Too Big to Jail: How Prosecutors Compromise with Corporations

by Brandon L. Garrett

American courts routinely hand down harsh sentences to individual convicts, but a very different standard of justice applies to corporations. Too Big to Jail takes readers into a complex, compromised world of backroom deals, for an unprecedented look at what happens when criminal charges are brought against a major company in the United States. Federal prosecutors benefit from expansive statutes that allow an entire firm to be held liable for a crime by a single employee. But when prosecutors target the Goliaths of the corporate world, they find themselves at a huge disadvantage. The government that bailed out corporations considered too economically important to fail also negotiates settlements permitting giant firms to avoid the consequences of criminal convictions. Presenting detailed data from more than a decade of federal cases, Brandon Garrett reveals a pattern of negotiation and settlement in which prosecutors demand admissions of wrongdoing, impose penalties, and require structural reforms. However, those reforms are usually vaguely defined. Many companies pay no criminal fine, and even the biggest blockbuster payments are often greatly reduced. While companies must cooperate in the investigations, high-level employees tend to get off scot-free. The practical reality is that when prosecutors face Hydra-headed corporate defendants prepared to spend hundreds of millions on lawyers, such agreements may be the only way to get any result at all. Too Big to Jail describes concrete ways to improve corporate law enforcement by insisting on more stringent prosecution agreements, ongoing judicial review, and greater transparency.

Genres: Law, Nonfiction, Politics, Economics, Business, Crime

384 pages, Hardcover

First published October 6, 2014

Reviews

[Beth · Rating 3 out of 5]

This was a book I got from a mass sale when I was in my early teens and wanted to become a corporate lawyer. It sat on my shelves for nearly a decade, moving literally around the country a couple times with me; and I can sincerely say I really should have just got rid of it years ago.

Overall the message of the book was clear and interesting, however it read somewhere in between an essay; with numbers and states to uphold commentary, and a timeline history. At no point was I particularly connected to the subject matter, although I do feel I have come away with a better understanding of how corporations are treated by the American law system, it really just leaves me more depressed about the country in general; although none of that is the fault of the authors.

I did find that the methodology was interesting, however the read overall was quite a slog to get through, and only sheer stubbornness to finally finish this book I've had for nearly a decade kept me reading it.

[Iggy · Rating 4 out of 5]

As I'm pretty sure other reviews already mentioned - it is quite a difficult read. You do want to have some basic understandings of how prosecutions work and of the law in general. But if you watch Legal Eagle on YouTube from time to time, that knowledge should suffice to not struggle with this book.
Overall, very interesting topics are brought up and explained, but there is very little story telling, so wouldn't recommend if that's what you're mainly looking for. Otherwise - great book.

[Jules · Rating 3 out of 5]

Very informative but extremely repetitive especially towards the end. It presents detailed reforms but then leaves the reader to decide what to do with that information

[John Plumeri · Rating 3 out of 5]

More academic prose than storytelling. Interesting stuff.

[Athan Tolis · Rating 4 out of 5]

Don’t be confused by the flashy cover of this book: it’s written by a lawyer for lawyers.

The author, a professor at the University of Virginia, has done some very important work in putting together data summarising all criminal prosecutions of corporations in the USA in the past decade, as well as data on deferred prosecution and no prosecution agreements for that period. In the same vein as Thomas Piketty, who wrote a book to go with his data on capital and wealth, what we have here is the words that go with the data.

But as an author Brandon Garrett is no Thomas Piketty. If you are not a lawyer, reading the book feels a bit like you’re eavesdropping on a conversation between lawyers or reading a legal publication. To the extent that I’d so far been spared both pleasures, that was a new experience for me, and to the extent that I really wanted to find out about “how prosecutors compromise with corporations” it has been mildly enlightening; but this was decidedly not light reading.

The title of the book is no coincidence: Only criminal charges can result in incarceration. Civil charges cannot. So this is a book about the process and the consequences of bringing criminal charges against corporations in the United States of America.

