United States v. Saena Tech Corporation

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

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UNITED STATES OF AMERICA )

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v. ) Criminal No. 14-66 (EGS)

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SAENA TECH CORPORATION, )

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Defendant. )

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________________________________

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UNITED STATES OF AMERICA, )

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v. ) Criminal No. 14-211 (EGS)

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INTELLIGENT DECISIONS, INC., )

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Defendant. )

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MEMORANDUM OPINION

The United States Attorney is the representative not of

an ordinary party to a controversy, but of a sovereignty

whose obligation to govern impartially is as compelling

as its obligation to govern at all; and whose interest,

therefore, in a criminal prosecution is not that it shall

win a case, but that justice shall be done.

Berger v. United States, 295 U.S. 78, 88 (1935). Prosecutors are

provided with many tools to use in the pursuit of justice and

are granted significant discretion to decide how best to

approach each case. The pending cases involve one such tool: the

deferred-prosecution agreement (“agreement”).

The concept is simple: The government intends to prosecute a

defendant for criminal wrongdoing, but decides that the

defendant is worthy of a chance at rehabilitation and avoiding

the collateral consequences that accompany a criminal

conviction. Rather than seeking a conviction through a trial or

guilty plea, the government agrees to defer prosecution for a

period of time during which the defendant will be monitored for

compliance with various conditions, in an attempt to assess the

defendant’s rehabilitation. If the defendant succeeds, the

government does not prosecute. If the defendant does not

succeed, the government may prosecute.

In these two cases, deferred-prosecution agreements are

pending before the Court. These agreements are not, however,

with individuals charged with criminal offenses, but rather with

corporations. The government requests in both cases that this

Court determine: (1) that the parties are entitled to an

exclusion of time under the Speedy Trial Act; (2) that Saena

Tech Corporation (“Saena Tech”) and Intelligent Decisions, Inc.

(“Intelligent Decisions”) have presented adequate corporate

representatives who have the ability to bind the corporations;

and (3) that Saena Tech and Intelligent Decisions knowingly and

voluntarily waived the right to indictment. No one disputes that

the Court has the authority to make these determinations. These

cases also present the question of the Court’s role, if any, in

determining whether the agreements should be approved at all.

2

The Court finds that the agreements in these two cases should

be approved. Notwithstanding the government’s opinion of the

Court’s limited role, the Court, as set forth infra, has the

authority to assess the reasonableness of a deferred-prosecution

agreement and to decline to approve agreements that are not

genuinely designed to reform a defendant’s conduct. This

authority is limited by the strong separation-of-powers concerns

that an overly-zealous judicial review of prosecutorial

decisions would raise as well as a recognition of the expertise

that the Executive Branch has in making such decisions. As

discussed infra, Congress intended judicial scrutiny in the

decision to divert prosecution.

Applying these principles to both cases, and upon

consideration of the pleadings, the submission of the amicus

curiae in the Saena Tech case, the applicable law, and the

entire record, the Court GRANTS the motions for exclusion of

time under the Speedy Trial Act and APPROVES both deferred-

prosecution agreements, subject to periodic status hearings to

monitor the defendants’ compliance with those agreements. The

parties are directed to file periodic reports to update the

Court on the defendants’ progress and compliance with the terms

of the deferred-prosecution agreements in each case as set forth

in the Orders accompanying this Memorandum Opinion.

3

In Part I of this opinion, the Court articulates the factual

and procedural background for the two agreements. Part II sets

forth the history of the statutory provision upon which

deferred-prosecution agreements are based and concludes that

court involvement in the deferral of prosecution was

specifically intended by Congress. In Part III, the Court

reviews the two District Court decisions that have examined the

scope of judicial authority to consider deferred-prosecution

agreements and analyzes the two sources of authority identified

in those decisions: the Speedy Trial Act and the Court’s

supervisory power. In Part IV, the Court applies this framework

to approve the agreements in the pending cases. In Part V, the

Court discusses the extent to which the current use of deferred-

prosecution agreements for corporations rather than individual

defendants strays from Congress’s original intent when it

created an exclusion from the speedy trial calculation for the

use of such agreements. The Court is of the opinion that

increasing the use of deferred-prosecution agreements and other

similar tools for eligible individual defendants could be a

viable means to achieve reforms in our criminal justice system.

I. Background.

These cases arise out of a lengthy investigation into

allegations of bribery in connection with certain government

contracts. The investigation yielded a series of guilty pleas

4

beginning in 2012. Most notably, Kerry Khan, a former

contracting official for the U.S. Army Corps of Engineers,

pleaded guilty to bribery and conspiracy to commit money

laundering, and accepted responsibility for more than

$20,000,000 in bribe payments. See Plea Agreement, United States

v. Khan, No. 11-cr-276, ECF No. 74 at 1–2. The investigation of

Mr. Khan led to the discovery of another public official, In

Seon Lim, who ultimately pleaded guilty to accepting bribes in

exchange for favorable treatment of government contractors in

connection with contracts with the United States Army. See Plea

Agreement, United States v. Lim, E.D. Va. No. 14-cr-159, ECF No.

21.

The agreement in the Intelligent Decisions (“the Intelligent

Decisions Agreement”) case is rather standard. Intelligent

Decisions has agreed to pay a fine and institute various

compliance measures to prevent the recurrence of bribery

offenses similar to the one with which it is charged. In

exchange, the government will defer prosecution for a period of

two years and dismiss all charges if Intelligent Decisions

remains in compliance. The government has also charged and

obtained guilty pleas from two employees of Intelligent

Decisions in connection with the crime with which the company is

now charged.

5

The agreement in the Saena Tech (“the Saena Tech Agreement”)

case is somewhat unusual. It is an agreement between not only

the federal government and Saena Tech, but also Jin Seok Kim—the

former Chief Executive Officer of Saena Tech who, according to

the Statement of Facts, is the individual who personally paid

the bribes Saena Tech is charged with paying. Mr. Kim has not

been named in any criminal proceeding, yet the Saena Tech

Agreement provides that prosecution of Saena Tech and Mr. Kim

will be deferred for two years, provided that Saena Tech pays a

fine and institutes a compliance program, and that Saena Tech

and Mr. Kim cooperate in the government’s ongoing investigation.

Successful completion of that two-year term will result in the

dismissal of any charges against Saena Tech. Mr. Kim thus

receives the benefits of deferred prosecution without having

been named in a criminal case.

A. United States v. Saena Tech Corp. 1

1. Factual Background Regarding Saena Tech.

Saena Tech is a South Korean company that was founded by Mr.

Kim in 2005. See Statement of Facts, ECF No. 5-1 at 18. Saena

Tech “operated as a subcontractor for U.S.-based government

contracting companies providing technical services and equipment

1 Unless otherwise noted, the ECF citations in this section refer

to documents filed in United States v. Saena Tech Corp., No. 14-

cr-66 (D.D.C. filed Mar. 24, 2014).

6

for the Eighth United States Army,” which is based in South

Korea. Id. One such contract involved the Program Executive

Office Enterprise Information Systems (“PEO EIS”), an

organization within the United States Army. See id.

Mr. Lim 2 was an Assistant Project Manager for a division of

the PEO EIS known as the Project Manager, Defense Communications

and Army Transmission Systems (“PM DCATS”). See id. at 18–19.

Mr. Lim was employed in this position and based in Seoul, South

Korea until approximately June 2010. See id. at 19. During his

time in South Korea, Mr. Lim was the contracting officer for

part of a contract (“the Prime Contract”) with the Eighth United

States Army, a position which gave him “influence over the

selection of subcontractors who performed work under the Prime

Contract.” Id. at 19. Saena Tech ultimately obtained

subcontracts to work on the Prime Contract from a variety of

sources, including “Company F,” the primary contractor for the

Prime Contract, as well as three subcontractors, “Company E,”

“Company G,” and Avenciatech. See id. at 19–20.

After coming into existence in 2005, Saena Tech began to

perform subcontract work for the United States Army on a project

that originated with the office at which Mr. Lim was employed.

See id. at 20. Mr. Kim, then Saena Tech’s CEO, met Mr. Lim at

2 In Seon Lim is referred to as “Public Official C” in the

Statement of Facts.

7

this time. Id. By early 2009, Saena Tech “was performing a

subcontract for a project administered by [Mr. Lim].” Id. at 20.

Mr. Kim soon “learned from [John Han] Lee that [Mr. Lim] wanted

a car” and Mr. Lee “further informed Kim that Lee would make the

arrangements for the purchase.” Id. at 21. Mr. Kim agreed to

contribute $10,000 toward the purchase of “a 2009 Lexus ES350

for [Mr. Lim] and to wire the [entire] purchase price of the

Lexus.” Id. Mr. Lim used the Lexus between March 2009 and June

2010, when he left South Korea. See id. Before leaving South

Korea, Mr. Lim was unable to sell the Lexus, so Mr. Kim “gave

Lee $25,000 in cash to purchase the Lexus,” and Mr. Lee did so,

without informing Mr. Lim that the money came from Mr. Kim. See

id.

During the Spring of 2009, Mr. Lee suggested that Mr. Kim

“should pay money to [Mr. Lim],” which caused Mr. Kim to believe

that if he failed to do so, “Saena Tech’s ability to retain

subcontracts and obtain new ones based on merit would be

jeopardized.” Id. Accordingly, around September 2009, Mr. Kim

gave Mr. Lim “approximately $40,000 in cash . . . to assist

Saena Tech in obtaining and retaining subcontracting

opportunities through subcontracts administered by [Mr. Lim] on

behalf of the Army.” Id. Around April 2010, Mr. Kim gave another

$30,000 for the same purpose. See id.

8

Also around April 2010, Mr. Kim met with Mr. Lim and the Chief

Executive Officer of Company G, one of the other subcontractors.

See id. at 22. They “agreed that [Mr. Kim] would cause Saena

Tech to submit an invoice to Company G for $250,000 for work

purportedly performed by Saena Tech on a subcontract to Company

G for work administered by [Mr. Lim]. . .” Id. They further

agreed that Saena Tech would not be obligated to perform any

actual work in exchange for that invoice. See id. Mr. Kim

“agreed to pay to [Mr. Lim] the proceeds obtained from the

fraudulent invoice, less 30% for taxes owed. . .” Id. In April

2010, Mr. Kim submitted the fraudulent invoice and paid

$175,000, the proceeds less taxes, “to [Mr. Lim] in several

installments between on or about April 9, 2010 and on or about

May 6, 2010.” Id.

The total amount of cash bribes paid by Mr. Kim on behalf of

Saena Tech was approximately $280,000. See id. at 21-22. During

the same time period, Mr. Kim also provided other things of

value to Mr. Lim, including “meals and entertainment to assist

Saena Tech in obtaining and retaining subcontracting

opportunities through subcontracts administered by [Mr. Lim].”

Id. Ultimately, Saena Tech obtained over fifteen subcontracts to

perform work for the United States Army, between January 2009

and the present. See id. The amount of money Saena Tech earned

on these contracts is unclear.

9

2. The Saena Tech Agreement.

On March 24, 2014, the government filed a one-count

Information charging Saena Tech with bribery of a public

official in violation of 18 U.S.C. § 201. See Information, ECF

No. 1 at 2. The Information charged that Saena Tech gave various

things of value to Mr. Lim

with the intent to influence official acts . . . to wit,

Saena Tech gave, offered, and promised in excess of

$250,000 in cash and other things of value, including

meals and entertainment, to [Mr. Lim] and for [Mr. Lim’s]

benefit in return for [Mr. Lim] using [his] official

assistance to direct subcontracts to Saena Tech and

providing preferential treatment for Saena Tech with

subcontracts awarded through the United States

Department of the Army.

Id. at 1–2. Notably, Mr. Kim was not charged in any criminal

case.

On April 16, 2014, the government filed a joint motion “for

approval of deferred prosecution and exclusion of time under the

Speedy Trial Act.” Mot. for Approval, ECF No. 5. 3 Attached to

that motion was the Saena Tech Agreement. See Deferred-

Prosecution Agreement, ECF No. 5-1. The Saena Tech Agreement is

between three parties: the U.S. Attorney for the District of

Columbia, Saena Tech, and Mr. Kim. See id. at 14–15.

3 The parties have since clarified their intent to move, not for

Court approval of the Agreement itself, but for approval of the

requested exclusion under the Speedy Trial Act. See Consent Mot.

to Clarify, ECF No. 23. To clarify the record regarding the

government’s view of this Court’s authority, the Court GRANTS

that motion.

10

The Saena Tech Agreement, which was entered into by Mi Kyoung

Lee, Chairperson of the Board of Directors, and Mr. Kim,

Managing Director, provides that, in consideration of the “past

and future cooperation” of Saena Tech and Mr. Kim, Saena Tech’s

payment of a fine, and Saena Tech’s implementation of a

corporate-compliance program, “any prosecution of the Company

and Mr. Kim . . . be and hereby is deferred. . .” Id. at 9. The

term of deferral is two years from “the date on which the

Information is filed.” Id. at 3. Saena Tech also admitted to the

truth of the facts set forth in the Statement of Facts and

agreed that “[s]hould [the U.S. Attorney’s Office] pursue the

prosecution that is deferred by this Agreement, the Company . .

. will neither contest the admissibility of nor contradict the

Statement of Facts.” Id. at 3. There is no parallel statement as

to the government’s potential use of the Statement of Facts

against Mr. Kim. In the event that the U.S. Attorney’s Office

were to determine, “in its sole discretion,” that either Saena

Tech or Mr. Kim breached the Agreement, “[they] shall thereafter

be subject to prosecution. . .” Id. at 9. Finally, “by signing

this Agreement, [Saena Tech] and Mr. Kim agree that the statute

of limitations with respect to any such prosecution that is not

time-barred on the date of the signing of this Agreement shall

be tolled for the Term [of the Agreement] plus one year.” Id. at

10.

