White Collar Crime - Solomon - Summer 2012

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					                          White Collar Crime - Solomon - Summer 2012




White Collar Crime
Course overview-principles of corp v. indiv
liability-            p 50-53; 56-62; 66-71; 76-84
INTRODUCTORY STUFFS
   White collar crime- Essence is notion of crim intent. what was the reason? But y? Whats in
   Politician's head? Did they act w/ corrupt intent- w/evil heart. What was her intent? Did
   they act w/ intent to conspire in a fraud or did the accountant or lawyer perform duties
   neg? Diff bet civil & crim. Did he participate knowingly & intentionally? No, he was just not
   good at the job. Intent can be proven through the coverup or the coverup itself becomes
   the crime. Prosecutor has to look for evid of that. Gives shortcut to crim intent. If defense
   lawyer- job to make sure they don’t do those stupid things. White collar crime is
   circumstantial.
 Jury instruction: we have to rely generally on circumstantial evid. Taking a set of circs &
   from it drawing a conc. What we tell jurors is direct evid is what we see w/ our own eyes.
   Seeing rain is direct. Seeing ppl w/ umbrella & coat is circumstantial. We think of how to
   prosecute & defend it. Wanna put it in terms jury underst&s. Sometimes circ evid can be
   stronger than direct.
 First half is statutes, specific issues. Second half of the book talks bout strategies-
   subpoena, gr& jury, search warrants, piercing atty/ client privilege. Strategic steps.
Corp liability
New york central & hudson river railroad co v. united states.
   Facts: (not really discussed) under elkins act. misdemeanor. B4 corps couldn’t have crim
   offenses.
   Common law held that to be a corp, couldn’t commit a crime. Members can tho. But
   actually a corp later held to can be held liable. can be held to give compensation or
   punished for a private wrong.
   A co held responsible for acts of the agent. Corps should be punishable bc if not they can
   abuse system. Get away w/things. Things violating statutes. A corp is held responsible for
   acts not within the agents corp powers strictly construed but which the agent has assumed
   to perform for the corp when employing the corp powers actually authorized, and in such
   cases there need be no written auth under seal or vote of the corp to constitute the agency
   or auth 2 act
   Times when prosecutor can prosecute & times when shouldnt. Case talks bout unintended
   consequence of corp prosecution. Deprived cos of being able to be held as innocent &
   hurts shs, also DP issues. When we talk bout unintended consequences, yes its legally
   allowed. But prosecutor has to step back & assess collateral damage. Did board make a
   voluntary disclosure of bad apples, cover it up? Then make the decision. Can the co be
   indicted is ez, hard ? is should they be?
        o Legal st&ard: 1) acts w/in scope of duties & 2) for the benefit of the corp.
        o Can be held liable civil & crimly through the agents if the above 2 things are met.
“for the benefit”
Standard Oil Co of texas v. us
   Issue: can co be liable 4 crime if theft 2 owner, didnt benefit co, & actually benefitted a 3rd
   person?
   FACTS: st&ard EEs paid by thompson, falsifying records, oil had to be made up. Pasotex
   reported it immediately (sub co of st&ard oil). no benefit intended or obtained.
   Analysis: knowledge req. Corp only guilty if deliberate. times tho where they can be crim
   liab w/o benefit, but purpose gotta be 2 benefit co. if not w/i scope of employment,
   doesn’t serve corp.
        o FUNCTION TEST- not enuf. could be said a funct, but was 2 further crim enterprise.
           Corp didn’t have know.
        o “but while benefit isn’t essential in terms of the result, the purp to benefit is decisive
           in terms of equating the agents action with that of the corp”
   Conc: reversed, not liable. No benefit to corp, not liable. Very narrow that the agents
   conduct is that co isnt getting a benefit. Being harmed. 2) isnt met.
Us v hilton hotels
   FACTS: association 2 attract conventions, asked for 1% by suppliers in Oregon to have a
   fund. viol Sherman act. Pres said was contrary 2 hotel policy. Ct supported holding co liable.