Given that corporations can be punished / disciplined in a variety of ways, therefore, what we have here is a partial view of what happens to corporations that break the law in America. Via an overview of the relevant case history (Siemens, Arthur Andersen, KPMG, Barclays Bank, HSBC, BP, Bristol-Myers Squibb, Zimmer, Southern Union, AU Optronics, BAE Systems etc.) you find out that while in theory corporations can be held liable and punished for the misdeeds of their employees, in practice it’s all wide open. There are (poorly observed) guidelines on what fines ought to be for convicted corporations, there actually aren’t any real rules on what victims can expect, care is taken not to punish the rest of society along with inanimate corporations, and the law makes a huge effort to reform rather than punish corporations (preferring to impose and monitor future compliance rather than imposing crippling fines or incarcerating principals), all while going 100% the other way when it comes to citizens themselves, with the US holding all sorts of records on convicting and jailing private offenders. On the other hand, corporations are not given the same constitutional rights (4th and 5th Amendment, chiefly) as individuals.

The one thing we can conclude for sure that the US is a very bad place to go to court if you are a foreign corporation. Perhaps a second thing that comes out is that listed companies pay much larger fines, while smaller companies that break the law tend to see higher percentages of their principals jailed.

The author fails, in my eyes, to place criminal prosecutions in context and, other than stating his serious doubts about the efficacy of deferred-prosecution agreements, largely stays on the fence on tons of issues. For example, he caveats his one real finding (that foreign corporations overpay on fines) with a pages-long list of reasons why this might not be as unfair as it sounds.

That said, I’m now “confused about higher things” than I was when I picked up this book and I also copied out some useful stuff I’d like to share.

First, the set of criteria that judges officially need to consider before they prosecute a corporation (p. 56):

1. Seriousness of the offense
2. Pervasiveness of wrongdoing within the corporation
3. Firm's history of similar conduct

4. Firm's timely and voluntary disclosure of wrongdoing
5. Firm's compliance program
6. Any remedial actions

7. The harm a prosecution would cause, including to shareholders
8. The adequacy of prosecutions of individuals
9. Whether it would be enough to impose civil or regulatory remedies

Second, the law offers employers enormous incentives to look for “bad apples,” to “blow the whistle” on its employees. In an environment where every effort is being made not to disrupt the economy by bringing corporations to their knees, individual low-level employees make very good scapegoats, while those at the top are statistically extremely unlikely to end up behind bars.

So overall this trip through the case history left me rather confused, but hopefully a bit wiser…

[Robert Miller · Rating 3 out of 5]

This book attacks the way and manner in which corporations are prosecuted. The central theme is that prosecutors are not really holding corporations accountable through the use of “deferred prosecution” or “non-prosecution” agreements that have been used in the prosecution of more than half of the large corporations (58%) between 2001 and 2012. He thinks that corporate crime “deserves more public attention”. He highlights several prominent corporate criminal cases and explains how the cases are usually settled by the corporation and government by either having the matter not prosecuted in exchange for various types of payments, including restitution, costs of cleanup operations, damages and changes in the particular corporate culture; in the latter area, he explains how the companies can be required to pay for “monitors” who are entrusted with the responsibilities of insuring corporate compliance with the negotiated changes that need to be made in those areas where the company has acted criminally. Some monitors have seized on to the power of their positions and have been accused of demanding staggering fees for their services that the companies are forced to deal with; he writes about how John Ashcroft, the former U.S. Senator from Missouri, and former U.S. attorney general, landed a monitor position (he was recommended by the U.S. attorney from New Jersey, Chris Christie), and then “showed billings of more than $7.5 million for the first five months of the monitorship, with a fixed monthly bill of $750,000 and hourly billings for additional team members”. Ashcroft tried to justify the “fixed” costs and fees, however, some legislators called Ashcroft’s deal a “no-bid” contract. The author says “One congressman commented: ‘In the Zimmer case [the company that was being monitored by Ashcroft], it is my understanding that Mr. Ashcroft’s firm was paid $52 million. To me, that is outrageous. I don’t care what you did. It is not worth $52 million. Even if you took steroids and hit 70 home runs, it is not worth $52 million’”. “In response to the outcry, the Justice Department changed the rules to require central review of the hiring of corporate monitors”, the author reports.
The author explains the difference between individual people charged with a crime, and corporations that are charged, and the variance in constitutional protections afforded to the two; individual citizens enjoy greater protection as “legal persons” but corporations have many of the same rights. The trend seems to be that the courts are limiting the vast powers of the government- especially when it comes to “property” versus “liberty” issues- but even in matters more closely associated with “personal rights”, a concept not normally equated to corporations, the courts are starting to voice disapproval of genuine over-reaching and “shocking” behavior on the part of the government. In short, corporations are starting to receive fairer trials. This is a good thing. I don’t think this nation is made better by further limiting our Constitutional protections in any case. The author would probably disagree with me on this point, but I think he ignores the fact that victims can always proceed through civil channels, and God knows, there are enough civil lawyers lingering around disaster locations, even before the fires are completely distinguished, ready to offer their services. I can recommend this book, but only if you have an interest in this subject.

