The Deal White-Collar Crime · Crime Lab 12 · Midwestern State University

Most corporate crime in the United States is resolved by contract. The company and the government agree on a charge, a payment, a term of years, and a set of promises, and a judge sees the agreement only to sign it, if at all. In 2025 the Justice Department reached 74 such resolutions, worth $4.4 billion, imposed no independent monitor in any of them, and published a policy setting out exactly what a company gets for disclosing, cooperating, and remediating. This lab puts you in the prosecutor's chair with a fixed set of facts. You will build a resolution from the choices prosecutors actually have, see it scored against the guidelines, the department's own policy, and the four readings of this unit, and then set it beside the deal the department made with Boeing. The question the course has been asking since Lab 1 is whether the harm that costs the most is punished the least. This is where you decide how much of that is a choice.

Five forms of resolution and what each costs

Declination
No charge. Under the Criminal Division's policy, the presumptive outcome for a company that voluntarily self-discloses before an imminent threat of exposure, fully cooperates, and remediates, with no aggravating circumstances. The company may still disgorge its gain. Nothing is filed in court.
Non-prosecution agreement
A letter agreement: the company admits facts, pays, and promises; the government agrees not to charge. Nothing is filed; no judge reviews it. The 2025 policy offers an NPA of under three years, a 75 percent reduction from the bottom of the guideline fine range, and no monitor to companies whose disclosure was a "near miss" or that have aggravating factors but cooperate and remediate.
Deferred prosecution agreement
A charge is filed and then held; if the company keeps its promises for the term, the charge is dismissed. A judge must accept the dismissal, which is how Judge O'Connor came to rule on Boeing. Terms in 2025 policy are capped at three years absent special reasons.
Guilty plea
A conviction, with the collateral consequences that follow (debarment from government contracts, loss of licenses, exclusion from Medicare for a health care company). A judge must accept the plea and can reject its terms, as Judge O'Connor did with Boeing's in December 2024. Companies that do not qualify for the other paths can still receive up to 50 percent off the low end of the range.
Trial
Rare for corporations: the government has tried a handful of companies in the last two decades. The fact that a conviction can be fatal to the firm (Arthur Andersen, 2002) is the reason the other four forms exist.

How the fine is computed. The Sentencing Guidelines for organizations (chapter 8) start from a base fine, the greatest of a table amount keyed to the offense level, the company's pecuniary gain, or the pecuniary loss it caused knowingly. A culpability score then sets a multiplier range: it starts at 5, rises with the size of the organization and the seniority of the people involved (up to +5 for a firm of 5,000 or more whose high-level personnel participated), rises for prior offenses and obstruction, and falls for self-reporting before the threat of disclosure (−5), cooperation and acceptance of responsibility (−2), and an effective compliance program (−3). A score of 8 gives multipliers from 1.6 to 3.2; a score of 3 gives 0.6 to 1.2. The range is the starting point for the discounts on the menu above. The policy discounts are taken from the low end.

The two other terms that matter. Individuals: since the 2015 Yates memorandum the department's stated policy has been that a company gets cooperation credit only by identifying the individuals involved, and the May 2025 memorandum says "it is individuals" who commit these crimes and the Division must focus on them; in practice, whether any individual is charged is the prosecutor's separate decision. Monitors: an independent monitor is an outside firm, paid by the company, that reports to the government on compliance for the term; the 2025 policy directs prosecutors to scale back monitors and limit their terms, and the Division imposed none in 2025.

In the 74 corporate criminal resolutions the Justice Department reached in 2025, how many included an independent compliance monitor?

0
monitorships imposed by the Criminal Division in 2025; several existing ones ended early
74
corporate resolutions in 2025, down from 104 in 2024 and 83 in 2023
$4.4B
in 2025, down from about $8.5 billion in 2024
8 · 6
deferred and non-prosecution agreements in 2025; the rest guilty pleas and declinations with disgorgement

Sources: U.S. Sentencing Guidelines Manual, ch. 8, parts C (8C2.4 through 8C2.7); U.S. Department of Justice, Criminal Division, Corporate Enforcement and Voluntary Self-Disclosure Policy as revised May 12, 2025, and the Galeotti memorandum of the same date, as summarized by Herbert Smith Freehills Kramer; Gibson Dunn, Corporate Resolutions 2025 Year-End Update, February 4, 2026.

