White Collar Crime Outline
Criminal Liability in the Corporate (Collective Entity) Setting
New York Central v. Hudson River Railroad v. United States
Constitutionality of convicting corporation of a crime
Argument that criminally punishing corporations unconstitutional?
Punishing the innocent, deprivation of property without due process of law
DOJ- argument for corporate criminal liability
Protecting integrity of free economic capital markets
Protecting consumers, investors, and business entities that compete only through lawful means
Protecting the American people from misconduct that would violate criminal laws safeguarding the environment
Factors to be Considered- 9-28.300- U.S attorneys manual
Seen as guidelines from prosecutors, not enforceable
Cannot argue that prosecution is not following own policies
Failure to follow guidelines not basis to dismiss case
First two- reasons to take action to charge corporation, the other 6 are for not going for the charge against corporation
Corporation can even be charged even if it’s a low level employee without anyone’s knowledge of approval, federal government can bring charges against employer.
Factor 2 says, is it an isolated wrongdoer? If its pervasive within the corporation, culture of illegality? Then reason to bring charges
Nature and seriousness of offenses- more likely if more serious to be indicted
Pervasiveness of wrongdoing within the corporation, including the complicity in wrongdoing
Corporations history of similar misconduct, prior criminal actions against it
Corporations timely and voluntary disclosure of wrongdoing, and its willingness to cooperate in the investigation of its agents
Reason not to prosecute, govt sometimes still does
Existence and effectiveness of corporation’s pre-existing compliance program
Corporations remedial actions- to fix problem what did they do?
Collateral consequences, including whether is disproportionate harm to shareholders, pension holders, employees, etc, impact on public from the prosecution
Adequacy of prosecution of individuals responsible for corporation’s malfeasance
Adequacy of remedies such as civil or regulatory enforcement actions
Do we have to go criminal at all?
When is an organization criminally liable for acts of its agents?
Does agent have to be a high level employee?
What if the agent acts in order to benefit himself? Not the benefit?
What if action is contrary to corporate policy, or contrary to corporate orders given to the agent?
Argument for bona fide compliance program?
Standard Oil v. United States
Stealing oil employees, not benefiting corporation. Under what circumstances is corporation criminally liable for acts of employees?
Holding- respondeat superior- act is performed within scope of duties, and for benefit of employer, employer is responsible for that act, rejects high managerial agent test
United States v. Singh
intent to benefit employer- did not have one, was stealing from the pockets of prostitution ring
court says- mixed intent, not true, some intent to benefit employer, some proceeds went into employer’s cash register, some intent to benefit himself
United States v. Hilton
Employee of Hilton threatens supplier who doesn’t pay, in violation of express corporate policy
Intent to benefit employer, in general conduct, was within scope of employment
MAJORITY RULE- Mere fact that if conduct violated company policy – is irrelevant
Company still on the hook for employee’s crime
United States v. Beusch
Issue- can employer be held criminally liable for such acts in contravention of corporate policy?
Holding- corporate policy is relevant to determining whether the acts performed with the intent to benefit employer.
Court says- jury can consider this, whether there was intent to benefit employer is a question of fact, Some intent, employer can still be liable
The nature and seriousness of a crime, including the risk of harm to the public from the criminal misconduct, are obviously primary factors in determining whether to charge a corporation.
9-28.500- Pervasiveness of Wrongdoing within the Corporation
Corporation’s Past History
The Value of Cooperation
Corporate Compliance Programs
Restitution and Remediation
Other Civil or Regulatory Alternatives
United States v. Bank of New England
If any employee knew that multiple checks would require the filing of reports, the bank knew it, provided the employee knew it within the scope of his employment.
Collective knowledge- the bank’s knowledge is the totality of what all the employees know within the scope of their employment. A collective knowledge instruction is entirely appropriate in the context of corporate criminal liability. The acts of a corporation are after all, simply the acts of all its employees operating within the SOE.
The corporation is considered have acquired the collective knowledge of its employees and is held responsible for their failure to act accordingly.
