Publications & Presentations
June 22, 2016
Acquittal of Former Pharm Executive Sends Message to DOJ

By Jonathan N. Rosen

Last Friday, a federal jury acquitted Carl Reichel, Warner Chilcott’s former president. The indictment alleged that Reichel violated the Anti-Kickback statute by instructing sales representatives to use "sham" promotional education dinners in exchange for prescription of Warner Chilcott products.

Reichel’s indictment was unsealed one month after the Yates Memorandum. According to the Yates Memorandum, no company will receive any cooperation credit from DOJ unless it first discloses all relevant information identifying all corporate malefactors. By equating individual prosecutions with long term deterrence, DOJ is putting the onus on any company seeking to avert an indictment to put their executives’ skin in the game.

Perhaps this explains why Reichel’s indictment was unsealed on the very same day that DOJ had announced a global settlement with Warner Chilcott. The company’s settlement did not include the type of commonly expected releases for its individual officers and agents. Moreover, Reichel was indicted along with three lower-level district managers, a further indication that DOJ’s corporate cooperation policy is aiming for the upper-ranks of the C-Suite.

Friday’s acquittal underscores the risks of DOJ’s focus on C-Suite prosecutions. Given the enormous litigation and reputational risks, companies are generally unwilling to take a case to trial. Individuals, on the other hand, are far more willing to go to trial, particularly to avert a term of imprisonment. At trial, no area of criminal law enforcement poses a greater challenge to the prosecutor than proving criminal intent. This is particularly true in the corporate setting where decision making in complex organizations is diffuse.

Here, the lower level managers all plead guilty. Reichel, however, challenged the government to meet its burden at trial. While the disposition of any case will depend on its specific facts, the Reichel trial demonstrates that holding senior corporate executives responsible for specific instances of corporate misconduct may be easier said than done.

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