Has DOJ lost the courage of its own convictions?

by Ben Vernia | May 31st, 2012

Comment: The Department of Justice’s May 31 press release touting its settlement with St. Jude Medical ends with the following sentence:

The claims settled by this agreement are allegations only, and there has been no determination of liability.

DOJ has included a similar sentence in a number of civil settlement announcements in recent months. On March 1, for example, it closed the Odyssey Healthcare release by stating:

The claims contained in the complaints against Odyssey are merely allegations and do not constitute an admission of liability.

(Emphasis added.)

These closing PR caveats are similar to one DOJ has for years routinely employed when announcing indictments, such as this sentence, closing a May 24 announcement of an indictment in an impersonation case:

An indictment is merely a charge, and a defendant is presumed innocent unless and until proven guilty.

Qualifying statements made in announcing an indictment is not only sound PR policy, it is necessary to ensure that defendants’ rights in an impartial jury are not harmed by pretrial publicity.

For years DOJ has acquiesced in the inclusion of “no admission of liability” paragraphs in civil settlements of fraud cases. But DOJ typically settles FCA cases after a lengthy investigation or discovery. Presumably, the Department insists on settlement payments in those cases because it believes in its allegations. Including the caveat in settlement announcements suggests, therefore, that DOJ is less than sure of the merits of the case, even after it has investigated it and insisted the defendant pay damages for the conduct DOJ is releasing. The fact that some press releases contain this qualifying language, while others do not, only adds to this inference for the cases in which it appears.

The use of the sentence is also puzzling in light of the controversy in the Southern District of New York over Judge Jed Rakoff’s criticism of the SEC’s for failing to extract admissions from Citigroup in its proposed settlement of SEC v. Citigroup Global Markets:

Finally, in any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth. In much of the world, propaganda reigns, and truth is confined to secretive, fearful whispers. Even in our nation, apologists for suppressing or obscuring the truth may always be found. But the S.E.C., of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if it fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency’s contrivances.

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