White Collar Crimes: Understanding the Complexities of Business-Related Offenses - Prof. V, Study notes of Business and Labour Law

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Chapter Eight – Terms and Concepts Criminal Law On the civil side, more than 90% of cases settle. This is also true and even more so on the criminal side!! This entire experience has opened my eyes up to a tragic world of injustice I never knew existed. If it is possible for law enforcement officials to systematically railroad us with no evidence whatsoever, it is frightening to think what they could do to those who do not to have the resources to defend themselves. So rather than relying on disparaging stereotypes, or creating political and racial conflicts, we must all take a step back from this case and learn from it. This tragedy has revealed that our society has lost site of the core principle of our legal system, the presumption of innocence. Reade Seligmann, former Duke University student and lacrosse player Simple Street Crime: Affects businesses on a street level (where they interact with the community). You must take in consideration the type of environments your business is located in

- Embezzlement Embezzlement is when you take something that was entrusted to you by your company. (Fraudulent conversion of property already in your possession) o This is a type of larceny (theft). Employee theft is a white collar crime - Computer Crimes: Anytime you are using a company’s computer and do something illegal (posting a downloaded movie) it can be a felony White Collar Crime Crimes committed by businesspeople, usually harmful to consumers, other businesses or the government. Crimes which are generally not considered “street crimes.” White collar crimes are sometimes thought of as less serious than street crimes, but economically speaking the aggregate economic effect of white collar crimes amounts to tens of billions of dollars annually. - Fraud : The deception of another person for the purpose of obtaining money or property from him. EX- Making misrepresentations about your company. Can be sued civilly and is also a crime. EX- WorldCom, Enron, etc. Enron went bankrupt overnight due to false financial statements - Workplace crimes : EX-repeated violations of statutes/regulatory standards, like health standards. - Conspiracy : Two or more people coming together to commit a crime - Arson - burning someone’s property. This comes up in the business context when people perform this to get insurance. This is an interplay between business and crime and business and insurance. This can be included as insurance fraud - Medicare fraud : Ripping off the government- claim treatment you actually didn’t apply **- Identity theft

• Money laundering** : take money that you know is a result of a crime and put it in a separate account so that when it is wired, it seems to be legitimate. The money launderer takes a portion of that money If you are charged for a crime with a risk of incarceration, you have a right to a lawyer. The government is the prosecutor for crimes! They must prove their case

“Beyond a reasonable doubt” is the standard for a criminal case Interstate Crime Crime committed in one state, which continues or leads to a result in another state. Significant in that Congress can criminalize interstate crime through its power to regulate interstate commerce. Wire fraud/mail fraud Federal crimes involving the use of interstate mail, electronic transmissions, telephone, radio or television to obtain money or property by deceit. Frequently, wire fraud and mail fraud charges are included in federal prosecutions of both white collar and street crimes. Medicare fraud :

- Using false statements, bribes, or kickbacks to obtain Medicare payments from the government Felony A serious crime for which a defendant can be sentenced to one year or more in prison Misdemeanor A less serious crime for which a defendant may be fined and/or sentenced to incarceration of 12 months or less Probation Court ordered supervision of a defendant that is convicted, but has all or a portion of his or her sentence suspended (meaning the defendant was given a sentence including a term of imprisonment, but does not have to serve the prison time so long as the defendant follows the rules of probation and maintains orderly and lawful behavior). Parole An administrative scheme which establishes guidelines for early release of prisoners; abolished in some states, including Virginia. Restitution Court ordered payment meant as compensation to a crime victim (separate and distinct from a fine, which is paid to the state). In prosecution of street crimes, offenders often cannot afford to pay restitution to compensate their victims. In white collar prosecutions, restitution payments often result and can be quite significant. Beyond a Reasonable Doubt The burden of proof necessary for the government to prove each element of its case against an accused criminal defendant. This standard is much higher than the “preponderance of the evidence” burden of proof generally applicable to civil trials. If a jury finds that a defendant is guilty “beyond a reasonable doubt,” it means that the prosecution has demonstrated to the jury that there is no reasonable interpretation of the facts presented at trial but that the defendant committed the particular crime of which he or she is accused. Guilty/Not Guilty The terms used to describe whether or a criminal defendant is convicted or acquitted. Analogous to the terms “liable” and “not liable” used in civil cases. Plea Bargain An agreement between the prosecution and defense that the defendant will plead guilty, usually to a reduced charge, in exchange for the prosecution recommending to the judge a more lenient sentence than might result if the defendant were to exercise his or her

right to a trial and be found guilty. A plea bargain is analogous to “settlement” of a civil lawsuit. As in civil cases, most criminal cases do not result in trials. Deterrence :

