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White Collar Crime
University of Mississippi School of Law
Johnson, Michael A.

White Collar Crime, Prof. Johnson Fall 2010

1) Introduction, 1-10
a) Most obvious harm flowing from white-collar crime: Financial
b) Environmental Crimes
i) Threaten the physical well-being of individuals and the public generally
c) Creates danger to social relations
i) Violate trust, thus creating distrust
(1) Which lowers morale and produces social organization on a large scale
ii)
d) Definition: Selecting Statutes for Study in “Substantive” Portion of the Course
i) No single definition
ii) Edwin H. Sutherland (sociologist)coined the term to attack the dominant criminological theories of the day that stressed poverty and social disorganization as the primary roots of crime
(1) Defined white collar crime as:
(a) Wrong doing (whether or not technically a crime)
(b) “committed by a person of respectability and high social status in the course of his occupation
iii) US dept. Justice REJECTED Sutherland’s definition
(1) Chose to focus on the nature of the ‘clearly’ criminal activity involved instead of Sutherland’s emphasis on status, occupation, and organization
(2) Today – white collar offenses regularly committed by members of all social classes and are not the exclusive domain of the rich and powerful; No long synonymous w/ high social standing and financial success
(3) Dept of Justice Definition:
(a) Non-violent illegal activities which principally involve traditional notions of deceit, deception, concealment, manipulation, breach of trust, subterfuge or illegal circumvention.
(b) Does not include: organized crime or “street crimes”
(i) i.e. drug, immigration and gun violations, forcible extortion, terrorism, murder, rape, burglary, robbery, and commonplace thefts or penny ante frauds
(c) Important to note: As a general manner, non-violent in the sense that physical coercion is not used as a means of committing the crime
(i) HOWEVER: Consequences of white-collar crimes (WCC) such as environmental and Food, Drug, and Cosmetic Act violations may well threaten public health and safety
(d) Overwhelming majority will be motivated, indirectly or directly, by a desire for monetary gain or professional advancement
(e) Bulk of WCC can be generally described as:
(i) Non-violent
(ii) Largely financial, commercial, or business crime (primarily frauds, swindles, embezzlements and paper thefts)
(iii)That is not perpetrated by professional criminals
(f) DOJ’s definition’s emphasis on deception and concealment = worth stressing
(i) Many WCC cases involve attempts to deceive the gov’t about a range of matters – also deceit to corporations or persons
(ii) Individuals’ attempts to evade or obstruct justice through a variety of non-coercive means
1. Lies to investigators, destruction of documents, perjury, attempts to compromise the evidence in others’ possession
(iii)
(g)
e) Recurring Themes in “Substantive” Federal Law
i) Criminalization
(1) I.e.: Where should the line be drawn btwn criminal and tortuous (or simply immoral) conduct
(2) 18 USC §3553
(a) The need for the sentence imposed
(i) To reflect the seriousness of the offense; to promote respect for the law, and the provide just punishment for the offense
(ii) To afford adequate deterrence to criminal conduct
(iii)To protect the public from further crimes of the defendant; and
(iv)To provide the defendant with needed educational or vocational training, medical care, or other correctional treatment, in the most effective manner
(3) D’s “moral culpability”is the feature most frequently invoked to justify the severe sanctions of criminal law
(a) Actor’s state of mind
(b) Nature of the conduct at stake as well as the kind and amount of resulting harm
(c) Must be some action (or inaction) in conjunction with that state of mind
ii) Federalization
(1) I.e. if one is satisfied that the conduct at issue should be pursued criminally, what principles should control the allocation of cases btwn federal and state enforcement authorities
iii) Judicial Role
(1) I.e. where the content of the criminal prohibition at issue is uncertain, how should courts respond?; and
iv) Prosecutorial Discretion
(1) I.e. what is the value of prosecutorial discretion and how should it be exercised, or where necessary, constrained?
f) Moral Culpability Considerations
i) Nature of activity
ii) Degree of threat to health or public safety if regulations not followed
iii) Extent and history of regulation
iv) Commonplace involvement in activity
v) Social mores
(1) Settled or evolving moral judgment
vi) Persons subject to regulation
(1) Business, businessman, or individaul
2) 32-5
a) Practice: Selecting “Procedural” topics relevant to WCC
i) Yale Study: Incidence of WCC likely to increase
(1) Majority of WC offenders it examined were employed and held jobs in “white-collar” positions—better educated and better off financially than common crime defendants and the general public
(2) Stressed that white collar practice overwhelming involves pursuing the very broad middle of the society
ii) Complexity, Scope and Magnitude
(1) Yale Study: Federal WCC much more likely than cases involving federal common crime to spread across county, state, and national boundaries – to involve large dollar losses, to target multiple victims, to involve 5 or more conconspirators, to demonstrate a pattern of offending, and to extend over a substantial period of time
(2) Also need more business knowledge than typical street crime – figure out intricacies of the commodities markets in order to determine how a fraud was accomplished or concealed
iii) Investigation
(1) Increasingly use investigative methods formerly reserved for street crimes for WCC;
(a) I.e. search warrants and wire taps
(2) Grand jury is still primary investigative force in WC cases
(a) Also: Use of formal or informal immunity grants to secure testimony from individuals who assert their 5th Amendment right are also primarily employed
(3)
iv) Defense Counsel Role
(1) Critical stages of a WC case from defense perspective: pre-charge, and if case goes forward – sentencing phases
(2) Most obvious difference btwn WC and other criminal practices: important role of defense counsel during investigation
(a) The battlle in many WC cases is perceived to be lost or won at the indictment stage
(i) Therefore: defense counsel’s 1st focus is on gathering information regarding the subject-matter and likely direction of the investigation
1. From counsel’s client, prosecutor, other subjects or targets of the investigation, witnesses, hostile sources, and public records
(b) ABOVE ALL: defense attorney works to keep potential evidence out of gov’t reach by controlling access to information
(3) Challenges in pre-charge stage
(a) Divining, w/out the benefit of formal discovery or other means of compelling the production of most types of info, what the gov’t is investigating
(b) Tracing or keeping a step ahead of the gov’t in learning the facts;
(c) Limiting, consistent w/ ethical and legal constraints, gov’t access to incriminating evidence; and
(d) Using the facts, law, and equitable arguments to persuade the gov’t to decline prosecution
(4) Know Federal Sentencing Guidelines
(5) If gov’t goes forward to indictment –defense counsel likely to negotiate some sort of disposition (i.e. negotiated plea or some sort of cooperation or immunity deal)
v) Organizational Presence
(1) Counsel will likely deal w/ issues relating to the presence of a legitimate business or governmental entity in the cases (i.e. as a victim, innocent instrumentality of wrong doing, or a potential defendant)
(2) Must often depend upon others potentially w/in the investigatory scope to assist them in determining the govt’s focus and the evidence it has uncovered
(3) Look beyond strictly legal concerns and focus on business considerations as well
(a) Regulatory disclosure obligations regarding status of the investigation, the serious collateral consequences flowing from certain criminal dispositions, and the economically onerous restitution, fine, and organizational probation provisions of the federal organizational sentencing guidelines
(b) ALSO: public relations concerns
(c) Law permits corporations to be

