White Collar Crime

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White Collar Crime
2014-12-16 17:23:21
White Collar Crime

White Collar Crime, 12/16
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  1. Corporate Criminal Liability
    • New York Central & Hudson River Railroad v. United States   
    • Corporations may be held criminally liable for the acts of its agents acting within the scope of their authority.
  2. The Respondeat Superior Rule
    • 1. Agent must be acting within scope of
    • responsibilities / apparent authority

    2. Agent has to be acting on behalf of the company

    3. High acting agent
  3. Criminal Acts
    • Commonwealth v. Beneficial Finance Co.
    • A corporation is criminally responsible for the
    • unlawful actions of its employees acting within the scope of their authority in
    • the particular business transaction determined to be illegal.

    • People v. Lessoff & Berger
    • Legal Partnership held responsible for
    • misconduct
    • United States v. Hilton Hotel Corp    
    • A corporation is criminally liable for the acts
    • of its agents in the scope of their employment, even where agents have acted
    • against the express policy of the corporation.
  4. Criminal Intent
    • United States v. Bank of New England
    • Knowledge
    • Can be satisfied through collective knowledge
    • Or through one employee

    • Willfulness
    • Employee acted willfully
    • Flagrant organizational indifference
  5. High Managerial Agent
    • State v. Chapman Dodge Center
    • Court held that general manager was not a high managerial agent
  6. Personal Liability in an Organizational setting
    • Wise Case   
    • Supreme court said cannot use corporation as a shield      
    • Corporate officers can be held liable
  7. Responsible Corporate Officers
    Mens rea - Knowledge

    Actus rea - Failure to prevent
  8. Conspiracy
    and agreement between 2 or more parties to commit an unlawful offense

    • 18 USC §371
    • Conspiring to commit an offense against the United States
    • Conspiring to Defraud the United States

    • Requires an overt act
    • Does not have to be illegal
    • Only one persons act enough
  9. Types of Conspiracies
    • Wheel Conspiracy
    • One person running conspiracy, has multiple other people in the conspiracy

    • Chain conspiracy
    • Chain of command
  10. Conspiracy Plurality Requirement
    • United States v. Stevens      
    • Intra-enterprise conspiracy theory
    • Shields related corporations from antitrust
    • conspiracy liability
    • A person cannot conspire with his own corp
  11. Conspire to defraud
    To cheat the government out of property or money,

    To interfere with or obstruct one of its lawful functions by decit, craft or trickery or at least by means that are dishonest

    • Mens Rea
    • United States v. Licciardi
    • Must intend to defraud US
  12. Conspiracy - Vicarious Liability
    Pinkerton v. United States

    An overt act of one partner may be the act of all without any new agreement specifically directed to that act.

    Must be within scope of conspiracy

    In furtherance of the conspiracy
  13. Withdrawal and Termination of a Conspiracy
    • United States v. Jimenez Recio
    • a conspiracy does not automatically terminate simply because the federal government has defeated its object,
    • When the object of the conspiracy becomes impossible to achieve
  14. Mail Fraud
    • Scheme to defraud
    • Intent to defraud – Knowing/willfully
    • Materiality – heart of the bargain, would a reasonable person rely on it.
    • Uses the mail system
  15. Intent to Defraud
    • Lustiger v. US
    • A scheme to defraud can be reasonably calculated to deceive, and that the mail was used in execution of the scheme
  16. Intangible Rights Theory
    • United States v. George
    • scheme to defraud employer,  evidence that employer may not have actually been defrauded was irrelevant.
  17. Mail Fraud - Money or Property Requirement
    • Carpenter v. United States
    • information employer's property was confidential business information.
    • Owed employer the fiduciary obligation to protect the confidential information
    • Fraudulent actions in misappropriating employer's property and used the mail and wire services to perpetrate the crime

    • Cleveland v. United States
    • Licenses are a regulatory interest, not a property interest

