1. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. Twomey & Jennings BUSINESS LAW Chapter 8 Crimes Chapter 8 Crimes

2. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 2 General Principles Crime: When a person does not live up to the standards set by law, that society will prosecute the person for the misconduct. Crimes are classified as felonies and misdemeanors. –A felony is a crime that is punishable by imprisonment or death. –A misdemeanor is punishable by a fine or less than a year in prison. Crime: When a person does not live up to the standards set by law, that society will prosecute the person for the misconduct. Crimes are classified as felonies and misdemeanors. –A felony is a crime that is punishable by imprisonment or death. –A misdemeanor is punishable by a fine or less than a year in prison.

3. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 3 General Principles Mental State The defendant does not have to know that the act is criminal; it is sufficient that the act was done voluntarily. Act An act or omission of a required act must actually take place. Harm Harm may occur, but is not a required element for an act to be classified as a crime.

4. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 4 General Principles Responsibility for Criminal Acts. –What happens when ‘innocent’ person is charged with a crime? Responsibility for Criminal Acts. –What happens when ‘innocent’ person is charged with a crime? Grabert v Dept. of Public Safety & Corrections (1967) Dexter: The Gambling Toddler. United States v Crandon (1999) Do the Crime and Get No Internet Time.

5. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 5 Corporate Liability Corporations may be held responsible for the criminal acts of their employees. –Liability may attach when employees fail to act. Corporations may be held responsible for the criminal acts of their employees. –Liability may attach when employees fail to act. United States v Park (1997) Rats in the Warehouse and a CEO with a Fine. Is the CEO criminally responsible? Forfeiture is a penalty for a crime.

6. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 6 Sarbanes-Oxley Reforms Passed after the Enron-Worldcom debacles, called the White-Collar Crime Penalty Enhancement Act of 2002. –Substantially increases penalties for corporate crimes. –Mail and wire fraud penalties to 20 years. Passed after the Enron-Worldcom debacles, called the White-Collar Crime Penalty Enhancement Act of 2002. –Substantially increases penalties for corporate crimes. –Mail and wire fraud penalties to 20 years.

7. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 7 White Collar Crimes Crimes that do not use (or threaten to use) force or violence or that do not cause injury to person(s) or physical damage to property. Credit Card Crimes Use of Mails to Defraud Criminal Libel Embezzlement Improper use of Interstate Commerce Securities CrimesCheats and Swindles Obtaining Goods by False Pretenses Bad Checks False Claims Perjury Forgery Counterfeiting Improper Commercial Influence Improper Political Influence Blackmail Extortion Bribery Racketeering

8. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 8 PunishmentPunishment There is no uniform law of crimes. Each state and the federal government define and punish crimes as they choose. Although the tendency is to follow a common pattern, many variations exist between the law of different states and federal law. “Patriot Act” after 9-11 amends the Money Laundering Control Act and Bank Secrecy Act. There is no uniform law of crimes. Each state and the federal government define and punish crimes as they choose. Although the tendency is to follow a common pattern, many variations exist between the law of different states and federal law. “Patriot Act” after 9-11 amends the Money Laundering Control Act and Bank Secrecy Act.

9. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 9 Computer Crimes Statutes have expanded the area of criminal law to meet situations in which computers are involved. –The unauthorized taking of information from a computer is made a crime under both federal and state statutes. –The Federal Computer Access Device and Computer Fraud and Abuse Act of 1984 and the Electronic Fund Transfers Act of 1978 also expand the definition of a computer crime. Statutes have expanded the area of criminal law to meet situations in which computers are involved. –The unauthorized taking of information from a computer is made a crime under both federal and state statutes. –The Federal Computer Access Device and Computer Fraud and Abuse Act of 1984 and the Electronic Fund Transfers Act of 1978 also expand the definition of a computer crime.

10. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 10 Computer Crimes Crime that can be committed only by person having knowledge or use of a computer. Computers can be ‘victims.’ –Theft of Hardware or Software. –Diverting Delivery by Computer. –Economic Espionage by Computer. –Circumventing Copyright Protection by Computer. Crime that can be committed only by person having knowledge or use of a computer. Computers can be ‘victims.’ –Theft of Hardware or Software. –Diverting Delivery by Computer. –Economic Espionage by Computer. –Circumventing Copyright Protection by Computer.

11. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 11 AgencyMay complaint name individual? Maximum individual penaltyMaximum corporate penalty Internal Revenue ServiceYesWillful failure to pay, $10,000/five years; willful failure to file, $25,000/one year; fraud, $100,000/three years Willful failure to pay, $10,000, 50% assessment, prosecution costs; willful failure to file, $100,000; fraud, $500,000 Antitrust Division of the Justice Department Yes$100,000, three years, or both$1 million, injunction, divestiture Food and Drug Administration Yes$1,000, one year, or both for first offense; $10,000, three years, or both thereafter, illegal drug importation, $250,000/ten years $1,000 for first offense, $10,000 thereafter; seizure of condemned products; illegal drug importation, $250,000 Federal Trade CommissionYesRestitution, injunctionRestitution, injunction, divestiture, $10,000 per day for violation of rules, orders Securities and ExchangeYes$10,000, five years, or both (1933); $100,000, five years, or both (1934) $2,000,000 Penalties for Business Crime

12. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 12 Penalties for Business Crime (cont’d) AgencyMay complaint name individual? Maximum individual penaltyMaximum corporate penalty Equal Employment Opportunity Commission NoInjunction (some state liability possible) Injunction, back pay award, reinstatement Office of Federal Contract Compliance Programs NoSuspension, cancellation of contract Environmental Protection Agency YesMedical waste, $50,000/two years; solid waste, $250,000/two years; $50,000 per day of violation penalty Medical waste, $1,000,000; solid waste, $1,000,000; $50,000 per day of violation penalty Occupational Safety and Health Administration NoWillful, maximum of $70,000 per violation; minimum of $5,000 per violation; death, $10,000 and/or six months; false reports, $10,000 and/or six months; advance notice of inspection, $1,000 and/or six months $70,000 Consumer Product Safety Commission Yes$50,000, one year, or both$500,000 (civil) Fair Labor Standards Act Department Yes$10,000 per employee, six months, or both $100,000, reimbursement of wages AgencyMay complaint name individual? Maximum individual penaltyMaximum corporate penalty Equal Employment Opportunity Commission NoInjunction (some state liability possible) Injunction, back pay award, reinstatement Office of Federal Contract Compliance Programs NoSuspension, cancellation of contract Environmental Protection Agency YesMedical waste, $50,000/two years; solid waste, $250,000/two years; $50,000 per day of violation penalty Medical waste, $1,000,000; solid waste, $1,000,000; $50,000 per day of violation penalty Occupational Safety and Health Administration NoWillful, maximum of $70,000 per violation; minimum of $5,000 per violation; death, $10,000 and/or six months; false reports, $10,000 and/or six months; advance notice of inspection, $1,000 and/or six months $70,000 Consumer Product Safety Commission Yes$50,000, one year, or both$500,000 (civil) Fair Labor Standards Act Department Yes$10,000 per employee, six months, or both $100,000, reimbursement of wages

13. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 13 Constitutional Amendments Criminal procedure is dictated by the Fourth, Fifth, and Sixth Amendments. –The Fourth Amendment protects against unreasonable searches. Criminal procedure is dictated by the Fourth, Fifth, and Sixth Amendments. –The Fourth Amendment protects against unreasonable searches. Dow Chemical Co. v United States (1986) Low-Flying Federal Aircraft Bearing Federal Agents with Cameras.

14. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 14 The Fifth Amendment protects against self- incrimination and provides due process. –Corporations do not have a right to remain silent. Disclosures of corporate records must be made The Sixth Amendment guarantees a speedy trial. The Fifth Amendment protects against self- incrimination and provides due process. –Corporations do not have a right to remain silent. Disclosures of corporate records must be made The Sixth Amendment guarantees a speedy trial. Constitutional Amendments