   Statute meant 4 competition & were going v. that. Imp. public interests at stake, comm
   offense.
   ISSUE: is co still liable even tho v. policy & their instructions to the agents? Yes. He was
   acting out of authority. Ct looked at corp in nature behavior.
   ANALYSIS: its hard to id EEs, easy to id corp. just bc they said no they coulda done
   something more.
   CONC: AFFIRMED. Co is liable. Ct is saying that w/ these kinda crimes it way 2 ex 4 co to put
   a memo or slap an EE on the wrist. *wink* who we kidding?!!
Collective knowledge
US v. Bank of New England
   FACTS: bank failed to file CTRs. Up to 10k. MCD w/drew more than 31 times to single teller.
   Bank had adequate warning. Bookie, drug dealer. Regulation, not crime
   ISSUE: Was the bank willful? DIFFERENCE BETWEEN KNOWINGLY & WILLINGLY:
        o Knowingly: voluntarily & intentionally. U know what ure doing. U intend ur conduct.
           Not drunk. Consciousness of conduct.
        o Willfully: means voluntarily, intentionally, w/ a spec. intent to disregard or violate
           law w/ bad purpose. Evil in heart/mind.
                    What it dont mean is that u have to know ure violating a specific crim federal
                    law.
                    Needs knowledge of reporting requirement AND Specific intent 2 commit
                    the crime.
   ANALYSIS: collective knowledge. If a knows 1 thing, & so does b, etc. co. knows both. Govt
   entitled to collective cumulate that knowledge into a whole. HEART of case.
       o Smurfing- small creatures. What crime is called.
       o Willfully 4 bank is if EE willfully did it so did bank. Look also @ banks regs. Did they
           teach their EEs, what their policies were?
       o Cts instruction on collective knowledge was imp & necessary. Was ok.
       o instructions on willful=proper since showed it takes more than mistaken or accidental
           acts.
       o Bank said not enough evid on willfulness, but head teller knew & a former testified.
           Its in lang of the regs. didn’t report bc a good customer. obvious something strange
           was going on.
   CONC: there was willfulness. Affirmed.
Individual responsibility
US v. Park
   FACTS: Market chain. In baltimore warehouse food exposed to rodents. Respondent given
   notice on various occasions. Chief of compliance of FDA gave notice. He was CEO, duties in
   bylaws. He said others were in charge, ppl were in a sense under him, but not really.
   ISSUE: Can a manager & co be prosecuted under FFD&CA. individual responsibility?
   ANALYSIS: imp to public health. Only way corp can act is thru indivs. also depends on evid
   to show wrongdoing. Crim provisions applied if EE did it themselves or by virtue of their
   position.-an omission or failure to act was sufficient. Consciousness of wrongdoing.
       o Positive duty to seek out & remedy violations, but also try to prevent them. He had
           responsible relationship to the conduct in ?. Omission or failure to act suff.
   CONC: Dont gotta b conscious fraud, but foresight & vigilance. Jury focused on d's auth. He
   was aware of deficiencies. No defense he relied on subordinates. Regulatory offenses-
   misdemeanors. Statutory framework. Not a felony to send u to jail for indiv
   wrongdoing/consciousness.
   DISSENT: The jury instructions weren't consistent w/ the law. Bad instructions. Basically if u
   find him guilty, conclude he is. Instructions were ok but they said not to attach meaning &
   him being CEO doesn’t require a finding of auth. Instructions needed to tell jury that beyond
   a reasonable doubt he engaged in wrongful conduct amounting to negligence, then he
   could be held guilty.
   Lower reg regime-ct is ok w/not gettin knowingly, willfully. Innocent but responsible bc of
   reg.

White collar intent- knowingly, willfully,
specific intent to defraud 89-99
     Knowingly: voluntarily & intentionally, not by mistake
     Willfully: w/ a specific intent to disregard the law, w/ a bad purpose to violate the law.
         o Means u are acting w/ a bad purpose. Evil malice in brain or heart. May not know itll
              specifically violate a certain statute, but u know & what u intend that ur doing is
              wrong.