    • Pasquantino v. US
    • Defraud of Canada not enforceable in the US
  18. Mail Fraud - Intent to Deprive
    • US v. Czubinski
    • Government had to prove intent to gain and loss/harm to the government
  19. Honest Services Theory
    • A scheme or artifice to deprive
    • another of the intangible right of honest services

    • Skilling v. US
    • Did not solicit or accept side payments from a third party in exchange for making the alleged misrepresentations, he did not commit honest services fraud
  20. Use of the mails
    • Schmuck v. US
    • Use of the mail need not be an essential element of the scheme, but that it was sufficient that the mailing be incidental to an essential part of the scheme

    • US v. Sampson
    • mailed with intent to defraud,  mailing done for the purpose of executing the scheme
  21. Mail and Wire Fraud Affecting A financial Institution
    • Bank Fraud (18 uscs 1344)
    • Knowingly
    • Executes
    • Or attempts to execute
    • Scheme or artifice
    • To defraud a financial institution
  22. Insider trading
    • Willfulness
    • Device, scheme, or artifice
    • Possess a duty
    • Insider,
    • Quasi-insider, work for company but not necessarily an employee of the company.
    • Misappropriater, Outsider
    • Buy or sell securities
    • Nonpublic, material information
  23. Securities Fraud - Willfullness
    • United States v. Tarallo
    • Schemes to defraud, misrepresented facts about fraudulent businesses

    Defendant argues willfulness required he knew he was breaking the law at the time

    A person can willfully break SEC rule even if they don’t know of its existence
  24. Insider Trading - Classical Theory
    • Classical Theory
    • Breaches duty, to shareholders or corporation

    • Chiarella v. United States
    • Employee of printer handling corporate takeover bids who deduced target companies' identities and dealt in their stock without disclosing knowledge of impending takeovers had not violated 10(b) of the Securities Exchange Act of 1934 (15 U.S.C. § 78j(b)) and SEC Rule 10b-5.
  25. Insider Trading - Misappropriation Theory
    Do not have to be a fiduciary, must have a fiduciary duty (Duty to employer)

    Commits fraud “in connection with” a securities transaction

    Violates §10(b) and Rule 10b-5

    • United States v. O’Hagan
    • An outsider who misappropriates confidential information to personally benefit violates Section:10(b) because there is deception in connection with the purchase or sale of a security 

    • Carpenter
    • Confidential information qualifies as property to which company has a right of exclusive use
  26. Inside Trading - Tipper/Tippee Theory
    • Tipper – individual who has received material corporate information and passes it on to a tippee
    • Tippee – individual who receives material corporation information by a tipper
    • Dirks v. SEC
    • A tippee owes a fiduciary duty to
    • shareholders if the tippee received material nonpublic information from an
    • insider that breached his fiduciary duty by disclosing the information, and the
    • tippee knows of the breach.
    • Dissent
    • Personal gain not an element of
    • the breach of this duty

    • United States v. Chestman
    • To be liable as an aider and abetter under the misappropriation theory, the tipper must owe a fiduciary duty of confidentiality to the corporation and the aider and abetter must know of the tipper’s breach of fiduciary duty.
  27. Insider Trading - Knowing Possession
    • Knowing v. Teicher
    • Jury rule Knowing possession enough
    • Cannot un-know something
  28. Security Fraud Elements
    Insider, quasi-insider, outsider, misappropriater, and tiper/tipee

    Buy and sell securities

    Martial non-public information


    Acting for personal gain

    Knowing possession
  29. False Statements
    • 18 USC 1001
    • Jurisdiction of the Government 
    • executive
    • legislative 
    • (Apply only to any administrative matter, or Investigation or review)
    • judicial branch
    • (not a statement to a judge in a judicial proceeding)

    knowingly and willfully

    • falsifies, conceals, or covers up
    • by any trick, scheme, or device a material fact;

    makes any materially false, fictitious, or fraudulent statement or representation; OR

    • makes or uses any false writing or document
    • knowing the same to contain any materially false, fictitious, or fraudulent statement or entry;
  30. False Statements - Jurisdiction
    • US v. Rodgers
    • "jurisdiction" should not have been given a narrow or technical meaning.

    existed a statutory basis for authority of the FBI and the Secret Service 

    not sufficiently ambiguous to permit the rule of lenity to be controlling.