The facts

Meridian Aero Components is a constructed company; no part of this fact pattern describes a real firm. Meridian makes hydraulic actuators for commercial aircraft. It has 6,000 employees and $2.1 billion in revenue. For four years, three quality engineers and a plant manager at its Kansas plant signed off inspection records for actuators that had failed pressure tests, and the records went to the Federal Aviation Administration, which relied on them to certify the parts. In the second year the vice president for quality learned of the practice from an internal audit and told the plant to "handle it," which it did by continuing. No part failed in service. When the practice came out, airlines pulled and replaced the parts at a cost of $600 million. Meridian avoided about $150 million in rework and scrap over the four years. Meridian disclosed the matter to the department two weeks after learning that a former engineer had filed a whistleblower complaint, cooperated fully once it did, fired the four plant employees and the vice president, and rebuilt its quality system. It has no prior record.

$600M
base fine: the loss caused knowingly, larger than the $150 million gain
8
culpability score: 5, plus 5 for a 5,000-employee firm with high-level participation, minus 2 for cooperation and acceptance; no self-report credit, since the disclosure came after the threat of exposure
$960M to $1.92B
guideline fine range, multipliers 1.6 to 3.2
Near miss
the policy's category for a disclosure that came too late to be voluntary: NPA path, up to 75 percent off the low end, $240 million

Your resolution

Choose each term. The scoring below updates as you choose, against the department's policy, the guidelines, and the four readings. When you are satisfied, lock the deal; it is recorded for your submission and compared with Boeing's.

How it scores

Your deal beside Boeing's

The Boeing record. The charge was one count of conspiracy to defraud the FAA's Aircraft Evaluation Group about the MCAS flight-control software; 346 people died in the two crashes. The January 2021 deferred prosecution agreement ($243.6 million criminal penalty, $1.77 billion to airline customers, $500 million to families, three years, no monitor) attributed the deception to two technical pilots; one was tried and acquitted in 2022. When the department found in 2024 that Boeing had breached the agreement, Boeing agreed to plead guilty, and Judge O'Connor rejected the plea in December 2024 over the terms for selecting a monitor. In May 2025 the department agreed not to prosecute at all: a $487.2 million fine with the $243.6 million already paid credited, $444.5 million for the families, $455 million on compliance and safety, an independent compliance consultant chosen by Boeing rather than a monitor, and a two-year term. The judge dismissed the case on November 6, 2025, and wrote that the agreement "fails to secure the necessary accountability."

Sources: United States v. The Boeing Company, N.D. Tex., deferred prosecution agreement of January 7, 2021, order of December 5, 2024, non-prosecution agreement of May 2025, and order of November 6, 2025, as reported by NPR and CNBC; Gibson Dunn (2026) for the $688.1 million figure (fine net of credit plus the family fund).

What the department did in 2025, and what the President undid

Two records bear on any deal you build. The first is the department's: fewer resolutions, less money, no monitors, and a policy that says so in advance. The second is the pardon power, which in 2025 and 2026 was used for fraud defendants at a rate with no precedent, and which removes the last term of any deal, the sentence, along with the restitution attached to it. Guess before the reveal.

Trevor Milton, the Nikola founder from Lab 5, was pardoned in March 2025 before serving his sentence. How much restitution had the government asked the court to order him to pay?

