US DoJ declines to seek fraud charges as part of corporate co-operation drive

The US Department of Justice’s national security division has for the first time declined to prosecute a company that reported misconduct within its own ranks after adopting a programme that aims to encourage more co-operation.

The DoJ on Wednesday announced charges against two people it accused of defrauding MilliporeSigma, a US subsidiary of German pharmaceutical group Merck, but said it would not prosecute the company itself. That decision comes after deputy US attorney-general Lisa Monaco last year directed all criminal enforcement units to establish voluntary self-disclosure programmes — a practice historically confined to the criminal division’s fraud section. 

Since being sworn into office in 2021, Monaco has sought to adapt the DoJ to a shift in the nature of national security risk, ranging from corporate malfeasance to artificial intelligence, cryptocurrencies and perceived data security threats around companies such as TikTok. 

“The threat landscape really has evolved,” Monaco told the Financial Times in an interview. “What I’m seeing here is a story of convergence. It is the convergence of nation-states and criminal actors . . .[of] corporations being on the front lines of geopolitical challenges.”

“We expect corporations to be attuned to new areas of risk and to reflect that in their investments in compliance . . . and we’re going to hold those [who are not] accountable,” she added. 

At the same time the DoJ was “trying to show” the benefit to co-operating with and self-disclosing to the government, “enabling us to hold the wrongdoers accountable [and] thereby sending a deterrence message,” Monaco said. “This is about driving behaviour changes” and “investments in compliance”. 

MilliporeSigma’s deal is one such example. A salesperson from 2016 to 2023 helped a co-conspirator obtain biochemical products with roughly $5mn in discounts, which were then transferred to China using falsified export documents, according to the DoJ. The salesperson and co-conspirator have each pleaded guilty to one count of wire fraud conspiracy. MilliporeSigma, meanwhile, will face no charges.

Asked for comment, MilliporeSigma highlighted its “voluntary and prompt self-reporting, comprehensive internal investigation, compliance programme enhancements, and exceptional co-operation” as the basis for the DoJ’s decision not to prosecute the company. It noted that the employee who was charged had been “terminated”.

Critics argue that giving companies incentives to self-disclose will only encourage criminal activity. Monaco stressed that if companies were “recidivists, we’re going to take a hard look at the full criminal history”. 

Monaco’s law enforcement career has spanned white-collar crime and national security. Her past roles include helping prosecute the case against Enron executives, heading the DoJ’s national security division and advising former president Barack Obama on homeland security and counterterrorism.

After the September 11 2001 attacks, when Monaco was with the FBI, the US sanctions regime was mainly top of mind for companies in financial services or defence. Since then, the growing list of sanctions has expanded the types of groups that could fall foul of this regime. “Now, if you are a multinational of any size in any industry, you need to be thinking about ‘where does my business intersect, potentially, with these risks?’” she said.

But national security threats are also “arising in unexpected ways for consumers”, she added. She pointed to TikTok, which under a new US law would be banned if it is not divested by its Chinese parent ByteDance.

A supporter of the initiative, Monaco said the concern was “that data that is getting vacuumed up by companies, TikTok or others, can be weaponised against us”, referring to a Chinese law that can compel Chinese companies or businesses based in the country to share information with the government.

“Controlling an algorithm that can serve up content in a way that may well be detrimental to our national security interests, whether it’s foreign influence, propaganda . . . those are very real concerns” too, Monaco said.

The deputy attorney-general has also prioritised artificial intelligence, warning that “there should not be this sense that if AI does it, somehow it is outside of a criminal enforcement or a liability structure . . . price fixing with AI is still price fixing”.

The DoJ, which in February appointed its first chief AI officer, is also focused on how the technology may be used for election interference, as the country gears up for the presidential contest in November.

Asked if the department will remain vigilant throughout the electoral count and certification, she said: “Absolutely. The potential to spread false narratives . . .[and] discord in relation to an election and results is not a far-fetched scenario”.