White Collar Crime Spring 2014 Rutgers Newark Prof Stuart Green
Corporate and White Collar Crime, Cases and Materials, Fifth Edition (Aspen Casebooks)
Note: A, B, C, E, F, G based on Prof’s syllabus (he skipped letter D and so this outline skips D)
notations shown with mark-up are class notes
This outline should be good enough for everyday use, too
A. The Concept of White Collar Crime; Corporate Criminal Liability
Chap 1 Corporate Criminal Liability
A. Corporate Criminal Liability
NY Central & Hudson River Railroad v. US 1909
Facts: to prevent sugar refiners from shipping by barge, railroad gave 5 cents discount to published rate by rebate; violate Elkins Act
Issue: can you compute criminal offense to a corporation?
but we didn’t used to!
but the poor shareholders!
no, looks like strict liability
regulatory statute = more likely to find strict liability
look at torts, look at public policy, look at within scope of job, so yeah
what does it mean for a coroporation to act? actus reas?
what kind of acts can be attributed to a corp?
Things to consider throughout classes
when civil or criminal?
B. Corporate Prosecution Policy
Federal Prosecution of Business Organizations 2003
guideline for when to prosecute p. 8
compliance and not is big deal
Two Basic Rules we need to contrast
Fed rule, broader Respondeat Superior Rule (many states follow)
MPC rule which requires high mangerial
II. The Respondeat Superior Rule
A. Criminal Acts
Commonwealth v. Beneficial finance 1971
def is small loan company
charged with bribing public officials
def: copr should not be held crim liable unless it was performed, authorized, ratified, adopted, tolerated by high ups
pros: standard in jury instructions correct, more flexible than above (which is like MPC), more that simply had the power in the corp to do what he did
Holding:the quantum of proof necessary to sustain the conviction of a corp for the acts of its agents is suff met if it is shown that the corp has placed the agent in a position where he has enough authority and resp to act for an in behald of the copr in handiling the particular corporate biness, operation or project in which he was engaged at the time he committed the criminal act
What would you do if you were in the organziation
High Mangerial Agent
Need to talk to everyone and make sure they are following
Might use many levels to diffuse
due diligence defense
People v. Lessof and berger NY Sup Ct 1994
motion to dismiss indictment
Penal Law Section 10.00(7)
moved to dismiss because it was one person, but this law allows that
The plain language of Penal Law § 10.00(7) authorizes an indictment of the partnership on such facts. That section provides that a “person”—which includes a person charged with a crime—means, “where appropriate,” “a partnership.” Similarly, the section defining the crime of insurance fraud, Penal Law § 176.00(3), provides that a “person” chargeable *1098 with the crime of insurance fraud includes any “firm, association or corporation”; under the Partnership Law, a partnership is “an association of two or more persons to carry on as co-owners a business for profit.” § 10(1) (emphasis added ). Unmistakably, therefore, the Penal Law applies to a law “firm,” whether it be a partnership or a professional corporation, and the law firm may be charged if one partner has committed a crime in the name of the law firm, as alleged in this case. Presumably, if there is a conviction of a partnership, the sentence can be a fine, a conditional discharge, or an unconditional discharge, as for a corporation.
US v. Hilton Hotel Corp 9th Circ 1972
appeal from conviction for Sherman Act
Facts: supply companies organized association to attract conventions, supply companies donated certain percentage, hotels agreed not to buy from those that didn’t put their money up
Issue: is this per se violation
Holding: yes; unreasonable restraint on trade
Issue: in scope of work?
Holding: liable for acts of its agents in the scope of their employment, even though contrary to general corporate policy and express instructions to agent
under Sherman act!
violatary (regulatory offenses,
Missed something about british approach
–jump to page 33—
III. MPC Rule
1956 reluctuanlt Section 2.07
State v. Chapman Dodge Center Inc (La. 1983)
Holding: We hold that since this record reveals no evidence of complicity by the officers or the board of directors, explicit or tacit, that the actions of these managers and/or employees were insufficient to cause this corporate entity to be guilty of the offense of an unauthorized use of a movable.
pros: use RS
def: use high managerial, and this person isn’t
When a corporation is accused of committing a crime which requires intent, it must be determined who within the corporate structure had the intent to commit the crime. If the crime was the product of a board of directors' resolution authorizing its employees to commit specific criminal acts, then intent on the part of the corporation is manifest. However, a more difficult question arises if the crime is actually committed by an employee of the corporation not authorized to perform such an act. Holding a corporation criminally responsible for the acts of an employee may be inconsistent with basic notions of criminal intent, since such a posture would render a corporate entity responsible for actions which it theoretically had no intent to commit.