Resolutions, 2025
74 corporate criminal resolutions for about $4.4 billion (104 and $8.5 billion in 2024). Eight deferred prosecution agreements, six non-prosecution agreements, the rest pleas and declinations with disgorgement. The largest: Hino Motors, a guilty plea for more than $1.6 billion over falsified emissions data; Boeing, an NPA the analysts value at $688.1 million; OKX, a $504.8 million plea for operating an unlicensed money transmitter; American Express, a $199 million NPA. No monitor in any of them, and monitorships at Glencore and NatWest ended early.
The policy, May 12, 2025
Ten priorities led by health care and procurement fraud, trade and tariff evasion, and fraud on U.S. investors; "individuals first"; a declination path for self-disclosure; an NPA path with 75 percent off and no monitor for near misses; up to 50 percent off for everyone else; terms capped at three years; monitors scaled back. The department describes this as fairness and efficiency; Davies and Malik's editorial gives the two readings of it that the field divides on.
Pardons, 2025 to 2026
Milton (securities and wire fraud; the government had sought about $675 million in restitution); Carlos Watson of Ozy Media (commuted; $36.8 million); Lawrence Duran (Medicare fraud; $87.5 million); Jason Galanis ($84.8 million) and Devon Archer ($43.4 million), for defrauding a tribal nation; Todd and Julie Chrisley (bank fraud and tax evasion; $22 million between them); Paul Manafort ($31.7 million plus an $11 million forfeiture); Changpeng Zhao of Binance, whose company had pleaded guilty and paid $4.3 billion in 2023. The California governor's office tallied nearly $2 billion in restitution and forfeiture erased; NBC News put the figure in the hundreds of millions for the financial cases alone.

What this does to the deal. Every term on the previous tab assumed that the sentence is the end of the process. In a system where the individual sentence can be removed after the fact, the one term Paternoster and Simpson's respondents said they feared most, the personal cost to the manager, is no longer certain even when a prosecutor secures it. The corporate terms survive a pardon; the individual ones may not. Put that next to a policy that says "individuals first."

Sources: Gibson Dunn, Corporate Resolutions 2025 Year-End Update (February 4, 2026); Office of the Governor of California, "Trump pardons wipe nearly $2 billion in victim repayment," March 5, 2026 (a political office's tally; the individual restitution figures are from the court records it cites); NBC News on the financial-crime pardons; Department of Justice, Criminal Division, memorandum of May 12, 2025.

Ayres and Braithwaite: the benign big gun

Responsive regulation's claim is that a regulator gets the most compliance by speaking softly while visibly carrying a big stick: an enforcement pyramid in which most encounters are persuasion at the base, escalating through warnings, civil penalties, criminal penalties, and license suspension to revocation at the peak, with the willingness to escalate credible at every step. The firm that cooperates is met with cooperation; the firm that defects meets the next rung. Two conditions make it work: the regulator must be able to escalate, and the firm must believe it will. Place the five sanctions on the pyramid, base to peak.

Base to peak: persuasion, warning letter, civil penalty, criminal penalty, license suspension, then revocation. The 2025 policy is a pyramid drawn as a menu: cooperate and you get the base, defect and the next rung is available. What responsive regulation requires, and what the year's record puts in doubt, is that the top of the pyramid stays visible. A regulator that has not tried a corporation in years, has stopped imposing monitors, and cannot be sure a sentence it wins will be served, is speaking softly without the stick. Ayres and Braithwaite would predict what follows: the base of the pyramid stops working, because the reason to cooperate was the credible threat of escalation.

Source: Ayres, I., and Braithwaite, J. (1992). Responsive Regulation: Transcending the Deregulation Debate. Oxford University Press, ch. 2, The Benign Big Gun (library; the enforcement pyramid and the pyramid of regulatory strategies are the chapter's two figures).

Heese, Krishnan, and Moers: who gets leniency

Regulators, like companies, can adopt a policy and decouple it from practice, and they can do it selectively. Heese, Krishnan, and Moers study Medicare's enforcement against hospital "upcoding," billing a more expensive diagnosis than the patient had, in California from 1996 to 2007. Their argument: a regulator under conflicting pressures, to be tough on fraud and to keep unprofitable services available, will enforce less against the organizations that supply the second good. Guess the finding.

Which hospitals were less likely to be subject to a False Claims Act settlement for upcoding, and upcoded more?

