Speaker 1: This is Bloomberg Law with June Grassoe from Bloomberg Radio.
Speaker 1: The prosecution of white collar crimes fell during the Trump administration,
Speaker 1: but experts are anticipating a ramp up in enforcement in
Speaker 1: a Biden Jostice department that would return the government to
Speaker 1: its past practice of scrutinizing corporate wrongdoing. The Trump administration
Speaker 1: professed to being tough on white collar crime. Here's former
Speaker 1: Deputy Attorney General Rod Rosenstein in a speech at n
Speaker 1: y U Law School in Corporate enforcement is an important
Speaker 1: focus of our department's criminal work, as well as our
Speaker 1: civil work. Investigations of corporate fraud and corruption are essential
Speaker 1: to promote the rule of law. People who do business
Speaker 1: in America need to know that our laws will be enforced. However,
Speaker 1: the prosecution of securities fraud, antitrust violations, and other such
Speaker 1: crimes dropped about thirty under President Trump as compared to
Speaker 1: President Obama, according to Syracuse University's Transactional Records Access Clearinghouse.
Speaker 1: My guest is Brandon Garrett, a professor Duke Law School,
Speaker 1: tell us about the prosecution of corporate crime and the
Speaker 1: Trump administration as compared to prior administrations. Joining me is
Speaker 1: Duke University law professor Brandon Garrett tell us about the
Speaker 1: prosecution of white color crime during the Trump administration relatively
Speaker 1: speaking to prior administrations. Over the course of Obama administration,
Speaker 1: corporate prosecutions continued to rise in both number and their
Speaker 1: size and significance. They had been doing that during the W.
Speaker 1: Bush administration, but after the financial crisis, there were just
Speaker 1: enormous number of cases of large ones to bring and
Speaker 1: corporate crime became a bigger and bigger priority at the
Speaker 1: Department of Justice. Tougher guidelines were and adopted, and that
Speaker 1: change was reflected in the multibillion dollar resolutions. The type
Speaker 1: of resolutions and moved from out of court settlements to
Speaker 1: more in court settlements. We saw something really different when
Speaker 1: they change over to the Trump administration occurred in the
Speaker 1: first year. There are some legacy cases from the Obama
Speaker 1: administration that were large that were settled. So once those
Speaker 1: were settled, things became very quiet, very quickly. So there
Speaker 1: was an enormous drop and several penalties really through the present,
Speaker 1: although just recently there's a JP. Morgan and the Goldman
Speaker 1: Stack settlement, which were large settlements, although they weren't much
Speaker 1: smaller than they could have been, and the changes were
Speaker 1: accompanied by changes in policy. It was the practice of
Speaker 1: the Department of Justice under the Trump administration to relax
Speaker 1: some of these rules. They highlighted how they did not
Speaker 1: want to pile on penalties, that they wanted to pursue
Speaker 1: declinations and more leneal settlements of corporations more often. And
Speaker 1: it was largely reflected in the data that we see
Speaker 1: the places where there was more continuity in practice, where
Speaker 1: areas in which the Department of Justice really staffed up
Speaker 1: under Obama, those groups of lawyers kept doing what they
Speaker 1: were doing more so than others. The best example of
Speaker 1: that is in the foreign corrupt practices area, where there's
Speaker 1: been someone more continuities between administrations. Is it from the top,
Speaker 1: does the Attorney General say this is what we want
Speaker 1: to do? Or is it because they put more resources
Speaker 1: in certain areas? And how does it work? Well, Many
Speaker 1: really important corporate cases are not brought at Main Justice.