- Specific deterrence is intended to teach this defendant that crime carries a heavy price tag - General deterrence is the goal of demonstrating to society generally that crime must be shunned - Both of these assume that by imprisoning someone, the law achieves a greater good for everyone utilitarianism (they are means to an end) Retribution - Giving back to the criminal precisely what he deserves. The punishment must be exactly equal to the crime they committed. This idea was proposed by Immanuel Kant who rejected the idea of deterrence. Vengeance - This is related to the idea of retribution. When a serious crime has occurred, society wants the perpetrator to suffer Actus Reus - Means “the guilty act” The prosecution must prove that the defendant voluntarily committed a prohibited act. The government punishes the ACT not thoughts of the crime. Mens Rea - “Guilty state of mind” The prosecution must prove this on the defendant’s part Criminal recklessness : Consciously disregarding a substantial risk of injury. EX- someone who jokingly points a gun at another Criminal negligence : Gross deviations from reasonable conduct. EX- A hunter who sees a movement and shoots at it, without bothering to determine what the target is Strict liability : In these cases, the prosecution must only prove actus reus. If he committed the crime, then he’s guilty regardless of mental state or irresponsibility. Legal Defenses : - Insanity - If the defendant can prove he was insane, he is not guilty. o M’Naghten rule  Must show he suffered a serious, identifiable mental disease  And did not understand the nature of his act Entrapment : When the government induces the defendant to break the law, the prosecution must prove beyond a reasonable doubt that the defendant was predisposed to commit the crime. If they can’t prove this, they are not guilty. Duress : A defendant may plead duress if she can show that a threat by a third person caused her fear of imminent serious physical harm. Computer Fraud and Abuse Act - prohibits using a computer to commit theft, espionage, trespass, fraud, and damage to another computer Access Device Fraud A ct - outlaws the fraudulent use of cards, codes, account numbers, and other devices to obtain money, goods, or services. EX- reprogramming a cellphone so calls are charged to another account Identity theft and assumption deterrence act- bars the use of false ID to commit fraud or other crime

Wire and electronic communications interception act- makes it a crime to intercept most wire, oral, and electronic communications Agent - anyone undertaking work on behalf of the corporation. A corporation can be found guilty of a crime based on the conduct of any of its agents!!

- If the agent commits a criminal act within the scope of his employment and with the intent to benefit the corporation, the company is liable. - The most common punishment for a corporation is a fine - Compliance Program - a plan to prevent and detect criminal conduct at all levels of the company. The court must determine whether the company had this. - Federal Sentencing Guidelines –detailed rules the judges must follow when sentencing defendants convicted of crimes in federal court OSHA (occupational safety and health act of 1970) – sets safety standards for many industries RICO (racketeer influenced and corrupt organizations act)- creates both criminal and civil law liabilities. - Treble damages – judgment for three times the arm actually suffered and can also recover attorneys fees. RICO allows the civil plaintiff this. - RICO prohibits using two or more racketeering acts to accomplish any of these goals: o Investing in or acquiring legitimate businesses with criminal money o Maintaining or acquiring businesses through criminal activity o Operating businesses through criminal activity - Racketeering acts are embezzlement, arson, mail fraud, etc. The criminal process-

1. Informant tells police. Police prepares an affidavit, a written statement signed under oath
2. Warrant- must specify reasonable certainty the place to be searched and the items to be seized
3. Probable cause- the magistrate will issue warrant only if it is likely that the evidence of crime will be found in the place mentioned.
4. Search and Seizure- search may not exceed what is described in the warrant.
5. Arrest- police take person under arrest to headquarters where they are booked (name, photograph, and fingerprints are entered in a log) and is entitled to a bail hearing
6. Indictment- government’s formal charge that the defendant has commited a crime and must stand trial
7. Arraignment- person goes back to court, is read her formal charges of the indictment, and asked if they have a lawyer, and then asked if they plead guilty or not.
8. Discovery
9. Motion to suppress- request that the court exclude certain evidence because it was obtained in violation of the constitution.
10. Plea bargaining- agreement between the prosecution and defense that the defendant will plead guilty to a reduced charge
11. Trial and Appeal- when there is no plea bargain, the case will go to trial Fourth Amendment prohibits the government from making illegal searches and seizures Exceptions to this rule where they may search without a warrant- - Plain view- if it is sticking out in plain view - Stop and frisk- if they suspect they are armed and dangerous, they may pat him down - Emergencies - Automobiles- if they have lawfully stopped a car and observe other evidence of crime, they may search - Lawful arrest- may always search a suspect they arrest

- Consent- if the owner gives consent Exclusionary rule - evidence obtained illegally may not be used at trial against the victim of the search. Patriot Act of 2001- designed to give law enforcement officials greater power to investigate and prevent potential terrorist assaults. National Security Letter- permits the fbi to issue this to communications firms such as internet service providers. This demands that the recipient furnish to the government its customer records, and that they never tell anyone what it has done. The FBI may do this for terrorist investigations. Fifth amendment includes protection for criminal defendants for: - Due process- requires fundamental fairness at all stages - Double jeopardy- defendant can only be prosecuted once for a particular offense - Self-incrimination- bars government from forcing anyone from testifying against himself Miranda vs. Arizona- Supreme Ct. ruled that a confession obtained from a custodial interrogation may not be used against a defendant unless he was first warned of his fifth amendment rights Sixth amendment- right to a lawyer Eighth amendment- prohibits cruel and unusual punishment Forfeiture- a civil law proceeding that is permitted by many different criminal statutes. The government seeks forfeiture of property associated with the criminal act once the court has convicted a defendant under certain criminal statutes such as RICO. - To determine how much property the government may take, the courts look for whether the property was used in committing the crime, whether it was purchased with proceeds from illegal acts, and whether the punishment is disproportionate to the defendant’s wrongdoing.