    • US v. Wright
    • false statement did not have to be made directly to the gov agency 

    • US v. Steiner Plastics Manufacturing
    • Knew info was to go to the navy
  31. False Statements Exceptions
    • US v. McNeil
    • Statements made in judicial proceedings were excluded

    • US v. Pickett
    • Must be an administrative matter, Investigation or review
  32. False Promises
    • US v. Shah
    • If at time of making promise, no intent of keeping promise, then a lie
  33. False Statements "Exculpatory No” Doctrine
    • Brogan v. US
    • does not permit the use of an "exculpatory no" (false denial of guilt)
  34. False Statements - Culpable Mental State
    • US v. Yermian
    • Proof  of actual knowledge of federal agency
    • jurisdiction was not required.

    Court holds that “knowingly and willfully” applies to making false statements

    Not as to intent

    • US v. Green
    • Defendant, a quality assurance director for a chemical company, falsified a test report and delivered it to a potential client to help secure a contract.

    • Found to have intended to deceive
    • clients
  35. False Statements - Multiple Punishment
    • US v. Ramos
    • The court explicitly noted that her hearsay statements were admitted to show the basis of her opinion as an expert, and the information was of the type normally relied upon by an expert in her field.
  36. Perjury
    Competent tribunal, officer, or person who can administer an oath

    Two witness rule



    No recantation
  37. False Declarations
    Proceedings before or ancillary to any court or grand jury

    No two witness rule

    2 inconsistent statements, do not need to prove which one is false


    Limited recantation
  38. Material False Statements
    • Bronston v. United States
    • Any special problems arising from the
    • literally true but unresponsive answer are to be remedied through the questioner’s acuity

    • United States v. Walser
    • Walser charged with knowingly and willfully causing Morrow to present false evidence under oath 

    • Section 2(b)
    • Willfully causes act done by him or another, that if done is punishable as principal
  39. The Two-Witness Rule
    Prohibits perjury on an oath against an oath

    • United States v. Davis
    • Two witness rule
    • 1. Defendant’s falsity of the statement must be corroborated by 2 witnesses or 1 witness and corroborating evidence
    • 2. Up to jury to determine
    • trustworthiness

    Lesser amount of evidence required if witness cannot remember
  40. The Recantation Defense
    • United States v. Sherman
    • Recantation defense
    • 1. Declaration has not substantially affected proceeding; OR
    • 2. It has not become manifest that such falsity has been or will be exposed
  41. Immunized Testimony
    • Use
    • Cannot use your testimony against you

    • Transactional
    • Gives you a pass for the whole transaction

    • United States v. Apfelbaum
    • Prevents use and derivative use of testimony with respect to any subsequent criminal case

    Except prosecutions for perjury and false swearing offenses in exchange for compelled testimony
  42. Perjury by government Witnesses
    • If government is aware their
    • witness is lying

    Reasonable likelihood that testimony influences the jury

    If Prosecutor unaware of testimony; Probably acquitted
  43. Obstruction of Justice
    • 18 USC §1503
    • Corruptly

    • Endeavor (attempt)
    • Less than an attempt

    Influence, obstruct, or impede

    • Pending Judicial Proceeding
    • Knowledge or notice of proceeding
  44. Pending Judicial Proceedings
    • United States v. Simmons
    • Subject to grand jury when
    • Officials of such agency apply for, and cause to be issued, subpoenas to testify before a sitting grand jury

    • United States v. Lundwall
    • Legislature to have a broad scope
    • Nothing in § 1503 or its legislative history limited the definition of obstruction of justice to apply only to the destruction of documents in the context of grand jury proceedings.
  45. Endeavoring to Influence or Impede
    Endeavor less than an attempt, no actual effect necessary

    Lying not enough, needs to close off avenues of inquiry

    • United States v. Collis
    • government did not have to prove that the forged letter defendant submitted to the district court actually obstructed justice,
    • Rather, it had the natural and probable effect of impeding justice..

