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White Collar Crime
Rutgers University, Newark School of Law
Green, Stuart

White Collar Crime – Green Fall 2015

Basic Principles

Class #1: What is White Collar Crime and Who Commits It?

I. Defining White Collar Crime

A. It’s a class term “white collar”

B. Sutherland: White Collar Criminality

1. Crime isn’t just petty crime on the street. There’s a whole area that can be studied. Criminologists focused too narrowly on crime in the streets, and they should also be looking at crime in the suites.

2. The financial cost of white collar crime

a) Several times a great of all the crimes regarded as the crime problem.

3. Sutherland is saying that it’s not just that people who are of higher economic standing are committing crimes. The behavior that they are engaging in is not treated as a crime.

C. Green: The Concept of White Collar Crime in Law and Legal Theory

1. Criminal law is the product of our class system. People who work in big corporations and powerful institutions are going to be treated more leniently. In the cases where they get caught, they’ll have the best lawyers to represent them and then they’ll go to high-security prisons. The whole system is rigged who are part of the higher social economic standing.

2. The most interesting thing about white collar crime is that there’s a certain moral ambiguity in white collar crime. The line between criminal behavior and merely aggressive business behavior is very fine. The same kinds of behavior that we reward (aggressive business practices, people who are savvy investors, wall street titans), make a fine line between what is legal and what’s not legal.

3. There is a difficulty in identifying the victim and the harm

4. There is a difficulty in identifying the perpetrator

5. The problem of codifying white collar crime

a) Putting all the federal crimes in a single codified body of law. Never enacted, and no interest in trying to do it.

Class #2: Corporate Criminal Liability

I. Why have Corporate Criminal Liability?

A. Corporations can be so complex in their structure that identifying let alone proving the 
mens rea of the agents responsible for its unlawful conduct may be well-nigh impossible. By making the entity itself criminally liable, each level of the corporate hierarchy is deterred from being willfully blind to the unlawful but beneficial acts of those for whom they are responsible.

Corporate Criminal Liability

II. New York Central & Hudson River Railroad v. United States

A. General Rule

1. A corporation can be held criminally liable for the acts of an agent within the scope of employment.

2. Corporations may be held criminally liable for the unlawful conduct of their agents acting within the scope of their designated authority. New York Central & Hudson River Railroad. If the unlawful conduct is done for the corporation (to wit, for its benefit), then criminal liability should attach no different than tort liability would (provided that positive law so prescribes that liability).

B. Facts

1. The Defendant corporation, New York Central & Hudson River Railroad Co. (Defendant), together with a managing agent within the corporation, were convicted of violating a federal law prohibiting the payment of rebates. Specifically, the corporation was prosecuted for the payment of rebates to the American Sugar Refining Company arising out of shipments of sugar from New York to Detroit. The Defendant was prosecuted under the “Elkins Act”, 32 Stat. 847, which held a corporation criminally liable for unlawful acts of its agents.

C. Issue

1. Is a corporation criminally responsible for the unlawful acts of its agent acting within the scope of authority conferred upon them by the corporation?

D. Holding

1. Yes.

E. Reasoning

1. We see no reason why a corporation cannot be imputed with the knowledge of unlawful conduct by its agents acting within the scope of their designated authority, which actions accrue to the profit of the corporation. It is well established that corporations may, as a corporate entity, be held responsible for damages in a torts action. In these cases, liability is not imputed to the corporation because it itself participated in the tortuous conduct, but because the tortuous conduct was done for the benefit of the corporation. Neither, then, can the criminal law close its eyes to the way business is conducted today. If corporations are permitted to continue with prosecutorial immunity for their actions, it would undermine virtually the only way the government can control and correct its abuses.

2. This important case took away

alf of the corporation to handle the particular business.

B. Issue

1. Is a corporation criminally liable for the unlawful actions of its employees acting within the scope of authority delegated to them by the corporation?

C. Holding

1. Yes.

D. Reasoning

1. Where a corporation has placed an employee in a position where he has authority to act for the corporation in the particular corporate business that is the subject of criminal prosecution, the corporation is itself liable for the violation of law. The title of an individual within a corporation should not be determinative of criminal responsibility. In fact, many low-level employees are entrusted with the responsibility of the everyday operations of the corporation. In this particular case, the disbursal of funds from the corporation to a state banking officials can be presumed to be a corporate act, as the individuals employees themselves could not be expected to bribe the officials out of their own pocket.

2. This case broadens the ambit of criminal responsibility for corporations to include liability for actions taken by non-managerial agents within the corporation. It recognizes the reality that many low-level employees have broad responsibilities to act on behalf of the corporation on a daily basis, while officers and directors are frequently less engaged in the corporation’s day-to-day activities.

E. Rule

1. The quantum of proof necessary to sustain the conviction of a corporation for the acts of its agents is sufficiently met if it is shown that the corporation has placed the agent in a position where he has enough authority and responsibility to act for and in behalf of the corporation in handling the particular corporate business, operation or project in which he was engaged at the time he committed a criminal act.

VI. People v. Lessoff & Berger