Justice News

Deputy Attorney General Rod J. Rosenstein Delivers Remarks to the International Association of Defense Counsel’s “Corporate Counsel College”
Chicago, IL
United States
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Thursday, April 26, 2018

Remarks as prepared for delivery

 

Thank you, Sky, for that introduction and thank you for your service to the people of Maryland on the Judicial Nominating Commission and as President of Maryland Defense Counsel.

Thank you also to outgoing president Andrew Kopon. And congratulations to your next president, Craig Thompson, who is from my home state of Maryland.

In Shakespeare’s play about Henry VI, the character Dick the Butcher famously proclaims: “The first thing we do, let’s kill all the lawyers.” 

That remark is often misinterpreted. Shakespeare intended for it to be ironic. Dick the butcher is not a businessman upset about overregulation. He is a villain scheming to take over the government.

Shakespeare’s point is that without lawyers, nobody would need to follow the law.

That would be good for criminals like Dick. But it would be bad for business!

The rule of law is essential to commerce. It allows businesses to enter contracts, make investments and project revenue with some assurance about the future. It establishes a mechanism to resolve disputes, and it provides some degree of protection from arbitrary government action.

In 1925, President Calvin Coolidge famously declared that “the chief business of the American people is business.”  The remark fairly may be criticized as incomplete, but it encapsulates the view that the government is responsible for promoting prosperity. A stable environment allows investors, innovators, and manufacturers to provide the goods and services that sustain us and improve our lives.

Americans of the founding era understood that good government and private enterprise should be mutually reinforcing.  The American Revolution in 1776 was not just a political revolution. It was also an economic revolution.  The movement included mercantilists, farmers, shopkeepers, and other ordinary men and women who banded together, essentially to protest excessive regulation.

The colonists were angry about burdensome tax laws.  They were upset about restrictions on their ability to settle and develop the western frontier.  They were concerned about unfair trade policies. 

With help from the Boston Chamber of Commerce, they engaged in a major public protest in December 1773.  That protest, now known as the Boston Tea Party, was a critical moment in our nation’s path from monarchy to freedom.

President Trump is mindful about the importance of promoting entrepreneurialism and avoiding unnecessary interference in law-abiding enterprises.  And under the leadership of Attorney General Jeff Sessions, the Department of Justice is doing its part to promote an environment where businesses can thrive.

Before attending law school, I studied management, marketing, and finance at an undergraduate business school.  At the time, I planned to put those skills to use in corporate America.  Public service took me in a different direction, but understanding the business world remains valuable to my work.

During my years as a white-collar crime prosecutor, it was helpful to know how business works. First, it is necessary to comprehend transactions in order to recognize when they are fraudulent. Second, familiarity with the business world sometimes enables me to discern an exculpatory explanation for conduct that otherwise may appear suspicious.

In my current job, business skills are useful for a more practical reason.  The Deputy Attorney General is responsible for managing an organization of 115,000 employees and tens of thousands of contractors.  I sometimes feel like I have more in common with a chief operating officer than a litigator. 

The Department of Justice is not a business, and its mission differs in key respects.  But many of the issues we confront are familiar to anyone who works in a large corporation. 

We strategize about how to improve organizational efficiency.  We recruit the best people, train them, and monitor their progress.  We constantly strive to better manage our budget and do more with less.

One of my most important duties is to protect our brand—to safeguard the integrity and defend the reputation of the Department of Justice by following the rule of law.

And we are always adapting to confront new challenges.

But as we pursue new goals and policies, we are guided by timeless principles, the most significant of which is our duty to promote a justice system founded on the rule of law.

I was pleased to learn from Andy last night that your organization plans to emphasize the “rule of law” as a theme for the coming year.

The rule of law is at the heart of the Department of Justice.

I have served under nine Attorneys General.  On every floor of the Main Justice Building, there are reminders of heroes, mentors and friends who have worked there.

They taught me that the Department of Justice stands for the principle that every American deserves equal protection under the rule of law.

The rule of law is about applying neutral principles and base our decisions on the truth.

