Judge Leon: DPA “Grossly Disproportionate” To Fokker’s Conduct Violating OFAC Sanctions

Judge Leon Rejects DPA Too Lenient on OFAC Violation

In a rare rebuke of the executive branch’s discretionary authority in enforcing economic sanctions, U.S. District Court Judge Leon sent Fokker Services, B.V., and the U.S. Department of Justice back to the drawing board to re-work their deferred prosecution agreement (DPA).  Both parties had agreed to the DPA and wanted it to be accepted by the court.  However, the parties were unsuccessful in persuading Judge Leon to overcome his misgivings about the DPA being too lenient and ineffective.

Although surprising in the context of economic sanctions, Judge Leon’s decision is consistent with some federal
judges’ concerns regarding Americans’ perceptions of a justice system that too-often provides unfair advantages (and leniency) to corporate and white collar offenders.  The judge’s decision also affirms the belief held by some that DPA’s are at least partially used to rehabilitate a company’s “corporate culture.”

In recognition of these issues, Judge Leon appears to have taken a page straight out of Brandon Garrett’s book in rejecting this particular DPA.  In his book, Garrett recommends improving DPAs by including greater judicial oversight, greater use of court-appointed monitors, and greater attention to breaches of the agreements.

In line with these suggestions, Judge Leon states in his memorandum opinion that the DPA should incorporate features such as an “independent monitor” who regularly reports to the court and “a probationary period longer than 18 months.”  Such features would presumably make the DPA more effective at changing Fokker’s corporate culture.  It also gives greater judicial oversight into the enforcement of the DPA instead of simply relying on Fokker’s self-reporting.

The judge also suggests that the fine should exceed the $21 million in criminal revenues generated by the company if the Justice Department does indeed want to adequately punish Fokker for its “egregious conduct.”  An increased fine appears to address the issue of corporate leniency in criminal law, as a similarly situated individual would surely have faced a significant term of imprisonment for unlawfully selling aircraft parts and services to the Iranian military.

Judge Leon remains “open to considering a modified version” of this particular DPA.  However, what this means for the future of DPAs in the context of corporate criminal liability is less clear.

Disclaimer: Blog posts should not be relied upon as legal advice and are only provided for informational purposes.  Information contained in blog posts may also become outdated with the passage of time as laws change and U.S. foreign policy and national security objectives evolve.