Speaker 1: They are brought by the different use attorney's offices, and
Speaker 1: in particular at the Southern District of New York. So
Speaker 1: who is the U S Attorney for the Southern District
Speaker 1: of New York really matters priorities from the tops also matter,
Speaker 1: and the Department of Justice has set a series of
Speaker 1: guidelines for bringing corporate cases. They keep changing. Each administration
Speaker 1: has been changing those practices, and so it's usually not
Speaker 1: the Attorney General, but usually the Deputy Attorney General, the
Speaker 1: head of the Criminal Section, the head of the Criminal
Speaker 1: fraud Section, you know, fairly high up POJ leadership plays
Speaker 1: a big role in ending policies and corporate cases. And
Speaker 1: they also have tone, even if these aren't always cases
Speaker 1: that the Department of Justice itself is handling, but rather
Speaker 1: one of the U S Attorney's offices. So when they
Speaker 1: say we don't want to see Philine on a fine,
Speaker 1: that sends a strong message to the news attorney's offices.
Speaker 1: In addition, the biggest companies tend to get a hearing
Speaker 1: at the highest levels of the Department of Justice. So
Speaker 1: the Use attorney mayweg and when you have a case
Speaker 1: US against the likes of a Wall Street bank, and
Speaker 1: they may weigh in and tell that the local use
Speaker 1: attorney you've gone too far, this fine is too big.
Speaker 1: You know, regular people do not get that kind of
Speaker 1: a hearing normally in their criminal cases. It takes a
Speaker 1: lot of coordination to resolve major corporate cases. If you
Speaker 1: have the Attorney General and other higher ups that Department
Speaker 1: of Justice saying take it easy on corporation, then companies
Speaker 1: will know that there's no reason to set all the
Speaker 1: case until they get away in from the Attorney General.
Speaker 1: In general, the Department of Justice has, as many have reported,
Speaker 1: become more politicized, and local use attorneys have been undermined
Speaker 1: by the Department of Justice, where the Attorney general wills
Speaker 1: have been sometimes an individual cases. There are always politics
Speaker 1: in these appointments, but do you see more of that
Speaker 1: during the Trump administration. There are serious concerns with firings
Speaker 1: of US attorneys under w. Bush, and we've seen much
Speaker 1: more of that. You know, we've also seen the reverse.
Speaker 1: We've seen a failure to fill a lot of really
Speaker 1: important mid level positions at the Department of Justice, which
Speaker 1: has meant less confidence in the middle and a power
Speaker 1: vacuum and more of a role for the Attorney General.
Speaker 1: It also means that you have less competent and you
Speaker 1: have a hollowing out of the mid level positions. You're
Speaker 1: just not going to have the bureaucratic coordination and bandwidth
Speaker 1: to resolve complicated cases. You know, you have corporations that
Speaker 1: can and do higher entire law firms to represent them,
Speaker 1: and when you have important unfilled positions at the d
Speaker 1: o J, you have corporations that are very well represented.
Speaker 1: And then on the prosecution side, you have no they're
Speaker 1: they're at the higher levels which are needed to finalize
Speaker 1: these complex multiparty deals. How is the prosecution of corporate
Speaker 1: crime likely to change in a Biden administration. There's a
Speaker 1: life cycle to corporate frauds in general. When you have
Speaker 1: criminal acts conducted within an organization, negative information can stay concealed.
Speaker 1: The higher ups in some of these cases in the
Speaker 1: corporation may not know about the crimes. So if they
Speaker 1: have bad compliance, serious misconduct might stay varied within corporation.
Speaker 1: And there hasn't been the same incentive for companies to
Speaker 1: invest in compliance during these Trump years when they know
Speaker 1: that enforcement, whether it's civil or criminal, it was not
Speaker 1: a priority, and so his conduct that was swept under
Speaker 1: the rug are not carefully investigated or not reported to
Speaker 1: the authorities may start to come out of the woodwork.
Speaker 1: And we've seen in the past that during an economic downturn,
Speaker 1: there all of a sudden comes to light wellfeasance as conduct.
Speaker 1: There's already some reporting around fraud problematic applications for relief
Speaker 1: relating to COVID. The economy is suffering because of COVID,
Speaker 1: and when the economy suffers, there can be incentives for
Speaker 1: corporations to disguise how poorly their books are fairing. Nevertheless,
Speaker 1: it may take some time for that conduct to be investigated.
Speaker 1: I suspect that over the next several years some major
Speaker 1: corporate investigation will come to life. There will also be
Speaker 1: more of an incentive for companies to self report to
Speaker 1: a Biden administration because they will be given credit for that.
