Polite Prediction: Criminal Division Appointee Positions DOJ For focus On Public Corruption, Civil Rights, National Security, And Fraud With A Heightened Scrutiny On Compliance Programs

Vinson & Elkins LLP

Vinson & Elkins LLP

On April 12, 2021, President Joe Biden nominated Kenneth Polite Jr. as Assistant Attorney General for the Criminal Division at the Department of Justice (“DOJ”). If confirmed by the Senate, Polite will hold the Criminal Division’s top seat and be responsible for supervising federal prosecutors nationwide who investigate and prosecute cases ranging from securities fraud to Foreign Corrupt Practices Act violations to cybercrime.

A look at Polite’s background may offer clues about how he will approach his new job. Criminal Division chiefs are important because they help set DOJ directives and policies that govern how companies are treated during criminal and civil investigations. DOJ’s approach to corporate crime, and how it encourages and values cooperation, plus how it treats privilege, have swung wildly over the last two decades.

Polite has been in private practice; he has been appointed as a U.S. Attorney (in the Eastern District of Louisiana); and he has been in-house counsel. So he has broad experience from different sides. His experience running a compliance program in-house is particularly notable. It has become de riguer for companies to have their compliance programs pass muster before settling cases with the government. Sometimes prosecutors lack sophisticated knowledge of how compliance programs actually work. Polite’s experience suggests he may bring a more nuanced and sophisticated approach to the evaluation of compliance programs. This suggests companies will really need to beef up their compliance programs and be “on their game” when presenting to the new leadership at DOJ.

Polite took a unique path to his current position. When his brother was shot and killed in New Orleans, Polite left private practice at a large law firm to become a federal prosecutor in New York. As an Assistant U.S. Attorney in the Southern District of New York from 2007 to 2010, Polite’s caseload focused on organized crime, public corruption, healthcare fraud, and identity theft.

After President Obama appointed him in 2013 to be the United States Attorney in New Orleans, Polite allocated resources to violent crime and narcotics offenses and established the district’s first standalone unit to address political corruption and civil rights violations. High-profile cases during his tenure in New Orleans included: the prosecution of Ray Nagin, former Mayor of New Orleans, who was convicted of bribery, conspiracy, and wire fraud in 2014 for accepting illegal gifts from contractors surrounding Hurricane Katrina; and the prosecution of former District Attorneys of St. Tammany and St. Charles Parishes for public corruption offenses. When Polite left the office in 2017, it had convicted “more human traffickers than in any prior U.S. Attorney’s tenure in the Office’s history, including the country’s first conviction of a motel operator for benefitting from sex trafficking.”

After leaving public service, Polite first worked as Vice President and Chief Compliance Officer at a Fortune 500 company in New Orleans. There, he designed and implemented a risk-based compliance model and compliance controls for regulations from the Federal Energy Regulatory Commission. When the DOJ updated its Compliance Manual last year and emphasized personnel access to data and reporting hotlines, Polite weighed in on the importance of an efficient and fluid compliance program that can readily adapt to change. He noted “[i]t’s not enough to just have a hotline that is essentially collecting dust” and “if [a company is] identifying that there is limited access to certain data and [isn’t] doing anything to address the limitation, that’s a red flag that [its] compliance program isn’t particularly effective.” The trend toward scrutinizing companies’ compliance programs has been accelerating for several years; Polite’s appointment will likely further that important trend. V&E has had great success in several cases using a robust compliance program to obtain good outcomes for our clients.

After returning to private practice in 2018 as a white collar criminal defense, compliance, and global investigations partner, Polite appeared in civil cases where he defended corporate clients – large banks, energy companies, and pharmaceutical companies – in matters involving racial discrimination claims under federal civil rights statutes, and products liability class actions in Louisiana federal court.[1] In 2014, Polite represented the United States alongside the City of New Orleans in defense of ordinances aimed at remedying a pattern of unconstitutional policing in New Orleans.[2] This familiarity with civil rights laws may further inform the DOJ’s upcoming priorities.

Other indications are that Polite will be interested in re-engaging the Criminal Division in bringing more corporate prosecutions, which waned during the last administration as it was more focused on immigration and violent crime. Before his nomination, Polite co-authored an article in which he predicted Biden-era changes, envisioning that the DOJ will:

  1. “push for investigations to continue at the same or an accelerated pace”;
  2. collaborate with other enforcement bodies to pursue “sophisticated financial and corruption offenses with international impact”;
  3. team up with the Securities and Exchange Commission to exercise “enhanced scrutiny” of hard-hit industries such as retail, hospitality and airlines; and
  4. continue investigating accounting and public reporting issues common in a “stressed economic environment like this one . . . as well as business behaviors that pique the interest of securities fraud enforcers who will be eager to question accounting practices and accuracy in market statements.”

Now he will have the chance to put these priorities into effect.

1 Dunn v. JPMorgan Chase Bank, N.A., 2:20-cv-00483-SM-JVM (E.D. La. Mar. 5, 2020); Broomfield v. Bayer Healthcare Pharm. Inc., 2:19-CV-12460 (E.D. La Sept. 5, 2019); Wilson v. Transocean Offshore Deepwater Drilling, Inc., 2:18-CV-04835 (E.D. La May 11, 2018); Starkey v. Exxon Mobil Corp., 2:10-cv-04178-SRD-DEK (E.D. La June 20, 2011).

2 Powers v. New Orleans City, Case 2:13-cv-05993-SM-JCW (E.D. La. Jan. 16, 2014).

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