    • United States v. Griffin
    • The court stated that it was immaterial whether defendant's testimony was described as evasive or false; in either event the government had charged in the indictment and proved at trial that the testimony had the effect of impeding justice.
    • Contemptuous conduct.

    • United States v. Aguilar
    • Lying not enough, need a connection between actions driving omnibus clause and the official proceeding

    • United States v. Cintolo
    • Attorney can be convicted of obstruction of justice by encouraging client to plead the fifth (excessively or to everything)
  46. The Victim and Witness Protection Act - The Omnibus Clause
    • 1503
    • United States v. Lester
    • conspiracy to obstruct justice and to obstruct a criminal investigation for arranging to have a witness leave town
  47. The Victim and Witness Protection Act - Corrupt Persuasion
    • Arthur Anderson LLP v. United States
    • The jury instructions failed to
    • convey properly the elements of a "corrup[t] persuas[ion]" conviction under §1512(b).

    could be convicted only if the persuaders were shown to be conscious that they were behaving corruptly.
  48. The Victim and Witness Protection Act - Misleading Conduct
    • United States v. Gabriel
    • § 1512 expressly extended to obstruction designed to hinder, delay, or prevent the communication of a law enforcement officer of information relating to the commission of a possible offense.
  49. The Victim and Witness Protection Act - Harassment
    • United States v. Wilson
    • The endeavor to dissuade testimony, not the success of an attempt, was the crime.
  50. Threats and Intimidation
    • United States v. Willard
    • Tried to convince witness not to testify
    • Knowingly used intimidation
    • Not necessary to show actually obstructed justice

    • United States v. Miller
    • While right to file defamation suit, no constitutional right to file frivolous lawsuit
    • Threatened to sue merely on cooperation
  51. Bribery of Public Officials
    • Bribery of Public Officials
    • Bribery Quid pro quo, bribe in exchange for something

    • Illegal gratuity
    • A payment for doing something, a tip, extra compensation
  52. Bribery
    Thing of value

    Public Official


    • Official act
    • Even when not in the scope of authority
  53. Bribery - Official Act
    • United States v. Parker
    • Official act encompasses use of governmental computer systems to fraudulently create documents for benefit of the employee or a third party for compensation, even when employee’s scope of authority does not formally encompass the act
  54. Bribery - Intent
    • United States v. Arroyo
    • Gov must prove that the briber giver or receiver acted corruptly
    • Often met by showing that payment made to influence official act
    • Not necessary that both parties
    • have same intent

    • United States v. Sun Diamond Growers of California
    • Payment made to create goodwill, which might affect future official acts, is insufficient. 
    • To obtain a gratuity conviction, the government must show that the party intended to make the payment for
    • specific official acts.
  55. Bribery - Lobbyist
    • United States v. Anderson
    • Lobbyist held to same bribery laws, being a lobbyist not a defense
  56. Bribery - Thing of Value
    • United States v. Williams
    • Thing of value – subjectively has value to the person receiving it
  57. Public Officials - Appointed Officials
    • Dixon v. United States
    • Occupants of positions of public trust with official federal responsibilities and were, therefore, liable for prosecution under the federal bribery statute.
  58. Public Officials - Elected Officials
    • United States v. Brewster
    • Only required to prove that appellee took the bribe with knowledge of the briber's illicit reasons.
    • Hence, the statute did not violate the Speech or Debate Clause.
    • Does not matter if follows through with intent of bribe
    • Only needs to accept bribe knowing what it is for
  59. Cooperation witnesses
    • United States v. Ware
    • Offering leniency to codefendants for their testimony allowed (public policy reasons
    • Despite: 201(c) prohibition against offering anything of value to a witness for testimony

    • Two classes
    • Would deprive government of a recognized or established prerogative, title or interest
    • Application to public officials would create an obvious absurdity

    • United States v. Ihnatenko
    • 201(c)(2) Does not prohibit government from paying fees, housing, and cash
    • So long as payment does not recompense any corruption of the truth of testimony.
  60. Federal Program Bribery
    • 18 USC 666
    • Agent of an organization
    • Requires gov to give more than $10,000
    • Bribe (thing of value) must be over $5,000
  61. Federal Program Bribery cases
    • Salinas v. United States
    • 18 USC section 666, not limited to cases in which the bribe has a demonstrated effect upon federal funds?

