Assistant Attorney General Kenneth A. Polite Jr. Delivers Justice Department Keynote at the ABA Institute on White Collar Crime
San Francisco, CA
Remarks as Prepared for Delivery
It is particularly uplifting to reunite in person, with so many friends and colleagues.
Most of us forged our bonds of trust and friendship during our government service, typically in the Department of Justice. Take a moment and think back to your DOJ careers. Think about what pushed you, motivated you, inspired you to enter public service. These are never jobs done for monetary gain.
No, we all answered the call for public service because of the people. To ensure justice for people in our communities.
One singular event served as my inspiration to become a prosecutor. In 2004, I lost my half-brother to a very violent death on the streets of New Orleans. He was 24 years old, and despite his young age, he had lost many friends, most even younger, to the same tragic fate. That loss led me to conclude that I needed to join the Department of Justice and help prevent other individuals in our communities from falling victim to criminality. To help other families and communities, so that they would not endure that same pain and loss.
From my first day as an Assistant U.S. Attorney to my current role as head of the Criminal Division, my commitment to vindicating the interests of victims has not wavered.
Now, it is easy to contemplate victims when we talk about violent crime. But even though this has been a focus of our prosecutors’ work for some time now, we all often lose sight of the damage caused by financial, corporate and greed-driven crimes, where victims can at times be difficult to identify and their injuries hard to calculate. We are called upon to consider the interests of crime victims at every stage of these investigations — from determining whether to prosecute or pursue an alternative resolution, to assessing which charges to bring and how those charges may affect crime victims’ rights, to considering how best to compensate victims of financial crimes.
Doing so may be more challenging in these cases. Oftentimes, these cases take years, are international in scope and involve multiple victims. But it is nonetheless essential.
Considering victims must be at the center of our white-collar cases.
So, when we talk about criminality in the emerging cryptocurrency space, we immediately raise sophisticated notions of blockchain analysis, cybersecurity and encryption. What we need to remember is that individuals, often at an information disadvantage, are the ones being exploited by other market participants.
Just last week, in a matter that the Fraud Section is prosecuting with the U.S. Attorney’s Office for the Southern District of California, a grand jury indicted the founder of cryptocurrency investment platform BitConnect. This defendant and conspirators allegedly used misrepresentations about BitConnect to raise more than $2.4 billion from investors in the United States and abroad — but in truth, operated a Ponzi scheme. When it unraveled, virtually all of the investors lost their funds.
In connection with the conviction of a co-conspirator last year, the department obtained authority to liquidate approximately $56 million in fraud proceeds, and has begun the process of seeking to return these funds to the victims.
Though we cannot always recover every cent, we deploy all tools at our disposal to restrain assets, obtain restitution, and when possible, repatriate assets for victims. Divesting criminals of ill-gotten gains and returning those funds to victims are the primary goals of the Criminal Division’s Asset Forfeiture Program — led by the Money Laundering and Asset Recovery Section — which has provided over $10 billion in forfeited funds to victims over the last two decades.
When we talk about health care fraud, we hear discussion of kickbacks, and medical necessity, nuances of Medicare and Medicaid, or medical professionals lining their pockets. What we need to keep in the forefront of our minds is that in the past year, drug overdoses killed a record number of Americans and more than 75,000 people died of opioid-related causes. Lives lost, leaving families and communities to grieve and suffer.
To address these ongoing casualties, since 2018, our Fraud Section’s Health Care Fraud Unit has prosecuted medical professionals engaged in fraud and diversion crimes through the Appalachian Regional Prescription Opioid, or ARPO, Strike Force. More recently, we expanded our work with the Sober Homes Initiative, which focuses on addiction treatment fraud, particularly within facilities like sober homes intended to aid recovery. Patients place their faith and trust in industry professionals to care for their well-being, only to be victimized by those sworn to do no harm.
In one recent example in South Florida, our prosecutors obtained convictions of seven defendants for their participation in a health care fraud scheme that exploited and endangered nearly 1,000 addiction treatment patients. These defendants provided illegal drugs to patients, destabilizing their recovery, causing them to relapse so that they would test positive and qualify for detox, over and over again. Abusing these people by trapping them in cycles of addiction.
Or in discussions of investment fraud, where we focus on issues materiality and disclosure obligations. What should come to mind are the 40,000 victims worldwide of the Bernie Madoff fraud scheme. In September 2021, we announced that the Madoff Victim Fund began its seventh distribution of approximately $568 million in funds forfeited to the United States. Thanks again to our Money Laundering and Asset Recovery Section, this distribution provided nearly 31,000 of those victims additional financial recovery from Madoff’s egregious crimes, bringing their total recovery to 81.35%.
To date, the distributions have totaled over $3.7 billion.
Or when we talk about bribery and corruption, we want to discuss legal questions about intent, and facilitation payments, and third-party conduits, or who qualifies as a foreign official. What fades into the background is that in cases like 1MDB, the bribery and corruption prevent the most needy individuals in our world from receiving critical investments in their lives and communities. The funds from 1MDB, formerly Malaysia’s investment development fund, were laundered through major financial institutions worldwide.
Last year, our Money Laundering and Asset Recovery Section repatriated an additional $452 million in misappropriated 1MDB funds to the people of Malaysia, bringing the total returned to over $1.2 billion.
Or in consumer fraud cases, where we often see the reporting focused on the dollars and cents. What I see are the faces of the people whose lives have been ruined — like in the Western Union matter. Vulnerable victims, some in our own families and communities.