     Willful plus- "voluntary, intentional violation of a known legal duty."
   Favorites of his for the exam are ABOVE.
   P 68: best definitions of the above mens rea.
   Crim guilt liability for corps
        o Agent acting w/ corp scope of duties
        o & acting for the benefit of the corp.
   Individual liability-requires specific intent that the govt must prove, some form of evil,
       motivation that isnt just negligent or reckless. Its intentional.
The mens rea element
Ratzlaf v. United states
    FACTS: report when 10k. bout willfully violating. Willfulness requires that D acted w/
    knowledge that his conduct was unlawful. reno debt, playin blackjack. Structuring
    transactions. (similar to bank of new engl&). He convicted, fined, sentenced to prison. He
    said didn’t have the willfulness.
    ISSUE: to gain a conviction for willful govt needed to prove he was aware of illegality of
    structuring.
    ANALYSIS: willful: knowledge of the reporting requirement & a specific intent to commit
    the crime.
        o RULE OF LENITY: Vague, so in favor of d. The tie goes to d, we choose more
            convenient interpretation of the statute. (P95)
        o Congress wrote it sloppy. Y 2 willful back to back? Must mean an added element of
            violation of a known legal duty.
        o Section 5313A: reporting req, here is what we want banks to do.
        o Section 5324: key is that is itself willful. If knowledge & intent to evade it that’s
            traditionally willful, but then turn page p 92.
        o Section 5322A: willfully violating the above provision.
                   Must mean something more than traditional & that’s y he calls it: WILLFUL
                    PLUS- VOLUNTARY INTENTIONAL VIOLATION OF A KNOWN LEGAL DUTY.
    But there are many occasions when structure w/o violating the law. What ct said is that u
    can have knowledge of reporting req & try to get around it, but cant not have the specific
    intent. What bout the small bus operator bringing 9500 in cash & going around irs audit
    which isnt a crime. Someone worried bout security, dont want ppl who work at bank & how
    many is thrown out.
        o Not enough 2 say some1 is evading, so its crim. Stamp act & gift act ex of givin dec
            31&jan 1.
        o Ignorance of law is no def to a crim charge,congress may say otherwise & they did w/
            5322a.
    CONC: reverse the judg. P 95. had to find he knew the structuring he engaged in was
    unlawful.
    Case often used is CHEEK:tax law case. Prosecutors have to prove knowingly & willing in the
    traditional sense but intentional to violate a known legal duty.
    DISSENT: lacks statute support, undermined by congress intent. Willful is consciousness of
    the act.
                 Only 2 things needed: knowledge of reporting req & structuring of evading
                 them. Theyre saying stop there, all that’s req. Common willful. Strays from the
                 text.
                 He knows the regulation so cant say he didn’t know the law. Congress
                 intended to require knowledge of, but not specific knowledge.
Statutory ambiguity & the rule of lenity-p 106-113
Ambiguity in other elements
Dowling v. US
    FACTS: natl stolen property act. Transport 5000 in goods & stolen. Bout bootleg
    phonorecords of elvis. No authority given & no royalties paid.
    ISSUE: do bootleg phonorecords count as "stolen, converted or taken by fraud?" What was
    ACTUALLY STOLEN? IP. But he steals master,digital recording. 1 thing. He then copies it.
    ANALYSIS: narrow interpretation used w/ federal crimes (rule of lenity) (p 112). Up to the
    legislature not the ct to define crime & ordain its punishment
        o Sect 2314 lang: interest, 5k or more, know stolen. D says that it wasn’t stolen. Govt
            says no right to distribute. Ct agrees w/ D. It has always been physical goods that
            have been stolen. Copyright owner has diff rights. Copyright act has diff term:
            infringer.
        o CONGRESS intent: originally act bout cars then extended 2 stolen property. Bout a
            need for federal action bc of stolen goods being passed interstate. That isnt the case
            for copyright.
