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White Collar Crime
University of South Carolina School of Law
Freeman, John P.

CORPORATE CRIMINAL LIABILITY

– Respondeat superior: default federal rule
§ features
· standard(commonwealth v. Beneficial)
o corporation positioned agent w/ authority & responsibility to act on behalf of corp in particular corp. matter engaged in at time of criminal act.
· Criticisms: criminality should be personal
o uses principles developed in tort and agency to impute criminal liability.
o abandons the idea that criminal guilt is personal and not vicarious.
§ Acti Rei
· Elements:
o ANY Agent commits a crime
o Within scope of employment & on behalf of corp.
§ Apparent/actual authority
o With intent to benefit the corporation
§ outcome irrelevant benefit not required
§ intent of agent controls
· adverse agent defense works.
§ Mens Rea: imputed
§ Defenses: deter prosecutors with due diligence/good faith/compliance programs
· hope for an adverse agent finding (sole agent exception)
· Or defend agent hoping for aquittal
o Still might not work
– 2.07 MPC
§ features
· criticisms: otherwise clear corp. policy must be traced to high agent
o corporations act w/agents, senseless to limit liability on agency basis
o limiting liability means limiting accountability
o incentivizes concealment and compartmentalization
§ concealing conduct easy but proving it is very difficult
§ enables underlings to be used as corp. armor
§ Acti Rei
· Elements
o the offense was authorized or recklessly tolerated
§ inferences usually developed from ratifying conduct
· acting to conceal activity
· Extent criminal act used corp. funds
· Procedures and practices in followed
o by directors or by high agent acting w/in scope and on corp’s behalf
§ totality must warrant assumption acts constitute acts of corp.
· extent of agent’s control / authority in corp.
· intent to benefit corporation
· extent and manner of corp. fund usage
· other 2.07 offenses
o act or omission violates statute
o statute’s plain purpose imposes corp. liability
o by agent w/in scope on corp’s behalf
§ Executive Culpability Act (FDA) strict liability (Park)
· Prima facie elements (shifts burden to defense)
o in a position to prevent harm
o failed to exercise authority/adequately supervise
§ Mens Rea generally imputed
· some statutes require specific scienter for corp. liability
· collective principles: built on agency / t

& intentionally retaliating vs fraud whistle blower(10 yrs)
o 1519: anyone knowingly&intentionally tampering docs in matter w/in fed. juris. (20 yrs)
§ Closes destruction loophole
o 1520: destroys records w/in 5yrs of audit by public corp. (10 yrs)
o 1350: ceo/cfo fails to certify sec filings: (20 yrs max)
o 1348: anyone wilfully scheming to defraud w/ respect to security (25 yrs)
· substantive securities laws
o lies about state of public traded company
o insider trading
· mens rea:
o willfulness:
§ requires volitional intent (intent to commit act that was prohibited)
§ does not require specific intent to violate known law
§ standard = awareness of high probability of fact
§ determined by all circumstances
§ bad faith extreme departure from standards of ordinary care (reckless) in disregarding truth vs. falsity
· Reckless was sufficient in (Weiner)
Extreme departure from standards of ordinary care (9th,5th,3rd.)