Last summer, we announced the third distribution of approximately $66 million from the Western Union Remission Fund — which was created with funds forfeited as part of the department’s 2017 criminal resolution. This latest distribution ensured that approximately 6,000 victims located in the United States and abroad, many of whom were elderly victims of consumer fraud, will be recovering the full amount of their losses.
Do not forget the people. That’s the call for all of us, whether you are in government or in private practice.
The Criminal Division is answering the call. In addition to the Deputy Attorney General’s Crime Victims Working Group, which is tasked with proposing revisions to the department's policy manual on how it fulfills its obligations to crime victims, I have taken the following steps:
- I am proud to announce that I will be adding a Victim Coordinator to my Front Office, with responsibility for crime victim issues and to further promote consistency in our approach division-wide;
- Our Deputy Assistant Attorneys General and Section Chiefs are conducting an assessment of our litigating components’ tools and resources that support victims’ interests in our cases or assist victims in swiftly and robustly reporting financial crimes; and
- Going forward, Criminal Division prosecutors will be asking companies to more fully address victim issues as part of their Filip Factors presentations. In addition, where appropriate and necessary, we will bifurcate corporate plea hearings from sentencing hearings to allow time for any victims to come forward. Keep that potential timetable in mind.
Identifying victim groups, engaging with them, and supporting their interests, where possible, is top of mind for department prosecutors; but as I noted earlier, in the white-collar space, especially in the corporate context, identifying the individuals harmed and affected by a crime is not always a straightforward exercise.
I encourage you to proactively think about potential crime victims and others in the community not only when you are sitting across the table from our prosecutors, but also when your corporate clients first learn of misconduct and during remediation.
And for those of you who represent potential victims, I want to emphasize the importance of rapidly contacting law enforcement to report crimes. Every day, the threats that we face — from financial fraud to emerging digital threats — are more diverse, sophisticated and dangerous.
In this landscape, we all have a role to play. The more quickly that threats are reported — from insider trading to ransomware — the more quickly law enforcement can act to restrain funds, gather critical evidence, disrupt criminal infrastructure and hold wrongdoers to account.
And speaking of holding wrongdoers to account — again, this is about people.
I ask you again, think back to when you became a prosecutor, and you did the job to protect victims. And to punish and deter criminality by wrongdoers.
I had a lot of memorable days as a U.S. Attorney, some joyful, others more difficult, but all rewarding. One stands out though, where my First Assistant, Rich Westling, called me to his office. Rich is one of the best lawyers I know, and this day he proved to be an even better colleague, friend and human being. He shared with me that another office would be handling a drug case, where there was credible evidence that the defendant was, in fact, the person responsible for my brother’s murder.
So, the tragic event that motivated me to join the department? Over 10 years later, the Department of Justice played a role in bringing justice to all involved.
Bringing justice in those situations is what motivated us all at the beginning of our public service.
When we talk about drug dealing and violence, we all have no problem conjuring notions of accountability for the criminal actors. But the sheer mention of individual accountability in white-collar cases was, and is, received as a shockwave in our practice. That inconsistency, that hypocrisy, is yet another reason why some question the credibility of our criminal justice system.
You heard earlier today from our Attorney General, who made clear that the department’s first priority in corporate criminal cases is to prosecute the individuals who commit and profit from corporate malfeasance. Our corporate enforcement efforts are a means to pursuing justice for individuals.
Though we can sanction corporations through forfeiture and fines, restitution, reporting obligations and other conditions, there is no corporate jail. A corporation is not a person.
The simple truth is that corporations commit crimes the same way that they commit other acts — through people. Through their employees and agents. Through individuals acting within the scope of their authority, with the intent to benefit an organization. For this reason, we prioritize prosecution of individuals responsible for corporate crimes to the fullest extent that our laws allow.
Critically, when allegations of wrongdoing surface, to receive any credit for cooperation, a corporation must notify the department of all relevant, non-privileged facts and evidence about the misconduct and all of the individuals involved. Our policies plainly serve our goal of securing evidence of individual wrongdoing because of the high priority that we place upon holding individual wrongdoers accountable.
The carrots and sticks of our corporate enforcement program are attempting to affect, punish, deter or change the decision-making and actions of individuals.
When you are asked about remedial action, and you’re asked about corporate leadership and personnel, we are doing so to ensure individual accountability.
For example, even if there is not any evidence that a CEO personally committed a crime, upon discovery of a crime, a corporation should examine whether a change in leadership is necessary, not for change’s sake, but because he modeled poor ethical behavior for the workforce, or fostered a climate in which subordinates committed wrongdoing with intent to benefit the company, or permitted weak internal controls that allowed the crimes of individuals to go undetected.
When you are asked about your compliance program and whether its adequately creating, maintaining and supporting an ethical culture, the question again goes to individual accountability. We want to know about your investment in compliance, not simply because we want you to hire more consultants or buy more sophisticated training software; no, as a former Chief Compliance Officer who now serves as the head of the Criminal Division, I want to know whether you are doing everything you can to ensure that when that individual employee is facing a singular ethical challenge, he has been informed, trained and empowered to choose right over wrong.
Or, if he makes the wrong choice, you have a system that immediately detects, remediates, disciplines, and then adapts to ensure that others do not follow suit.
Many of you give your time and treasure to organizations and efforts that help change the lives of people in your communities. That instinct — to focus on people — is still with you. Do not lose sight of what is most important here. It is the same now as it was at the beginning of your careers in public service.
When you come in to advocate for your clients, I welcome the discussion of your company, your culture, your legal reasoning, your dollars and cents. But when you do, do not forget your humanity.
Tell me about how you are effecting change to ensure that we bring justice to the wronged and the wrongdoers.
Tell me about the people.
Updated March 3, 2022