Kaleb Byars says that the United States should require judicial review of deferred prosecution agreements.

Why?

One reason – about two-thirds of the agreements he studied imposed penalties that fall below the low end of the Sentencing Commission guidelines for organizational defendants.

Byars is an associate professor of law at Mercer Law School in Macon, Georgia. He is the author, most recently of – A Concrete Standard of Judicial Review for Corporate Deferred Prosecution Agreements (Florida Law Review, 2025).

Byars used Virginia Law School’s Corporate Prosecution Registry and pulled all the deferred prosecution agreements from between 2021 and 2024. There were a total of 39 agreements in that period. 

“What I found was that these deferred prosecution agreements regularly imposed financial penalties that were significantly less than the financial penalties that would have been imposed if a court had imposed a sentence,” Byars told Corporate Crime Reporter in an interview last month. “When a court imposes a sentence, the court references the U.S. Sentencing Guidelines. It says –  here is a mathematical formula to figure out a range of fines that should be imposed on an organization based on the offense, on the history and characteristics of the defendant.”

“What I found was that in 67 percent of the deferred prosecution agreements I looked at, the agreement sets forth discounts from the fine range. They imposed fines below the fine range that a court would have applied.” 

“The discounts were not minimal. The most common discount now is 25 percent below the low end of the guideline range. And discounts of up to 40 percent below the guideline range were not uncommon. I found one agreement where the fine was 82 percent below the low end of the guideline range.” 

“I do want to add that courts are not bound by these guidelines. So if these cases had proceeded to sentencing, it is not necessarily the case that the courts would have imposed sentences within the guidelines. But based on my research, courts generally impose sentences below the guideline range in about a third of all cases. But in deferred prosecution agreements,  the government and defendants are agreeing to fines below the guideline range in a supermajority of cases – 67 percent of cases.”

Todd Haugh and Mason McCartney found a similar result when they studied 600 Foreign Corrupt Practices Act (FCPA) settlements in a paper titled DPA Discounts.

The paper finds that the culpability score calculations made pursuant to the guidelines, which are designed to calibrate a company’s ultimate penalty with its level of wrongdoing, are not statistically significant in determining penalties. 

“Instead, it appears a hardened norm has developed at the Department of Justice of giving an almost uniform 25 percent discount off the low end of the fine range regardless of a company’s culpability,” Haugh and McCartney write.

We asked Byars – hasn’t Congress sought to impose judicial review on these agreements? 

“There has been legislation introduced in Congress – the Accountability and Deferred Prosecution Act. That legislation was introduced in 2008, 2009 and 2014. That legislation would have required courts to approve these agreements. Specifically, courts would have to find that the agreements were in the interests of justice.” 

“In 2018 and 2019, Senator Elizabeth Warren (D-Massachusetts) introduced legislation called the Ending Too Big to Jail Act. It was essentially the same as the previous legislation.” 

But weren’t deferred prosecution agreements for corporations developed as a result of Justice Department policy?

“Prosecutorial guidance informed prosecutors when they should use these agreements and when they shouldn’t use them. The Speedy Trial Act says that if the defendant has been charged and the prosecution is deferred by the government, then the time for the trial itself would be delayed. So these agreements were allowed by Congress with the passage of the Speedy Trial Act.”

“When the Speedy Trial Act was passed, corporations were not on the mind of Congress. Deferred prosecutions were originally designed for first time non violent offenders. They were offered to provide leniency for those first time offenders. They would not have criminal convictions on their records. They were designed for individuals, not for corporations.”

But the Speedy Trial Act calls for judicial approval of the deferred prosecution agreement, doesn’t it?

“You have just identified what has been the crux of much scholarly commentary. The text of the Speedy Trial Act says the criminal case can be deferred ‘with the approval of the court.’ And that is generally true. A court does have to approve them. But courts have interpreted that language of the Speedy Trial Act not to require substantive review of deferred prosecution agreements.” 

“Appellate courts have said that judges cannot substantively review these agreements and reject them just because the terms are unfair or disproportionate. In the Fokker case, the district court did reject a deferred prosecution agreement. The court said that the defendant’s conduct was egregious. It said the fine was too low. That case was reversed on appeal. And other circuits that have addressed that issue have followed the Fokker decision and said that even though the Speedy Trial Act says that the agreement has to be approved, there is no legitimate basis for substantive review and rejection of the agreement.”

“These courts are saying that to allow a court to reject a deferred prosecution agreement violates separation of powers principles because it infringes on the executive or prosecutorial authority for charging.” 

You argue that by not allowing judicial review of these agreements, the executive is usurping from the judiciary the power to sentence.

“That’s correct. Prosecutors prosecute, juries decide guilt, courts impose sentences. These agreements allow the defendant and the government to do all of that themselves. Even though they are exercising that sentencing function, they are doing it poorly. The courts impose sentences below the guideline range in about a third of the cases. The government and the companies are imposing sentences below the guideline range in two-thirds of all cases.”

You say they are doing it poorly, but from the perspective of the government and the corporations – which appear to be on the same side – they are doing it quite well.

“That might be one way to look at it. Yes, the government and the defendant are getting what they want.” 

“There was a deferred prosecution with Bristol Myers Squibb. As part of the agreement, the company agreed to endow I think it was a chair in ethics at Seton Hall Law School. That was where the U.S. Attorney in that case – Chris Christie –  went to law school. That’s another reason for judicial review.”

In your paper, you put forward a concrete standard of judicial review of these agreements.

“Let me first say that people like Brandon Garrett and Peter Reilly have come up with thoughtful standards. And there are standards in the UK. These standards basically say that a court can approve a deferred prosecution agreement as long as that agreement is reasonable, as long as it’s in the public interest, in the interests of justice.”

“Those are broader standards of judicial review that would allow a court to look at the totality of circumstances and say – overall, this agreement is fair and I’m going to approve it. Professor Garrett has proposed specific factors that courts can look at in making those determinations.” 

“My article says that those types of proposals are a good start. But when you have these totality of the circumstances type standards, courts have a bad habit of going through the motions and saying – we have considered all of the relevant factors and determined that the agreement is in the public interest, we have determined that it’s reasonable. It seems like often the courts are just going through the motions.” 

“Where agreements require these kinds of totality of the circumstances type approval – like class action settlements, they are almost always approved. They are rarely rejected.” 

“In light of that, what might be better is a use of specific concrete findings that courts have to make before approving a deferred prosecution agreement. This requires courts to do specific things. And appellate courts and the public can say – yes the court has followed these procedures to make sure the agreement is fair and reasonable. That also promotes uniformity in corporate criminal justice.”

“The first specific finding that I propose is that the charges have to be adequately supported by a statement of facts in the agreement. Courts should look at the offense charged and make sure the elements of those offenses were satisfied by the facts.”

“Second, the financial penalties are not greater than necessary to achieve the purpose of the sentencing and to conform to the Sentencing Guidelines.” 

“Third, courts should find that any structural reform is narrowly tailored to get rid of the organizational criminal conduct without unduly interfering with the defendant’s business.”

“And finally, it’s also true that in some industries, there might need to be additional findings. For example, if it’s a small business, a court may want to make sure that the agreement doesn’t impose terms that would put it out of business.”

“Some of the legislation that has already been introduced included the broader standards, which I think would be less optimal. But it wouldn’t be difficult to instead pass the same bill requiring judicial review and then lay out the findings that a court needs to make in doing the review.”

[For the complete q.a format Interview with Kaleb Byars, see 39 Corporate Crime Reporter 14(14), April 7, 2025, print edition only.]