11

The Saena Tech Agreement creates three obligations necessary

to obtain the deferral:

Cooperation: Mr. Kim and Saena Tech must cooperate in ongoing

investigations by: (1) “[t]ruthfully disclos[ing] all factual

information not protected by [certain privileges] with respect

to” activities of Saena Tech, and related entities and

individuals, “concerning all matters relating to corrupt

payments in connection with United States government contracts”;

(2) “designat[ing] knowledgeable employees, agents, or attorneys

to provide to the Office the [relevant] information and

materials”; (3) “us[ing] . . . best efforts to make available

for interviews or testimony . . . present or former officers,

directors, employees, agents and consultants of the Company”;

and (4) for Mr. Kim, “agree[ing] to travel to the United States

for interviews or testimony as requested.” Id. at 4–5.

Fine: Saena Tech agreed to pay a $500,000 fine “within ten . .

. days of the filing of the Information.” Id. at 6. That fine,

the Saena Tech Agreement declares, “is appropriate given the

facts and circumstances of this case.” Id.

Compliance Program: Saena Tech agreed to implement “a

compliance and ethics program designed to prevent and detect

violations of the applicable anti-corruption laws throughout its

operations. . .” Id. at 8. The Saena Tech Agreement requires

changes to “ensure that the Company maintains: (a) a system of

12

internal accounting controls designed to ensure the making and

keeping of fair and accurate books, records, and accounts; and

(b) a rigorous anti-corruption compliance code, standards, and

procedures designed to detect and deter violations of the

applicable anti-corruption laws.” Id.

3. Procedural History of United States v. Saena Tech.

The Court scheduled a status hearing for May 7, 2014 to

“determine the process and procedures that will apply to further

proceedings regarding the joint motion for approval of the

deferred-prosecution agreement.” Minute Order of April 29, 2014.

At that status hearing, the Court indicated that it would not

consider the Saena Tech Agreement without first receiving in-

person testimony from a corporate officer with the ability to

bind Saena Tech and to testify regarding the provisions of the

deferred-prosecution agreement as well as the underlying facts.

The Court also required Saena Tech to submit corporate documents

proving that its representative had the authority to bind the

corporation.

On June 3, 2014, Saena Tech filed various corporate documents

to demonstrate its approval of the Saena Tech Agreement and to

demonstrate that Ms. Lee, its Chief Executive Officer—who is

also Mr. Kim’s wife—has the authority to bind the corporation.

See Notice of Filing, ECF No. 13. These included Saena Tech’s

Articles of Incorporation and a resolution of Saena Tech’s Board

13

of Directors approving the deferred-prosecution agreement. See

Articles of Incorp., ECF No. 13-3; Resolution, ECF No. 13-5. The

resolution reflects that Saena Tech’s “directors’ meeting” was

attended by only two directors: Ms. Lee and Mr. Kim. See

Resolution, ECF No. 13-5 at 2.

On June 6, 2014, the Court directed Saena Tech “to file

evidence of its new corporate-compliance program.” Minute Order

of June 6, 2014. Saena Tech filed responsive documents regarding

its compliance program on June 12, 2014 and June 16, 2014. See

Proffer, ECF No. 16; Proffer Replacement Doc., ECF No. 17. In

these documents, Saena Tech asserts that it has taken six steps

in furtherance of its obligations:

• Appointment of Compliance Officer: Saena Tech appointed

Choondong Lee as Internal Compliance Officer, “to carry out

the responsibility of implementing and supervising a

corporate-compliance and ethics program.” Proffer, ECF No.

16 at 1-2; see also Board of Directors Resolution, ECF No.

16-1.

• Creation of Internal Control System: Choondong Lee has

“established and implemented an internal control system.”

Proffer, ECF No. 16 at 2. This system requires the

Compliance Officer to monitor company actions and ensure

that only authorized individuals are engaging in company

transactions and using company assets, and that accounting

and inventory audits are regularly and accurately done. See

Report, ECF No. 16-2 at 3-4. The Compliance Officer is also

required to file monthly reports with Saena Tech’s auditor.

Id.

• Establishment of Hotline: Saena Tech created a “Corporate

Compliance Hotline . . . to provide Saenatech’s [sic]

employees with a means by which to raise their concerns and

to report possible wrongdoing” using a confidential

14

procedure that will be investigated by Saena Tech’s outside

counsel. See Proffer, ECF No. 16 at 2; ECF No. 16-3 at 2.

• Design of Code of Conduct: Saena Tech contracted with a law

firm “to draft a Code of Conduct, Standards and Compliance

in furtherance of the requirements of the DPA.” Proffer,

ECF No. 16 at 2; see also Contract, ECF No. 16-4. The Code

of Conduct consists of a 24-slide PowerPoint presentation.

See ECF No. 17-1. It provides guidance regarding various

potential ethical issues, including Saena Tech’s commitment

not to retaliate against those who expose ethical issues,

how to respond to and report ethical and legal concerns,

how to approach business-related gifts, and Saena Tech’s

prohibition on the payment of bribes. See id.

• Holding a Seminar Series: Choondong Lee has conducted the

first of what will be a periodic seminar series “for all

employees for the purpose of instructing them with regard

to anti-corruption and corporate-compliance issues.”

Proffer, ECF No. 16 at 3; see also Report, ECF No. 16-8.

• Appointment of New Compliance Officer: Saena Tech appointed

its outside counsel, Sucheol Noh, to serve as the company’s

auditor “to carry out more professional checking and

balancing” because “[t]he former Inspector had been a

relative of Mr. Kim and Ms. Lee.” Proffer, ECF No. 16 at 3;

see also Stockholders Minutes, ECF No. 16-9.

The Court commenced the July 17, 2014 hearing by expressing a

few concerns regarding the deferred-prosecution agreement. See

Tr. of July 17, 2014 Status Hearing, ECF No. 38 at 4:11–7:11.

Specifically, the Court noted that the agreement appears to

“essentially ha[ve] the effect of immunizing Mr. Kim” and that

this raises concerns regarding the “fundamental fairness of this

agreement” in light of the guilty pleas and criminal records

that have resulted for other defendants charged in the

investigation. Id. at 4:11–25. The government responded to the

Court’s concerns, conceding that the agreement “essentially

15

offers Mr. Kim letter immunity, but it’s contingent upon his

cooperation.” Id. at 7:16–17. Regarding the fairness of the

Saena Tech Agreement, the government agreed that this is

“certainly a better ride than the other defendants,” id. at

9:12-13, but noted what the government considered in making its

decision: (1) “Saena Tech is a Korean corporation . . . does its

work in Korea; no work in the United States at all. Mr. Kim is a

Korean national, did his work for Saena Tech in South Korea, was

not doing work here in the U.S., and so there are obstacles with

regard to a prosecution”; (2) “Mr. Kim’s cooperation is

extremely important to the Government with regard to [Mr. Lim’s]

case . . . and with regard to potential[] future cases”; (3) Mr.

Kim “volunteered a lot of the information that Your Honor sees

in the statement of offense”—“information the Government did not

know”; and (4) “this company is almost assuredly going to be

permanently debarred” from government contracts. See id. at

9:24–12:25.

After this discussion, the Court noted that the case was

“nontraditional” in that “[t]here’s no one else in the courtroom

raising concerns” and “the Court cannot be an advocate.” Id. at

19:13–19. The Court indicated that it would appoint an amicus

curiae to fill that role. See id. at 26:7–20. Accordingly, the

Court proceeded with a colloquy with Mr. Kim and Ms. Lee, as

Saena Tech’s corporate representative, and “defer[red] the

16

question of acceptance or rejection to another date.” Id. at

26:21–25. The Court engaged both Ms. Lee and Mr. Kim in a

colloquy regarding their understanding of the Saena Tech

Agreement, their agreement to the truth of the Statement of

Facts, their waivers of conflicts of interest in connection with

the joint representation, and, in the case of Ms. Lee, her

waiver of indictment and speedy trial, and ability to bind the

corporation. See id. at 41:16–71:1.

After the hearing, the Court appointed Professor Brandon L.

Garrett of the University of Virginia School of Law to serve,

along with Dean Alan Morrison of The George Washington

University Law School as his local counsel, “as amicus curiae to

respond to the parties’ arguments and provide the Court with

advocacy in favor of broader court authority, vel non, to

consider issues including the fairness and reasonableness of a

deferred-prosecution agreement in deciding whether to accept or

reject a deferred prosecution-agreement.” 4 Minute Order of July

21, 2014. The government filed its supplemental brief,

responding to the concerns raised by the Court, on August 8,

2014. See Gov’t’s Suppl. Br., ECF No. 26. The defendant filed a

“letter in lieu of a more formal brief” indicating that it and

Mr. Kim concur with the government’s brief. See Letter, ECF No.

4 The Court appreciates the helpful suggestions and illuminating

analysis provided by amicus curiae.

17

25-1 at 1. The amicus filed his brief on August 22, 2014. See

Amicus Br., ECF No. 31. The government filed a brief in response

to the amicus’s filing on August 29, 2014. See Reply, ECF No.

32.

A motion hearing regarding approval of the deferred-

prosecution agreement was held on September 5, 2014. Counsel for

the government and Saena Tech, as well as the court-appointed

amicus curiae, presented argument during that hearing. After the

hearing, the Court entered the following Minute Order regarding

two questions that had arisen during the hearing:

In accordance with the discussion held on the record

during the September 5, 2014 motion hearing, the parties

are directed to file supplemental briefs addressing the

following issues: (1) whether, after a Court approves an

exclusion of time under Section 3161(h)(2) of the Speedy

Trial Act, the Court has any authority to hold a defendant

that is party to the relevant deferred-prosecution

agreement in contempt for failing to comply with the

agreement’s provisions; and (2) whether the Court may

order a party to a deferred-prosecution agreement to

comply with the provisions of that agreement in

connection with a colloquy regarding that party’s

understanding of the agreement and relinquishment of its

constitutional and statutory right to a speedy trial.

Minute Order of September 5, 2014. The government filed its

brief on October 13, 2014. See Gov’t’s Suppl. Br., ECF No. 35.

The amicus curiae filed his brief on October 21, 2014. See

Amicus Suppl. Br., ECF No. 36.

18

B. United States v. Intelligent Decisions, Inc. 5

1. Factual Background Regarding Intelligent Decisions.

Intelligent Decisions is an information-technology company

based in Ashburn, Virginia, which conducts “the vast majority”

of its business with the United States government. See Statement

of Facts, ECF No. 3-2 at 18. Harry Martin, Jr. was the founder,

President, CEO, and owner of Intelligent Decisions, while Chae

Shim was the company’s Director of Acquisition Accounts for the

Asia/Pacific region. See id. Both Mr. Martin and Mr. Shim were

provided with corporate credit cards by Intelligent Decisions.

See id.

Intelligent Decisions’ involvement in the bribery scheme is

similar to that of Saena Tech. Like Saena Tech, it sought to

obtain contracts related to the PEO EIS organization within the

United States Army. See id. at 19. Also like Saena Tech,

Intelligent Decisions’ interactions were with Mr. Lim in his

capacity as Assistant Project Manager for the PM DCATS division

of the PEO EIS. See id. at 19.

Intelligent Decisions ultimately replaced another company in

providing an Information Technology Help Desk subcontract on the

same Prime Contract that Mr. Lim was supervising and in which

5 Unless otherwise noted, the ECF citations in this section refer

to documents filed in United States v. Intelligent Decisions,

Inc., No. 14-cr-211 (D.D.C. filed October 10, 2014).

19

Saena Tech was involved. See id. at 20. During this time, Saena

Tech “operated as a subcontractor for Intelligent Decisions” as

well as other companies. Id. Intelligent Decisions was involved

in the help desk subcontract from January 2009 until March 2010.

Id.

In January 2009, John Han Lee, an employee of the company that

was then-servicing the help desk subcontract, approached Mr.

Martin and Mr. Shim with the opportunity to take over the

subcontract. Id. at 21. Mr. Shim and Mr. Martin then traveled to

South Korea to meet with Mr. Lim. See id. On approximately

January 23, 2009, Mr. Martin paid $553.03 for dinner with Mr.

Lim and Mr. Shim, among others, and Mr. Shim paid $2,382.49 for

drinks and entertainment with Mr. Martin and Mr. Lim, among

others. See id. Both payments were made using Intelligent

Decisions’ corporate credit cards. See id. On January 30, 2009,

Intelligent Decisions was awarded the help desk contract with

Mr. Lim’s assistance. Id. The contract was worth $525,000, and a

second contract obtained by Intelligent Decisions was worth

$67,294.40. Id. Intelligent Decisions also agreed to hire Mr.

Lee and two other individuals to work on the subcontracts. Id.

For the remainder of 2009, Intelligent Decisions paid a number

of expenses on behalf of Mr. Lim. See id. at 22–26. The total

came to over $10,000 in meals, entertainment, golf outings, and

golf equipment, as well as a vehicle worth over $30,000. See id.

20

at 26. In exchange, Intelligent Decisions obtained modifications

to the existing subcontracts, which increased their values

significantly. See id. at 23–25.

Mr. Shim is no longer with the company. He pleaded guilty

before this Court to one count of felony gratuity in violation

of 18 U.S.C. § 201(c)(1)(A), and was sentenced to two years of

probation. See Plea Agreement, United States v. Chae Shim, No.

