Deputy Attorney General Rod Rosenstein – the second-highest-ranking official at the Department of Justice – recently announced the formation of the Task Force on Market Integrity and Consumer Fraud. The announcement came at a widely publicized press conference, a signal that the Task Force ranks high on the list of the Department’s law enforcement priorities. Given the prominence of the Task Force, all businesses would be well served by understanding what it is and what it seeks to accomplish.
The Task Force has a strikingly broad mandate. According to the Presidential Executive Order that created it, the Task Force is to aid in the “investigation and prosecution of cases involving fraud on the government, the financial markets, and consumers, including cyber-fraud and other fraud targeting the elderly, service members and veterans, and other members of the public; procurement and grant fraud; securities and commodities fraud, as well as other corporate fraud, with particular attention to fraud affecting the general public; digital currency fraud; money laundering, including the recovery of proceeds; health care fraud; tax fraud; and other financial crimes.”
The membership of the Task Force further highlights the breadth of its mandate – and the importance that the Department places on it. The Task Force comprises a wide array of government officials from numerous government bodies. Its Chair is the Deputy Attorney General; its Vice Chair is the Associate Attorney General, the third-highest-ranking official at the Department. Other Department officials on the Task Force are the Assistant Attorneys General for the Criminal, Civil, Tax, and Antitrust Divisions; the Director of the FBI; and designated U.S. Attorneys. What’s more, the Task Force is to invite the participation of no fewer than eight Cabinet Secretaries, the Director of the Bureau of Consumer Financial Protection, the Chairman of the Federal Trade Commission, the Chairman of the Securities and Exchange Commission, and more than 10 other agencies, commissions, and boards.
If past is prologue, then we have a good sense of the way the Task Force will operate. We say that because the Task Force is not the first of its kind. The Task Force replaces the Obama-era Financial Fraud Enforcement Task Force – created in the wake of the financial crisis – which, in turn, replaced the Bush-era Corporate Fraud Task Force – created in the wake of the Enron scandal. Although these earlier task forces were very much creatures of their time – the Financial Fraud Enforcement Task Force emphasized fraud of all types associated with residential mortgages and the Corporate Fraud Task Force emphasized public company accounting fraud – these earlier task forces had much in common operationally. We know that because of our deep involvement with them; our partners include the former Executive Director of the Financial Fraud Enforcement Task Force and the former Director of the Department’s Consumer Protection Branch, a leader in that task force’s Consumer Protection Working Group. These earlier task forces helped to coordinate nationwide enforcement activity, be it criminal, civil, or administrative. They convened working groups that offered recommendations for changes to laws, policies, investigative tactics, and prosecutions. And, most important, they helped to direct resources – money and people – to areas that they believed merited particular attention. In so doing, these earlier task forces set enforcement priorities.
We expect that the new Task Force will operate in much the same way as these earlier task forces. The question, of course, is what kinds of cases will this new Task Force pursue? Where, in other words, will it send government resources?
The answers to those questions are still a bit fuzzy, but we have some clues. We find them in the speeches given by the government officials at the press conference announcing the Task Force. There, Mr. Rosenstein, the Chairman of the Securities and Exchange Commission (Jay Clayton), the Acting Director of the Bureau of Consumer Financial Protection (Mick Mulvaney), and the Chairman of the Federal Trade Commission (Joe Simons) all spoke. Woven into each of the speeches were several themes, some of which carry over from the Corporate Fraud Task Force and the Financial Fraud Enforcement Task Force:
- The Task Force will focus on conduct that harms individual people. That harm could be financial; it could arise from a fraud scheme in which money is stolen from consumers. That harm could also be physical; it could arise from a healthcare billing fraud scheme associated with the unlawful prescription of opioids.
- Of particular concern is conduct that victimizes the elderly or service members.
- The Task Force will seek to better use the vast amounts of data available to the government so as to target conduct that results in the most harm.
- Improved cooperation and communication among government agencies are key.
- That cooperation will include closer coordination of remedies so as to avoid the “piling on” of duplicative penalties imposed by several government agencies for the same conduct.
Given the still evolving nature of the Task Force and given the stated themes that will animate it, there are some tips we urge you to heed:
- Stay tuned for further announcements from the Task Force about the specific kinds of cases it will pursue. As Mr. Rosenstein stated, one of the first orders of Task Force business will be to survey its partner agencies to identify areas in need of enforcement activity. The results of that survey should provide important clarity as to where the Task Force is headed.
- If your client or customer base is composed of individual consumers – especially if they are older Americans or service members – be sure that your risk and compliance processes, procedures, and policies are robust and fully up to date.
- Any subject of government enforcement activity must seek the advice of a broad range of advocates. The Task Force’s emphasis on coordination – and its stated desire to avoid “piling on” – puts a premium on the ability to accurately assess global exposure, and then confront it. That assessment might involve, for instance, experts in criminal litigation; government procurement and grant rules; state Attorneys General authority; and private class action defense.