U.S. DOJ Investigations: Thoughts about the Scope of Applicability of the “Law”

I. Introduction – “Why is an American attorney here?”

“Why is an American attorney here?” This is a common refrain heard by many attorneys from the U.S. who have come to Japan to represent Japanese companies in investigations by the U.S. Department of Justice (DOJ). The DOJ has a history of prosecuting Japanese companies and their employees based on conduct that occurred outside of US territory.  

In this series of articles, we will discuss why acts committed in Japan may be subject to DOJ investigation and prosecution. In addition, we will discuss why these types of problems are relevant to not only large corporations, but also to small and medium-sized enterprises, and require a deeper understanding as part of a company’s risk management. In this article, we address the fundamental question of “Why is an American attorney here?”  

II. The Extraterritorial Scope of U.S. Law

First, there is a need to understand the extraterritorial reach of U.S. law. In determining whether a Japanese company's conduct in Japan is subject to U.S. investigative authorities, it is necessary to consider whether the conduct falls within the scope of U.S. law. The table below includes a summary of the applicable scope of representative laws.

Reviewing the provisions pertaining to application, each law is applicable even if the culpable conduct at the core of the offense is performed outside of the U.S. territory. To take money laundering as one example, a subject residing in Japan may wire proceeds of a crime from an account in Japan to an account in the United States, and then further wire the proceeds to an account in Europe. Even though the subject may have conducted all of the wiring transactions from Japan, U.S. law may possibly apply. The basis for the extraterritorial application of U.S. law is not about the location in which the subject conducted the transactions to wire the proceeds, but about the conduct of using a U.S. account. 

Summary of the Applicable Scope of Representative laws 

III. The DOJ’s Approach

1. The DOJ’s Approach to Illegal Conduct

The extraterritorial application of U.S. law is a technical answer, as a reason that a US investigative agency may prosecute conduct that occurred on foreign soil. However, some may question what the purpose of an investigation under U.S. law is in practice. It is a legitimate question to ask.  

The DOJ has a public guidebook called the “Justice Manual,” that sets forth internal DOJ policies and procedures.¹ In the Justice Manual, the Principles of Federal Prosecution (Principles of Federal Prosecution) are set forth. Like the Japanese Public Prosecutors Office,² prosecutors of the DOJ consider not only the legal requirements, but also a number of other requirements when deciding whether to bring an indictment or to drop the charges.³ One practical internal requirement in the United States is whether the prosecution substantially serves a Substantial Federal Interest.

(1) The DOJ’s Approach – Cartel Conduct

As a reason to prosecute extraterritorial conduct, the DOJ’s approach to the “substantial federal interest” requirement became somewhat more public in the civil class action case Motorola Mobility LLC v. AU Optronics Corp. No. 14-8003 (7th Cir. 2014) (“LCD Civil Case”). The alleged conduct was cartel conduct, in which LCD manufacturers entered into agreements with each other at meetings in the Asian region that set high prices for LCD screens worldwide.  

While the court was considering the scope of the U.S. antitrust laws in the civil action, the DOJ, as a third party to the case, submitted an amicus curiae brief with the objective of avoiding a broad ruling that would also impact criminal investigations. The DOJ focused on its characteristics as a government agency. The DOJ argued:

A different approach is required for criminal prosecutions and actions in equity brought by the government under Sections 1-4 of the Sherman Act. In these instances, the sovereign sues not to redress a particular injury in its business or to obtain compensation for damages to its property, but to prosecute or enjoin a violation of its laws.⁴

The DOJ appeared to make a distinction between suits between private parties and suits in which the government is a party. It argued that private lawsuits, such as civil class actions, are personal problem-solving exercises and the goal is to return the plaintiff to economic wholeness. By comparison, the role of a government agency, like the DOJ, is charged with protecting the public even if illegal acts have been committed abroad.

The DOJ argued that the way to protect the public is to enjoin or prosecute illegal acts. While there are many objectives in indicting foreign suspects, at least one of them is to create a deterrent effect on future suspects from committing illegal acts. The DOJ’s role is not limited to prosecuting suspects identified by the investigation, but also to deter those who may commit illegal cartel acts against the public.

The argument is that, as a government agency, the DOJ must consider the protection of the public as a whole. The amicus opinion appears argue that the DOJ, as a government agency, is protecting the nation from extraterritorial suspects, seeking to have a deterrent effect on other suspects and serving a “substantial federal interest” by prosecuting extraterritorial conduct in this manner.

(2) The DOJ’s Approach – Bribery of Foreign Government Officials

The DOJ has also made its opinions public on other statutes.  In its Resource Guide to the US FCPA, it has expressed the following opinion on bribery:

Foreign bribery is a scourge that must be eradicated.  It undermines the rule of law, empowers authoritarian rulers, distorts free and fair markets, disadvantages honest and ethical companies, and threatens national security and sustainable development.⁵ 

(3) The DOJ’s Approach – Money Laundering

Regarding money laundering, a court ruling states

Congress enacted the Money Laundering Control Act, 18 U.S.C.S. § 1956, to criminalize the use of United States financial institutions as clearinghouses for criminal money laundering and conversion into United States currency.⁶

The “substantial federal interest” in prosecuting money laundering activities is to protect the integrity of U.S. financial institutions and U.S. currency.  

(4) The DOJ’s Approach – Wire Fraud

With respect to wire fraud, there is no clear public statement, but as with money laundering, the purpose appears to be to protect the integrity of U.S. telecommunications institutions.

2. DOJ’s Approach to Personal Accountability

The most important means of building deterrent effect is to have the offender serve time in prison. To analyze the reasons for the DOJ's insistence on jail time, it is useful to look at history.  After the Lehman Brothers collapse in 2008, the DOJ was heavily criticized by the public for prosecuting only one bank employee. In 2015, the DOJ published a memo prepared by Deputy Attorney General Sally Yates emphasizing the importance of holding individuals accountable in corporate fraud investigations.

One of the most effective ways to combat corporate misconduct is by seeking accountability from individuals who perpetrated the wrongdoing. Such accountability is important for several reasons: it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public’s confidence in our justice system.⁷ 

In 2021, Deputy Attorney General Lisa Monaco likewise announced that she would change the way corporate misconduct is investigated, citing the above from the Yates memo. As with extraterritorial application, the reasons for requiring individuals to serve sentences are the need to gain public confidence and deter future illegal conduct.

One common thread that runs through all of these is the strong public opinion that corporate misconduct is common and that the DOJ needs to increase action. An OECD study found that eradicating cartel activity would lower prices by 20%.⁸ In addition, U.S. President Biden has announced that corruption is taking 2-5% out of the world's gross domestic product.⁹ Regardless of the accuracy of these claims, they certainly represent the sentiment of the people. The Japanese also have a special responsibility regarding the pursuit of personal accountability and the extraterritoriality of U.S. law. Congress originally enacted the FCPA in 1977 with an eye towards the Japan Lockheed scandal in 1967.¹⁰   

IV. Conclusion – To answer the question

In this respect, the answer to the question of “why is an American attorney here” is that the DOJ is of the opinion that the public has given it the task of protecting U.S. citizens from foreign suspects.

This series aims to get companies in Asia up to speed with the fundamentals and the latest developments in U.S. DOJ investigations. It is prepared by Ken Sakurabayashi, who served as a prosecutor at the DOJ for seven years. Contact us if you wish to discuss in more detail. Stayed tuned for the upcoming articles.

The Japanese version of this article was originally published in May 2025 edition of Japan Business Law Review.