14-cr-182 (D.D.C. filed Nov. 6, 2014), ECF No. 8 at 1; J.,

United States v. Chae Shim, No. 14-cr-182 (D.D.C. filed April

17, 2015), ECF No. 27 at 2. Mr. Martin resigned as Chairman and

CEO of Intelligent Decisions, pleaded guilty before this Court

to one count of felony gratuity in violation of 18 U.S.C. §

201(c)(1)(A), and was sentenced to three years of probation and

a fine of $250,000. See Plea Agreement, United States v. Harry

Martin, No. 14-cr-210 (D.D.C. filed Nov. 24, 2014), ECF No. 4 at

1; J., United States v. Harry Martin, No. 14-cr-210 (D.D.C.

filed Mar. 20, 2015), ECF No. 27 at 2, 4.

2. The Intelligent Decisions Agreement.

On October 15, 2014, the government filed a one-count

Information charging Intelligent Decisions with paying a

gratuity to a public official in violation of 18 U.S.C. § 201.

See Information, ECF No. 1 at 1. The Information charged that

Intelligent Decisions gave various things of value to Mr. Lim

21

because of an official act performed and to be performed

by In Seon Lim . . . that is, Intelligent Decisions gave,

offered, and promised to In Seon Lim over $10,000 in

meals, entertainment, golf outings, and golf equipment,

and a vehicle worth over $30,000, for and because of

Lim’s official assistance to direct subcontracts to

Intelligent Decisions and Lim’s provision of

preferential treatment for Intelligent Decisions with

subcontracts awarded through the United States Army.

Id.

On October 28, 2014, the government filed a joint motion for

exclusion of time under the Speedy Trial Act. See Joint Mot.,

ECF No. 3-1 at 1. Attached to that motion was the Intelligent

Decisions Agreement. See Deferred-Prosecution Agreement, ECF No.

3-2. The Intelligent Decisions Agreement provides that, in

exchange for Intelligent Decisions’ cooperation, its payment of

a fine, and its implementation of a corporate-compliance

program, prosecution of Intelligent Decisions will be deferred

for a term of two years. See id. at 3, 4. Intelligent Decisions

admitted, in entering into the Agreement, to the truth of the

Statement of Facts, and also agreed that “[s]hould [the U.S.

Attorney’s Office] pursue the prosecution that is deferred by

this Agreement, the Company . . . will not contradict anything

in the Statement of Facts at any such proceeding.” Id. at 3. In

the event that the U.S. Attorney’s Office were to determine, “in

[its] sole discretion,” that Intelligent Decisions breached the

Agreement, it “shall thereafter be subject to prosecution.” Id.

at 10. Finally, the Intelligent Decisions Agreement provides

22

that “by signing this Agreement, [Intelligent Decisions] agrees

that the statute of limitations with respect to any such

prosecution that is not time-barred on the date of the signing

of this Agreement shall be tolled for the Term [of the

Agreement] plus one year.” Id. at 10.

Much like the Saena Tech Agreement, the Intelligent Decisions

Agreement imposes three obligations on the company that are

necessary to obtain the deferral:

Cooperation: Intelligent Decisions must cooperate fully in any

“investigation of the Company and its affiliates . . . in any

and all matters relating to the conduct described in the

Agreement and [Statement of Facts]. . .” Id. at 4. The company

must (1) “truthfully disclose all factual information not

protected by [certain privileges]”; (2) designate knowledgeable

employees, agents, or attorneys to provide to the Office the

[relevant] information and materials”; (3) “use its best efforts

to make available for interviews or testimony . . . present or

former officers, directors, employees, agents and consultants of

the Company”; and (4) “consent to any and all disclosures . . .

as the Office, in its sole discretion, shall deem appropriate.”

Id. at 5-6.

Fine: Intelligent Decisions agreed to pay a $300,000 fine

within ten days of the filing of the Information. Id. at 7. That

23

fine, the Intelligent Decisions Agreement declares, “is

appropriate given the facts and circumstances of this case.” Id.

Compliance Program: Intelligent Decisions agreed to implement

“a compliance and ethics program designed to prevent and detect

violations of 18 U.S.C. § 201 and other applicable anti-

corruption laws throughout its operations.” Id. at 8. The

Intelligent Decisions Agreement requires that it undertake a

review of its “existing internal accounting controls, policies,

and procedures regarding compliance with anti-corruption laws”

and “adopt new or modify existing internal controls, policies,

and procedures” to maintain: “(a) a system of internal

accounting controls designed to ensure the making and keeping of

fair and accurate books, records, and accounts; and (b) a

rigorous anti-corruption compliance code, standards, and

procedures designed to detect and deter violations of the

applicable anti-corruption laws.” Id. at 8-9.

3. Procedural History of United States v. Intelligent

Decisions, Inc.

On November 13, 2014, the Court held a status hearing “to

discuss the procedures that will govern the Court’s review and

consideration” of the Joint Motion for approval. Minute Order of

October 28, 2014. The Court then ordered a hearing to “conduct a

colloquy with one or more corporate officers of defendant

Intelligent Decisions.” Minute Order of November 13, 2014. The

24

Court also ordered that this hearing would follow procedures

similar to the Saena Tech case: “one or more corporate officers

with authority to bind Intelligent Decisions and familiarity

with the deferred-prosecution agreement and attached statement

of facts shall appear at that hearing” and “Intelligent

Decisions is directed to file . . . copies of documentation

sufficient to show that the corporate officers who will appear

at the January 8 hearing have the authority to speak on behalf

of and to bind the corporation.” Id. The hearing was scheduled

for January 8, 2015. See id.

The Court also ordered Intelligent Decisions to review the

pleadings filed in the Saena Tech case related to the scope of

the Court’s authority to accept or reject deferred-prosecution

agreements. Id. The Court requested that the defendant address

the issues raised by the Court in Saena Tech. See id.

Intelligent Decisions filed a brief addressing these issues on

January 5, 2015. See Def.’s Br., ECF No. 8. The Court held a

hearing on January 15, 2015, at which time the Court conducted a

colloquy similar to that in the Saena Tech case, and indicated

that it would take the Intelligent Decisions Agreement under

advisement. See Minute Entry of January 15, 2015.

25

II. Legislative History of the Speedy Trial Act’s Provisions

Related to Deferred-Prosecution Agreements.

The relevant legislative history demonstrates that deferred-

prosecution agreements were originally intended to give

prosecutors the ability to defer prosecution of individuals

charged with certain non-violent criminal offenses to encourage

rehabilitation. At this time, however, and as discussed in

detail in Part V of this Opinion, deferred-prosecution

agreements appear to be offered relatively sparingly to

individuals, and instead are used proportionally more frequently

to avoid the prosecution of corporations, their officers, and

employees.

A. The Legislative History of the Speedy Trial Act Reflects

an Intent to Permit the Deferral of Individual

Prosecutions in an Effort to Facilitate Rehabilitation.

The Speedy Trial Act permits an exclusion from the speedy

trial calculation of “[a]ny period of delay during which

prosecution is deferred by the attorney for the Government

pursuant to written agreement with the defendant, with the

approval of the court, for the purpose of allowing the defendant

to demonstrate his good conduct.” 28 U.S.C. § 3161(h)(2). It is

this sentence that forms the basis for deferred-prosecution

agreements. Without it, prosecutors would have difficulty

bringing a case onto a court’s docket and thereby obtaining the

26

benefit of the pending criminal charge and potential court

supervision of the defendant.

The legislative history of the Speedy Trial Act demonstrates

that Congress intended to provide a tool to assist in

rehabilitating individuals, modeled on successful deferred

prosecution programs in New York City and the District of

Columbia. In 1969, then-Representative Abner Mikva introduced a

bill that ultimately became the Speedy Trial Act. See Anthony

Partridge, Fed. Judicial Ctr., Legislative History of Tile I of

the Speedy Trial Act of 1974 at 19 (1980), available at

http://www.fjc.gov/public/pdf.nsf/lookup/lhiststa.pdf/$file/lhis

tsta.pdf. The bill introduced by Representative Mikva (“Mikva

Bill”) contained speedy trial exclusions, similar to those

ultimately codified in Section 3161(h) of the Speedy Trial Act.

See id. at 116. Those exclusions included what would become

Section 3161(h)(2), but omitted court involvement in the

deferral process. See id. at 280-81 (excluding “[t]he period of

delay during which prosecution is deferred by the United States

attorney pursuant to written agreement with the defendant for

the purpose of allowing the defendant to demonstrate his good

conduct” in “computing the time for trial”).

In 1970 and again in 1971, Senator Sam Ervin introduced his

own speedy trial legislation. See id. at 13-14. With the

exception of corrections for cross references, the two bills –

27

as introduced – were identical. See id. at 5. The 1970 bill

introduced by Senator Ervin (“Ervin Bill”) included an exclusion

for “[a]ny period of delay during which prosecution is deferred

by the United States attorney pursuant to written agreement with

the defendant for the purpose of allowing the defendant to

demonstrate his good conduct.” Id. at 288. The lack of court

involvement in this provision generated some debate. During a

hearing on the 1971 Ervin Bill, Former Assistant U.S. Attorney

Daniel A. Rezneck submitted a prepared statement arguing that

“the words ‘with the approval of the court’ should be inserted.”

Id. at 116. Mr. Rezneck stated:

This provision, which recognizes and encourages the

deferral of prosecution pursuant to written agreement

with a defendant that he will demonstrate his good

conduct, is desirable. Since it has some of the elements

of a plea bargain and does result in a pro tanto waiver

of the defendant’s right to a speedy trial, approval by

the court on the record is a wise and necessary

safeguard.

Id.

The 1971 Ervin Bill was pending before the Constitutional

Rights Subcommittee of the Senate Judiciary Committee in 1972

when language requiring court approval of the deferral was added

via amendment. See id. at 5, 299 (excluding “[a]ny period of

delay during which prosecution is deferred by the attorney for

the Government pursuant to written agreement with the defendant,

with the approval of the court, for the purpose of allowing the

28

defendant to demonstrate his good conduct”). The same version of

the bill was introduced again in 1973, and it was reported out

by the Senate Judiciary Committee in 1974. See id. at 314. The

Senate Judiciary Committee’s Report on that provision provides

the explanation of its purpose:

Subparagraph 3161(h)(2) is designed to encourage the

current trend among United States attorneys to allow for

deferral of prosecution on the condition of good

behavior. A number of Federal and State courts have been

experimenting with pretrial diversion or intervention

programs in which prosecution of a certain category of

defendants is held in abeyance on the condition that the

defendant participate in a social rehabilitation

program. If the defendant succeeds in the program,

charges are dropped. Such diversion programs have been

quite successful with first offenders in Washington,

D.C. (Project Crossroads) and in New York City

(Manhattan Court Employment Project). Some success has

also been noted in programs where the defendant’s

alleged criminality is related to a specific social

problem such as prostitution or heroin addiction. Of

course, in the absence of a provision allowing the

tolling of the speedy trial time limits, prosecutors

would never agree to such diversion programs. Without

such a provision the defendant could automatically

obtain a dismissal of charges if prosecution were held

in abeyance for a period of time in excess of the time

limits set out in section 3161(b) and (c). This section

of S. 754 differs from its counterpart in S. 895. It now

requires that exclusion for diversion only be allowed

where deferral of prosecution is conducted “with

approval of the court.” This assures that the court will

be involved in the decision to divert and that the

procedure will not be used by prosecutors and defense

counsel to avoid the speedy trial time limits.

Id. at 117 (quoting S. Rep. No. 93-1021, at 36–37 (1974)). The

bill that was reported out by the Senate Judiciary Committee was

ultimately passed by the Senate on July 23, 1974 and signed by

29

the President on January 3, 1975, becoming Public Law No. 93-

619. See id. at 15, 6. Section 3161(h)(2) was not altered in any

way after it was approved by the Senate Judiciary Committee. See

id. at 116. 6 Nor did the 1979 Amendments to the Speedy Trial Act

affect Section 3161(h)(2). Id.

The legislative history thus demonstrates that Court

involvement in the deferral of a prosecution was specifically

intended by Congress when it passed this legislation. The Court

analyzes the contours of that involvement in Part III of this

Opinion.

6 The House Judiciary Committee received some pushback from the

Department of Justice regarding the requirement of court

approval, but did not act on it. In the exhibit to Assistant

Attorney General W. Vincent Rakestraw’s 1974 testimony, the

Department commented:

In juvenile matters the Attorney General presently

authorizes U.S. Attorneys to utilize the so-called

“Brooklyn Plan” for deferred prosecution, and in some

pilot districts a program of deferred prosecution of

adults has been initiated under the Executive Authority

of the Attorney General. Neither of the foregoing

deferred plans for prosecution require approval of the

court. Involving the court in this type of prosecutorial

decision would seemingly violate the doctrine of

separation of powers . . . . Because of the foregoing

reasons, it is proposed that the language “with the

approval of the court” be deleted.

Id. at 117-18.

30

III. The Court’s Role When Presented with a Deferred-Prosecution

Agreement.

A. Decisions in United States v. HSBC and United States v.

Fokker Services.

There is no dispute that the government is empowered to offer

deferred-prosecution agreements to the defendants in these

cases. The question is the Court’s role in reviewing and

approving those agreements. Two District Court opinions have

addressed the source and scope of a district court’s authority

to review a deferred-prosecution agreement. See United States v.

