Pletcher_WhiteCollarCrime_Fall2014
Ward was the other professor
August 25, 2014
I. White Collar Crime: “A Crime committed by a person of respectability and high social status in the course of his occupation.” – Edward Sutherland 1938
A. Excludes
1. Violent Crime
2. Burglary
3. Physical
4. Immigration
5. Civil Rights
6. Organized Crime
B. Includes
1. Deception
2. Professional/Business oriented settings
II. Should we criminalize WCC?
A. Yes
1. Fairness – level playing field
2. Major impact on victims
3. Deterrence
4. Civil penalties are insufficient
5. Promotes confidence within the system
6. People lose jobs with corporations failing and devastating effect on the economy
B. No
1. Collateral damage
2. Vague statutes
3. Chilling effect on business
4. How do we decide who is to be indicted?
a. High discretion in prosecution
5. Victimless crime
a. Is it morally in the right place?
b. WCC is morally ambiguous
6. Very recourse-intensive to prosecute WCC
a. Is it worth it?
III. Mens Rea – Required culpable state of mind required for the commission of a specific offense
A. Specific Intent (purposeful)
B. Knowing: Aware of an act and not acting through ignorance, mistake, or accident
C. Reckless: Conscious disregard of a substantial or unjustifiable risk
D. Negligence: Should have been aware of a substantial or unjustifiable risk
E. Willfully: No real definition. Close to purposeful/knowing
F. Strict liability: no mens rea requirement.
IV. U.S. v Gypsum (Sherman Act Case), 1978
A. Where to draw the line on civil/criminal activity
B. Vague statute
1. Trial judge imposed strict liability because there was no mens rea in the statute
2. Supreme Court said that there must be a mens rea because you cannot have crime without intent
C. Anti-trust à Inherent intent in crimes based on deception/conduct
1. Need additional proof of intent, not just effect of intent
September 8, 2014
Jed Rakoff: Former SDNY judge, leader in WCC
I. Mail/wire fraud
A. One of the most commonly used statutes because mail/wire is used in almost everything
B. Fraud is very broad
C. Mail is required for federal jurisdiction reasons (and commerce)
1. Most fraud is at the state level. Mail lets you get federal jurisdiction. The statute has been expanded to include private couriers as well (commerce).
2. Allows the federal government to prosecute larger, more complex frauds.
II. Elements to prove a mail fraud beyond a reasonable doubt
A. Knowingly or intended to devise a scheme or plan to fraud or to obtain money or property by means of false or fraudulent pretense.
1. Scheme to defraud is very broad and includes things like deceiving, cheating, true statements meant to mislead, etc.
B. Materiality: States made/facts omitted must influence the person to part with property
C. Intent to cheat or defraud (specific intent)
1. High mens rea because it is a criminal charge.
D. Use of mails
1. For wires, wire must be interstate
III. Regent Office Supply (p. 85)
A. R sold office supplies and made false representations to get past the secretaries to office managers.
1. There were no misrepresentations about the stationary itself or the price.
B. The statements were false and were fraudulent. R intended to deceive but did not intend to cheat.
C. The behavior was “repugnant” but just because someone is a scumbag does not make them a white collar criminal.
IV. Schmuck (p. 128)
A. S turned back odometers, sold vehicles to dealers who mailed in the title transfers, who would then sell to other customers.
1. False representation was on the mileage and people parted with more money.
2. Mailing the title change form was the mail element.
a. There was no materiality at this stage because the DMV does not make up its mind on issuing the title change on the mileage.
B. Prosecution used 12 mailings to show a broad scheme.
1. Δ argued that the crime/fraud was completed and cited Kann, Parr, and Maze.
2. The Court distinguished these by saying that this was an entire scheme and the mailing was essential to completion of the broad scheme.
3. The dissent argued that the statute is mail fraud not mail and fraud.
V. Honest services Fraud: Fraud that deprives a person of honest services. E.g. a city official prosecuted for bribery.
A. McNally (1987)
1. Honest services fraud was held unconstitutional (to the NY Constitution).
2. Officials in KY were taking kickbacks. Found guilty because they had a duty to the state and did not fulfill their duty.