    CONC: reverse the judg. ITSP, the SP doesn’t match. Not going to let this be used to
    prosecute this particular offense.
    DISSENT: its bootleg, broad enough to be theft. statute doesn’t have distinction bet
    tangible & not.
(most these below found in tit 18,tax crim offense in tit 26):3 main ways to prosecute w/tit
18:
Section 1951: The Hobbs Act
        o Extortion- usually applied to state & local officials (non federal officials)
Section 201: Bribery & Gratuity statute
        o Applies only to federal officials (ie pres on down to ur local mailman)
        o Bribery under 201 also requires QPQ
Section 1341, 1346: mail fraud statutes
        o Has honest service prosecutions (big blow w/ reversal of enron skilling's conviction)
Public corruption cases- p117-144
Going beyond the statute?
McCormick v. United States (1991)
   FACTS: member west VA house of delegs extort prop & false tax return. Shortage, temp
   license foreign docs. Extend a yr. Not clear he changed his position, did it b4 he got $ from
   docs, 1200 then 2k. didnt list as campaign contribs. Violated hobbs act. Induced cash
   knowingly & willingly.
       o Extortion deft: $ obtained wasn’t lawfully due &owing to him. He was convicted. ct
           appeals said he may be convicted w/o proof he granted benefit.
   ANALYSIS: there needs to be quid pro quo for the crime.
       o  Its unrealistic to say whatever benefits the interests of their constituents is extortion.
           THAT’S WHAT POLITICS IS. It is only if the payments are made in return for an
           explicit promise or undertaking by the official to perform or not perform an official
           act.
   QUID Pro Quo: the specific intent of the payment is to influence a specific official act.
   essential for extortion conviction. Have been given in return for performance of or
   abstaining a certain act.
       o Not under 201 bc he isnt federal official.
       o READ HOBBS ACT (P 118): split personality statute. Extortion isnt robbing, u get them
           to give u $, but u induce that by wrongful use of actual threaten force, violence, or
           fear. That’s the traditional extortion model ie guys w/ baseball bats.
   Or under color of official right: by virtue of my badge. Favor bc my title. Bc that, u owe me
   tribute.
       o Ct sayin theyre puttin a little more of a gloss, goin to make QPQ & apply it to any
           extortion case when a public office holder might ask 4 pay that might arguably b
           campaign contrib.
       o P 119: knowingly & willfully would have been the traditional instruction.
   CONC: conviction Reverse & remand. QPQ is essential.
   CONCUR: weird to make conc w/o lookin to text which doesn't even have allusion to quid
   pro quo.
   Dissent:extort dont got b writen/partic form, its extortion.Mutual underst&ing. QPQ not
   necess
Evans v. US (1992)
   FACTS: FBI agent posed as real estate developer. Rezone. Cash, check, & didn’t report $. He
   didn’t ask, but received it, is that enough? Even if idea came from police, that’s not
   entrapment. For entrapment needs a persistent nagging persuit of crime to pt where he
   overcomes will of d. He was convicted by jury. instruction didn’t req jury to find that he
   dem&ed or requested $ or conditioned it. Ct of appeals held it was ok & that passive
   acceptance is sufficient. Majority view goes w/ that.
   ISSUE: is an affirmative act of inducement by a public official an element of extortion under
   color of official right? Is the undercover agent inducing enough?
   ANALYSIS:common law meanin:request by official not element of offense.
       o NY law extortion could be committed by one who merely received unauthorized
           payment. Induced doesn’t have to begin w/the public official. doesn’t mean the
           transaction needs to be started by the recipient of the bribe. coercive element is
           provided by the pub office itself.
       o Ct sayin term of extortion is w/his consent, under color of official right. Induced
           only goes to violent prong of extortion. Only needa show public official has
           obtained pay to which he wasnt entitled, knowin that payment was made in
           return for official acts. Even if he didn’t induce or ask for it. Congress hasn’t
           changed the law.

				
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