APPLYING A THERAPEUTIC JURISPRUDENCE PERSPECTIVE TO THE DOJ’S USE OF DEFERRED PROSECUTION AGREEMENTS FOR CORPORATE OFFENDERS By LYNN LANGTON AUSTELL A DISSERTATION PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY UNIVERSITY OF FLORIDA 2012 1 © 2012 Lynn Langton Austell 2 ACKNOWLEDGMENTS This dissertation is dedicated to my parents and sister, John, Andrea, and Victoria Langton. Without their constant love, support, and encouragement I would never be where I am today. I am eternally grateful for the doors they opened and the opportunities they provided me. It is dedicated to my husband, Dan Austell, who has been endlessly loving, understanding, supportive, and patient through this process. I am incredibly thankful to him for keeping me sane, always lending a listening ear for venting, providing much needed distractions, and giving me a bright spot in every day. Finally, it is dedicated to my dissertation committee, Drs. Richard Hollinger, Marian Borg, Lonn Lanza-Kaduce, and Albert Matheny, who have gone above and beyond in providing wisdom, guidance and advice over the many years of this process. I am so thankful to them for their support and for not giving up on the idea or expectation that I would eventually finish someday. 3 TABLE OF CONTENTS page ACKNOWLEDGMENTS ...............................................................................................................3 LIST OF TABLES ...........................................................................................................................7 LIST OF FIGURES .........................................................................................................................8 ABSTRACT .....................................................................................................................................9 CHAPTER 1 INTRODUCTION ..................................................................................................................11 Why Formal Sanctions Are Not Effective Against Corporate Offenders ..............................17 Overview of the Examination of DPAs through the Therapeutic Jurisprudence Lens ...........22 Voluntary Disclosure and Cooperation ...........................................................................25 Compliance Monitor ........................................................................................................26 Monetary Penalties and Restitution .................................................................................26 Business Reforms and Compliance Programs .................................................................27 2 THERAPEUTIC JURISPRUDENCE ....................................................................................28 Review of the Literature .........................................................................................................28 The Application of Therapeutic Jurisprudence in Extant Research .......................................33 3 THE DEVELOPMENT AND CURRENT APPLICATION OF DEFERRED PROSECUTION AND NON-PROSECUTION AGREEMENTS .........................................38 Developing Guidelines for Charging and Sentencing Corporations ......................................39 US Sentencing Commission Organizational Guidelines .................................................39 The Holder Memorandum ...............................................................................................41 Corporate Offending at the Turn of the Century .............................................................43 Sarbanes-Oxley ........................................................................................................44 Corporate Fraud Task Force .....................................................................................45 The Thompson Memorandum .........................................................................................46 The McCallum Memorandum .........................................................................................48 The McNulty Memorandum ............................................................................................50 Post-McNulty DPA Changes ...........................................................................................52 The Features of DPAs and NPAs ...........................................................................................53 Voluntary Disclosure and Cooperation ...........................................................................55 Compliance Monitor ........................................................................................................60 Business Reforms and Compliance Programs .................................................................64 Monetary Penalties and Restitution .................................................................................68 4 4 NON-EMPIRICAL ANALYSIS OF THE THERAPEUTIC VALUE OF DEFERRED PROSECUTORIAL AGREEMENTS ....................................................................................72 Voluntary Disclosure and Cooperation ..................................................................................76 Business Reforms and Compliance Programs ........................................................................80 Business Reforms .....................................................................................................81 Compliance and Ethics Programs ............................................................................85 Monetary Penalties and Restitution ........................................................................................87 Compliance Monitors .............................................................................................................94 5 CASE STUDY: BRISTOL-MYERS SQUIBB ....................................................................101 Terms of the BMS DPA .......................................................................................................104 Voluntary Disclosure and Cooperation .........................................................................104 Business Reforms and Compliance Programs ...............................................................106 Monetary Penalties and Restitution ...............................................................................108 Compliance Monitor ......................................................................................................109 DPA Aftermath .....................................................................................................................111 Subsequent Criminal and Other Transgressions ............................................................111 Collateral Consequences ...............................................................................................115 Case Study Conclusion .........................................................................................................119 6 EMPIRICAL ANALYSIS: DATA AND METHODOLOGY .............................................121 Current Focus ........................................................................................................................121 Data .......................................................................................................................................122 Hypothesis 1 Variables .........................................................................................................128 Dependent Variables .....................................................................................................128 Independent Variables ...................................................................................................130 Compliance Monitor ..............................................................................................131 Business Reforms and Compliance Programs .......................................................131 Monetary Penalties and Restitution ........................................................................132 Voluntary Disclosure and Cooperation ..................................................................132 Controls ..................................................................................................................133 Hypothesis 2 Variables .........................................................................................................134 Analytic Plan ........................................................................................................................134 7 EMPIRICAL ANALYSIS: FINDINGS ...............................................................................136 General Descriptive Statistics ...............................................................................................136 Hypothesis 1 Findings ..........................................................................................................141 Hypothesis 2 Findings ..........................................................................................................147 8 CONCLUSIONS, LIMITATIONS, AND FUTURE RESEARCH .....................................156 Discussion and Conclusion ...................................................................................................156 Limitations and Suggestions for Future Research ................................................................161 5 LIST OF REFERENCES .............................................................................................................167