menuCriminal Law and Business

Chapter 4: Criminal Law and Business

Learning Objectives

  1. Distinguish criminal law from civil law in purpose, burden of proof, and sanctions.
  2. Identify the elements of criminal liability (actus reus and mens rea) and explain when corporations and their managers can be held criminally responsible.
  3. Describe the main white-collar crimes, including fraud, embezzlement, bribery, money laundering, and RICO violations.
  4. Explain the major cyber crimes and the federal laws that address them.
  5. Outline the constitutional protections that apply in criminal investigations and the stages of criminal procedure.

Week 4. Chapter content to be written. The description below sets out what the chapter will cover.

Businesses can be victims of crime, and they can also commit it. This chapter covers both. It explains how criminal law is set up differently from civil law, how liability can attach to a corporation and to the individual managers who run it, and which crimes come up most often in business.

4.1 Planned Sections

Criminal Law Basics. The purposes of criminal punishment, felonies and misdemeanors, the "beyond a reasonable doubt" standard, and the elements of a crime. Defenses such as justifiable use of force, necessity, entrapment, and the statute of limitations.

Corporate Criminal Liability. When a corporation is liable for its employees' acts, the responsible corporate officer doctrine, deferred prosecution agreements, and the federal sentencing guidelines for organizations, including the credit given for an effective compliance program.

White-Collar Crime. Embezzlement, mail and wire fraud, bribery (including the Foreign Corrupt Practices Act), bankruptcy fraud, insider trading as a preview of securities law, theft of trade secrets, and money laundering. RICO and its civil side.

Cyber Crime. Identity theft, phishing, hacking and the Computer Fraud and Abuse Act, ransomware, and the practical challenges of prosecuting crime across borders.

Criminal Procedure. The Fourth, Fifth, Sixth, and Eighth Amendments; the exclusionary rule; Miranda; and the stages from arrest through indictment, arraignment, plea bargaining, and trial.

Arthur Andersen LLP v. United States, 544 U.S. 696 (2005). As the Enron scandal unfolded, Enron's auditor, Arthur Andersen, reminded its staff of the firm's document-retention policy, and employees shredded large amounts of Enron-related paper and email. The firm was convicted of "corruptly persuading" others to withhold documents from an official proceeding. The Supreme Court unanimously reversed the conviction because the jury instructions had not required proof of "consciousness of wrongdoing." The reversal came too late to help the firm. A felony conviction had already ended its ability to audit public companies, and its 28,000 U.S. employees were largely gone.

Why this case: It shows the mens rea requirement at work, how a corporation can be prosecuted as an entity, and why companies now negotiate deferred prosecution agreements instead of going to trial.

Discussion question: The firm won in the Supreme Court and still went out of business. What does that say about the costs of indicting a company rather than the individuals responsible?

4.2.1 Short Case Summaries

4.3 Planned Features