Speaker 1: And you know, no company wants to be in the
Speaker 1: position of having been caught in the act without having
Speaker 1: been cooperative, without having self reported. So more corporate climate
Speaker 1: come to the d o j's attention once it's clear
Speaker 1: that the d o J takes corporate clip seriously, and
Speaker 1: that was what was happening under the Obama administration, a
Speaker 1: more serious corporate climate approach. What kind of prosecutions might
Speaker 1: be the prior priorities of a Biden Justice Department. There
Speaker 1: are such a wide range of white color crimes, is
Speaker 1: a priority to go after healthcare fraud. It is a
Speaker 1: priority to go after bank related froad securities products and
Speaker 1: to any public company is a priority to target environmental crimes,
Speaker 1: environmental disasters. Pharmaceutical companies have been prosecuted for un savory practices.
Speaker 1: Sure there will be investigations relating to efforts to profit
Speaker 1: from COVID test or vaccines. There was on savory conduct,
Speaker 1: corn bribery, money laundering has been a big priority. They're
Speaker 1: just a host of priority areas that have been somewhat
Speaker 1: neglected in recent years. There's a lot of work for
Speaker 1: a lot of prosecutors to do, and a lot of
Speaker 1: that work also depends on investigations and referrals by administrative
Speaker 1: agencies like the SEC, like the Environmental Protection AGC, like
Speaker 1: Ocean so where you similarly had a following out of
Speaker 1: enforcement at a range of administrative agencies. If enforcement of
Speaker 1: those agencies become small, robust pipelines to prosecutors will also
Speaker 1: be robust. That's Brandon Garrett of do Law School. Harvard
Speaker 1: can continue to consider race and its admissions decisions after
Speaker 1: a federal appeals court rule that the university isn't intentionally
Speaker 1: discriminating against Asian Americans and the policy doesn't violate the Constitution.
Speaker 1: But the case is not over yet, and the battle
Speaker 1: over affirmative action continues in other courts. Joining me is
Speaker 1: Audrey Anderson, who heads the higher education practice at bass
Speaker 1: Baryan Sims. Audrey tell us the main points of the decision.
Speaker 1: While the First Circuit Court of Appeals upheld the District
Speaker 1: Court's finding that Harvard's affirmative action policy complies with the
Speaker 1: legal standards. So this is a victory for Harvard and
Speaker 1: being able to use race in considering applications to Harvard
Speaker 1: College when it admits you. In making that finding, the
Speaker 1: court found that Harvard has a compelling interest in using
Speaker 1: race in terms of certain educational goals. It's trying to
Speaker 1: further in educating students. And it also found that Harvard's
Speaker 1: use of race is narrowly tailored to meeting those goals.
Speaker 1: Those are the two basic standards at the Supreme Court
Speaker 1: has set. The Court said that Harvard doesn't use quotas
Speaker 1: or engage in racial balancing. What does that mean and
Speaker 1: what does Harvard do? What that goes to, June is
Speaker 1: the narrow tailoring. If a college university is going to
Speaker 1: use race, it has to do so in a way
Speaker 1: that is narrowly tailored to its goals. So that means
Speaker 1: that you can't just set a quota for any racial
Speaker 1: group and say we are going to admit x per
Speaker 1: cent of African American students or Hispanic students or white students.
Speaker 1: The Court has said that you can use race as
Speaker 1: one factor among many in determining the students that will
Speaker 1: be admitted and trying to obtain a diverse students body.
