WHITE COLLAR CRIME – JOHNSON – Spring 2011 –
Introduction______________________________________________________
– Corporate liability and conspiracy liability are “collective liability notions.” In other words, someone other than the person who committed the act is held responsible. The acts of one person are imputed to another entity, usually through agency principles such as respondeat superior
– Berger v. US: Great quote about responsibility of an AUSA to act ethically, etc.
– Statutory Interpretation
o Plain language of statute
o Structure of statute and context
§ Construe to give all words meaning
o Legislative history and purpose / intent of the statute
§ Construe to give rational purpose and common sense to Congressional intent
o Rule of Lenity
o Policy (as determined by the court)
Corporate & Entity Liability______________________________________
– Corporations can only act through their employees and as a result, they can only be held liable vicariously through the doctrine of respondeat superior
– Elements
o Someone (1) acting within the scope of their employment, (2) commits a crime, (3) to at least partially benefit the company
– The Scope of Employment
o NY Central Hudson River v. US: Respondeat superior established for corporate criminal liability in the interest of public policy. Corporations can be responsible even if the agent acted wantonly or recklessly against the express orders of the corporation.
§ Contrast with State v. Chapman Dodge: Louisiana adopts MPC approach to corporate liability, which requires that high management authorize or recklessly tolerate criminal activity. The MPC approach is not the law in federal prosecutions.
o Note: “Within the Scope of Employment” essentially equates to “Within the Scope of Authority.” However, it is the agent’s function that matters; not the agent’s title or official position, i.e., apparent authority based on the agent’s acts.
– Intent to Benefit Requirement
o US v. Automated Med. Labs: RPC was a subsidiary of AML. RPC personnel falsified records despite express orders not to from AML. Although RPC personnel had their own personal interests in mind (climbing the corporate ladder, etc.), their actions benefitted AML, which could therefore be held liable. As such, only a small intent to benefit the actual corporation is required.
o Note: It doesn’t matter whether the corporation actually benefitted or not (or even if it was actually harmed)
o Note: However, if the corporate actor intends only to benefit himself, but the corporation is actually benefitted in the process, the corporation can be held liable
– Against Express Orders, etc.
o US v. Hilton Hotels: The primary justification for holding corporations liable – despite express contrary orders to the agents who engaged in criminal activity – is that in complex corporate structures, identifying exactly who is at fault is very difficult and sometimes impossible.
§ Note: Although prevailing legal rules make irrelevant the fact that the agent disregarded corporate orders or policies, that circumstance may be relevant to prosecutorial discretion as to whether to prosecute and how to charge. It may also be factored into sentencing decisions.
– Intent Standards for Corporations
o Bank of New England (1st Cir.): Demonstrates the Collective Knowledge Doctrine. Individuals in the bank all knew about separate parts of an illegal activity. Their collective knowledge was imputed to the corporation. As such, a corporation can be held liable in situations where individuals cannot: No one individual had culpable knowledge of the crime, and therefore Respondeat superior would not have worked. So, that is a way to establish intent. But remember, there must be an act as well.
– Individual Liability
o The reverse of corporate liability: an individual, who has certain duties but engages in no criminal activity directly, is held liable for the acts of an agent of a corporation.
o US v. Park: Warehouses with rat infestations were in violation of FDA orders. Conviction of the CEO upheld due to the Responsible Corporate Officer Doctrine.
§ Elements: Officer had (1) a duty to do something, (2) the authority to do something.
§ Note: No intent was required in this case because it was a strict liability offense. So, application of this doctrine may differ in other cases. This doctrine is not often employed due to DOJ prosecution guidelines, and that is due partly to the difficulty that would arise in applying it to non-strict liability crimes.
§ Possible Defense: The language the Court uses suggests that a possible defense might be that the officer was powerless to remedy the problem (i.e., the CEO was not in charge of warehouse sanitation in any direct sense).
– Problem 2-1, p. 57
Conspiracy________________________________________________________
– Elements
o (1) An agreement existed to
§ (a) commit an offense against the U.S. or
§ (b) defraud the U.S.
o (2) Two or more persons entered the agreement
o (3) The defendant intended
§ (a) to enter the agreement and
§ (b) that the object of the agreement be accomplished
o (4) One conspirator performed some act in furtherance of the agreement
– Initial Core Concepts
o A conspiracy charge is not a substitute for charging the underlying crime. A conspiracy is completed by the reaching of an agreement, and the success of the underlying offense is irrelevant. Ds can be charged with both.
o 18 U.S.C. § 371 is the core statute, and it requires an overt act. Note, however, that there are many statutes that do not have an overt act requirement (e.g. Drug Conspiracy, Mail Fraud Conspiracy, Money Laundering Conspiracy).
§ Overt Act: Any act in furtherance of the conspiracy. The act itself does not have to be criminal. For example, if two people
means to interfere with or obstruct one of its lawful functions by deceit, craft or trickery, or at least by means that are dishonest. It is not necessary that the government shall be subjected to property or pecuniary loss by the fraud, but only that its legitimate official actions and purpose shall be defeated by misrepresentation, chicane, or the overreaching of those charged with carrying out the government intention.”
o US v. Arch Trading Co: The “defraud” and “commit offense” language of Sec. 371 are not mutually exclusive. During Desert Storm, Bush I issued an executive order preventing companies from doing business in Iraq. Arch Trading faked certifications with U.S. Customs in order to get paid. They argued the indictment was invalid because they should have been charged under the “defraud” language rather than the “commit offense” language. Court rejects that argument.
o So, defrauding the U.S. does not require that the U.S. suffer pecuniary or property loss. Rather, the test is Interference with a Legitimate Government Function through deceitful or dishonest means.
§ Example: A Kline Conspiracy: a conspiracy to defraud the government by impairing the ability of the IRS to properly determine if taxes are due and owed (it does not require that taxes actually were due and owed, it only requires that government functions be interfered with).
§ Elements, specific to the “defraud” language: (1) D entered into an agreement, (2) To obstruct a lawful government function, (3) By deceitful or dishonest means, and (4) at least one overt act occurred in furtherance of the conspiracy
o Double Jeopardy: The government cannot charge under “offense against,” and then, with the same elements and facts, charge “defraud” separately. However, it can charge them in the same case as alternative theories.
– Issues with Single v. Multiple Conspiracies
o Kotteakos v. US: A “spokes on the wheel conspiracy.” The D dealt separately with several co-conspirators. They were all tried together, and argued they should be tried separately because they were not part of the overall conspiracy, but only their separate, individual conspiracies. Because the jury acquitted some and convicted others (i.e. the “spokes”), there could be no “whole” conspiracy. Dissent argued this was valid because the jury considered individual liability (evidenced by their acquittal of some and conviction of others).
