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

BUSINESS CRIMES OUTLINE
Spring 2008 – Professor Freeman
Case Book: Pamela H. Bucy, White Collar Practice (3rd ed.)
CHAPTER ONE: Conspiracy
                                                                          
·         Conspiracy is one of the most frequently charged white collar crimes.
 
·         Elements of a Conspiracy:
1.      An agreement between two or more persons to commit a wrongful (civil) or illegal (criminal) act;
a.       The essence of the offense is the agreement itself NOT acts taken in furtherance of the agreement.
b.      It is NOT necessary to prove that a coconspirator had knowledge of the entire scope of the conspiracy OR that he knew the identity of all other coconspirators.
2.      an intent to commit the wrongful or illegal act, and
3.      the commission of at least one overt act by one coconspirator which is in furtherance of the conspiracy.
a.       Overt act does not have to be criminal. This element just functions to demonstrate the existence of the conspiracy.
 
·         Strategic Advantages to the Prosecutor
o       Permits the government to synthesize into one indictment many far-flung actors and types of conduct.
o       Allows government to indict otherwise un-indictable persons.
o       Buttresses the government’s case
o       Evidentiary
o       Allows the government to select venue from any place where any part of the conspiracy took place
·         How do you prove a conspiracy?
o       Requires a highly-fact specific analysis.
o       United States v. Brown –
 
·        Coconspirators’ Statements
o       This is the greatest advantage a prosecutor has in proving a conspiracy.
o       The coconspirator hearsay exception is often referred to as an “historical anomaly.”
o       Fed. R. Evid. 801(c)
§         “Hearsay is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.”
§         Rule 801 also provides that statements for which a party is properly deemed responsible are not hearsay, including:
·         801(d)(2)(E) – “a statement by a conspirator of a party made during the course and furtherance of the conspiracy.”
o       Treats coconspirator statements as non-hearsay, despite the fact that the declarant is NOT the party against whom they are offered.
o       Government does not have to charge conspiracy to lay the necessary evidentiary foundation for admission of coconspirators statements.
§         Government must only prove that a conspiracy existed by a preponderance of the evidence.
o       United States v. Lindemann –
§         Reasons for Conspiracy Exception to Hearsay Rule
·         Agency – The acts by one conspirator are chargeable against all who conspired. (Pinkerton)
·         Necessity –
o       conspiracies are secretive
o       they raise social costs and risks more than individual crimes
o       live testimony by active participants is hard to get
§         (Bourjaily) A court will admit such statements if:
·         It determines that the declarant and the defendant were involved in an existing conspiracy, AND
·         The statement was made in furtherance of the conspiracy.
o       Preponderance of the evidence standard applied. Court may consider all non-privileged evidence in making the determination.
§         If a defendant fails to object to the admission of evidence at the trial level, an appeal will only be successful if the Appellate Court finds that there was plain error.
o       Constitutional Concerns with Admission of Coconspirator Statements
§         This rule may violate the 6th Amendment’s confrontation clause –
·         Each defendant has the right “to be confronted with the witnesses against him.”
§         United States v. Weiner – 9th Circuit rejected this argument.
·         The court explains that the Supreme Court has acknowledged that the confrontation clause does NOT bar the admission of all hearsay. The two are not overlapping.
·         There should be a determination of whether there are sufficient indicia of reliability to permit the introduction of the hearsay declarations in spite of the lack of opportunity for the defendant.
o       Reliability Factors –
§         Whether the witness would have had knowledge of roles and identities of others within the conspiracy.
§         Whether the witness’s recollection of the declarant’s statements is likely to be accurate and whether the declarant would have had any reason to have lied to the witness.
§         Whether cross-examination of the declarant would be likely to show that the declarant’s statements were unreliable.
§         Whether the evidence is “crucial” or “devastating” to the defense.
o       Distinguished from “Bruton” statements
§         The Supreme Court reversed the conviction of a defendant, holding that admission of a confession by a codefendant violated the first defendant’s Sixth Amendment right to be cross-examined.
§         Now, if the government wishes to introduce confessions which implicate others besides the confessor, the government must “Brutonize” confessions by deleting all references to codefendants.
§         The key difference in the proper admission of coconspirator statements and improper admission under Bruton is the circumstances under which the statement is made.
·         If the statement is made during a conspiracy and in furtherance of it, it will likely qualify as admissible.
·         If a statement is a confession, is it not made in furtherance of the conspiracy.
·         Pinkerton Doctrine
o       Pinkerton v. United States –
§         A coconspirator can be convicted of substantive offenses which he never participated. A coconspirator may be held liable for the substantive offenses committed by another if:
·         The cocons

gests that Congress was attempting with §1346 to give the federal government the right to impose upon states a federal vision of appropriate services or impose an ethical regime for state employees. (federalism argument)
§         Federal prosecutors can go after state officials in public corruption prosecutions. BUT, the prosecutor must prove that the conduct of a state official breached a duty respecting the provision of services owed to the official’s employer under state law.
·         The official must act or fail to act contrary to the requirements of his job under state law.
o       United States v. Brown – What/who does mail fraud protect?
§         Eleventh Circuit says that the crime of mail fraud does NOT exist when no reasonable person would believe the false representations.
§         The government must prove that a defendant intended to create a scheme reasonably calculated to deceive “persons of ordinary prudence and comprehension.”
·         This is an objective standard not directly tied to the experiences of a specific person.
o       Reliance – Circuit Courts split
·         First Circuit and DC Circuit take the opposite approach than Brown. These courts hold that mail fraud exists even where only the “most gullible” would be deceived, arguing that these are the people who most need protection.
·         Posner’s Middle ground – The 7th Circuit suggests that the gullibility of the victim is one fact to consider in assessing the intent to defraud.
§         United States v. Brien – reasonableness doesn’t matter
·         First Circuit says that it makes no difference whether the persons the schemers intended to defraud are gullible or skeptical, dull or bright. The only issue is whether there is a plan intended to defraud.
§         United States v. Coffman – Judge Posner – middle ground
·         Taking advantage of the vulnerable is the leitmotif of fraud. It would be very odd for the law to protect only those who, being able to protect themselves, do not need the law’s protection.
·         The gullibility of the intended victims of the scheme to defraud is relevant to assessing intent.
 
·         The Mailing
o       United States v. Sampson
Defendants file a motion to dismiss the indictment for failure to charge an offense. The defendants argued that even if all acts alleged by