For lawyers, truth is about credible evidence, not strong opinions. Many people sincerely believe things that are just not true.  A 19th century Philadelphia doctor remarked that “sincerity of belief is not the test of truth.” People are sincere-but-wrong all the time.  If you take poison in the sincere belief that it will it safe your life, the truth eventually will overcome your belief.

So people who seek the truth need to avoid confirmation bias and remain open to the possibility that the truth may not match their preconceptions.

Defense attorneys understand that principle very well. Being a criminal defender can be a thankless job. It involves representing unpopular clients. It sometimes requires representing people you do not like.  It means struggling to mount the best defense possible in the face of long odds. But the role is essential to safeguarding justice.

Consider the Boston massacre in 1770, three years before the Tea Party.  Five colonists died after British soldiers fired on a crowd. A captain and eight soldiers were charged with murder.

Most lawyers were unwilling to represent the suspects, but future President John Adams agreed to do it. Adams said that he had “no hesitation in answering that Council ought to be the very last thing that an accused Person should want [for] in a free Country.”

Adams proceeded to win the acquittal of the British captain. He later represented eight other British soldiers involved in the incident. Six soldiers were acquitted and two were convicted of manslaughter.

During his argument for the defense, Adams famously observed that “[f]acts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence.”

Defending the British soldiers was not a popular cause. In a diary entry about the case, Adams wrote that it “procured me anxiety, and obloquy .... It was, however, one of the most gallant, generous, manly, and disinterested actions of my whole life, and one of the best pieces of service I ever rendered my country.”

One of the finest defenses of the rule of law appears in Robert Bolt’s play about Sir Thomas More, A Man for All Seasons. In one scene, More and his family are discussing whether More should prosecute a man they do not like.

More’s wife says, “Arrest him!”

More replies, “For what?”

More’s daughter explains: “Father, that man is bad!”

And More responds, “There’s no law against that.”

More proceeds to explain that as a judicial officer, he must be concerned with the law. What is right is a subjective matter of opinion. What is legal is an objective issue of fact and law.

All lawyers share an interest in making sure that our legal system values truth. It is an adversarial system, but that does not mean that opposing lawyers are enemies. 

As a prosecutor, I always valued a strong advocate on the other side.  A good defense attorney forces prosecutors to make better arguments, marshal more evidence, and refine their reasoning.  The Book of Proverbs says that iron sharpens iron. Argumentation can help us clarify our understanding, find the truth, and achieve justice.

Corporate lawyers, like prosecutors, make tough and sometimes unpopular decisions.

An in-house attorney has the difficult task of saying no, sometimes to a boss — and sometimes to a promising initiative.  And if you don’t say no, often you need to say, “yes, but…”

In-house corporate lawyers usually need to be generalists.  It often falls to lawyers to manage interdepartmental relationships, institutional knowledge, and legal risks across a wide variety of subject matters and market segments.

American corporations are on the cutting-edge in many areas of science, technology, research, and development.

That makes you a target for hostile individuals, organizations, and governments.  They attempt to profit from American ingenuity by infiltrating our computer systems, stealing our intellectual property, and evading our controls on technology exports.

When hackers gain unlawful access to computers, for example, it can take only a few minutes to steal discoveries that took many years of work and many millions of dollars of investment here in the United States to produce.

This type of criminal activity is not just harmful to private interests.  It damages our economy and it threatens our national security.

Law enforcement agencies prosecute criminal wrongdoing only after it occurs.  Prosecutions achieve deterrence indirectly.  But a company with a robust compliance program can prevent crime or detect it early, reducing the need for enforcement activity.

Strong compliance programs are a company’s first line of defense.

American corporations increasingly devote resources to compliance and oversight efforts designed to protect them from becoming victims of crime.

One of the important lessons I learned in business school is that ethical conduct is a good investment. Companies sometimes gain a short-term advantage over competitors by cutting corners, but in the long run, companies with a culture of integrity usually prevail in the marketplace.

Good people want to work for honest businesses. Investors trust them.  Customers like to do business with them.

I know that most American companies are serious about engaging in lawful business practices.  Those companies want to do the right thing. They need our support to protect them from criminals who seek unfair advantages.