to disclose evidence to the defense, require prosecutors to expose exculpatory evidence to grand juries, require prosecutors to discourage public statements by law enforcement personnel, and limit the prosecutors (but not defense’s) ability to discourage witnesses from cooperating w/ their adversaries
(c) Several: adopted ethics rules that forbid lawyers to compensate fact witnesses for their testimony and a reasonable argument can be made that plea bargaining inducements do constitute compensation under the state ethics rules
(d) State bar organizations have recently begun to consider whether general prohibitions against ‘misrepresentations’ by attorneys should be applied to prosecutors, which would affect undercover investigations conducted under a prosecutor’s supervision, as well as prosecutorial efforts to induce confessions or cooperation by defendants by making threats that they do not intend to carry out as well as misrepresentations about the facts
(3)
c) Defense Challenges
i) Ethical questions
(1) Fundamental: How far can I go in my effort to keep facts from being revealed to my opponent?
(a) Two goal that may conflict:
(i) Create maximum control over information and avoid committing an offense himself while attempting to help the client
(ii) Ask: How close to the margin of legitimate action can I go before violating ethical proscriptions
1. i.e.: how much he can help clients to understand which documents not to turn over to the gov’t when relevant ethical rule states ‘an attorney shall not conceal or knowingly fail to disclose that which he is required by law to reveal” or “knowingly make a false statement of law or fact” or “counsel or assist his client in conduct that he knows to be illegal or fraudulent”
2. Must decide how far to go in secreting information he receives about a client’s ongoing crimes or new crimes committed to cover up past crimes when the relevant ethical rules state that the attorney shall “not knowingly reveal a confidence or secret of his client” but that he “may reveal the intention of his client to commit a crime and the info necessary to prevent the crime.”
3. Must decide whether he can influence a client to persuade his employees, associates, or other persons to keep silent, when the relevant ethical rule states that an attorney “shall not give advice to a person who is not represented by a lawyer other than the advice to secure counsel, if the interests of such persons are or have a reasonable possibility of being in conflict w/ the interest of his client.”
ii)
d)
3) 8/26/10 – Mens Rea
a) The Public Welfare Doctrine
i) United States v. International Minerals & Chemical Corp
(a) Shipping sulfuric acid in interstate commerce – “did knowingly fail to show on the shipping papers the required classification of said property, to wit, Corrosive Liquid in violation of 49 CFR 173.427
(2) Characterized Balint and similar cases as involving statutes regulating “dangerous or deleterious devices or products or obnoxious waste materials.”
In such situations, as long as a D knows he is dealing with a dangerous device of a character that places him “in responsible relation to a public danger”, he should be alerted to the probability of strict regulation and we have assumed that in such cases Congress intended