As Heritage Foundation senior legal research fellow Paul Larkin and I have written elsewhere, this shared view is correct: “Just as ‘a corporation can only commit crimes through flesh-and-blood people,’ a criminal punishment, if it is to serve any special purpose not already accomplished by a civil fine, must inflict pain on one or more corporate directors, officers, or employees” who themselves violated the law.
Sessions has already made good on one commitment made at his confirmation hearing: to provide more transparency in how the department distributes corporate settlement funds. The Obama administration occasionally distributed the money obtained from corporate settlements to politically favored third-party groups rather than alleged victims.
Sessions ended that practice in a June memorandum.
Another laudable step in department policy would be to curtail, as much as possible, the related practice of punishing innocent employees, retirees, and shareholders instead of the few wrongdoers within a corporation’s ranks. That would make for sound law and good business.
At the least, it would make the department treat criminal activity within private entities in the same way that it is now treating the wrongdoers within the U.S. Postal Service, an independent federal agency. And what’s sauce for the goose is sauce for the gander.