Fokker Servs., B.V., 79 F.Supp.3d 160 (D.D.C. 2015), appeals

docketed, Nos. 15-3016, 15-3017 (D.C. Cir. filed Feb. 23, 2015);

United States v. HSBC Bank USA, No. 12-cr-763, 2013 WL 3306161

(E.D.N.Y. July 1, 2013). As commentators have noted, “nearly

every . . . DPA that the government has negotiated with a U.S.

company has been approved without judicial modification.” Peter

Reilly, Negotiating Bribery: Toward Increased Transparency,

Consistency, and Fairness in Pretrial Bargaining Under the

Foreign Corrupt Practices Act, 10 Hastings Bus. L.J. 347, 393

(2014); see also Brandon L. Garrett, Structural Reform

Prosecution, 93 Va. L. Rev. 853, 922 (2007) (noting, prior to

the issuance of the HSBC decision, that “[e]very judge approving

a deferred prosecution agreement has done so without any

published rulings or modifications to the agreement”). Judge

John Gleeson’s decision in HSBC was apparently the first in

31

which a District Court Judge declined to automatically approve a

deferred-prosecution agreement, while Judge Richard Leon’s

Opinion in Fokker was the first rejection of a deferred-

prosecution agreement. These decisions provide helpful insight

for this Court’s assessment of its authority regarding the two

pending agreements. The Court therefore reviews each decision in

some detail.

1. United States v. HSBC.

Judge Gleeson’s decision in United States v. HSBC Bank was the

first written decision to address this issue, and it identified

the potential sources of a court’s authority to consider whether

to approve deferred-prosecution agreements. In that case, Judge

Gleeson was presented with an agreement entered into in

connection with charges that HSBC “willfully fail[ed] to

maintain an effective anti-money laundering . . . program” and

“willfully facilitate[ed] financial transactions on behalf of

sanctioned entities.” HSBC, 2013 WL 3306161, at *1. The

government entered into a deferred-prosecution agreement with

HSBC, which “request[ed] that the Court hold the case in

abeyance for five years . . . and exclude that time pursuant to

28 U.S.C. § 3161(h)(2) from the 70-day period within which trial

must otherwise commence.” Id.

Judge Gleeson first concluded that the court’s authority in

addressing a deferred-prosecution agreement has a different

32

basis than its authority in connection with guilty pleas or

pleas of nolo contendere. Id. at *2. Federal Rule of Criminal

Procedure 11(c)(1)(A), which provides for some court oversight

of government dismissals of charges “[i]f the defendant pleads

guilty or nolo contendere,” and Section 6B1.2 of the United

States Sentencing Guidelines, which provides standards for a

court’s acceptance of a plea agreement, did not apply, according

to Judge Gleeson, because the defendant “has not agreed to plead

guilty or nolo contendere to any of the charged offenses . . .

Nor has the government agreed to dismiss other charges in

exchange for a plea of guilty.” Id. at *2.

Judge Gleeson identified two possible sources of authority:

the Speedy Trial Act, which permits the parties in a criminal

case to obtain an exclusion of time pursuant to agreements to

defer prosecution, and the Court’s supervisory power. See id. at

*2–7. Judge Gleeson found that the Speedy Trial Act

unequivocally contemplates a district court’s participation in

the process to approve a deferred-prosecution agreement and that

this approval requirement “is grounded in a concern . . . that

parties will collude to circumvent the speedy trial clock,”

meaning that courts must “consider whether a deferred-

prosecution agreement is truly about diversion and not simply a

vehicle for fending off a looming trial date.” Id. at *3. The

Court’s supervisory power provides additional authority, Judge

33

Gleeson concluded, because “[b]y placing a criminal matter on

the docket of a federal court, the parties have subjected their

DPA to the legitimate exercise of that court’s authority.” Id.

at *5. Judge Gleeson ultimately approved the deferred-

prosecution agreement pursuant to the Court’s supervisory power.

See id. at *1,7 – 11. Judge Gleeson observed that “[a]s long as

the government asks the Court to keep this criminal case on its

docket, the Court retains the authority to ensure that the

implementation of the DPA remains within the bounds of

lawfulness and respects the integrity of this Court.” Id. at

*11. Pursuant to this authority, Judge Gleeson directed the

parties to file quarterly reports “with the Court to keep it

apprised of all significant developments in the implementation

of the DPA. Doubts about whether a development is significant

should be resolved in favor of inclusion.” Id.

2. United States v. Fokker Services.

Judge Leon relied on the HSBC decision when he issued the

first decision declining approval of a deferred-prosecution

agreement. See Fokker, 79 F.Supp.3d 160. In that case, Fokker

Services, a Dutch aerospace services provider, was charged with

violating export laws from 2005 until 2010 by engaging in

transactions with sanctioned countries including Iran, Burma,

and Sudan. Id. at 162. The United States and Fokker Services

entered into an agreement whereby Fokker Services: (1) accepted

34

responsibility for its conduct, and (2) agreed to pay

$10,500,000; to cooperate with the government; to implement a

new compliance program; and to comply with export laws going

forward. The agreement further provided that if the company were

to fulfill these conditions over the course of eighteen months,

the government would dismiss the charges. Id. at 164.

Relying on HSBC, Judge Leon found that a plain reading of the

Speedy Trial Act calls for a district court to play a role in

approving the agreement. Id. He also “agreed with [Judge

Gleeson’s] well-reasoned conclusion that a District Court has

the authority ‘to approve or reject the DPA pursuant to its

supervisory power.’” Id. at 165 (quoting HSBC, 2013 WL 3306161,

at *4). “One of the purposes of the Court’s supervisory powers,”

Judge Leon wrote, “is to protect the integrity of the judicial

process.” Id. While Judge Leon recognized the government’s

discretion to choose not to prosecute a case, he emphasized that

the government chose to charge Fokker, and asked the court to

lend its “judicial imprimatur” to the deferred-prosecution

agreement. Id. He therefore found that “it is this Court’s duty

to consider carefully whether that approval should be given.”

Id.

Based on these two sources of authority, Judge Leon concluded

that the agreement presented in Fokker was not an appropriate

exercise of prosecutorial discretion because the agreement was

35

”grossly disproportionate to the gravity of Fokker Services’

conduct.” Id. at 167. In arriving at this conclusion, Judge Leon

observed that “the integrity of the judicial proceedings would

be compromised by giving the Court’s stamp of approval to either

overly-lenient prosecutorial action, or overly-zealous

prosecutorial conduct.” Id. at 166. Fokker Services had

allegedly violated export laws for five years and earned more

revenue than it agreed to pay in fines. Judge Leon took issue

with the short compliance period, the low fine, and the lack of

an independent compliance monitor. Id.

* * *

These two cases inform the Court’s analysis of its authority

to approve these two deferred-prosecution agreements. The Court

agrees that the Speedy Trial Act and the judiciary’s supervisory

power appear to be the only potential sources of court authority

to review deferred-prosecution agreements. During the September

5, 2014 hearing in the Saena Tech case, the Court raised the

possibility that it could derive authority to punish failure to

comply with a deferred-prosecution agreement from either the

fact of having approved an exclusion under the Speedy Trial Act

or from a specific Court Order directing compliance with the

agreement’s provisions. Because the Court is not currently

presented with any information indicating that either defendant

36

has failed to comply with their respective agreements, the Court

need not address whether it has this authority at this time.

B. Review of a Deferred-Prosecution Agreement Must Recognize

the Expertise of Prosecutors and the Separation-of-Powers

Concerns Inherent in Judicial Review of Charging

Decisions.

It is well established that the Executive Branch has broad

discretion to decide when to initiate criminal proceedings.

Cmty. for Creative Non-Violence v. Pierce, 786 F.2d 1199, 1201

(D.C. Cir. 1986) (“The power to decide when to investigate, and

when to prosecute, lies at the core of the Executive’s duty to

see the faithful execution of the laws”); see also Interstate

Commerce Comm’n v. Bhd. of Locomotive Eng’rs, 482 U.S. 270, 283

(1987) (“it is entirely clear that the refusal to prosecute

cannot be the subject of judicial review”). This “broad

discretion” is deserved, in part, because the Executive Branch—

exercising its responsibility to take care that the laws be

faithfully executed—must take a variety of factors into

consideration. “Such factors as the strength of the case, the

prosecution’s general deterrence value, the Government’s

enforcement priorities, and the case’s relationship to the

Government’s overall enforcement plan are not readily

susceptible to the kind of analysis the courts are competent to

undertake.” Wayte v. United States, 470 U.S. 598, 607 (1985).

Indeed, “[t]o mandamus a particular prosecution . . . would

37

normally be very difficult, for a prosecutor may lawfully take

account of many factors other than probable cause in making such

decisions.” Nader v. Saxbe, 497 F.2d 676, 679 n.18 (D.C. Cir.

1974).

As such, the decision to prosecute is “particularly ill-suited

to judicial review.” Wayte, 470 U.S. at 607. Thus, “‘[t]he

presumption of regularity supports’ . . . prosecutorial

decisions and, ‘in the absence of clear evidence to the

contrary, courts presume that they have properly discharged

their official duties.’” United States v. Armstrong, 517 U.S.

456, 464 (1996) (quoting United States v. Chem. Found., Inc.,

272 U.S. 1, 14–15 (1926)); see also Nader, 497 F.2d at 679 n.18

(“The federal courts have customarily refused to order

prosecution. . .”).

Not only is the Judicial Branch ill-suited to review

prosecutorial decisions—given the complex factors involved—but

judicial intervention would also undermine the Executive

Branch’s ability to “take Care that the Laws be faithfully

executed.” U.S. Const. art. II, § 3. As the Supreme Court

elaborated:

Judicial supervision in this area, moreover, entails

systemic costs of particular concern. Examining the

basis of a prosecution delays the criminal proceeding,

threatens to chill law enforcement by subjecting the

prosecutor’s motives and decision-making to outside

inquiry, and may undermine prosecutorial effectiveness

by revealing the Government’s enforcement policy. All

38

these are substantial concerns that make the courts

properly hesitant to examine the decision whether to

prosecute.

Wayte, 470 U.S. at 607-08.

Furthermore, “a district judge must be careful not to exceed

his or her constitutional role.” United States v. Microsoft

Corp., 56 F.3d 1448, 1462 (D.C. Cir. 1995). The judiciary is

separated from the prosecutorial function, “keep[ing] the courts

as neutral arbiters in the criminal law generally.” Nader, 497

F.2d at 679 n.18. “When a judge assumes the power to prosecute,

the number [of branches] shrinks to two.” In re United States,

345 F.3d 450, 454 (7th Cir. 2003); see also United States v.

Cox, 342 F.2d 167, 171 (5th Cir. 1965) (“It follows, as an

incident of the constitutional separation of powers, that the

courts are not to interfere with the free exercise of the

discretionary powers of the attorneys of the United States in

their control over criminal prosecutions.”). These institutional

concerns must shape any analysis of the Court’s role in

reviewing the government’s decision to offer a defendant a

deferred-prosecution agreement.

C. The Speedy Trial Act Subjects Deferred-Prosecution

Agreements to Limited, But Meaningful, Court Review.

Section 3161(h)(2) allows for the exclusion of “[a]ny period

of delay during which prosecution is deferred by the attorney

for the Government pursuant to written agreement with the

39

defendant, with the approval of the court, for the purpose of

allowing the defendant to demonstrate his good conduct.” 28

U.S.C. 3161(h)(2). As Judge Gleeson held in HSBC, “a plain

reading of this provision” contemplates court involvement in

approving a deferred-prosecution agreement. See HSBC, 2013 WL

3306161, at *3. The government appears not to contest this

point. See Gov’t’s Br. at 1. That said, however, the Act does

not provide a standard for the court’s review, nor is the term

“approval” defined. See HSBC, 2013 WL 3306161, at *2. 7 Moreover,

with the exception of the HSBC Opinion and Judge Leon’s Opinion

in Fokker, there is no case law on this issue.

7 In HSBC, Judge Gleeson rejected the defendant’s reliance on

Section 3161(h)(7) of the Speedy Trial Act, which provides for

an exclusion of time based on a determination “that the ends of

justice served by [delay] outweigh the best interest of the

public’s and the defendant’s interests in a speedy trial” and

provides set of factors for a court to consider in conducting

this inquiry. HSBC, 2013 WL 3306161, at *3. That provision,

Judge Gleeson held, “is not a ‘catch-all provision’; rather, it

describes one specific type of exclusion—i.e., when the ends of

justice served by the exclusion outweigh the best interests of

the public—permitted by the Speedy Trial Act.” Id. Moreover, he

found, “nowhere” does the Speedy Trial Act “suggest[] that this

balancing inquiry applies to the myriad other types of exclusion

enumerated in 28 U.S.C. § 3161(h).” Id; but see United States v.

Wright Med. Tech., No. 10-8233, 2010 WL 6606785, at *1 (D.N.J.

Sept. 30, 2010) (importing, without analysis or explanation, the

3161(h)(7) factors in deciding to grant an exclusion of time

under 3161(h)(2)). The Court agrees with Judge Gleeson. The

3161(h)(7) factors have not been used to inform court decisions

regarding any other Speedy Trial Act exclusion and it would be

anomalous to apply them to Section 3161(h)(2).

