Department of Justice Seal

FINAL

*Remarks of Deputy Attorney General
Larry D. Thompson
Corporate Fraud Task Force Conference
Washington, DC
September 26, 2002


      Good Morning.

      We are gathered here this week on what I know is relatively short notice -- to work together on some of the most significant issues facing our nation and our economy. Our financial markets have been shaken by a sustained series of episodes of significant criminal conduct at the highest levels in American corporations. While this conduct is shocking, it is not without precedent and we in this room are continuing to take swift and certain action to punish the wrongdoers and restore confidence to investors.

      Those crimes have compromised the integrity of a wide range of companies -- from multi-billion dollar communications giants to tiny internet start-ups. Because the vitality of our increasingly complex economy rests on free and fair exchange of information, these crimes are particularly pernicious and appropriately the subject of intense law enforcement focus and action. They affect not only institutions, but shareholders and employees and pensioners. They harm average folks as well as major investors, Main Street as well as Wall Street.

      I know that all of you have been working and working hard on these problems since well before the President created the Corporate Fraud Task Force in July. While in ordinary times those efforts would have sufficed, this widespread spate of fraud has required a commensurately comprehensive response.

      None of the agencies of government standing alone could tackle this problem in the rapid manner that is required. This is why the President directed the Task Force to oversee and coordinate the federal government's already substantial commitment to seeking out and stamping out corporate fraud so as to best direct our ongoing work and harness our expertise. We are also tasked with developing recommendations to change law and policy to aid us in these efforts.

      The Corporate Fraud Task Force member agencies have been selected based on their missions and their competencies. The US Attorneys on the Task Force come from our major business centers: New York, Chicago, Los Angeles, Houston, San Francisco and Philadelphia. In addition to investigators from the FBI, Treasury's IRS, and the Postal Inspection Service, our members include the regulators of the SEC, CFTC, FCC and FERC, and I would like to welcome the Department of Labor as our newest member.

      The reason that you are all here today is that the entire federal law enforcement community needs to be involved in the Task Force's efforts against corporate fraud. Faced as we are with a significant challenge, the President and the American people have called on all of us to work together to overcome it.

      We need to better use the resources we have and learn to work better together. People often complain that pursuing corporate fraud is fiendishly complex, and it can be difficult. But, at bottom, our goal is simple. We need to hit the bad guys hard and take away their money. When we work together we can harness the power of the SEC to bring civil actions to freeze assets and seek lifetime bars. In the Justice Department, we too need to consider pre-trial asset freezing and ultimate forfeiture in every appropriate case. As we establish with ever increasing certainty the prospect that corporate criminals will lose both their fortunes and their liberty, we will have gone a long way to restoring the integrity of the market the confidence of the nation.

      At this conference we are going to continue the work begun in July and developed during the meetings of the Task Force. We will work through the many pressing issues that this initiative presents; review the new tools that recent legislation has delivered us; assess ways to better assist one another in pursuing and punishing corporate fraud; learn more about the resources at our disposal; and I hope have the opportunity to meet one another to foster the human bonds that this cooperative enterprise requires.

      This is a formidable group -- whose like has rarely been assembled -- with tremendous power to guide the direction of our policy and promote the swiftness of our actions. I encourage you to listen and share, to take back with you to your agencies and hometowns a better understanding of the direction of our collective efforts and a basis for better cooperation. As our brief history with the Task Force has shown, significant corporate fraud matters arise not only in New York and Los Angeles, but in small cities and towns throughout the country. I hope and expect that this session will give everyone here a better grounding in the issues and policy and a better basis for mutually productive cooperation to help them participate in the Task Force's efforts wherever corporate fraud is revealed.

      A crucial task in confronting a problem of this magnitude is understanding the nature and origin of corporate fraud, particularly its source and refuge in a culture of criminal license that pervades some of the companies now under investigation. I know from my own experience as a prosecutor and as a defense attorney that corporations develop their own methods and culture that guide employees' thoughts and actions. That culture is a web of attitudes and practices that tends to replicate and perpetuate itself beyond the tenure of any individual manager. That culture may instill respect for the law or breed contempt and malfeasance.

      Where the corporate culture has been corrupted, it may be impossible to excise this problem simply by addressing individuals' bad conduct and without taking direct measures against the company itself. Although it should be done sparingly, we should never hesitate to prosecute both the guilty individuals and the companies themselves when the circumstances warrant it.

      In making the decision to seek an indictment against a corporation we should consider the company's history of wrongdoing, its response to regulatory actions, its reaction to the criminal conduct committed by its employees, the level within the corporation at which the crimes were committed or condoned, and the pervasiveness of the criminal behavior within the organization.

      Without corporate criminal liability, there would be no effective deterrent to a corporate culture that -- expressly or tacitly -- condones criminal conduct. Instead, corporations could merely appoint a "Vice-President in Charge of Going to Jail" who would serve as a whipping boy for the collective acts of the organization. It should go without saying that we will seek to punish individuals who commit crimes. I cannot stress strongly enough that the prosecution of guilty individuals should always take precedence over the prosecution of entities. But both law and long-standing precedent wisely prescribes criminal punishment to reform the corporation that fosters or condones its employees' criminal behavior.

      I want to thank all of you for participating in this conference and I am especially glad to see so many of our colleagues from the SEC and other regulatory and investigative agencies. I know we are all looking forward to hearing from the President and the Attorney General, but the entire program should be highly instructive. I look forward to working with you to help fight corporate fraud and restore investor confidence.

      Thank you.

*NOTE: Mr. Thompson frequently speaks from notes and may depart from the speech as prepared. However, he stands behind the speech as presented in written format.