it’s an appeal and we can’t decide these complex issues but we can say criminal intent has not been adequately established
Dissenting in part
high-up who had authority knowingly committed this within scope of employment so corp criminall liable
—-jump to 42 (to 57)—–
III. Responsible Corporate Officers
liable even though didin’t know drugs misbranded
Act “puts the burden of acting at hazard upon a person otherwise innocent but standing in respoible reation to a public danger”
US v. Park 1975[i][ii] looking at individual liability from company
As I understand the Court's opinion, it holds that in order to sustain a conviction under s 301(k) of the Federal Food, Drug, and Cosmetic Act the prosecution must at least show that by reason of an individual's corporate position **1915 and responsibilities, he had a duty to use care to maintain the physical integrity of the corporation's food products. A jury may then draw the inference that when the good is found to be in such condition as to violate the statute's prohibitions, that condition was ‘caused’ by a breach of the standard of care imposed upon the *679 responsible official. This is the language of negligence, and I agree with it.
considered about breath of the rule
how would he construct the rule? how would he limit the liability?
would read into it a negligence requirment
Theory in park
has to be a responsible corporate officer – that is enough for theory of liability
Supposing the facility was in Hawaii
made multiple attempts, has plan for last attempt but materials haven’t arrived yet
Is that enough for valid
See 535 f2d 508
Corporation and its president were co
Appeals reversed, reasoning that although this Court's decision in United States v. Dotterweich, 320 U.S. 277, 64 S.Ct. 134, 88 L.Ed. 48, had construed the statutory provisions under which respondent had been tried to dispense with the traditional element of “awareness of some wrongdoing,” the Court had not construed them as dispensing with the element of ‘wrongful action.’ The Court of Appeals concluded that the trial court's instructions ‘might well have left the jury with the erroneous impression that (respondent) could be found guilty in the absence of ‘wrongful action’ on his part,' and that proof of that element was required by due process. The court also held that the admission in evidence of the 1970 FDA warning to respondent was reversible error. Held:
1. The Act imposes upon persons exercising authority and *659 supervisory responsibility reposed in them by a business organization not only a positive duty to seek out and remedy violations but also, and primarily, a duty to implement measures that will insure that violations will not occur, United States v. Dotterweich, supra; in order to make food distributors ‘the strictest censors of their merchandise,’ Smith v. California, 361 U.S. 147, 152, 80 S.Ct. 215, 218, 4 L.Ed.2d 205 the Act punishes ‘neglect where the law requires care, or inaction where it imposes a duty.’ Morissette v. United States, 342 U.S. 246, 255, 72 S.Ct. 240, 246, 96 L.Ed. 288. Pp. 1910-1912.
2. Viewed as a whole and in context, the trial court's instructions were not misleading and provided a proper guide for the jury's determination. The charge adequately focused on the issue of respondent's authority respecting the conditions that formed the basis of the alleged violations, fairly advising the jury that to find guilt it must find that respondent ‘had a responsible relation to the situation’; that the ‘situation’ was the condition of the warehouse; and that by virtue of his position he had ‘authority and responsibility’ to deal therewith. Pp. 1912-1913.
3. The admission of testimony concerning the 1970 FDA warning was proper rebuttal evidence to respondent's defense that he had justifiably relied upon subordinates to handle sanitation matters. Pp. 1913-1914.
[iii] Defendant cattle producers and their corporation were convicted in the United States District Court for the District of South Dakota, Charles B. Kornmann, J., of conspiracy, mail fraud, wire fraud, and fraudulent sales of misbranded meat. Defendants appealed, and government cross-appealed. The Court of Appeals, Hansen, Circuit Judge, held that: (1) evidence supported misbranding convictions; (2) Federal Meat Inspection Act misbranding provision does not require that false or misleading statements be “material,” and lack of materiality element did not render statute overly broad or vague, in violation of due process; (3) district court's jury instructions and evidentiary rulings were not erroneous; (4) submitting unredacted indictment to jury was not abuse of discretion; and (5) district court calculated reasonable estimate of losses attributable to each defendant, under sentencing guideline applied to fraud offenses.