1. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Chapter 8 Business and Online Crimes Chapter 8 Business and Online Crimes

2. 6 - 2 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Purpose of Criminal Laws Allow people to coexist peacefully Allow commerce to flourish Protect people and property from injury by others

3. 6 - 3 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman United States Criminal Law System Person charged is presumed innocent until proven guilty. The burden of proof is on the government Accused must be found guilty beyond a reasonable doubt. In most other systems, person is presumed guilty unless he can prove otherwise.

4. 6 - 4 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Crime Any act done by an individual in violation of those duties that he or she owes to society and for the breach of which the law provides that the wrongdoer shall make amends to the public.

5. 6 - 5 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Penal Codes and Regulatory Statutes Statutes are the source of criminal law. State penal codes define in detail: –The activities considered to be crimes within their jurisdiction; and –The penalties that will be imposed for their commission.

6. 6 - 6 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Penal Codes and Regulatory Statutes (continued) A comprehensive federal criminal code defines federal crimes. State and federal regulatory statutes often provide for criminal violations and penalties.

7. 6 - 7 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Penalties Imposed for Crimes Fines Imprisonment –Means of incapacitating wrongdoer –Rehabilitation –Deterrent for others –Prevent personal retribution Both fines and imprisonment Probation

8. 6 - 8 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Parties to a Criminal Action In a criminal lawsuit, the government is the plaintiff. The government is represented by a lawyer called the prosecutor. The accused is the defendant. The accused is represented by a defense attorney.

9. 6 - 9 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Classification of Crimes Felonies Misdemeanors Violations

10. 6 - 10 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Felonies Felonies are the most serious kinds of crimes. Felonies include crime that are mala in se – inherently evil. Most crimes against persons and certain business-related crimes are felonies. Usually punishable by imprisonment. Mandatory sentencing for some crimes.

11. 6 - 11 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Misdemeanors Misdemeanors are less serious than felonies. They are crimes mala prohibita – not inherently evil but are prohibited by society. Many crimes against property are misdemeanors. Usually punished by fines and imprisonment up to one year.

12. 6 - 12 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Violations Crimes that are neither a felony nor a misdemeanor Punishable by fines and, occasionally, a few days of incarceration.

13. 6 - 13 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Chapter 113 Essential Elements of a Crime Criminal Act Criminal Intent

14. 6 - 14 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Criminal Act The defendant must have actually performed the prohibited act. Actus reus (guilty act) – the actual performance of the guilty act. Merely thinking about a crime is not a crime, because no action has been taken.

15. 6 - 15 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Criminal Intent Mens rea (evil intent) –Possession of the requisite state of mind when act performed Specific intent –Accused purposefully, intentionally, or with knowledge commits a prohibited act General intent –Showing of recklessness or lesser degree of mental culpability Non-intent crime –Imposes criminal liability without a finding of mens rea

16. 6 - 16 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Criminal Acts as the Basis for Tort Action An injured party may bring a civil tort action against a wrongdoer who has caused the party injury during the commission of a criminal act. Civil lawsuits are separate from the government’s criminal action against the wrongdoer. Criminal is often judgment proof.

17. 6 - 17 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Civil and Criminal Law Compared IssueCivil LawCriminal Law Party who brings the action The plaintiffThe government Trial by juryYes, except actions for equity Yes Burden of proofPreponderance of the evidence Beyond a reasonable doubt Jury voteJudgment for plaintiff requires specific jury vote Conviction requires unanimous jury vote Sanctions and penalties Monetary damages and equitable remedies Imprisonment, fine, capital punishment, probation

18. 6 - 18 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Chapter 118 Criminal Procedure Pretrial Criminal Procedure The Criminal Trial

19. 6 - 19 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Pretrial Criminal Procedure Pretrial criminal procedure consists of several distinct stages including: –Arrest –Indictment or Information –Arraignment –Plea Bargaining

20. 6 - 20 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Arrest Police must obtain arrest warrant based on showing probable cause –Must show substantial likelihood that they committed crime Warrantless arrests allowed when police arrive during commission of crime, “hot pursuit” situations, or where likely evidence will be destroyed

