White Collar Criminal Law
Schumacher
Winter 2016
Why impose Criminal Sanctions?
Consequentialist (Deterrence, incapacity, rehabilitation)
Protect the rights of the innocent
Retributivist (Just deserts)
One definition of Criminal Conduct
Intentional or purposeful conduct
That society (or the legislature) has said is wrong
That causes harm (As is this)
For which the person deserves
Defining White Collar Crime
OLD DEFINITION FOCUSED ON CLASS- “Criminal Conduct committed by person of wealth, respectability, and social status.” Edwin Sutherland.Focused too much on the identity of the actor, not the identity of the action.
NEWER DEFINITION – “Those illegal acts which are characterized by deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force or violence.Individuals
White Collar Crime Basics
Most white collar crimes are federal crimes
White collar crimes generally involve money
Not crimes of violence
Not “crimes of passion”
Corporations can be the defendant.
Criminal sanctions are the “capstone” to complex regulatory scheme.
Prosecutors have enormous discretion in deciding whom to charge with a white collar crime.
The Major Players in White Collar
Defense Counsels
Grand Jury
Federal Courts
US DOJ
Private Practice
For indictments
Forum
US Attorney’s Office
Agencies CIDs
Fed Public Defenders
CJA Attorneys
Corporate Criminal Liability
General Notes-
Making corporations criminally liable makes sense because:
They have deep purses
Hard to identify individual actors
Makes them police their own
They benefit from the crime
Collateral estoppel
Coordinated effort to go after corporation and responsible individuals
Deep pockets
Corporate Case Studies
Ford did a cost benefit analysis with the Ford Pinto case.Pretty amazing numbers on the screen when they are putting burn deaths and assigning a number.That got them in trouble. The government ordered a recall.If there was no criminal aspect to white collar stuff, this sort of analysis might happen more often.
Arthur Andersen LLP – indicted for obstruction of justice for their role in trying to cover up the Enron scandal by destroying documents.Even though they were eventually acquitted by SCOTUS, the company was already gone.
Failed to obtain or maintain due diligence or KYC information on HSBC Group Affiliates, including HSBC Mexico;
Failed to adequately monitor billions of dollars in purchases of U.S. banknotes between July 2006 and July 2009 from HSBC Group, including over 9.4 billion from HSBC Mexico.
Entered into a Deferred Prosecution Agreement (DPA).Used because of Arthur Anderson.
HSBC admits that case against it could be proved beyond beyond a reasonable doubt
Agrees to pay 1.92 billion
Increased their AML staff from 4 to 430.
Remedial Actions
Fully cooperated with law enforcement
Spent 290 million on remedial measures
Exited Banknotes business.
HSBC USA has new CEO and GC
HSBC Group has new CEO, Chairman and Chief Legal Officer.
All of the awful conduct was outside of the United States. The Know Your Customer stuff was the stuff that happened in the US. More of a crime of omi
able in criminal law.
A corporation can be found guilty of a crime requiring specific intent for actions committed by its agent if… (State v. Christy Pontiac-GMC)
The agent was acting within the course and scope of his employment, having the authority to act for the corporation with respect to the particular corporate business which was conducted criminally,
The agent was acting, at least in part, in furtherance of the corporation’s business interests, AND
The criminal acts were authorized, tolerated, or ratified by corporate management.
New York Central & Hudson River Railroad v. United States (CORPORATIONS CAN BE LIABLE)- A corporations may be held criminally liable for the acts of its agents acting within the scope of their authority. The corporations and it’s managing agent were convicted of violating a federal law prohibiting the payment of rebates. Specifically, the corporation was prosecuted for the payment of rebates to the American Sugar Refining Company arising out of shipments of sugar from New York to Detroit. The Defendant was prosecuted under the Elkins Act which held a corporation criminally liable for unlawful acts of its agents. Holding: A corporation can be imputed with the knowledge of unlawful conduct by its agents acting in the scope of their duty as long as their actions bring a profit to the corporation. Corporation can be held responsible for damages in a torts actions for the actions of their agents done for benefits of the corporation. Criminal law applies too.