Speaker 1: So what Harvard does is its admissions officers have access
Speaker 1: to information about the race of applicants if applicants choose
Speaker 1: to provide that information, and in giving applicants the overall rating,
Speaker 1: which is one factor that the admissions committee considers, the
Speaker 1: readers of applications can consider race. It's also possible in
Speaker 1: the Harvard system. Harvard has a series of what they
Speaker 1: call tips for special considerations that applicants can be given
Speaker 1: for athletic ability or if they have a parent that
Speaker 1: works at Harvard or has donated a lot of money
Speaker 1: to Harvard. One of those tips is race, so you
Speaker 1: can also get a tip for your racial background. So
Speaker 1: parents making large donations is actually recognized as part of
Speaker 1: the rating for the applicant Yeah, and the plane of
Speaker 1: your students for care admissions said that one of the
Speaker 1: reasons that Harvard system was unconstitutional or didn't meet the
Speaker 1: appropriate standards was that Harvard should be forced to give
Speaker 1: up some of those other tips and also give up
Speaker 1: the use of rights. If Harvard gave up the tips
Speaker 1: for children of large donors, maybe it wouldn't have to
Speaker 1: consider race and it could still get a diverse skin body.
Speaker 1: And the court said that Harvard is allowed to pursue
Speaker 1: diversity with race conscious means and also pursue other educational goals,
Speaker 1: and it said that one of those goals can be
Speaker 1: to give special consideration to some children of large donors
Speaker 1: in order to encourage donations to the college. According to
Speaker 1: the court's opinion, the share of admitted Asian American applicants
Speaker 1: co varies almost perfectly with the share of Asian American applicants,
Speaker 1: So the percentages are equal basically of those who are
Speaker 1: admitted in those who applied who are Asian Americans. So
Speaker 1: what was the problem that the plaintiffs saw here? One
Speaker 1: problem that they saw was one of the ratings that
Speaker 1: applicants to Harvard get is called a personal ratings and
Speaker 1: the personal ratings for Asian American students were with certain
Speaker 1: statistical analyzes shown to be lower than for other students.
Speaker 1: So the plaintiffs argued that the only reason you would
Speaker 1: have a personal ratings that was lower for Asian American
Speaker 1: students would be based on stereotypes about Asian Americans that
Speaker 1: were impermissible. They also complained about the fact that on
Speaker 1: what the plaintiffs like to call objective measures and the
Speaker 1: academic ratings that have to do with class ranking and
Speaker 1: performance on standardized tests, the Asian American students tended to
Speaker 1: do better. So the students who had high marks on
Speaker 1: those standards were admitted at lower rates than even white
Speaker 1: students who scored at those same measures did. That that
Speaker 1: leads to people making arguments like, you know, if you
Speaker 1: get a really high score on the standardized test, you
Speaker 1: have to get even a higher score if you're Asian
Speaker 1: in order to get into Harvard. Now that's a very
Speaker 1: hard argument to make at Harvard, because Harvard can fill
Speaker 1: up its entering class many times over. The court pointed
Speaker 1: out that the plaintiffs hadn't presented a single Asian American
Speaker 1: applicant who claimed Harvard discriminated against them. How could that
Speaker 1: be aren't those the plaintiffs in the case. So the
Speaker 1: plaintiff here, June is an association, Students for Fair Admission,
Speaker 1: and they did have members who were who are Asian
Speaker 1: Americans who put forward affidavits saying that they had applied
Speaker 1: to Harvard and not been admitted. They did not identify themselves,
Speaker 1: and they did not come forward and give testimony. So
Speaker 1: courts have allowed associations like Students for Fare Admissions to
Speaker 1: have standing to bring a lawsuit on behalf of their
Speaker 1: members if they can show that they have a member
Speaker 1: who was harmed. So that you think about the N
Speaker 1: double A c P often steps forward and brings lawsuits
Speaker 1: on behalf of their members who are harmed by discrimination.
Speaker 1: So Students for Fare Admissions would say, it's just like
Speaker 1: the N double A c P. Now, Harvard made an
Speaker 1: argument to say that the f f f A should
Speaker 1: not be allowed to bring this lawsuit because the court
Speaker 1: should have looked further to see if s f f
Speaker 1: A was really truly further in the interests of the
Speaker 1: Asian American students it claimed to be representing. And that
Speaker 1: was a win for f f f A because the
Speaker 1: First Circuit examined that argument of Harvards and said, look
Speaker 1: a f f f A does not have to meet
Speaker 1: that special test that Harvard your arguing they need to meet.
