DOJ wants investigated companies to out their fraudsters

The Justice Department is looking for scalps.

Companies under investigation for fraud better be prepared to name names if they want prosecutors to show any mercy, the Justice Department’s criminal head said in a speech Friday at New York University.

“We really expect a company that’s seeking full cooperation credit to identify the culpable individuals who are engaged in criminal misconduct even if they’re senior executives,” said Leslie Caldwell, the assistant attorney general in charge of the DOJ’s criminal division.

“Prosecuting corporate individual executives in the case of corporate misconduct is really our top priority,” she added.

Caldwell has led major prosecutions against some of the biggest banks since she started in her role at the agency a year ago. French bank BNP Paribas paid $8.9 billion in fines and pleaded guilty to laundering money for black-listed nations like Iran and Sudan. Credit Suisse paid $2.6 billion in fines and pleaded guilty to aiding tax cheats.

Those prosecutions could have been less painful for those firms if only they had cooperated, Caldwell said Friday.

For all the tough talk, some people believe that the feds are too soft, especially when it comes to prosecuting individuals. Manhattan federal Judge Jed Rakoff down-played the DOJ’s string of cases against the big banks.

“Most respectfully, I think that is very small potatoes when compared to prosecuting individuals, in particular high-level individuals responsible for the crime,” Rakoff said in a speech Friday evening at the New York University School of Law.

“OK, we’ve got companies agreeing they’re going to pay $2 billion — which will help fund the Department of Justice for another week — and we get a great big press conference and we announce that this time, by gosh, that they admitted X-Y-Z,” he said during a question-and-answer session.