    • United States v. DeLaurentis
    • Must be a nexus between alleged bribes and any federal interest or program

    • Sabri v. United States
    • The Spending Clause authorizes Congress to spend money for the general welfare,
    • Necessary and Proper Clause authorizes it to take any reasonable steps to prevent such money from being misspent.
    • (These reasonable steps include prohibiting bribery)

    • United States v. Copeland
    • Abnormally high commissions found to be kickbacks, and bribery
  62. Extortion Under Color of Official Right
    • Evans v. United States
    • Extortion
    • Committed by a public official
    • Took money by color of law
    • Not due to him
    • For performance of his official duties
  63. RICO
    18 USC 1962

    • 1962(a)
    • Income derived from a pattern of racketeering, using or investing in an enterprise

    • 1962(b)
    • Through a pattern of illegal activity to infiltrate a legitimate enterprise

    • 1962(c)
    • Any person employed or associated with any enterprise to conduct or participate in such enterprises affairs through a pattern of racketeering

    • 1962(d)
    • Conspiracy to violate any of the provisions
  64. RICO - Enterprise
    • Investing in an enterprise
    • Acquiring interest in or maintaining control over an enterprise
    • Conducting the affairs of an enterprise, through a pattern of racketeering

    • United States v. Turkette
    • Does not have to be a legal entity

    • Boyle v. United States
    • Enterprise Requirements
    • Structure
    • (Purpose, Relationships, and Longevity)
    • Ascertainable
    • Beyond that inherent in the pattern
    • of racketeering activity
    • (Interpretations - Existence of an enterprise is a separate element, it is correct. Of existence of enterprise may never be inferred it is incorrect.)

    • National Organization for Women v. Scheidler
    • RICO applies to enterprises without economic motives, including anti-abortion protesters. RICO liberally construed
  65. RICO - Pattern of Racketeering
    • HJ Inc v. Northwestern Bell Telephone
    • Pattern
    • Relationship
    • Continuity
    • Multiple scheme test, 2 event minimum

    Relatedness not enough to establish a pattern
  66. RICO - State Predicate Crimes
    • United States v. Garner
    • RICO statute included state officials
  67. Relationship Between Person and Enterprise
    • Reves v. Ernst Young
    • One must participate in the operation or management of an enterprise to be liable under RICO.
    • Operation or management test -Directing the affairs of the enterprise

    • McCullough v. Suter
    • A sole proprieter with employees can be an enterprise
  68. Rico Conspiracies
    • Salinas v. United States
    • To be convicted of conspiracy to violate RICO under section 1962(d), the conspirator need not himself have committed or agreed to commit the two or more predicate acts, such as bribery, requisite for a substantive RICO offense under section 1962(c).

    Knowledge of facilitated bribes enough for liability

    • No overt act requirement in the RICO conspiracy statute
  69. RICO - Asset Forfeiture (attorneys fees)
    • Monsato
    • Because no exclusion of attorneys fees, subject to forfeiture

    • Caplin & Drysdale v. United States
    • When a defendant is under an Order of Forfeiture, he may not use those assets, even to pay for his defense.