[Socraticgadfly · Rating 4 out of 5]

This is a good basic overview of criminal prosecutions in general, and financial and securities fraud and related issues in particular, tying in to the question of whether some financial institutions are "too big to fail."

Garrett explains how the criminal prosecution of corporations work, what legal rights they do and do not have, including constitutional ones, as corporate "persons," the powers of prosecutors and more. With multinational corporations, he then explains what powers U.S. prosecutors have, and especially in relation to the Foreign Corrupt Practices Act, how some U.S. ideas for corporate criminal jurisprudence have been imported; he notes that this is most interesting in Continental European countries, where judges have more more power over the trial process vis-a-vis the Anglo-American prosecution-defense adversary system. (Read Kafka's "The Trial" or Camus' "The Stranger" for some idea of how the European system words.)

From there, we get the meat of the book.

Many corporations get deferred prosecution; this is the equivalent of federal individual criminal law, and what is called either deferred prosecution or deferred adjudication at the state level.

Corporations often get deferred prosecution, and Garrett explains there's often good reasons. In some cases, civil law may have already so weakened a company a criminal case isn't worth it. In other cases, a corporation may be perceived as having already "cleaned up" enough on its own to get the benefit of the doubt.

However, unlike "three strikes" laws that are especially popular at the state level, federal criminal corporate law has no recidivist rules. And, unless a plea deal as part of that deferral appoints a corporate monitor, and one with transparency in his or her reporting, and one who reports to a judge, not just prosecutors, it's hard to know how much good deferrals do.

Garrett tackles these and related transparency issues at multiple places in the book.

This really is a 4-star book more than a 5-star, but the language is NOT that "lawyerly." For that and other reasons, I'm giving it a bump.

[Jack Townsend · Rating 5 out of 5]

This is a really good book. I read it with academic and practice interest. I am a lawyer with a significant tax controversy practice, including tax crimes. I handled a federal tax prosecution, the KPMG individual defendants case from around 2004 through about 2010, said to be the largest tax prosecution ever -- both in terms of the "tax loss" (a sentencing term) and the number of defendants (19). KPMG (the entity) received a deferred prosecution agreement. I am very familiar with that DPA because the prosecution excesses leading up to that DPA and then the DPA and its requirements (both stated and unstated) was the principal background for the case in which I represented one of the individual defendants. The prosecutors forced KPMG to withhold the payment of attorneys fees and, upon lying about that to the judge in the individual defendants case, the judge got to the truth and ultimately dismissed the individual defendants who were denied attorneys fees by prosecutorial misconduct. At any rate, the KPMG and the prosecutorial misconduct in the case is a principal subject of the book. So, I could fact and nuance check the author on that DPA. Plus, I have been watching DPAs and the related nonprosecution agreements (NPAs) for a long time and found the analysis in the book consistent with my understanding of all of those. Plus, the author is a keen observer of the scene. BTW, I had lunch with the author recently incident to my move to Charlottesville, VA and plan to audit some of his courses at UVA Law. That's a bit of a digression, but I recommend the book for any readers interested in how the use of DPAs and NPAs can help and hurt the criminal justice system. Finally, in terms of analysis of problems, in the criminal justice system, I think I can tentatively recommend his other book "Convicting the Innocent: Where Criminal Prosecutions Go Wrong." I have not yet read the book (he said he would give me a copy when next we meet), but I have read enough about it (including some excerpts) to be confident that it will be a great read.

[Nicholas · Rating 4 out of 5]

I enjoyed this book which focused on a topic - corporate crime - that in my view ought to get a great deal more attention than it does. The arguments of the book are on a very solid foundation of databases of corporate convictions (and deferred or non-prosecution agreements) in the US over the last decade or so.

I have put my further thoughts about the book here:

http://deceptioninhighplaces.com/puni...

[Sarah Alawami · Rating 4 out of 5]

A good book on the law.