2 parts to wilfull mens rea- must act knowingly, and with specific intent to violate law
United States v. Brown & Meadows
Does Meadows have necessary mens rea or actus rea?
Issue is- intermediate step b/w application of issuance of Section 8 housing, the selection of particular applicants for the receipt of certificate or voucher.
Meadows argues- she lacked necessary mens rea, and was inadequately trained.
A defendant can be guilty of violating 18 USC 1001, as a principal even if the evidence does not show that she herself actually made false statements, so long as the evidence shows that she aided, abetted, counseled, induced, or proceured the commission of the fraud, or alternatively caused the false statements to be made.
Conviction is reversed because Meadows 1. Lacked the necessary specific intent
Doctrine of Respondeat Superior
Employer liable for crime committed by agent or employer if agent or employee
acted within the scope of his/her employment AND
with some intent to benefit the employer
upshot- it is extremely easy to convict companies for crimes of their employees
Personal Liability in Collective Entity Setting
Govt is able to charge both individual and corporation, don’t have to choose
Often conflict of interest, corporation says go after employees, higher level employees say go after corporation
When can an individual be held criminally responsible for crimes commited on behalf of employer?
United States v. Wise
Issue- Is Wise personally subject to criminal liability for his actions on behalf of his employer?
Argument that he is not a person under Act? Argument that he is? Implications of court’s decision
National Dairy Products Corporation with engaging in a combination and conspiracy to eliminate price competition in the sale of milk in the Greater Kansas City market in unreasonable restraint of trade and commerce, in violation of the Sherman Act.
According to the appellee, the Sherman Act does not apply to corporate officers acting in a representative capacity, he contends that the statute exclusively applicable to these officers.
The government contends that a corporate office is obviously a person within the act.
But when the officer is acting solely for his corporation, the appellee contends that he is no longer a person within the act.
U.S v. Brown and Tobey
Can Brown and Tobey be held criminally liable for consenting to subordinates misconduct?
Consenting and knowing=
promptly to correct, the violation complained of and that he failed to do so
Rule of Law-A reasonable corporate officer can be held liable for failure to act precisely bc that individual had the power to prevent the violation
United States v. Iverson
In Park case, Supreme Court further defined the scope of the “reasonable corporate officer” doctrine under the FFDCA.
Rule of Law in Parkà a corporate president argued that he could not be “responsible” under Dotterweich bc he had delegated decision-making control over the activity in question to a subordinate.
Under the CWA, a person is a “responsible corporate officer” if the person has authority to exercise control over the corporation’s activity that is causing the discharges.
There is no requirement that the officer in fact exercise such authority or that the corporation expressly vest a duty in the officer to oversee the activity.
18 U.S.C §371 – Conspiracy
If two or more persons conspire either to commit any offense against the United States or to defraud the UnitedStates, or any agency thereof in any manner or for any purpose, and one or more of such persons do any to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than 5 years or both.
If, however, the offense, the commission of which is the object of the conspiracy is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor.
Agreement between two or more persons to commit a criminal offenses
Agreement = Intent to agree and meeting of the minds
Crime that is complete and chargeable before the object of the crime, is complete
Charging multiple people best to charge with multiple people, under FRCrimProc 8(b)
Easier to convict, saves resources too
Gets out of court statements (not under oath) not admissible at trial for truth of the matter asserted (hearsay provisions of the federal rules) cannot introduce hearsay at trial, no opportunity to cross-examine witness who provides statement
If statement made in furtherance of conspiracy, admissible and NOT hearsay
Prosecutor can make indictment speak
Indictment-formal charge that person committed crime, issued by grand jury who votes on it, if decide probable cause, then indictment is issued
Normally charges are a separate count of an indictment- Count 1 mailfraud, 2 wire fraud, have to be short and to the point
Consiracy count- allows prosecutors to write a long narrative to lay out nature, purpose, background of conspiracy
Department of justice guidelines prohibit prosector from making public comments about case that is already public record
Conspiracy is properly venued in any jurisdiction in which any overt act of the conspiracy took place
Conspiracy can be charged without more than one person in some states
Conspiracy- if one member is a undercover cop, still can be charged in some states