3. NY Court said no, this statute was too vague and unconstitutional as to what honest services were. Congress must speak more clearly and thus 18 USC § 1346 was created.
B. HSF is a type of mail/wire fraud
1. Instead of a scheme to defraud…. It is an intent to deprive a person of the intangible right to honest services.
2. Must still meet intent, materiality and mailing.
3. Self-dealing is no longer valid for honest services fraud, only bribes and kickbacks.
VI. Rybicki (p. 115)
A. Bribing insurance adjuster to expedite their client payments
1. Lawyers who wanted their fee faster were convicted of honest services fraud for kickback and self dealing.
a. Kickbacks did not require a loss but self-dealing did require some loss/harm.
B. Materiality: Here, they had self-dealing so there was no requirement to show loss.
1. The lawyers here schemed with the insurance adjusters who had an honest duty.
C. In the Jeffrey Skilling case (Enron), the SC held that honest services fraud was limited to bribes and kickbacks and self-dealings did not apply.
September 15, 2014
I. Conspiracy: An agreement to commit a crime
A. Usually a different charge from the underlying offense
B. Very vague which gives prosecutors a lot of discretion and decide what is the crime and when to charge
1. Also leads to implications regarding venue
a. The government can charge anywhere where the conspiracy happened
C. Can also extend the statute of limitations to some extent
1. Conspiracy does not end until the last act ends
D. It is an inchoate crime
1. Crime does not need to be completed
E. Why is there such a huge advantage to the prosecution? Because when people get together to commit a crime, they are more dangerous than the sum of their parts.
II. 18 U.S.C. § 3371 – Conspiracy
A. Elements
1. An agreement between two or more persons
2. Knowing of the object of the crime and intending to accomplish it
3. And an overt act in fu
y was still within the scope of employment because
1. They want to discourage internal illegal activity
2. Corporations have the least burden to check it
a. It is very burdensome for enforcement to find individuals and their conviction would not be an effective deterrent.
b. Punishing the business entity would be more appropriate and effective.
3. The corporation (rather than the individual) benefits from the illegal activity
4. Counter-Argument: Might disincentive corporations from taking risks.
5. Note that the Court noticed that Hilton knew about the illegal activity but that is not necessarily the standard to find liability.
III. US v. Park (p. 39)
A. ∆s Acme Company and its CEO Park were cited for FDA violations for rodent infestations in two warehouses that had commodities sent into the stream of commerce (from one state to another). They were given notice and the conditions were not remedied.
1. Park was aware of the notifications and delegated to his officers to handle it but the conditions were not fixed.
2. Acme pled out but Park was convicted ($50/charge)
a. Why did this go all the way to the SC? Likely to avoid the criminal conviction on his record to avoid the stigma for someone in a prestigious position such as CEO.
B. Appellate court reversed saying that the jury instruction allowed the jury to find liability based solely on his position as CEO.
1. SC affirmed the trial court because the jury instruction was sufficient to indicate that he had the authority and power to fix the conditions.
2. The statute (and the Court) are concerned about the purity of food and protecting consumers who have little power in food production.
C. Dissent argues that there should have been a required negligence finding.
D. Strict liability appropriate?
1. Yes, about health, food and safety.
a. Compare to securities violations (just financial losses)
2. Counter: This might scare off talented people form CEO positions.
IV. Deferred & Non-Prosecution Agreements (DPAs and NPAs)
A. Two types
1. DPA still has an indictment but gives the corporation time to comply.
2. NPA does not have an indictment but the corporation must agree to some conditions.
B. Benefits to the government
1. The business gives up trial rights
2. Government save money on prosecution
3. Corporations pay restitution (repayment to victims)
4. They also get cooperation in the prosecution of others
C. Alternative sanctions
1. Monitoring
a. Usually some high ranking government official comes in to monitor the corporation
i. Sometimes costly, intrusive, etc.
2. Restitution
3. Cooperation
September 29, 2014
