Business Crimes
I. White Collar Crime Generally
a. ∆’s tend to be very smart people
b. Not always easy to figure out what exactly happened
c. Criminality lines are not always clear
d. Tend to involve a lot of grand jury/pre-trial action
e. Often inter-related with civil wrongs
i. RICO – criminal & civil liability (treble damages, attorney’s fees)
ii. Qui tam – cheating the gov’t (e.g. False Claims Act)
1. Provides bounty hunter relief for whistle-blowers (treble damages)
iii. 5th Amendment problems can arise
iv. Sentencing guidelines
v. Civility is being eroded
f. Google the US Attorney’s Manual (USAM) – good resource
i. Also look in JLR on Westlaw
II. Conspiracy
a. Inchoate offense – does not have to reach fruition
i. Think contract
ii. “Conspiracy is an agreement between two or more persons to commit an unlawful act.”
iii. Where the object is a tort, & the conspiracy injures π, you may have a Civil Conspiracy
iv. SC Code § 16-17-410 – Conspiracy
1. Unlawful object OR Lawful object by unlawful means
b. U.S. v. Brown
i. Bankruptcy Fraud Program run by gov’t
1. IRS is a major creditor in many bankruptcy proceedings
2. Goal to increase voluntary compliance w/ federal tax laws by selectively prosecuting violators
ii. Brown is an associate at a law firm who failed to speak up about what he knew, engaged in an attempted cover-up (discovery abuse, at least)
1. He was aware of the pension fund diversion and hiding of assets
2. Jury could infer Brown’s knowledge
a. Smoking gun: destruction of records
c. Ethics Rule 3.4
i. [FILL THIS IN]
d. Ethics Rule 5.2 – Nuremburg Defense (Following Orders)
i. [FILL THIS IN]
ii. Generally this is not a defense
iii. There is no arguable question of professional duty when an agent of the federal gov’t has demanded documents or when such a demand is imminent (IF investigation is imminent, THEN you are on notice)
e. Crucial Evidence
i. FRE 801(d)(2)(E) – Co-conspirators’ statements
ii. FRE 404(b) – Evidence of other crimes, wrongs, or acts
f. Elements – pp. 6-7 – see PPT for Expanded Discussion
i. Agreement
1. Do NOT have to know a lot about the overall plan
2. Co-conspirators do NOT necessarily need to see the big picture
ii. Intent to Commit the Wrongful Act
iii. [ONE MORE, SEE PPT]
g. IF an overt act is needed, it can be innocent in itself (must look to statute or case law for the requirement of an overt act)
i. Benefits to prosecutors
1. Flexibility in packaging an indictment (of seemingly unrelated activities/actors)
2. Can indict people who would not otherwise be indicted
3. Evidentiary advantage (FRE 602) – prove existence of a conspiracy [BY A PREPONDERANCE; & CAN USE CO-CONSPIRATORS’ STATEMENTS TO PROVE], you can then get co-conspirators’ otherwise excludable hearsay statements into the record
a. Logic – (see pp. 16-17)
ii. Venue advantages
1. IF Nationwide conspiracy THEN prosecutor can take ∆ to the venue of his choice (where conspiracy took place, at least in part)
h. Conspiracy Generally
i. Conspiracy begins the moment the agreement is reached
ii. Conspiracy is inchoate
iii. Impossibility is not a defense
iv. Pinkerton Liability – X can be guilty for the crimes of Y in furtherance of the conspiracy
v. To leave a conspiracy one must take affirmative steps to withdraw (e.g. blow the whistle)
i. The Sociology of Conspiracies – U.S. v. Recio, 123 S. Ct. 819, 822 (2003)
i. USSC held that a criminal agreement is “‘a distinct evil’ which ‘may exist and be punished whether or not the substantive crime ensues.’”
1. Conspiracy poses “a threat to the public” over and above the threat of the commission of the relevant substantive crime
a. Combination makes more likely the commission of other crimes
b. Combination decreases the probability that the individuals involved will depart from their path of criminality
ii. Groups are more likely to
(conspiracy, accomplice liability, etc.)
vi. Rakoff Quote (p. 30) – “the federal prosecutors of white collar crime, the mail fraud statute is the [bread and butter] with its simplicity, adaptability . . .
b. Elements
i. A scheme to defraud
1. Any scheme that involves getting somebody else’s money wrongfully
ii. Using the mails (or interstate wires)
1. USSC – “Where one does an act with the knowledge that the use of the mails will follow in the ordinary course of business or where such use can reasonably be foreseen… then he ‘causes’ the mails to be used.”
2. The use of the mails can be, in itself, innocent
iii. See p. 37, n. 4
c. US v. McDougal
i. Lesson: do not commit fraud in a transaction involving a government agency or bank; watch what your loan applications say
ii. The mailing was a necessary part of the scheme – even though the money was obtained before the mails were used
iii. Conspiracy vs. Aiding and Abetting
1. Conspiracy requires proof of an agreement w/ others to commit the crime
2. Aiding and Abetting requires knowledge, participation, and assistance
3. They are different, but often found together
iv. Evidentiary NOTE: Bell, p. 40
1. Court threw out conspiracy count, but allowed co-conspirators’ statements because her lawyer did not properly object
v. Mailing factors: see PPT.
d. Fiduciary Duty Breaches (McNally; 18 U.S.C. § 1346; txt p. 43)
i. See also Brumley
ii. Political issue (federalism)
iii. McNally Loophole – fixed by § 1346; Brumley – fraud on state gov’ts is NOT embraced by mail/wire fraud statutes
