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Chapter7PP.2019.ppt

ACC 150
THE LEGAL ENVIRONMENT OF BUSINESS

With Doreen Smith, Esquire

Chapter 7

GENERAL PRINCIPLES OF
CRIMINAL LAW

  • Nature and Classification of Crimes.
  • A crime is a violation of the law that is punished as an offense against the state or government.
  • A misdemeanor is punishable by less than a year in prison. A felony is a crime that is punishable by imprisonment of over a year.
  • Elements of a crime:
  • Mental state or intent and
  • Act or omission

GENERAL PRINCIPLES

Basis of Criminal Liability.

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Chapter 8

BUSINESSES

Corporate Liability

Corporations can be held liable for the actions of their employees.

Officers and Agents of Corporations

When a business manager knows of illegal conduct by and employee or authorized the action, he or she can be held liable under criminal law.

Under federal law, an executive must actively engage in the underlying crime to be found criminally liable.

PENALTIES

  • Forfeiture
  • Giving up property used or gained from a criminal act.
  • Criminal Penalties
  • Corporate Integrity Agreements
  • Federal Sentencing Guidelines
  • Officer and Executive Banishment
  • Barring executive and officer from working in the field.

SOX

  • Sarbanes-Oxley (SOX)
  • Federal statute passed after the Enron-WorldCom debacles
  • Sets standards for public companies and accountants.
  • Obstruction of Justice: SOX.
  • Felony for anyone (including company employees, auditors, attorneys, and consultants), “to alter, destroy, mutilate, conceal, cover up, ……..[records or documents to] obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States.”

SOX

  • SOX:
  • Auditors must retain work papers for 5 years
  • Destruction of documents prior to that time constitutes a felony with a penalty of 20 years in prison
  • Corporate officers must certify their financial statements when issued.

SOX PENALTIES

  • Up to 20 years penalty for mail or wire fraud
  • Violation of pension laws can be up 10 years and fines up to $100,000
  • Corporate fraud can result in fine of $1 million and 10 years or for a willful violation $5 million and 20 years.

WHITE-COLLAR CRIMES

Money Laundering.

Crime is the knowing and willful participation in a financial transaction involving unlawful proceeds in order to disguise the source of the funds.

  • Money Laundering Control Act (2000), amended by Patriot Act and Bank Secrecy Act.
  • Patriot Act expands coverage. Banks are more involved in supervising accounts.

WHITE-COLLAR CRIMES

Racketeering Influenced and Corrupt Organizations (RICO)

  • Federal law targeting organized crime
  • The government has used this law to prosecute a wide variety of criminals (not just organized crime)
  • Criminal conviction can result in $25,000 fine and 20 years in prison
  • A civil plaintiff can recover treble damages (3 times actual damages) and attorneys fees

WHITE-COLLAR CRIMES

Bribery

Giving of money, property or benefit to influence that person’s judgment.

Foreign Corrupt Practices Act

Federal criminal statute applies to a US business that gives bribes to a foreign entity (more about this law in the International law chapter).

Extortion and Blackmail.

  • Extortion: public officer makes illegal demand for money.
  • Blackmail: Extortion demands made by a nonpublic official.

WHITE-COLLAR CRIMES

Counterfeiting

Making a document or coin that appears genuine but is not (needs fraudulent intent)

Forgery

Fraudulently making or altering an instrument. Example-such as signing someone else’s name on a check.

Perjury

Knowingly giving false testimony.

WHITE-COLLAR CRIMES

Bad Checks

Using a check knowing there is insufficient funds in the bank to cover the check

Credit Card Crimes

Possess or use a credit card without the permission of the card owner

Embezzlement

The fraudulent taking of another’s property or money by a person who has been entrusted with the property or money

COMMON LAW CRIMES

  • Larceny
  • Wrongful taking of the property of another
  • Robbery
  • Taking personal property in the presence of the victim by force or fear.
  • Burglary
  • Breaking and entering into a dwelling of another with the intent to commit a felony
  • Arson
  • Willful and malicious burning of another’s dwelling.

CRIMINAL LAW AND THE COMPUTER

  • What is a Computer Crime?
  • The unauthorized taking of information from a computer is a crime under both federal and state statutes.
  • Theft of hardware and software
  • Dealt with under laws that deal with theft
  • Intentional damage
  • Intentional damage through malware or using a virus can be a crime depending on the law in the state where the crime occurred.

CRIMINAL LAW AND THE COMPUTER

Economic Espionage by Computer.

  • Economic Espionage Act (federal law): felony to steal, appropriate, or take, copy, duplicate, sketch, draw, photograph, download, upload, alter, destroy, replicate, transmit, deliver, send, mail, or communicate information from a computer to an unauthorized person
  • Electronic Fund Transfer Crimes (federal law)
  • Makes it a crime to use any counterfeit, stolen, or fraudulently obtained card to obtain money or goods.
  • Digital Millennium Copyright Act (federal law)
  • Makes it a federal offense to circumvent or create programs to circumvent encryption to copy copyrighted material (without authority to do so)

CONSTITUTIONAL
RIGHTS FOR BUSINESSES

U.S. Constitution protects both individuals and businesses from violation of rights by the government.

Fourth Amendment Rights for Businesses.

Search and Seizure: Warrants. The Fourth Amendment protects against unreasonable searches.

Government must obtain a search warrant based on probable cause.

Exceptions to Warrant Requirement: Emergencies and Plain View.

CONSTITUTIONAL
RIGHTS FOR BUSINESSES

Fourth Amendment Rights for Businesses.

Business Records and Searches

Requires a search warrant

The records sought can be at an accountant’s or attorney’s office

Protections for Privileged Records and Documents.

  • Includes: attorney-client privilege and other privileges.

CRIMINAL PROCEDURE
RIGHTS FOR BUSINESSES

Fifth Amendment Self-Incrimination Rights for Businesses.

Self-Incrimination. The Fifth Amendment protects against self-incrimination and provides due process. Does not apply to corporations, only individuals. Disclosures of corporate records must be made.

CONSTITUTIONAL
RIGHTS FOR BUSINESSES

Fifth Amendment

Self-Incrimination Rights for Businesses.

Miranda Rights.

The rights that must be given to a person who is to be interrogated in relationship to a crime

Due Process Rights for Businesses.

  • Due Process is the right to be heard, question witnesses, and present evidence before any criminal conviction.

Sixth Amendment requires a speedy trial

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Chapter 8