21. 6 - 21 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Indictment or Information Grand jury –Determines whether there is enough evidence to hold accused for trial –Serious crimes –Issues an indictment Magistrate –Determines whether there is enough evidence –lesser crimes –Issues an information

22. 6 - 22 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Arraignment If indictment or information issued, arraignment is next procedure. Accused informed of all charges Asked to enter a plea –Guilty –Not guilty –Nolo contendre Does not admit guilt, but agrees to penalty Cannot be used as evidence of liability in civil trials

23. 6 - 23 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Plea Bargaining Allows accused to plead to lesser crime Saves money, time Avoids risk of trial Prevents further overcrowding of jails

24. 6 - 24 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman The Criminal Trial All jurors must unanimously agree before the accused is found guilty of the crime charged. If one juror has reasonable doubt about the guilt of the accused, the accused is not guilty. If jurors cannot agree, jury considered to be a hung jury. If all of the jurors agree that the accused did not commit the crime, the accused is innocent of the crime charged.

25. 6 - 25 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman The Criminal Trial (continued) After trial, the following rules apply: If the defendant is found guilty, he or she may appeal. If the defendant is found innocent, the government cannot appeal. If it is a hung jury, the government may choose to retry the defendant.

26. 6 - 26 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Crimes Affecting Business Robbery Burglary Larceny Theft Receiving stolen property Robbery Burglary Larceny Theft Receiving stolen property Arson Forgery Extortion Credit card crimes Bad checks Arson Forgery Extortion Credit card crimes Bad checks

27. 6 - 27 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Robbery In common law, robbery is the taking of personal property by use of fear or force. If a weapon is used, it is considered armed or aggravated robbery.

28. 6 - 28 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Burglary In common law, burglary was the breaking and entering of a dwelling at night. It has been extended to include daytime entry of any structure.

29. 6 - 29 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Larceny In common law, larceny was the wrongful and fraudulent taking of another person’s personal property. Neither the use of force nor entry into a structure is required Some states distinguish between grand and petit larceny, based on value of property taken

30. 6 - 30 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Theft Some states group robbery, burglary, and larceny together under the heading of theft Distinguish between grand theft and petit theft –Based on dollar value of property taken

31. 6 - 31 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Receiving Stolen Property Crime of knowingly receiving stolen property with the intention of depriving rightful owner of that property. Property must be tangible property.

32. 6 - 32 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Arson In common law, arson was the malicious or willful burning of another’s dwelling. Now has been extended to all structures. Has also be extended to structure’s owner.

33. 6 - 33 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Extortion Obtaining a property from another, with their consent, induced through actual or threatened force, violence, or fear Blackmail Under color of official light –Extortion by public officials

34. 6 - 34 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman White Collar Crimes Forgery Embezzlement Bribery Criminal fraud

35. 6 - 35 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Forgery Written documents fraudulently made or altered Change affects legal liability of another

36. 6 - 36 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Embezzlement Fraudulent conversion of property by person to whom property is entrusted Key is that property was entrusted to person

37. 6 - 37 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Bribery Requires intent –Offeror commits crime when bribe is offered –Commercial bribery often referred to as kickback or payoff –Bribe can be of anything of value

38. 6 - 38 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Criminal Fraud Obtaining title to property through deception or trickery Also called false pretenses or deceit Mail and wire fraud –Federal law prohibits use of mail or wires to defraud persons

39. 6 - 39 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman The Foreign Corrupt Practices Act Makes it illegal for American companies, or their officers, directors, agents, or employees, to bribe a foreign official, a foreign political party official, or a candidate for foreign political office. Requires firms to keep accurate books and records of all foreign transactions.

40. 6 - 40 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Racketeer Influenced and Corrupt Organizations Act (RICO) Makes it a federal crime to acquire or maintain an interest in, use income from, or conduct or participate in the affairs of an enterprise through a pattern of racketeering activity.