Speaker 1: They've met the standards for associational standing and that they
Speaker 1: have shown that they have members who alleged that they
Speaker 1: have been harmed in this way, and they can go forward.
Speaker 1: We are not going to dig below that and make
Speaker 1: them prove that their real purpose is to help Asian Americans.
Speaker 1: So the plaintiffs, the anti affirmative action groups Students for
Speaker 1: Fair Admissions, says the lawsuit is now on track to
Speaker 1: go up to the Supreme Court. Tell us about the group.
Speaker 1: F f f A is headed by Edward Blum and
Speaker 1: appears to be funded by Edward Blum, and he has
Speaker 1: brought other cases where Asian American students were not the plaintiffs,
Speaker 1: and it seems that his real goal here is just
Speaker 1: to end affirmative action. So I don't know that Blum
Speaker 1: ever expected to win this case up until this point.
Speaker 1: I think that one's purpose here is to get the
Speaker 1: United States Supreme Court to overturn its current rulings that
Speaker 1: allow colleges and universities to use race as one factor
Speaker 1: in admitting students. So what he has done is he
Speaker 1: has brought several suits across the country and is hoping
Speaker 1: that one of them will be accepted by the Supreme Court,
Speaker 1: and through that suit, the new membership of the Court
Speaker 1: knew since the last one of these cases was decided,
Speaker 1: will overturn the prior president and hold that colleges and
Speaker 1: universities may not use race as a factor in admitting students.
Speaker 1: The group has also brought a lawsuit against the University
Speaker 1: of North Carolina. Will it help them if that verdict
Speaker 1: conflicts with the Harvard verdict? Exactly, You are exactly right.
Speaker 1: So the case against the University of North Carolina Chapel
Speaker 1: Hill is being tried right now in the Middle District
Speaker 1: of North Carolina, so it will be appealed. Whoever loses
Speaker 1: in the district court will appeal that case to the
Speaker 1: Fourth Circuit Court of Appeals. In the Fourth Circuit will
Speaker 1: issue a ruling. The Supreme Court kind of standard for
Speaker 1: granting review in a case is when there is a
Speaker 1: split in authority between between the courts of appeals. However,
Speaker 1: the Supreme Court has shown an interest in granting review
Speaker 1: of cases where the courts of appeals have considered affirmative
Speaker 1: action in college admissions even when there is no split
Speaker 1: in authority. So the Supreme Court reviewed the Fisher case
Speaker 1: which was against the University of Texas at Austin. They
Speaker 1: reviewed that case even without a split in authority. So
Speaker 1: the Court may choose to review this case from Harvard,
Speaker 1: even though right now there is no what an authority,
Speaker 1: but to kind of bolster his chances. Blum or s
Speaker 1: f f A has the case in North Carolina that's
Speaker 1: in trial right now. They also have two other cases,
Speaker 1: or at least one other case. They filed suit again
Speaker 1: against the University of Texas in Austin, and if that
Speaker 1: case is appeal, that will go to the Fifth Circuit.
Speaker 1: And then there's a case that was originally filed by
Speaker 1: the United States against Yale University, and s f f
Speaker 1: A has recently filed a motion to be allowed to
Speaker 1: enter that case as a plaintiff against Yale. So Blum
Speaker 1: has four k or s f f A has four
Speaker 1: cases going on right now if it does go to
Speaker 1: the Supreme Court, just as Kennedy I believe was the
Speaker 1: key to allowing affirmative action to continue. So how might
Speaker 1: this new more conservative Supreme Court look at a case
Speaker 1: on affirmative action, So June, there are actually four members
Speaker 1: of the current Court who have not had occasion to
Speaker 1: rule at Supreme Court justices on the question of race
Speaker 1: conscious college admissions programs. One of them is Justice Kagan.
Speaker 1: She was on the Court when the Court last considered
Speaker 1: um affirmative action in the Fisher case, but she refused herself.
