Why American Corporations Are Almost Never Prosecuted
The Department of Justice has developed a system of deferred prosecution agreements that allows companies to avoid criminal convictions for conduct that would send an individual to prison. The system is working exactly as designed.
Between 2015 and 2023, the Department of Justice entered into deferred prosecution agreements (DPAs) or non-prosecution agreements (NPAs) with Goldman Sachs (1MDB fraud), HSBC (money laundering for drug cartels), JPMorgan Chase (foreign exchange manipulation), Boeing (737 MAX certification fraud), and dozens of other major corporations for conduct that, had it been committed by individuals without the corporate intermediary, would almost certainly have produced criminal convictions.
In a DPA, the DOJ agrees to defer prosecution of criminal charges — the charges are filed but not prosecuted — in exchange for the company's agreement to pay fines, cooperate with investigations, and implement compliance reforms. If the company complies with the agreement for a specified period (typically two to three years), the charges are dismissed. The company is not convicted of any crime. No criminal record attaches. The executives responsible for the criminal conduct are typically not prosecuted.
The rationale for DPAs — articulated in a series of DOJ policy memoranda beginning with the "Holder Memo" of 1999 — is that the consequences of actually convicting a major corporation could be disproportionate: criminal conviction can trigger mandatory debarment from federal contracting, license revocations, and reputational damage severe enough to harm innocent employees, shareholders, and customers who bear no responsibility for the criminal conduct. The "collateral consequences" doctrine — that prosecution must weigh not just the offense but its downstream effects on innocent third parties — provides the intellectual framework for the corporate-favorable resolution of most major federal criminal cases.
This doctrine is not obviously wrong as applied to genuine edge cases. It has been applied so broadly that it has become the default response to corporate crime rather than an exception, producing a system in which the entity with the greatest capacity to pay fines and the most sophisticated compliance infrastructure receives the most favorable treatment from the criminal justice system.
The individual prosecution gap
The systemic failure of corporate criminal justice is not the absence of corporate prosecution, though that is real. It is the absence of individual prosecution for corporate crime.
The Arthur Andersen prosecution in 2002 — which produced a criminal conviction that effectively destroyed the company — is the canonical DOJ argument against aggressive corporate prosecution. Its lesson has been applied so broadly that the DOJ has become systematically unwilling to bring criminal charges against major financial institutions and their employees for conduct that caused enormous harm. The 2008 financial crisis produced no criminal convictions of senior bank executives despite conduct that included fraudulent representations to investors, misleading loan originators, and systematic evasion of disclosure requirements.
The "too big to jail" problem identified by Senator Sherrod Brown and others is real, but its mechanism is more specific than the phrase suggests. The problem is not that major corporations cannot be prosecuted; it is that the individuals responsible for corporate crime are shielded from personal accountability by the complexity of corporate decision-making, the cost and difficulty of proving individual knowledge and intent in large organizations, and the tacit understanding that pursuing individual prosecutions for corporate decisions creates liability risk for any executive in any major company.
The result is that the primary deterrent for corporate crime — individual criminal accountability — has been effectively removed for the class of conduct most likely to produce large-scale social harm.
Metaculus forecasts a 31 percent probability that a major US financial institution or its senior executives will face a successful criminal prosecution — resulting in a conviction rather than a deferred prosecution agreement — before 2030. The probability has been roughly constant for a decade; the structural factors that produce it have not changed.
Nathaniel Brooks is a contributing writer at The Auguro covering constitutional law, the Supreme Court, and the legal dimensions of technology and democracy.