40

The text of the Act grants an exclusion when prosecution is

deferred “pursuant to written agreement with the defendant, with

the approval of the court, for the purpose of allowing the

defendant to demonstrate his good conduct.” 28 U.S.C. §

3161(h)(2). Although this language is not crystal clear, the

requirement of court approval implies that the court must place

its formal imprimatur on the agreement. This is significant, as

the amicus notes, because “other provisions of the [Speedy

Trial] Act do not require court approval, while still other

provisions of the Act limit discretion, for example, by

providing factors to be considered when deciding whether to

grant a continuance, or by supplying standards for whether a

type of delay is reasonable.” Amicus Br., ECF No. 31 at 4. 8 The

8 See 28 U.S.C. § 3161(h)(1) (excluding “[a]ny period of delay

resulting from other proceedings concerning the defendant” and

providing a representative list of such proceedings); id. §

3161(h)(3) (excluding “[a]ny period of delay resulting from the

absence or unavailability of the defendant or an essential

witness” and defining “absence”); id. § 3161(h)(4) (excluding

“[a]ny period of delay resulting from the fact that the

defendant is mentally incompetent or physically unable to stand

trial”); id. § 3161(h)(5) (excluding, in cases where an

information or indictment is dismissed by the government and

charges are re-filed for the same offense, “any period of delay

from the date the charge was dismissed to the date the time

limitation would commence to run as to the subsequent charge had

there been no previous charge”); id. § 3161(h)(6) (excluding

“[a] reasonable period of delay when the defendant is joined for

trial with a codefendant as to whom the time for trial has not

run and no motion for severance has been granted”); id. §

3161(h)(7) (excluding “[a]ny period of delay resulting from a

continuance” provided that the judge finds “that the ends of

justice served by taking such action outweigh the best interest

41

language does not grant the Court plenary power to review the

agreement, however. The Court’s approval authority is located

within a sentence stating that the agreement must be “for the

purpose of allowing the defendant to demonstrate his good

conduct.” 28 U.S.C. § 3161(h)(2). Arguably, then, court review

must be tied to determining whether the agreement satisfies this

purpose. Had Congress intended courts to review a deferred-

prosecution agreement for other purposes, it presumably would

have provided courts with guidance as to those purposes.

In the Court’s opinion, the legislative history of Section

3161(h)(2) clearly shows that court involvement in the deferred-

prosecution process was specifically intended. See supra Part

II. This involvement was included to “assure[] that the court

will be involved in the decision to divert and that the

procedure will not be used by prosecutors and defense counsel to

avoid the speedy trial time limits.” S. Rep. No. 93-1021, at 37

(1974). One could seize on this final sentence of the Senate

Judiciary Committee’s Report to construct an argument in favor

of the public and the defendant in a speedy trial” and reciting

factors for the court to consider in making this determination);

id. § 3161(h)(8) (excluding “[a]ny period of delay, not to

exceed one year, ordered by a district court upon an application

of a party and a finding by a preponderance of the evidence that

an official request . . . has been made for evidence of any such

offense and that it reasonably appears, or reasonably appeared

at the time the request was made, that such evidence is, or was,

in such foreign country”).

42

of greater court authority. However, stating that the court

“will be involved in the decision to divert” should not be

interpreted to mean that the court will make the decision

whether to divert.

The amicus argues in favor of a broad reading of the Speedy

Trial Act, based on the Act’s delegation of authority to the

Court to “approve,” and the absence of factors that are provided

in other Speedy Trial Act exclusions. See Amicus Br. at 3–5. In

light of the novelty of corporate deferred-prosecution

agreements, amicus argues, the Court should fashion its own

standards for approving or rejecting an agreement on a case-by-

case basis, looking to standards provided for court oversight of

other types of agreements. See id. at 5–7. The government would

limit the Court’s authority to deciding whether an agreement is

merely an attempt to put off a pending trial. See Gov’t’s Br.,

ECF No. 26 at 6–7.

Faced with arguably ambiguous text that most clearly reads as

tying the Court’s authority to approve the agreement to

determining whether it is truly designed to hold prosecution in

abeyance while a defendant demonstrates good conduct, and

arguably ambiguous legislative history that most clearly reads

as intending that same result, the Court concludes that its

authority under the Speedy Trial Act is limited to assessing

43

whether the agreement is truly about diversion. 9 This limited

interpretation is especially appropriate where a broader one

could effectively seize authority by the Judicial Branch over a

traditional Executive Branch function. See supra Part III.B.

Accordingly, the Court finds that approval of a deferred-

prosecution agreement should be granted under the Speedy Trial

Act when the agreement is intended to hold prosecution in

abeyance while a defendant demonstrates good conduct. See HSBC,

2013 WL 3306161, at *3 (the text and legislative history of the

Speedy Trial Act make clear that the Court’s involvement in

deferred-prosecution agreements “is grounded in a concern . . .

that parties will collude to circumvent the speedy trial clock,”

meaning that courts must “consider whether a deferred-

prosecution agreement is truly about diversion and not simply a

vehicle for fending off a looming trial date”); cf. United

States v. Credit Suisse AG, No. 9-352, 2009 WL 4894467, at *1

(D.D.C. Dec. 16, 2009) (brief order stating that “following a

careful review” of a deferred-prosecution agreement, the Court

9 This ambiguity, combined with the fact that Congress’s original

purpose had nothing to do with the broad-ranging corporate

deferred-prosecution agreements that have become commonplace,

suggests that congressional action to clarify the standards a

court should apply when confronted with a corporate deferred-

prosecution agreement may be appropriate. As the amicus has

written, corporate deferred-prosecution agreements often result

in large structural reforms that may have far-reaching

consequences. See Brandon L. Garrett, Structural Reform

Prosecution, 93 Va. L. Rev. 853 (2007).

44

concluded “that the period of delay . . . is for the purpose of

allowing Defendant . . . to demonstrate its good conduct and

implement its remedial measures”).

This authority necessarily involves limited review of the

fairness and adequacy of an agreement, to the extent necessary

to determine the agreement’s purpose. In this respect, the Court

finds that its authority is greater than the largely

administrative authority contemplated by the government. The

Court must determine whether an agreement is truly about

permitting a defendant to demonstrate reform. In so doing, the

factors the amicus provided could be useful guideposts. See

Amicus Br. at 11–17 (suggesting that courts look at nine factors

in reviewing deferred-prosecution agreements: (1) reasonableness

of any fines or other punitive measures; (2) compliance-related

safeguards; (3) independent corporate monitors to supervise

compliance; (4) cooperation with authorities in ongoing

investigations; (5) the lack of unrelated requirements that

might require judicial intervention; (6) potential collateral

consequences of the agreement; (7) the appropriateness of

restitution to any victims; (8) the effect of the agreement on

other regulators; and (9) the effect of the period of delay on

statutes of limitations or other interests). An agreement that

contained neither punitive measures (such as fines) nor

requirements designed to deter future criminality (such as

45

compliance programs and independent monitors) could not be said

to be designed to secure a defendant’s reformation and should be

rejected. Even an agreement that contained some of these

elements could be ineffective if the obligations were found to

be so vague or minimal as to render them a sham. Cf. Fokker

Servs., 79 F.Supp.3d at 166 (finding fines and compliance

measures to be weak and noting the complete lack of an

independent monitor or requirement that the defendant submit

compliance reports in denying approval of a deferred-prosecution

agreement). Accordingly, the Court is persuaded that it retains

authority under the Speedy Trial Act, albeit limited, to

consider the terms of a deferred-prosecution agreement to

determine whether they provide the defendant an opportunity to

demonstrate good conduct while prosecution is deferred.

D. The Court’s Supervisory Power Permits the Court to Deny

Approval Where a Deferred-Prosecution Agreement Would

Involve the Court in Illegal or Especially Problematic

Agreements.

“The supervisory power . . . permits federal courts to

supervise ‘the administration of criminal justice’ among the

parties before the bar.” United States v. Payner, 447 U.S. 727,

735 n.7 (1980) (quoting McNabb v. United States, 318 U.S. 332,

340 (1943)). “Judicial supervision of the administration of

criminal justice in the federal courts implies the duty of

establishing and maintaining civilized standards of procedure

46

and evidence. . . [which are] not satisfied merely by observance

of those minimal historic safeguards for securing trial by

reason which are summarized as ‘due process of law.’” McNabb,

318 U.S. at 340.

The courts have exercised this authority at times

“substantively, that is, to provide a remedy for the violation

of a recognized right of a criminal defendant.” HSBC, 2013 WL

3306161, at *4. Thus, the supervisory power may be used “to

exclude evidence taken from the defendant by ‘willful

disobedience of law.’” Payner, 447 U.S. at 735 n.7 (quoting

McNabb, 318 U.S. at 345). It may relatedly be used “to correct

an error which permeated [a judicial] proceeding.” Ballard v.

United States, 329 U.S. 187, 193 (1946) (grand and petit juries

were drawn, in violation of applicable state law, from a pool

that excluded women).

The power has also been used to “formulate[] rules of evidence

to be applied in federal criminal prosecutions.” McNabb, 318

U.S. at 341. As the Supreme Court explained more recently, “[i]n

the exercise of its supervisory authority, a federal court ‘may,

within limits, formulate procedural rules not specifically

required by the Constitution or the Congress.’” Bank of Nova

Scotia v. United States, 487 U.S. 250, 254 (1988) (quoting

United States v. Hasting, 461 U.S. 499, 505 (1983)). This

Circuit has exercised its supervisory power to mandate the use

47

of a particular jury-deadlock instruction, United States v.

Thomas, 449 F.2d 1177, 1187 (D.C. Cir. 1971). The U.S. District

Court for the District of Columbia used the power to establish

standards governing the sealing and unsealing of court records.

See United States v. Ring, No. 8-274, 2014 WL 2584054, at *2

(D.D.C. June 10, 2014) (citing United States v. Hubbard, 650

F.2d 293, 315–18 (D.C. Cir. 1980)). Moreover, “courts have

historically exercised their supervisory power to develop

appropriate exceptions to the rule of grand jury secrecy.” In re

Kutler, 800 F. Supp. 2d 42, 46 (D.D.C. 2011).

Of utmost importance, the supervisory power serves “to protect

the integrity of the federal courts.” Payner, 447 U.S. at 744

(Marshall, J., dissenting) (citing McNabb, 318 U.S. at 342, 345,

347); see also id. (“The Court has particularly stressed the

need to use supervisory powers to prevent the federal courts

from becoming accomplices to . . . misconduct”); Mesarosh v.

United States, 352 U.S. 1, 14 (1956) (“This is a federal

criminal case, and this Court has supervisory jurisdiction over

the proceedings . . . . If it has any duty to perform in this

regard, it is to see that the waters of justice are not

polluted.”). As Justice Holmes stated in Olmstead v. United

States, “no distinction can be taken between the government as

prosecutor and the government as judge. If the existing code

does not permit district attorneys to have a hand in such dirty

48

business it does not permit the judge to allow such iniquities

to succeed.” 277 U.S. 438, 470 (1928) (Holmes, J., dissenting);

see also id. at 483 (Brandeis, J., dissenting) (“When the

government, having full knowledge, sought, through the

Department of Justice, to avail itself of the fruits of these

acts in order to accomplish its own ends, it assumed moral

responsibility for the officers’ crimes. . . . [A]nd if this

court should permit the government, by means of its officers’

crimes, to effect its purpose of punishing the defendants, there

would seem to be present all the elements of a ratification. If

so, the government itself would become a lawbreaker.”). “One of

the primary purposes of the supervisory power is to protect the

integrity of judicial proceedings.” HSBC, 2013 WL 3306161, at *4

(citing Hasting, 461 U.S. at 526; Payner, 447 U.S. at 735 n.8;

Elkins v. United States, 364 U.S. 206,216 (1960)).

The supervisory power is a limited power, however. It “is an

extraordinary one which should be ‘sparingly exercised.’” United

States v. Jones, 433 F.2d 1176, 1181–82 (D.C. Cir. 1970)

(quoting Lopez v. United States, 373 U.S. 427, 440 (1963)). This

is so because it arguably functions as “a form of specialized

and limited federal common law.” United States v. Gatto, 763

F.2d 1040, 1045 (9th Cir. 1985); see also United States v.

Strothers, 77 F.3d 1389, 1397 (D.C. Cir. 1996) (Sentelle, J.,

concurring) (“[W]hatever its historical underpinnings, the

49

exercise of the supervisory power denotes a distinctive form of

judicial lawmaking by the federal courts.” (citation omitted)).

The authority is thus limited by the doctrine of separation of

powers. Even if exercised in a “sensible and efficient” fashion,

it “is invalid if it conflicts with constitutional or statutory

provisions.” Bank of Nova Scotia, 487 U.S. at 254 (citation

omitted); see also Payner, 447 U.S. at 737 (Burger, C.J.,

concurring) (“this Court has no general supervisory authority

over operations of the Executive Branch, as it has with respect

to the federal courts”); Gatto, 763 F.2d at 1046 (“Proper regard

for judicial integrity does not justify a ‘chancellor’s foot

veto’ over activities of coequal branches of government”)

(quoting United States v. Russell, 411 U.S. 423, 435 (1973)).

Use of the supervisory power must therefore be balanced against

concerns of competing branches of the federal government.

In the context of prosecutorial decisions, “the federal

judiciary’s supervisory powers over prosecutorial activities

that take place outside the courthouse is extremely limited, if

it exists at all.” United States v. Lau Tung Lam, 714 F.2d 209,

210 (2d Cir. 1983). As previously discussed,

[T]he decision to prosecute is particularly ill-suited

to judicial review. Such factors as the strength of the

case, the prosecution’s general deterrence value, the

government’s enforcement priorities, and the case’s

relationship to the government’s overall enforcement

plan are not readily susceptible to the kind of analysis

the courts are competent to undertake.

50

Wayte, 470 U.S. at 607. In this vein, the Court would have

little authority, if any, to review an out-of-court non-

prosecution agreement between the government and a defendant.

See Amicus Br., ECF No. 31 at 6. Similarly, the government may

offer an individual immunity from prosecution and courts have no

discretion to review the appropriateness of the Executive

Branch’s decision. See Ullmann v. United States, 350 U.S. 422,

432-33 (1956); United States v. Moore, 651 F.3d 30, 82 (D.C.

Cir. 2011) (holding that district courts have “no authority to

immunize . . . or to compel the government to immunize”; “[t]he

decision to grant immunity from prosecution rests solely with

the Executive Branch”).

