Expert Testimony – Corporate Compliance & Ethics

A new “practice” area may be emerging for testifying experts.

When an employee(s) of an organization violates a law, regulatory requirement, etc., the organization can be, and often is, held liable for it.  That liability may be, among to other things, criminal in nature (corporate criminal liability) or one associated with government contracting (present responsibility and/or responsible government contractor).  It may also be civil, in such instances where there are collateral civil actions (class actions and/or shareholder derivative suits) arising out of the employee(s) misconduct.

One of the primary considerations of corporate liability, at least from the enforcement perspective, is the organization’s corporate compliance & ethics program (“Program”).   That Program, in many respects, serves as the “body armor” against vicarious liability because of its consideration under 8B2.1 of the United States Sentencing Guidelines.  Government prosecutors and Agency regulators, including suspension and debarment officials, consider an organization’s Program heavily, as demonstrated by the attention focused on such Programs in various government settlement agreements (i.e. Deferred and Non-Prosecution Agreements, Administrative Agreements, Consent Agreements, etc…).

While the benefits of an outside compliance expert are obvious as it relates to demonstrating the effectiveness of a Program to the Government, this may be a consideration in collateral civil litigation, where the Program can become a defense for the organization (or an offense for the plaintiff).  Plaintiffs and defendants routinely hire outside experts for all sorts of things associated with such litigation (i.e. damage calculations, forensic accountants, etc.) – Why not a Compliance and Ethics Program Expert?  After all, if the organization had an effective Program, what more could they have reasonably done to prevent the misconduct?  If the government uses this as the measuring stick, why shouldn’t it be considered in civil litigation?

Just a thought.  But if your organization or an organization you represent becomes embroiled in such matters, you should consider how this might fit into your litigation strategy.

If you want more thoughts about how a Corporate Compliance and Ethics Program Expert might fit within the litigation strategy of any matters you are involved in, call me.  If nothing else, it would be a very interesting conversation.

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The Fraud Guy

John has over 27 years of fraud investigations, forensic accounting, corporate compliance & ethics, and audit experience. He has applied his extensive experience in these areas across a wide array of areas and industries, frequently assisting counsel, government agencies and companies with internal corporate investigations and other matters arising from alleged fraud or misconduct. John is a thought leader and expert on Corporate Monitors/Compliance Monitors, a practice area involving the imposition of an independent third party by a gov't agency or department upon a corporation to verify that corporation’s compliance with the terms of a settlement agreement. John has previously served in a leadership role in a federal Monitorship and was involved in six other federal monitorships: three as the named Monitor, one as the "Independent Business Ethics Program Evaluator" and twice in support of the named Monitor. In these roles, John has reported to the Department of Justice, the Department of Interior, the Department of Transportation, the Small Business Administration, the Federal Highway Administration and the Massachusetts Department of Transportation. His practical experience as a Corporate Monitor and extensive knowledge in this area was applied to the development of formalized Standards for Corporate Monitors through John's Membership on the Task Force on Corporate Monitor Standards of the American Bar Association. John is also the Founder of the International Association of Independent Corporate Monitors, a not-for-profit Membership association dedicated to the practice of corporate monitoring. John is a frequently sought speaker on the topic and has provided practical advice, ideas and strategies to lawyers, government officials, and corporate executives involved in such matters, as well as newly appointed Corporate Monitors. Prior to Artifice, John spent over 5 years as a leader in the fraud investigations and forensic accounting practice of a large publicly traded international financial consulting firm. Before that, he served for 10 years as an FBI Agent, specializing in complex fraud investigations.

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