When companies are victimized, good in-house counsel, working with the Department, can help with damage control and prevent problems from spreading within the company or to other companies.  It is often in your interest to help our prosecutors and investigators do our jobs.

I have seen many examples of corporations working with prosecutors to combat fraud. 

For example, a few years ago, two Chinese men working for Goodyear used a kickback scheme to steal $1.5 million from their employer. They set up shell companies and spent three years arranging for Goodyear to buy millions of dollars’ worth of rubber from their own shell companies.  They required Goodyear’s suppliers to use them, too. Finally, the company received an anonymous tip about what was going on, and the company’s attorneys reported it to the Department of Justice. As a result, we were better positioned to limit the damage and bring the individual perpetrators to justice.

In another case, the Chinese company Sinovel stole more than $900 million of intellectual property from American Superconductor forcing the company to lay off more than 600 employees.  American Superconductor notified law enforcement early on in the investigation, and that allowed us to preserve digital evidence of the crime.  The FBI executed search warrants on wind turbines in Massachusetts, which resulted in valuable evidence that Sinovel had stolen American Superconductor’s software. 

American Superconductor also made its staff available to be interviewed by the prosecution team.  Its most senior engineers spent hours teaching government lawyers about “power electronics” and “wind energy” so that they could help explain the value of the stolen intellectual property to the jury. That helped the Department make Sinovel the first Chinese company ever convicted of stealing intellectual property in the United States.

In another example, a Chinese scientist working for a company in Kansas was sentenced earlier this month for stealing genetically engineered rice.

The CEO, scientists, and other employees cooperated fully throughout the entire trial.  Like the scientists at American Superconductor, they spent a great deal of time and effort helping government lawyers understand the significance of the evidence and the full cost of the crime committed.  A number of them testified in court.  As a result, the defendant received a 10 year sentence.

Those are just a few examples of how corporate counsel, defense counsel, and prosecutors can work together to fight crime. 

Corporations can be held vicariously liable for certain acts of their employees, but when problems arise, your goal is for the government to regard you as a victim. And if you want the Department to treat a corporate entity as a victim, it should act like a victim and help ensure that the perpetrators are held accountable. 

Cooperation also may work to your advantage even if your company is a target of an investigation. 

Things go wrong in every organization.  The challenge to prevent wrongdoing by an individual employee or small group of employees is especially acute in large and diverse organizations.  I empathize: I reflect every day on the challenges we face with 115,000 employees in the Department of Justice. 

We understand very well that mistakes or misconduct by one employee can damage the reputation of an entire organization.

When something does go wrong, law enforcement should give the greatest consideration to companies that have effective compliance programs in place and timely report the conduct to law enforcement, because that frees up our agents and prosecutors to focus on people who are committing more serious financial crimes or who present other threats to the American people.  An investment in a strong compliance program can pay dividends if you find your company named as a subject or target.

Threats to American safety and security grow more complex over time.  We need corporate America to help us detect and fight those threats. 

When you work with us, you help us uphold the rule of law and ultimately help create the kind of legal environment where your companies can thrive.  That is good for your company—and it is good for us all.

Finally, before I conclude, I want to take a moment to tell you a true story that melds two of my goals as Deputy Attorney General — to support the exceptional men and women who protect and serve us as law enforcement officers, and to combat the deadly opioid drug epidemic that contributed to the record 70,000 American lives lost to drug overdoses last year.

The Deputy Attorney General is protected by a security detail of Deputy U.S. Marshals. Two of them came to Chicago a few days ago to prepare for my visit.  One night when they were returning from the hotel gym, they came across a young woman who was unconscious and near death in the hallway. They did not know it at the time, but she had overdosed on the synthetic opioid drug known as fentanyl, a deadly poison from China.

One of the deputies started performing CPR, while the other deputy called for help. They kept the victim alive until an emergency medical team arrived. The team revived the victim with two doses of naloxone. The deputy who performed CPR on that unconscious stranger was checked at the hospital emergency room, and thankfully received a clean bill of health.

Those Deputy U.S. Marshals saved a life here in Chicago, and they are with us today, so please join in a round of applause for Tony Manson and Chris Carson.

It has been a great pleasure for me to spend this time with you. Thank you very much.

Updated April 26, 2018