Nonetheless, the Court is not presented with an outright

grant of immunity, a decision not to prosecute, or a non-

prosecution agreement. The parties have brought criminal cases,

consented to the waiver of an indictment, and presented the

Court with deferred-prosecution agreements for the Court’s

approval. Whether the parties label that approval as the

approval only of a Speedy Trial Act exclusion, or approval of

the agreements themselves is of little consequence. The Court is

being asked to place its formal imprimatur on the agreements, to

hold open two federal criminal cases, and to make various

51

findings with respect to the Speedy Trial Act. As Judge Gleeson

found in HSBC:

[F]or whatever reason or reasons, the contracting

parties have chosen to implicate the Court in their

resolution of this matter. There is nothing wrong with

that, but a pending federal criminal case is not window

dressing. Nor is the Court, to borrow a famous phrase,

a potted plant. By placing a criminal matter on the

docket of a federal court, the parties have subjected

their DPA to the legitimate exercise of that court’s

authority.

HSBC, 2013 WL 3306161, at *5. This implicates the aspect of the

supervisory power that is “concerned with law enforcement

practices . . . in so far as courts themselves become

instruments of law enforcement.” McNabb, 318 U.S. at 347.

The question remains what standard the Court should apply in

deciding whether a request for approval of a deferred-

prosecution agreement and placement of that agreement on the

Court’s docket must be rejected “to protect the integrity of the

federal courts.” Payner, 447 U.S. at 744 (Marshall, J.,

dissenting). As the amicus notes “[a] court would be

particularly deferential in reviewing the decision whether to

offer pre-trial diversion.” Amicus Br. at 10. That decision,

like the decision whether to prosecute, is largely within the

discretion of the Executive, and the Court may review it only in

very limited circumstances. See United States v. Richardson, 856

F.2d 644, 647 (4th Cir. 1988) (the decision whether to offer

pre-trial diversion “is one entrusted to the United States

52

Attorney”); United States v. Hicks, 693 F.2d 32, 34 n.1 (5th

Cir. 1982) (“Since pretrial diversion is a program administered

by the Justice Department, considerations of separation of

powers and prosecutorial discretion might mandate an even more

limited standard of review.”).

With respect to the contents of the agreements, the Court is

of the view that the amicus’s proposal of largely plenary court

review, discussed above in connection with the Speedy Trial Act,

is too broad. The power to protect the integrity of the

judiciary keeps courts from becoming accomplices in illegal or

untoward actions, but the Court’s review is necessarily limited.

Here, in particular, Congress, in passing the Speedy Trial Act,

has arguably prescribed a narrower role for courts in reviewing

these very sensitive and important decisions. See supra Part

III.C. Respect for the separation of powers thus counsels in

favor of Judge Gleeson’s view of the role the supervisory power

plays:

[I]t is easy to imagine circumstances in which a deferred

prosecution agreement, or the implementation of such an

agreement, so transgresses the bounds of lawfulness or

propriety as to warrant judicial intervention to protect

the integrity of the Court. For example, the DPA, like

all such agreements, requires HSBC to “continue to

cooperate fully with the [government] in any and all

investigations.” Recent history is replete with

instances where the requirements of such cooperation

have been alleged and/or held to violate a company’s

attorney-client privilege and work product protections,

or its employees’ Fifth or Sixth Amendment rights. The

DPA also contemplates, in the event of a breach by HSBC,

53

an explanation and remedial action, which the government

will consider in determining whether to prosecute the

pending charges and/or bring new ones. What if, for

example, the “remediation” is an offer to fund an endowed

chair at the United States Attorney’s alma mater? Or

consider a situation where the current monitor needs to

be replaced. What if the replacement’s only

qualification for the position is that he or she is an

intimate acquaintance of the prosecutor proposing the

appointment?

HSBC, 2013 WL 3306161, at *6–7 (citations omitted). This is far

from an exhaustive list, but it demonstrates the situations

where a court’s integrity might truly be imperiled. Two of the

factors proposed by the amicus are useful here: (1) whether the

agreement “impos[es] substantial, unrelated obligations on an

organization . . . such as requiring charitable contribution

unrelated to remedying the harm caused by the crime”; and (2)

the potential collateral consequences of an agreement. See

Amicus Br. at 14–15. An agreement with especially problematic

collateral consequences—whether intended or not—might be viewed

as involving the Court in something inappropriate. In that

regard, the Court can envision an especially unfair or lenient

agreement as transgressing these bounds and therefore justifying

rejection, independent of a court’s review under the Speedy

Trial Act.

54

IV. Applying these Standards to the Agreements in the Case, the

Court Approves Both Agreements.

The Court need not opine further on the precise circumstances

in which the Court’s authority under the Speedy Trial Act or the

supervisory power would warrant rejection of an agreement. The

agreements in these cases, although somewhat troubling to the

Court in the Saena Tech case, do not implicate the integrity of

the Court. For that reason, the Court will approve both

agreements and grant the requested exclusion of time under the

Speedy Trial Act.

A. United States v. Saena Tech.

The Saena Tech Agreement clearly is about diversion with

respect to Saena Tech itself. Saena Tech has paid a $500,000

fine that, while not clearly shown to be proportional to the

offense, 10 is not de minimis. Moreover, the Saena Tech Agreement

provides that prosecution will be reinstated in the event that

Saena Tech breaches the agreement. See Deferred-Prosecution

Agreement, ECF No. 5-1 at 9. The Saena Tech Agreement also

provides for the creation of a corporate-compliance program to

ensure that Saena Tech does not commit bribery in the future.

10The Agreement provides, without support or explanation, that

$500,000 is “appropriate given the facts and circumstances of

this case.” Deferred-Prosecution Agreement, ECF No. 5-1 at 5.

Given that Mr. Kim paid approximately $280,000 in bribes and

received fifteen subcontracts for Saena Tech, it is certainly

conceivable that he and the corporation earned far more than

$500,000.

55

See id. at 7. In response to this provision, Saena Tech has

created a Code of Conduct and guide for its employees addressing

ethical issues including those related to gifts and bribery,

created a confidential hotline for employees to report

misconduct, and appointed its outside counsel to monitor the

hotline and serve as an independent auditor. See Proffer, ECF

No. 16. The Saena Tech Agreement thus contains both punitive and

rehabilitative elements sufficient to convince the Court that it

is designed to defer prosecution for two years to enable Saena

Tech to reform itself and demonstrate its rehabilitation.

Although no independent compliance monitor with reporting

responsibilities is included in the Saena Tech Agreement, and

the Court shares Judge Leon’s concerns with deferred-prosecution

agreements that lack such monitoring, see Fokker Servs., 79

F.Supp.3d at 166, given the relatively small size of Saena Tech,

its appointment of its outside counsel to serve as a monitor,

and the Court’s exercise of authority to require reports and

status hearings, the Court finds that the lack of an independent

compliance monitor in this case does not doom the Saena Tech

Agreement. 11

11Initially, Saena Tech had used an individual who was related

to Mr. Kim as its compliance monitor. Because that practice

changed before the Court’s September 5, 2014 hearing, see

Proffer, ECF No. 16, the Court need not address whether such a

concerning practice would alone be enough to justify rejection

56

The Saena Tech Agreement is novel, however, because it also

includes Mr. Kim, who is not currently subject to prosecution at

all. Although the parties do not seek approval of a Speedy Trial

exclusion as to him (there is no pending case and thus no clock

to toll), and the government argues that any grant of immunity

is unreviewable by this Court, Gov’t’s Br., ECF No. 26 at 10–11,

nonetheless, the government decided to include Mr. Kim in a

deferred-prosecution agreement that the Court must review before

approving an exclusion for Saena Tech. 12 Just as the parties may

not collude to enter into a deferred-prosecution agreement with

each other for reasons other than allowing the defendant to

demonstrate good conduct, so too may they not enlist a third

party—in this case a company controlled by Mr. Kim and his wife—

to effect the same result.

Thus, if the punitive and remedial measures regarding Saena

Tech were mere “window-dressing” to cover an attempt to collude

between Mr. Kim and the government, the Court would be empowered

to reject the Saena Tech Agreement under the Speedy Trial Act.

Although it could be readily criticized for its favorable

of the Saena Tech Agreement or a finding of non-compliance with

that Agreement.

12 As discussed supra, the government conceded that in the Saena

Tech Agreement, Mr. Kim is essentially being immunized, but

noted that the immunity is contingent upon his cooperation. The

government also articulated its rationale for not charging Mr.

Kim.

57

treatment of Mr. Kim vis-à-vis others who arguably played lesser

roles in related criminal activity but received felony

convictions, in view of the prior discussion about the

application of deferred-prosecution agreements for individuals

in appropriate cases, it is not so problematic as to implicate

the Court’s authority here. Though Mr. Kim faces no punitive

measures personally, he and his wife are the sole owners of

Saena Tech; thus the agreement’s punitive force against Saena

Tech touches him as well. Moreover, Mr. Kim may be prosecuted in

the event of a breach, and he admitted to the truth of the

Statement of Facts at the July 17, 2014 hearing. See Deferred-

Prosecution Agreement, ECF No. 5-1 at 9; Tr. of July 17, 2014

Hearing, ECF No. 38 at 66:14–67:4. Mr. Kim remains free to

operate Saena Tech along with his wife, but he must institute

and follow the compliance program required of the company. It is

therefore not apparent that the Saena Tech Agreement is an

elaborate attempt to collude to put off a trial of Mr. Kim.

Indeed, no Speedy Trial clock is ticking and the government

presumably could have obtained his agreement to waive the

statute of limitations out-of-court, making collusion

unnecessary. Accordingly, despite the odd posture, the

provisions regarding Mr. Kim do not change the outcome under the

Speedy Trial Act.

58

Nor does the Court’s supervisory power justify denial of the

Saena Tech Agreement because nothing in the Saena Tech Agreement

strikes the Court as implicating the concern with avoiding court

involvement in unlawful or untoward collusion. The authority to

make charging decisions is entrusted to prosecutors for a

reason: their expertise and the separation of powers mandates

it. Absent a stark deviation from reasonable exercise of that

discretion, it is not this Court’s role to second-guess such

decisions. 13

B. United States v. Intelligent Decisions.

The Intelligent Decisions Agreement is a relatively easy one

to approve. Much like the Saena Tech Agreement, it contains most

of the hallmarks of an agreement that is designed to reform a

company’s conduct. See Deferred-Prosecution Agreement, ECF No.

12. Intelligent Decisions paid a fine that appears to be within

a range of reasonableness, and agreed to cooperate and institute

compliance measures. For reasons similar to the Saena Tech

Agreement, the Court finds that the lack of an independent

compliance monitor with reporting responsibilities alone is not

sufficient to warrant rejection of the Intelligent Decisions

13Congress, of course, has the ability to dictate a more

involved role for district courts that would extend to such

searching review of deferred-prosecution agreements. The Court

expresses no opinion on the propriety of such an action or any

separation-of-powers concerns that may arise therefrom.

59

Agreement. The Intelligent Decisions Agreement deviates from the

Saena Tech Agreement in that it contains nothing that would

immunize an individual responsible for the crime with which

Intelligent Decisions is charged. Indeed, the owner and former

CEO of Intelligent Decisions pleaded guilty to a felony, as did

a key employee who was also involved in the conduct. There is

thus nothing to indicate that the Intelligent Decisions

Agreement is anything but an attempt to reform the company and

allow it to demonstrate good conduct. Nor is there anything in

the Intelligent Decisions Agreement that would appear to

implicate the Court’s supervisory powers.

V. Original Intent vs. Current Use of Deferred-Prosecution

Agreements.

Although the Court approves the two deferred-prosecution

agreements in these cases, the Court observes that the current

use of deferred-prosecution agreements for corporations rather

than individual defendants strays from Congress’s intent when it

created an exclusion from the speedy trial calculation for the

use of such agreements. The Court is of the opinion that

increasing the use of deferred-prosecution agreements and other

similar tools for individuals charged with certain non-violent

criminal offenses could be a viable means to achieve reforms in

our criminal justice system.

60

A. Congress Modeled the Provision Allowing Deferred-

Prosecution Agreements on Projects Designed to

Rehabilitate Individuals Charged with Certain Non-

Violent Offenses.

The legislative history of the Speedy Trial Act, discussed

supra Part II, shows just how far the use of Section 3161(h)(2)

to defer the prosecution of corporations departs from what

Congress intended. The history demonstrates that the provision

was intended to encourage practices that had been ongoing in

certain courts, which permitted the deferral of prosecution on

the condition that a defendant participate in a rehabilitation

program. The Senate Judiciary Committee specifically cited a

successful project in New York City, the Manhattan Court

Employment Project, as well as the District of Columbia’s

Project Crossroads as examples of the types of deferred

prosecution it intended with this provision.

1. The Manhattan Court Employment Project.

The Manhattan Court Employment Project (“the Project”) was

designed as an experimental, alternative disposition available

for select, eligible defendants. It was developed in 1967 by the

Vera Institute of Justice, was sponsored by the Mayor of New

York City, and received funding from the United States

Department of Labor. See Vera Inst. of Justice, The Manhattan

Court Employment Project of the Vera Institute for Justice:

Final Report 1967-1970 at 1 (1970), available at

61

http://www.vera.org/sites/default/files/resources/downloads/the-

manhattan-court-employment-project.pdf. After the three-year

“experimental phase”, the Project published a Final Report

summarizing its process, progress, and findings. Id. at 2. 14

The Project would intervene after a defendant’s arrest,

offering counseling and vocational opportunities for ninety

days. If the defendant cooperated, the Project would recommend

that the prosecutor (and judge) dismiss the charge(s). Id. The

Project was designed to “convert a defendant’s arrest from a

losing to a winning experience” by freeing the overburdened

criminal justice system, reducing recidivism, employing

defendants, and benefitting the community by rehabilitating

defendants. Id.