41. 6 - 41 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Racketeer Influenced and Corrupt Organizations Act (RICO), continued Two acts within a ten year period sufficient Convicted individuals can be fined up to $25,000 and receive 20 years imprisonment Must forfeit property and business interests gained by RICO violations

42. 6 - 42 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Criminal Conspiracy Two or more persons enter into an agreement to commit a crime Requires an overt act Crime does not have to be committed

43. 6 - 43 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Money Laundering Money Laundering Control Act –Knowingly engage in monetary transaction through financial institution involving property worth more than $10,000. –Knowingly engage in a financial transaction involving proceeds of an illegal activity. –If convicted, fines can be assessed up to $500,000 or twice the value of the property and up to 20 years in prison

44. 6 - 44 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Corporate Criminal Liability Corporations may be held criminally liable for actions of their officers, employees, or agents. Corporate directors, officers, and employees are personally liable for the crimes they commit while acting on behalf of the corporation.

45. 6 - 45 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Unreasonable Searches and Seizures The Fourth Amendment protects persons and corporations from overzealous investigative activities by the government. Reasonable search and seizure by the government is lawful. Search warrants based on probable cause are necessary in most cases.

46. 6 - 46 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Exclusionary Rule Evidence obtained from an unreasonable search and seizure can generally be prohibited from introduction at a trial or administrative proceeding against the person searched. Evidence is freely admissible against other people Good faith exception –Evidence may be introduced if law enforcement reasonably believed that they were acting pursuant to valid search warrant

47. 6 - 47 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Searches of Business Premises Government may not search businesses without a search warrant Certain hazardous and regulated business are exceptions –Subject to warrantless searches provided statutory procedures met

48. 6 - 48 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Federal Antiterrorism Act of 2001 In response to the events of September 11, 2001, Congress enacted a new federal Antiterrorism Act. The act assists the government in detecting and preventing terrorist activities and investigating and prosecuting terrorists.

49. 6 - 49 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Federal Antiterrorism Act of 2001 (continued) The act contains the following main features: –Special Intelligence Court –Nationwide Search Warrant –Roving Wiretaps –Sharing of Information –Detention of Non-citizens –Bioterrorism Provision –Anti-Money Laundering Provisions

50. 6 - 50 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Privilege Against Self- Incrimination The Fifth Amendment states that no person shall be compelled in any criminal case to be a witness against him- or herself. This protection applies in federal cases and is extended to state and local criminal cases through the Due Process Clause of the Fourteenth Amendment.

51. 6 - 51 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Privilege Against Self- Incrimination (continued) Protection against self- incrimination applies only to natural persons who are accused of crimes. Corporations and partnerships (artificial persons) cannot raise this protection. –Business records of corporations are not generally protected from disclosure.

52. 6 - 52 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Miranda Rights Supreme Court held that the Fifth Amendment right against self-incrimination is not useful unless suspect had knowledge of the right Rights must be read before interrogation Any statements or confessions obtained before the rights are read can be excluded

53. 6 - 53 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Attorney-Client Privilege Client can tell his or her lawyer anything about the case without fear that the attorney will be called as a witness against the client. –Psychiatrist/psychologist-patient privilege –Priest/minister/rabbi/clergy- penitent privilege –Spousal privileges –Parent-child privilege –There is no accountant-client privilege under federal law.

54. 6 - 54 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Immunity from Prosecution Government may offer person immunity from prosecution in exchange for testimony Government cannot pursue charges for that crime against the person Person loses their right to assert their Fifth Amendment privilege Partial grants of immunity may be offered

55. 6 - 55 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Protection Against Double Jeopardy The double jeopardy clause of the Fifth Amendment protects persons from being tried twice for the same crime. If the same criminal act involves several different crimes, the accused may be tried for each of the crimes with no double jeopardy. If the same act violates the laws of two or more jurisdictions, each jurisdiction may try the accused without violating the double jeopardy clause.

56. 6 - 56 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Right to a Public Trial The Sixth Amendment guarantees certain rights to criminal defendants. These rights are: 1. To be tried by an impartial jury of the state or district in which the accused crime was committed. 2. To confront (cross-examine) the witnesses against the accused. 3. To have the assistance of a lawyer. 4. To have a speedy trial.

57. 6 - 57 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Protection Against Cruel and Unusual Punishment Eighth Amendment protects criminal defendants from torture or other abusive punishment. –This clause does not prohibit capital punishment.