Beware of Enforcement Agencies, say Ex-Bush Officials

A group of former George W. Bush administration officials gathered at O’Melveny & Myers Wednesday evening to discuss the current enforcement environment. But, at times, you might’ve thought they were pitching a campy horror flick.
 
Latham & Watkins partner Alice Fisher, previously assistant attorney general of the Criminal Division at the Department of Justice, compared ramped up enforcement efforts to Dr. Octopus, one of the villains from the Spiderman movies. "His arms just keep going and going and going," she said.
 
Hogan & Hartson partner Chuck Rosenberg, previously U.S. attorney for the Eastern District of Virginia as well as a main Justice official, said companies feel like they’re taking "a walk in the woods with a very hungry grizzly bear. …The bear’s going to get you if you’re a lagger."
 
Former Secretary of Homeland Security Michael Chertoff, now senior of counsel at Covington & Burling, skipped the analogies, stating simply, "It’s going to be rough, is the bottom line."
 
In other words: Be afraid, Corporate America. Be very afraid.
 
The Bush officials-turned-white-collar defense lawyers addressed the Barack Obama administration’s enforcement priorities, as well as changes across federal agencies in response to the financial crisis. They spoke to a room full of corporate executives, government officials, and fellow lawyers. O’Melveny partner Ken Wainstein, previously homeland security adviser to Bush, moderated the discussion.

 
The panelists advised caution with regard to programs enacted to help financial institutions deal with the economic crisis. Lawyers need to be even more sensitive to clients that took TARP money, for example, said Chertoff, since the government wants to know how those funds are spent. Lawyers advising such clients, said Chertoff, consequently have to evaluate "garden variety transactions" from the perspective of "a hostile enforcer."
 
Chertoff also predicted a spike in investigations into Medicare and Medicaid fraud, as the Obama administration places more emphasis on healthcare.
 
Fisher advised that companies keep close tabs on their overseas operations. She said joint investigations between the United States and other countries will continue to be a focus at Justice and the Securities and Exchange Commission.  
 
One message echoed by each panelist was that companies need to be proactive about putting compliance mechanisms in place, so if they do become the target of an investigation, they can at least demonstrate they made a good faith effort to obey the law.
 
"It buys you protection," said Fisher.
 
Wainstein added that it’s not enough to send an email around the company once a year advising employees to comply with the law. He said corporations should consider training programs, and internal auditing systems to keep their operations in the good graces of enforcement agencies.
 
Wainstein said the current environment surpasses even the pro-enforcement era immediately following the collapses of Enron and WorldCom in the early 2000s: "It’s 2002 on steroids."

Comments

[Richard Kaye]

It's a good thing that Bernie Madoff got out just in time.

[Janene]

This is just a predictable business development tool and nothing more.