The Project established eligibility standards for potential

participants to identify defendants most likely to benefit from

the program. The criteria included individuals: (1) between the

ages of 16 and 45; (2) who were residents of New York City;

(3) not earning more than $125/week; (4) not charged with a

petty offense, homicide, rape, kidnapping, or arson; (5) with no

identifiable drug or alcohol addiction; and (6) who have not

spent more than one continuous year in a penal institution. Id.

14The Court was unable to determine how long the Project

continued. The Report indicates the Project was expanding at the

time of publishing and that “the Mayor and other city and court

officials continue to support the Project.” Id. at 61.

62

at 3. The Project initially eliminated defendants arrested for

engaging in the drug trade or prostitution, id. at 21, but over

time, became more capable of assisting defendants with drug or

alcohol problems and defendants charged with more serious

crimes. See id. at 22.

The District Attorney’s office and Project administrators

would request that the court and prosecutors permit a defendant

to participate. Once participation was approved, the case would

be put on hold for ninety days. Id. at 3. Depending on

participant success, the Project would recommend dismissal,

further adjournment to permit additional counseling, or

termination of the defendant’s participation and the resumption

of the case. Id. at 3-4. To remain in the Project and receive a

dismissal recommendation, a participant was required to: (1)

avoid re-arrest and narcotics use; (2) keep all appointments

with Project staff; (3) attend all counseling sessions; and (4)

make a satisfactory vocational adjustment. Id. at 4.

Over three years, 1,300 defendants participated in the

Project, id. at 5, and the number of successful participants –

those for whom dismissals were recommended and accepted –

increased over the Project’s three years from 38.9% in the first

year to 45.6% in the second year, and 61.4% in the third year.

Id. at 39. The Report also assessed the Project’s success in

63

placing defendants in employment, providing counseling and

social services, and preventing recidivism.

Employment. While not every participant was unemployed upon

entry into the Project, most were. Id. at 7. The Project was

successful in placing defendants in employment. In the first

year, 14.3% of participants were employed at intake and 91.4%

were employed at dismissal. Id. In the second year, 43.1% of

defendants were employed at intake and 95.4% were employed at

dismissal. Id. In the third year, 30.6% of participants were

employed at intake and 79.3% were employed at dismissal. Id. The

Project attributed the drop in the third year to a change in the

minimum-wage law in July 1970 and an increase in the number of

students participating in the Project that year. Id. at 8.

Further, the Project checked the employment status of a random

sample of 100 successful participants who had been dismissed

from the Project for 14 months. The Project was able to locate

87 participants; 70 were still employed 14 months later. Id.

Considering that the Project had certified its participants as

previously having been “hard-core” unemployed, these results

were encouraging. Id. at 27.

Counseling and Social Services. The Project provided both

group and individualized counseling for participants. Though it

was difficult for the Project to quantify success on this front,

the rate of participation in group counseling increased from 45%

64

to 67% over the Project’s three years. Id. at 10. The Project

also had a Social Service Unit, which worked with New York

City’s Department of Social Services to respond to participants’

financial, medical, and housing needs. Id. Participants’ need

for welfare decreased, in part due to increased employment. Id.

at 11.

Recidivism. Finally, the Project compared recidivism rates for

successful participants whose charges were dismissed and rates

for participants who were unsuccessfully terminated from the

Project. Id. at 12. During the first two years, the re-arrest

rate for the dismissed group was about 50% less than that of the

terminated group: 15.8% of successful participants were re-

arrested compared to 30.8% of terminated participants. Id. at

12. In the last nine months of the three year experimental

phase, the re-arrest rate dropped to 2.9%. Id. at 10.

Significantly, the Project found that the recidivism rates for

terminated participants, whose prosecution was ultimately only

diverted for a few months, and the control group, were

statistically identical. Id. The data “strongly suggests that

diversion from prosecution alone does not affect the likelihood

of re-arrest” and that “supportive and rehabilitative services

can significantly alter the incidence of repeated criminal

activity.” Id.

65

2. Project Crossroads.

Project Crossroads was created in 1967 to provide a pre-trial

intervention alternative for youthful, first-time defendants in

Washington, D.C. It provided services to approximately 800

participants for a limited period of time. 15 Roberta Rovner-

Pieczenik, Nat’l Comm. for Children and Youth, Project

Crossroads as Pre-Trial Intervention: a Program Evaluation 1

(1970), available at http://files.eric.ed.gov/fulltext/

ED113651.pdf. The Project received funding from the United

States Department of Labor. Id. at 2. Like the Manhattan Court

Employment Project, Project Crossroads intervened after arrest,

offering a variety of services for defendants including

counseling, job placement, job training and remedial education.

Id. at 1. If a defendant cooperated and participated

successfully for ninety days, the Project would recommend that

the charges be dismissed. Id. at 2. According to the program

evaluation, “[i]t was the hope of all concerned that the court,

in its willingness to aid the individual by providing him with a

non-punitive opportunity for rehabilitation, would come to be

15The program evaluation was written three years after Project

Crossroads began. See id. at 1. The Court was unable to

determine how long the project continued after the evaluation

was published.

66

viewed as an institution interested in the individual and

oriented toward the treatment approach to crime prevention.” Id.

Project Crossroads set general eligibility standards for

potential participants, including individuals: (1) between the

ages of 16 and 26; (2) with no prior conviction record in that

court; (3) who were unemployed, underemployed, tenuously

employed, or school enrolled; and (4) who were charged with a

crime accepted by both the court and Project. Id. at 1.

Ultimately, participants who were terminated favorably had their

charges dismissed three times as often as a control sample. Id.

at 15.

Employment. The evaluation of Project Crossroads found that

twice as many individuals were employed at program termination

than were employed at intake. Id. at 14. It found that

participants’ wages and skill level increased after termination

when compared to the same measures taken at entrance. Id. It

also found that participants were more likely to be steadily

employed during the year following project termination. Id. The

evaluation followed up with a sample of 134 participants one

year after termination. About 60% of those favorably terminated

were employed for more than 80% of the year following

termination, while only about 23% of those unfavorably

terminated were employed over the same period. Id. at 12.

Further, favorably terminated participants were almost all

67

working in a non-Crossroads job within four months after

termination. Id. at 13. Thus, the Project concluded “that the

routine of work, as well as such intangibles as self-confidence

and increased aspiration derived from the Crossroads experience,

tend to keep an individual employed after the official

relationship with Crossroads is ended.” Id.

Recidivism. The evaluation also found the rate of recidivism

to be the “most dramatic positive finding related to the

project’s legal success. . .” Id. at 17. “[T]here is little

doubt that recidivism in . . . [the] 15-month period following

initial arrest was markedly lower for participants favorably

terminated.” Id. at 17-18. The overall recidivism rate within

fifteen months of initial arrest for those favorably terminated

was 20.13% compared to 56.65% for those unfavorably terminated

and 43.36% for the control group. Id. at 17.

B. Current Use of Deferred-Prosecution Agreements.

Notwithstanding Congress’s intent in enacting Section

3161(h)(2) of the Speedy Trial Act, rather than offering

deferrals to individuals charged with certain non-violent

criminal offenses to encourage rehabilitation, the government

increasingly now offers—as it did to the defendants in these

cases—to defer prosecution of a corporation for criminal

misconduct in exchange for the payment of a fine and the

institution of compliance measures. See, e.g., Gibson Dunn, 2015

68

Mid-Year Update on Corporate Non-Prosecution Agreements and

Deferred Prosecution Agreements 1, (July 8, 2015), available at

http://www.gibsondunn.com/publications/Pages/2015-Mid-Year-

Update-Corporate-Non-Prosecution-Agreements-and-Deferred-

Prosecution-Agreements.aspx. From 2000 through 2005, the average

number of deferred-prosecution agreements was just over four per

year. See id. In contrast, from 2005 through 2015, the number of

deferred-prosecution agreements increased dramatically, and the

number of agreements with corporations may exceed historical

highs in 2015. See id. Often, but not always, as the Intelligent

Decisions case demonstrates, the corporation is the only entity

ever charged and the individuals responsible face no charges.

See Defs.’ Br., ECF No. 8 at 2-3 (“two [Intelligent Decisions]

employees, Chae Shim and Harry Martin, have pled guilty to one

count of providing travel and entertainment gratuities to Mr.

Lim, for which they are awaiting sentencing.”); see also Gibson

Dunn, 2010 Year-End Update at 1 (discussing the increased

criticism and heightened judicial scrutiny surrounding the use

of deferred-prosecution agreements without related prosecutions

of any individuals whose conduct resulted in corporate

liability).

In response to criticism surrounding the practice of failing

to prosecute the individuals whose actions are actually the

cause of corporate crimes, the Department of Justice recently

69

issued guidance designed to strengthen its ability to hold

individuals accountable for corporate wrongdoing in future

investigations and pending investigations “to the extent it is

practicable to do so.” See Memorandum from Sally Quillian

Yates, Deputy Attorney General, to Assistant Attorneys Gen.,

Dirs. Of the Fed. Bureau of Investigation and the Exec. Office

for U.S. Trs., and U.S. Attorneys at 2-3 (Sept. 9, 2015),

available at http://www.justice.gov/dag/file/769036/download.

The memo sets forth six key steps to achieve this goal:

(1) In order to qualify for any cooperation credit,

corporations must provide to the Department all relevant

facts relating to the individuals responsible for

misconduct;

(2) Criminal and civil corporate investigations should focus

on individuals from the inception of the investigation;

(3) Criminal and civil attorneys handling corporate

investigations should be in routine communication with

one another;

(4) Absent extraordinary circumstances or approved

departmental policy, the Department will not release

culpable individuals from civil or criminal liability

when resolving a matter with a corporation;

(5) Department attorneys should not resolve matters with a

corporation without a clear plan to resolve related

individual cases, and should memorialize any declinations

as to individuals in such cases; and

(6) Civil attorneys should consistently focus on individuals

as well as the company and evaluate whether to bring suit

against an individual based on considerations beyond that

individual’s ability to pay.

70

Id. at 2-3. The memo states that some of these steps reflect

policy shifts, but does not identify those which change current

policy. Id. at 2.

Just a week after announcing this policy shift, however, and

in a shocking example of potentially culpable individuals not

being criminally charged, the Department of Justice announced

that it had entered into a Deferred-Prosecution Agreement with

General Motors Company (“GM”) regarding its failure to disclose

a safety defect. Under this agreement, GM admitted that it

failed to disclose a “potentially lethal safety defect” and that

it “affirmatively mislead consumers about the safety of GM cars

afflicted by the defect,” resulting in numerous deaths. General

Motors Company – Deferred Prosecution Agreement, 15-cv-7342

(N.Y.S.D.), ECF No. 1-1 at 3, 34-36 (describing fatalities

associated with the safety defect). Despite the fact that the

reprehensible conduct of its employees resulted in the deaths of

many people, the agreement merely “imposes on GM an independent

monitor to review and assess policies, practices, and procedures

relating to GM’s safety-related public statements, sharing of

engineering data, and recall processes” plus the payment of a

$900 million fine. Press Release, Dep’t of Justice, Manhattan

U.S. Attorney Announces Criminal Charges Against General Motors

and Deferred Prosecution Agreement with $900 Million Forfeiture

(Sept. 17, 2015), available at http://www.justice.gov/usao-

71

sdny/pr/manhattan-us-attorney-announces-criminal-charges-

against-general-motors-and-deferred. If GM abides by the terms

of the agreement for three years, the government will defer

prosecution and then seek to dismiss the charges. Id.

Despite this evolution in the use of deferred-prosecution

agreements, the Court does not find that approving such

agreements with corporations to be legally improper: Congress

provided the deferred-prosecution tool without limiting its use

to individual defendants or to particular crimes.

Notwithstanding clear congressional intent, however, the Court

is disappointed that deferred-prosecution agreements or other

similar tools are not being used to provide the same opportunity

to individual defendants to demonstrate their rehabilitation

without triggering the devastating collateral consequences of a

criminal conviction. Department of Justice statistics indicate

that in fiscal year 2012, there were a total of 253 pretrial

diversions for individual defendants, accounting for 0.9% 16 of

the reasons why Assistant United States Attorneys declined to

prosecute. See Mark Motivans, Statistician, Dep’t of Justice,

Office of Justice Programs, Bureau of Justice Statistics,

“Federal Justice Statistics, 2012 - Statistical Tables”, tbl.

16Percent is based on suspects for whom a reason for declination

could be determined. See Bureau of Justice Statistics, at tbl.

2.3 p. 12.

72

2.3 p. 12 (2015), available at http://www.bjs.gov/content/pub/

pdf/fjs12st.pdf. This is in contrast to the use of corporate

deferred-prosecution agreements and non-prosecution agreements

in the Department of Justice’s Criminal Division, which the

Government Accountability Office found were comparable to the

number of corporate prosecutions undertaken between fiscal years

2004 and 2009. See U.S. Gov’t Accountability Office, GAO 10-110,

DOJ Has Taken Steps to Better Track Its Use of Deferred and Non-

Prosecution Agreements, but Should Evaluate Effectiveness 1

(2009), available at http://www.gao.gov/assets/300/299781.pdf.

That said, in the U.S. Attorneys’ Offices, the number of

deferred-prosecution and non-prosecution agreements was less

than the number of corporate prosecutions. Id. at 13.

As the use of deferred-prosecution agreements to benefit

corporate defendants has increased, public dialogue has begun to

focus on ways in which the criminal justice system can be

reformed to reduce over-incarceration of individuals for non-

violent crimes, especially drug crimes. President Barack H.

Obama recently acknowledged that “[m]ass incarceration makes our

country worse off, and we need to do something about it.”

President Barack Obama, Remarks by the President at the NAACP

Conference (July 14, 2015), available at https://www.whitehouse

.gov/the-press-office/2015/07/14/remarks-president-naacp-

73

conference. The President went on:

The United States is home to 5 percent of the world’s

population, but 25 percent of the world’s prisoners.