The "beneficent" hospitals. Hospitals that provided more charity care and more medical education were less likely to face an upcoding settlement, and, knowing it, upcoded more, financing the unprofitable services the regulator wanted from them with the mispricing the regulator was supposed to stop. The authors call the first half selective regulator decoupling and the second half the organizations' strategic response, and note that the hospitals used nonmarket strategies, political relationships and the visibility of their good works, to keep their favorable status (pp. 2178-2180). The application to this lab is direct. A company that supplies something a government wants, aircraft, jobs in a district, cooperation in other cases, a promise of investment, is dealing with a regulator under conflicting pressures, and the terms it gets will reflect the second pressure as well as the first. Meridian's file will not say so. Neither did Boeing's.

Source: Heese, J., Krishnan, R., and Moers, F. (2016). Selective regulator decoupling and organizations' strategic responses. Academy of Management Journal, 59(6), 2178-2204 (abstract and framework, pp. 2178-2190; hypotheses on leniency and on upcoding as stated in the assigned pages).

Davies and Malik: two camps

The editorial that opens your Meeting B reading describes a discipline divided. On one side, regulation and governance scholarship in Braithwaite's line, which argues "against excessive criminalization" and for a mix of strategies, and which reads the deferred prosecution agreement as "restorative justice in action," combining a penalty with behavioral remedies while avoiding overcriminalization (pp. 3-4). On the other, critical corporate criminology, for which regulatory strategies "serve to maintain existing power relations," compliance and self-regulation are a "crime (un)control industry," and corporate harm "occurs not because the law and regulation is disobeyed, but rather because it is obeyed" (p. 3). The editors say the journal embraces both, and that in the absence of structural reform, incremental changes can still disrupt harmful practice (p. 3). The deal you built belongs to one camp or the other. The response sheet asks which.

Source: Davies, J., and Malik, H. M. (2022). Challenging existing regulatory approaches for white-collar and corporate crimes. Journal of White Collar and Corporate Crime, 3(1), 3-6, at the pages cited.

Lab 12 response sheet

Answer the four questions below in complete sentences. Then use the button at the bottom to assemble your answers and your locked deal into one block of text, and paste that text into the Lab 12 submission in D2L before you leave class. Your answers stay on this page and are not sent anywhere until you paste them.

Your name
1. Your deal. State its terms and defend the two you found hardest: the form and the individuals. Say what you gave up to get what you wanted, and which of the four readings your choice relies on.
Four to six sentences. Use the scores.
2. Boeing. Compare your Meridian deal with the May 2025 Boeing agreement term by term. Where Boeing's terms are weaker than yours, say what in the record explains the difference (the policy, the company's position, the judge's limits, Heese's selective decoupling), and whether Judge O'Connor's "accountability" would be satisfied by yours.
Four to six sentences.
3. The camps. Davies and Malik describe two positions on what a deal like yours is: restorative justice that avoids overcriminalization, or a crime (un)control industry that lets harm proceed by obeying the law. Say which describes your deal, and what evidence over the term of the agreement would let you tell.
Three to five sentences. Cite the editorial by page.
4. Your case project. How was your case resolved (trial, plea, DPA, NPA, civil settlement, declination, nothing), what were its terms, and which rung of the pyramid was it? Say what a resolution built on your Meridian principles would have looked like in your case, and why the actual one differed.
Four to six sentences. This is the core of Part 4.

About the fact pattern and the figures

Meridian Aero Components and every fact about it are constructed for the lab; the culpability score and fine range are computed under the Sentencing Guidelines' organizational provisions as simplified on the first tab, and the policy discounts are those in the Criminal Division's May 12, 2025 policy. The scoring on the second tab is the lab's reading of the four assigned works and of Judge O'Connor's order, not a legal standard. The 2025 resolution figures are from Gibson Dunn's year-end update; the pardon figures are from the sources cited on the third tab, one of which is a political office. The Boeing terms are from the agreements and orders as reported.