    • United States  v. Moffitt Zwerling & Kemler
    • Law firms belief money from client was
    • legit was unreasonable

    • United States v. Stein
    • Had expectation of legal expenses being paid by employer
    • Right that representation
  70. RICO - Forfeitable Interest
    • 1963(a)
    • (1) any interest…acquired or
    • maintained in violation of section 1962
    • (2) any
    • Interest in;
    • Security of;
    • Claim against; or
    • Property or contractual right
  71. RICO - Third Party Interests
    • Bonafide transaction
    • Gave value consideration for the asset, BPV – bona-fide purchaser for value
    • Reasonably believed property not
    • tainted
  72. RICO - Constitutional Limits
    • Alexander I
    • Property forfeited as a criminal penalty
    • 8th amendment argument 
    • Cruel & unusual
    • Excessive fines

    • Alexander II
    • Consider duration and gravity of criminal activity for property forfeiture

    • Alexander III
    • Sentence appropriate
  73. Tax Fraud - Willfulness
    • Willfulness
    • Proof of Culpability
    • Ignorance or Mistake
    • Reliance on Professional Advice
  74. Tax Evasion
    • § 7201
    • Existence of a tax deficiency,
    • Willfully,
    • Affirmative act to elude or defeat the obligatory payment of tax
  75. Tax Evasion - Attempt to Evade or
    • United States v. Eaken,
    • Defendant made affirmative steps to conceal the money in separate bank accounts
  76. Tax Evasion - Methods of proof
    • Net Worth Method
    • United States v. Bencs
    • Government was not required to trace the origin of all funds deposited into a bank account.

    • Bank Deposits and Cash Expenditures Method
    • United States v. Abodeely
    • gambling and prostitution evidence
    • was relevant because it had the tendency to make it more probable that defendant had unreported income from a taxable source
  77. False Declarations
    • Material Matters
    • United States v. Di Varco
    • Admitting impeachment evidence of one defendant's prior convictions was not an abuse of discretion because it immediately followed an instruction on the status of a United States witness as an informer, and the impeachment evidence stressed that the convictions were remote in time

    • True and Correct
    • United States v. Greenberg
    • Materiality was properly an issue of law

    • Siravo v. United States
    • elements of 26 U.S.C.S. §7206(1) were proved, regardless of the lack of proof that defendant had made an affirmative false statement as to the extent of his income
  78. Sentencing guidelines roadmap
    • Step One: Determining the Base Offense Level Rank offense categories
    • Step Two: Specific Offense Characteristics
    • Step Three: Chapter 3 adjustments
    • Step Four: multiple Counts
    • Step Five: Acceptance of Responsibility
    • Step Six: Prior Criminal History
    • Step Seven: determining the applicable sentencing range
  79. Pre-Guidelines Sentencing
    • United States v. Bergman
    • Court says he should not be sent to prison for “rehabilitation” Prison is punishment

    • Browder v. United States
    • Court thought study of other sentences ridiculous and thrown out
  80. Sentencing - Relevant Conduct
    • United States v. Pinnick
    • Plead guilty to one count, court factored in all four counts in the sentencing
    • Court can consider dismissed counts when conduct when it is intrinsic to conviction
    • Court used other counts toward sentencing
  81. Federal Sentencing based on
    • Charge offense system
    • Only on the charges convicted of

    • Real offense system
    • Can look at facts and can be charged for other crimes plead out of
  82. Judicial Fact Finding
    Finding of a sentence above the maximum must be submitted to the jury or agreed upon by the defendant

    • Booker
    • Federal sentencing guidelines violate criminal defendants right to a traditional trial

    Federal sentencing guidelines no longer mandatory

    • Gall v. United States
    • Federal courts have the authority to set any reasonable sentence as long as they explain their reasoning.
  83. Post-Booker Adjustments - Enhancements
    • United States v. Ebbers
    • Sentencing
    • Base level 6 (0-6 months)
    • After enhancements 44 (life in
    • prison)
  84. Post-Booker Adjustments - Downward Departures
    • United States v. Martin
    • Defrauded HealthSouth employees and investors out of almost $1.4 billion
    • Given 7 day sentence after departure
    • Court remanded and assigned to another judge
  85. Post-Booker Adjustments - Non-Guideline Considerations
    • United States v. Ebbers
    • Adelphia case
    • Used company to own personal gain
    • Sentenced to 15 years
    • 80 years old, if not would have been more years