Think about that. Our incarceration rate is four times

higher than China’s. We keep more people behind bars

than the top 35 European countries combined. And it

hasn’t always been the case -- this huge explosion in

incarceration rates. In 1980, there were 500,000 people

behind bars in America -- half a million people in

1980. . . . Today there are 2.2 million. It has

quadrupled since 1980. Our prison population has

doubled in the last two decades alone.

* * *

But here’s the thing: Over the last few decades, we’ve

also locked up more and more nonviolent drug offenders

than ever before, for longer than ever before. And that

is the real reason our prison population is so high. In

far too many cases, the punishment simply does not fit

the crime. If you’re a low-level drug dealer, or you

violate your parole, you owe some debt to society. You

have to be held accountable and make amends. But you

don’t owe 20 years. You don’t owe a life

sentence. That’s disproportionate to the price that

should be paid.

Id. Along similar lines just last year, then-Attorney General

Eric H. Holder celebrated the first year-to-year drop in the

federal prison population in decades:

[T]he United States will never be able to prosecute or

incarcerate its way to becoming a safer nation. We must

never, and we will never, stop being vigilant against

crime—and the conditions and choices that breed it. But,

for far too long—under well-intentioned policies

designed to be “tough” on criminals—our system has

perpetuated a destructive cycle of poverty, criminality,

and incarceration that has trapped countless people and

weakened entire communities—particularly communities of

color.

* * *

74

Perhaps most troubling is the fact that this astonishing

rise in incarceration—and the escalating costs it has

imposed on our country, in terms both economic and human—

have not measurably benefitted our society. We can all

be proud of the progress that’s been made at reducing

the crime rate over the past two decades—thanks to the

tireless work of prosecutors and the bravery of law

enforcement officials across America. But statistics

have shown—and all of us have seen—that high

incarceration rates and longer-than-necessary prison

terms have not played a significant role in materially

improving public safety, reducing crime, or

strengthening communities.

* * *

We know that over-incarceration crushes opportunity. We

know it prevents people, and entire communities, from

getting on the right track. And we’ve seen that—as more

and more government leaders have gradually come to

recognize—at a fundamental level, it challenges our

commitment to the cause of justice.

Eric Holder, Att’y Gen., One Year After Launching Key Sentencing

Reforms, Attorney General Holder Announces First Drop in Federal

Prison Population in More Than Three Decades (Sept. 23, 2014),

available at http://www.justice.gov/opa/pr/one-year-after-

launching-key-setencing-reforms-attorney-general-holder-

annouces-first-drop-0. The Federal Bureau of Prisons (BOP)

recently announced that the number of inmates also decreased in

fiscal year 2015, marking the second consecutive year of

decreases and reversing a 34 year trend of successive increases.

Press Release, Bureau of Prisons, Federal Inmate Population

Declines (October 5, 2015), available at https://www.bop.gov

/resources/news/20151001_populationDecline.jsp. BOP stated that

75

an overall inmate reduction of over 11% is expected by the end

of fiscal year 2016. Id.

Consistent with these observations, Congress, the President,

and the Sentencing Commission have worked to expand the

flexibility of the criminal justice system in various ways. Much

effort has focused on reducing sentencing disparities and

lowering the offense levels applicable to certain drug crimes.

See, e.g., Fair Sentencing Act of 2010, Pub. L. No. 111-220, 124

Stat. 2372 (2010); U.S. SENTENCING GUIDELINES MANUAL app. C, amend.

782 (U.S. SENTENCING COMM’N 2014). The 2014 amendments to the

Guidelines, which lowered the base offense levels applicable to

drug offenses, will soon result in the early release of 6,000

prisoners, and ultimately are expected to result in the early

release of up to 46,000 prisoners nationwide. Sari Horwitz,

Justice Department Set to Free 6,000 Prisoners, Largest One-time

Release, WASH. POST (October 6, 2015), https://www.washingtonpost

.com/world/national-security/justice-department-about-to-free

6000-prisoners-largest-one-time-release/2015/10/06/961f4c9a-

6ba2-11e5-aa5b-f78a98956699_story.html. Moreover, the Sentencing

Commission recently identified “encourage[ing] the use of

alternatives to incarceration” as a new policy priority for

2015-16. 80 FR 48957 (Aug. 14, 2015).

In another example, the Department of Justice has altered its

charging policies in a manner that grants prosecutors more

76

discretion to take into account the unique facts of particular

defendants and cases. See Memorandum from Eric Holder, Att’y

Gen., to United States Attorneys and the Assistant Att’y Gen.

for the Criminal Division, (Aug. 12, 2013), available at

http://www.justice.gov/sites/default/files/oip/legacy

/2014/07/23/ag-memo-department-policypon-charging-mandatory-

minimum-sentences-recidivist-enhancements-in-certain-

drugcases.pdf. Moreover, in his recent speech to the NAACP, the

President proposed a number of additional reforms:

We should pass a sentencing reform bill through Congress

this year. . . . We need to ask prosecutors to use their

discretion to seek the best punishment, the one that's

going to be most effective, instead of just the longest

punishment. We should invest in alternatives to prison,

like drug courts and treatment and probation programs.

. .which ultimately can save taxpayers thousands of

dollars per defendant each year.

President Barack Obama, Remarks by the President at the NAACP

Conference (July 14, 2015), available at https://www.whitehouse.

gov/the-press-office/2015/07/14/remarks-president-naacp-

conference. Proposals are currently pending in Congress that

would reduce mandatory-minimum sentences in certain cases and

otherwise provide more opportunity for the sentences of drug

offenders to be more closely tailored to the particular offense.

See, e.g., SAFE Justice Act, H.R. 2944, 114th Cong. (2015);

Justice Safety Valve Act of 2015, S. 353, H.R. 706, 114th Cong.

(2015); Smarter Sentencing Act, S. 502, H.R. 920, 114th Cong.

77

(2015); Sentencing Reform and Corrections Act of 2015, S. 2123,

114th Cong. (2015).

These reform efforts are laudable because they would provide

prosecutors and judges with greater flexibility and more tools

to address the facts of individual cases and defendants, seeking

to serve the twin goals of punishment and deterrence while also

serving society’s compelling interest in the rehabilitation of

individuals. Regrettably, despite the renewed focus on such

reforms, the deferred-prosecution agreement and other similar

tools have not been used as much as they could to achieve

reform. This oversight is lamentable, to say the least! The

United States Attorneys’ Manual contemplates the use of pretrial

diversion for certain individuals, and the Criminal Resource

Manual sets forth the procedures governing pretrial diversion

agreements for such individuals. See U.S. Attorneys’ Manual, 9-

22.000, Pretrial Diversion Program, available at

http://www.justice.gov/usam/usam-9-22000-pretrial-diversion-

program#9-22.100 (Updated April 2011). To provide individuals

with the opportunity for meaningful rehabilitation, it is

critical that they be provided with adequate supervision. The

Criminal Resource Manual contemplates the need for such

supervision: "If it is determined that [Pretrial Diversion] is

appropriate for an offender, supervision should be tailored to

the offender's needs and may include employment, counseling,

78

education, job training, psychiatric care, etc. Many districts

have successfully required restitution or forms of community

service as part of the pretrial program. Innovative approaches

are strongly encouraged." See U.S. Attorneys’ Manual, Criminal

Resource Manual, 712, Pretrial Diversion, available at

http://www.justice.gov/usam/criminal-resource-manual-712-

pretrial-diversion.

Another seldom used tool is pre-judgment probation, which is

authorized by the Federal First Offender Act, 18 USC § 3607.

Section 3607(a) gives courts the authority to place on probation

persons found guilty of simple possession of a controlled

substance if the person: (1) has not been convicted of violating

a federal or state law relating to controlled substances; and

(2) has not had a previous disposition under 18 USC § 3607. If

the person complies with the conditions of probation, the court

is authorized to dismiss the proceedings without entering a

judgment of conviction. 18 USC § 3607(a). Furthermore, if the

person was less than 21 years of age at the time of the offense,

the court is authorized to enter an expungement order. 18 USC §

3607(c).

The Court recognizes that prosecutors are confronted regularly

with difficult questions of how to exercise their discretion.

The decision how to proceed in each case is within the expertise

and constitutional responsibility of the Executive Branch, and

79

this Court has neither the desire nor the authority to dictate

charging decisions. The Court is, however, extremely dismayed

that despite all of the focus on providing tools for prosecutors

to reduce over-incarceration, attack the root causes of crime,

and mitigate where possible the collateral consequences of

criminal convictions, deferred-prosecution agreements for

individuals and other similar tools have gone largely

unmentioned. As President Obama recently recognized in commuting

the sentences of forty-six individuals convicted of non-violent

drug offenses, “America is a nation of second chances.” Sari

Horwitz & Juliet Eilperin, Obama Commutes Sentences of 46

Nonviolent Drug Offenders, Wash. Post, July 13, 2015,

https://www.washingtonpost.com/world/national-security/obama-

commutes-sentences-of-46-non-violent-drug-

offenders/2015/07/13/b533f61e-2974-11e5-a250-42bd812efc09

_story.html. Deferred-prosecution agreements could provide a

powerful opportunity for a second chance for deserving

individuals. 17 Individual defendants should be given a chance to

rehabilitate, subject to the supervision of a court and

17In the Court’s opinion, some will argue that deferred-

prosecution agreements would not serve a unique purpose because

drug courts can serve the same purpose. Such a position fails to

take into account the fact that federal drug courts are

dependent upon Congressional funding, and that drug offenses are

not the only offenses for which deferred-prosecution agreements

may be appropriate.

80

prosecutor, with an eye toward avoiding the very serious

collateral consequences that a criminal conviction can have for

an individual and for society. Cf. Doe v. United States, No. 14-

mc-1412, 2015 WL 2452613, at *4 (E.D.N.Y. May 21, 2015)

(expunging a prior conviction, Judge Gleeson chronicles the

“wide-ranging effects” of a criminal conviction, many of which

result in punishment that lasts long after a sentence has been

served without any corresponding benefit to the public: “simply

put, the public safety is better served when people with

criminal convictions are able to participate as productive

members of society by working and paying taxes.”); Stephenson v.

United States, 2015 WL 5884810, at *3-*7 (E.D.N.Y. Oct. 7,

2015)(denying without prejudice Ms. Stephenson’s application to

expunge a prior conviction based on controlling precedent and

the fact that she was employed and that her ability to become a

licensed nurse was realistic in light of applicable law

prohibiting discrimination on the basis of criminal history, but

noting the inconsistency between controlling precedent and the

accumulation of “solid evidence establishing that a criminal

conviction is often a significant obstacle to employment” as

well as the link between unemployment and recidivism, and

calling on all three branches of government to take action to

better ensure that persons who have “pa[id] [their] debt to

society” are truly given a second chance).

81

The Court is of the opinion that people are no less prone to

rehabilitation than corporations. Drug conspiracy defendants are

no less deserving of a second-chance than bribery conspiracy

defendants. And society is harmed at least as much by the

devastating effect that felony convictions have on the lives of

its citizens as it is by the effect of criminal convictions on

corporations. Extending the use of deferred-prosecution

agreements to individuals who are charged with certain non-

violent offenses would be a powerful tool to achieve one of the

goals proposed by President Obama this year: “give judges some

discretion around nonviolent crimes so that, potentially, we can

steer a young person who has made a mistake in a better

direction.” President Barack Obama, Remarks by the President at

the NAACP Conference (July 14, 2015), available at

https://www.whitehouse.gov/the-press-office/2015/07/14/remarks-

president-naacp-conference.

VI. Conclusion.

Unless and until Congress amends the Speedy Trial Act to

provide for broader involvement by the judiciary in assessing

the substance of deferred-prosecution agreements, courts will be

constrained to reviewing an agreement for: (1) whether it is

truly intended to hold prosecution in abeyance while a defendant

demonstrates rehabilitation, as required by the Speedy Trial

Act; and (2) whether the agreement involves the Court in the

82

type of illegal or untoward activity that might impugn the

Court’s integrity. That authority, however, is not as limited as

the government might prefer. Because the agreements in these

cases transgress neither boundary, the Court approves them, and

does not have occasion to set forth the full scope of a district

court’s authority to review and reject a deferred-prosecution

agreement. Nothing in this Opinion should be interpreted to

approve the judicial abdication of this review authority. Even

agreements that clearly meet the requirements of the Speedy

Trial Act and do not at all implicate a court’s supervisory

authority warrant searching review to establish why they should

receive court approval.

The Court respectfully requests the Department of Justice to

consider expanding the use of deferred-prosecution agreements

and other similar tools to use in appropriate circumstances when

an individual who might not be a banker or business owner

nonetheless shows all of the hallmarks of significant

rehabilitation potential. The harm to society of refusing such

individuals the chance to demonstrate their true character and

avoid the catastrophic consequences of felony convictions is, in

this Court’s view, greater than the harm the government seeks to

avoid by providing corporations a path to avoid criminal

convictions. If the Department of Justice is sincere in its

expressed desire to reduce over-incarceration and bolster

83

rehabilitation, it will increase the use of deferred-prosecution

agreements for individuals as well as increase the use of other

available resources as discussed in this Opinion.

For the foregoing reasons, the Court GRANTS the requests for

approval of the deferred-prosecution agreements and an exclusion

of time under the Speedy Trial Act in each of these cases.

Further, given that these cases remain pending on this Court’s

docket, the parties are directed to file periodic reports to

update the Court on the status of the implementation of the

agreements in each case as set forth in the Orders accompanying

this Memorandum Opinion.

Signed: Emmet G. Sullivan

United States District Judge

October 21, 2015

84