Second Annual Consumer Protection Summit: Principal Dag Stuart Delery Touts $2 Billion Recovered And 23 Convictions In Consumer Protection Enforcement Actions In 2012

By: James W. Kraus

Principal Deputy Attorney General Stuart F. Delery, who heads DOJ’s Civil Division, used last Friday’s speech to the Second Annual Consumer Protection Summit at Georgetown University School of Law to review the 2012 accomplishments of the Consumer Protection Working Group.   In his remarks, he highlighted the efforts of the Consumer Protection Branch in securing of over $1.95 billion in criminal fines, forfeiture, restitution and civil disgorgement, as well as 23 criminal convictions during 2012.  He also indicated that there is more to come.

The Consumer Protection Working Group is part of the Financial Fraud Enforcement Task Force, a grouping of federal agencies, working in partnership with state governments, formed in the wake of the financial crisis to pursue those thought to be responsible for numerous abuses in the financial industry.   As we reported previously, DOJ plans to make increased cooperation with the states on financial fraud a top priority, seeing opportunity for shared resources to create, as Acting Associate Attorney General Tony West put it, “a formidable force-multiplier when it comes to accountability and deterrence.”

His comments are yet another reminder of DOJ’s dedication to maintaining the trend of increased government enforcement in the name of consumer protection, including criminal prosecutions if necessary, against companies and those who run them.

Delery ticked off a laundry list of priorities for the Civil Division generally and the Consumer Protection Branch specifically, including “dietary supplement safety, debt relief scams, phantom debt scams, payday lending, lottery scams, and even romance scams.”  He added, however, that their work is even broader than that diverse grouping.

He went on to indicate that cases brought during 2012 included cases against food manufacturers that produce food under insanitary conditions; drug makers who mislead consumers about the safety and efficacy of the drugs they produce and market; and those who commit fraud in the mortgage industry.  We have reported on specific examples of those types of prosecutions recently, including:

  • The prosecution of former officers and employees of the Peanut Company of America (PCA) in relation to a salmonella outbreak traced to its plant in Georgia (read more);
  • The scattered fallout from the Second Circuit’s ruling in Caronia that the First Amendment can provide a defense to drug manufacturers facing charges relating to off-label marketing (read more); and
  • The Lender Processing Services Inc. (LPS) case, where LPS agreed to pay $35 million in criminal penalties and forfeiture as part of a non-prosecution agreement, which followed the November 2012 felony guilty plea by the former CEO of wholly owned LPS subsidiary (read more).

While Delery also mentioned the importance of “collaboration, education, and outreach,” his overriding message was that DOJ and its sister agencies will use all tools available in pursuit of their consumer protection mission.  His comments are yet another reminder of DOJ’s dedication to maintaining the trend of increased government enforcement in the name of consumer protection, including criminal prosecutions if necessary, against companies and those who run them.  The trend is more than perception, as all objective statistical data supports this conclusion.  His remarks are also a reminder of the need for increased vigilance in establishing, maintaining and enforcing corporate compliance programs.

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