Speaker 1: We can expect that Justice Kagan will agree with Justices
Speaker 1: Bryer and so do Mayor and find that race can
Speaker 1: be used if the college proves they have a compelling
Speaker 1: interest and if it's narrowly tailor, so that gets you
Speaker 1: three votes. But then you have Justices Gorsuch, Kavanaugh, and
Speaker 1: Barritt that you don't know what they'll do. You have
Speaker 1: to expect that they're going to rule more in line
Speaker 1: with Chief Justice Roberts and the Justices Thomas and Alito.
Speaker 1: The three of them, Roberts, Thomas, and Alito are all
Speaker 1: on the record as saying that they don't believe the
Speaker 1: Constitution s allows colleges and universities to use race in
Speaker 1: colleges missions. They do not believe that race can be
Speaker 1: used as a compelling interest. The colleges do not have
Speaker 1: a compelling interest in pursuing the educational benefits of a
Speaker 1: diverse student body. So, based on the other things we
Speaker 1: know about Corsach, Kavanaugh and Barrett, one would expect them
Speaker 1: to join the views of Roberts, Thomas, and Eledo. However,
Speaker 1: let's say they agree with with with them on this,
Speaker 1: then you have to answer the question of wealth. The
Speaker 1: court has this precedence in Grutter the case from the
Speaker 1: University of Michigan from the early two thousand's and the
Speaker 1: Fisher case. So then if for sich, Kavanaugh and Barrett say, well,
Speaker 1: if this came to me in the first instance, I
Speaker 1: would say there is no compelling interests in using race
Speaker 1: for the educational benefits of aversity. However, now I have
Speaker 1: to consider whether we are going to overrule the courts
Speaker 1: prior President the Trump administration joined the plaintiffs in the
Speaker 1: Harvard suit, and the Trump administration sued Yale. One of
Speaker 1: the highest profile actions by the Civil Rights Division during
Speaker 1: the Trump administration was that lawsuit against Yale. Will it
Speaker 1: change to the Biden administration? Change things? May? Might they
Speaker 1: drop that lawsuit against Yale? Is that why Blum wants
Speaker 1: to join it. Maybe you got that exactly right. I'm
Speaker 1: the Biden administration could very well drop the lawsuit against
Speaker 1: Yale or try to find a way to settle it,
Speaker 1: except that Blum has now moved to become a poaintiff,
Speaker 1: And if the court allows f f F A to
Speaker 1: become a poaintiff in that Yale suit, it doesn't really
Speaker 1: matter what what the government does. I mean it earth,
Speaker 1: but not nearly as much I will. I expect that
Speaker 1: the Biden administration UH Department of Justice will switch sides
Speaker 1: in these cases and support the use of affirmative action
Speaker 1: and college admissions. I think that they may have already
Speaker 1: said that. There was a guidance document that was put
Speaker 1: out during the Obama administration about ways that colleges and
Speaker 1: universities could, consistent with the constitution, use race in college
Speaker 1: admissions and other actions. The Trump administration revoked that guidance,
Speaker 1: and I'm pretty sure that the Biden administration has said
Speaker 1: that one of the actions is going to take is
Speaker 1: to put that guidence back in place. So that's a
Speaker 1: really good marker of what they will do UM once
Speaker 1: there in place. But if f f F A UM
Speaker 1: is allowed to be a plaint if in the Yale case,
Speaker 1: it doesn't really matter. You will have to fight against
Speaker 1: the private point of than for being in the Bloomberg
Speaker 1: Last Show, Audrey, that's Audrey Anderson, who has the higher
Speaker 1: education practice at Bassbarian SIMS. And that's it for the
Speaker 1: sedition of the Bloomberg Law Show. I'm June Grasso. Thanks
Speaker 1: so much for listening. Remember you can always get the
Speaker 1: latest legal news on our Bloomberg Law Podcast. You can
Speaker 1: find them on iTunes, SoundCloud, or at www dot bloomberg
Speaker 1: dot com slash podcast Slash Law. Thanks so much for listening,
Speaker 1: and please tune into the Bloomberg Laws Show every evening
Speaker 1: at ten pm Eastern right here on Bloomberg Radio.