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McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All Right Reserved
The Legal & Regulatory
Environment of Business 16e
Chapter 13
Criminal Law and
BusinessReed Pagnattaro Cahoy Shedd Moorhead
13-2
Learning Objectives
To recognize the basic terms and procedures relevant to criminal conduct.
To explain Fourth, Fifth and Sixth Amendment rights.
To identify the elements of specific crimes.
To realize the far-reaching impact of criminal behavior as the same acts can give rise to both civil and criminal liability.
13-3
2
Introduction Criminal law provides a means to
punish wrongdoers who affect ownership of property.
A crime is a wrong against society.
Federal & state penal codes
13-4
CrimeInherently Wrong
Malum In Se
Deemed Wrong By Legislature
Malum ProhibitumExamples
White-collar crime committed by:
•Business entities
•Desk workers
•Accountants
•Attorneys
•Officers13-5
Crime Classifications
Felony
Indictment
Grand Jury
Fine Or
Imprisonment
Misdemeanor
Information
Gov’t Charge
Fine Or
Jail<1 yr.
13-6
3
Underlying Concepts
13-7
Crime
IntentWillfully
Or Knowingly
Pleas in Criminal Cases
Guilty
Not Guilty
Nolo Contendere
(“no contest”)
Criminal conviction may be basis for civil damages suit
13-8
Grand Jury
Constitution- 5th
Amendment
23 Citizens
Determine Probable Cause
Presumption Of Innocence
No Defense Counsel
Subpoena Power
Secret Proceedings13-9
4
pop
QUIZpop
QUIZpop
QUIZCrimes punishable by one year or more
imprisonment are called _________.
a. Misdemeanors
b. Criminal indiscretions
c. Felonies
d. Indictments
13-10
Constitutional Protections
The Bill of Rights of the
U.S. Constitution
provide civil liberties that
protect persons from the power of
government, including persons
accused of crimes. It also
protects businesses
from excessive regulation.
13-11
Unreasonable search & seizure - privacy
Extends to certain civil matters
Expectation of privacy
Generally assumed
Not for some businesses
Fourth Amendment
13-12
5
Food for thought…
The word privacy is not contained in
the U.S. Constitution. Our rights to
privacy arose from common law
decisions rendered by judges as they
interpreted our rights.
13-13
Self-Incrimination• Protects accused from testifying
against self• Does not protect against being
required to produce evidence• Business records can be obtained• Only protects sole
proprietorship entity
Double Jeopardy
Fifth Amendment
13-14
Provides Protections To:
Speedy/Public Trial
Trial by Jury
Be Informed of Charge
Confront Accuser
Subpoena Witnesses
Assistance of Attorney
Sixth Amendment
13-15
6
Specific Business Crimes
Fraud Larceny
Conspiracy RICO
Obstruction of Justice Cyber Crime
False
Statement
Endangering Workers
Fraud Larceny
Conspiracy RICO
Obstruction of Justice Cyber Crime
False
Statement
Endangering Workers
13-16
think
TANKthink
TANKthink
TANKGenerally, when corporations are charged
with crime, corporate officers can
also be criminally charged.
a. True
b. False
13-17
think
TANKthink
TANKthink
TANKEmployees of some business do not
have 4th amendment protections
because of public policy considerations.
a. True
b. False
13-18
7
Fraud Larceny
Conspiracy RICO
Obstruction of Justice Cyber Crime
False
Statement
Endangering Workers
•Must be Scheme to
Defraud
•Elements –
• Intent To Mislead
• Misstatement Of Fraud
• Justifiable Reliance
• Injury
•Mail & Wire Fraud
•Securities Fraud
•Health Care Fraud
•Counterfeiting
•Bankruptcy Fraud
Fraud
Specific Business Crimes
13-19
Interstate communication
Scheme to defraud- course of
action to deceive others
Legal aspects- statement
(material fact) known to be
untrue or disregards truth
• Intent to defraud- act knowingly
• Good faith
Mail and Wire Fraud
13-20
Fraud Larceny
Conspiracy RICO
Obstruction of Justice Cyber Crime
False
Statement
Endangering Workers
More than 1 person agrees
to carrying out criminal
offense
Each member is agent/
Partner of other members-
willful member
Commit overt act- not
required to know details
Conspiracy
Specific Business Crimes
13-21
8
Fraud Larceny
Conspiracy RICO
Obstruction of Justice Cyber Crime
False
Statement
Endangering Workers
•Act committed with intent
to obstruct legislative or
judicial process
• Integrity of proceedings
• Examples:
•Clean up files
•Changing record of
phone conversation
•Shredding documents
during pending
investigation
Obstruction of
Justice
Specific Business Crimes
13-22
Fraud Larceny
Conspiracy RICO
Obstruction of Justice Cyber Crime
False
Statement
Endangering Workers
• To Bank•Financial statements•Relate to material fact
•To Federal Agency•Willfully and knowingly
•Relate to material matter
•“Exculpatory no”False
Statement
Specific Business Crimes
13-23
Fraud Larceny
Conspiracy RICO
Obstruction of Justice Cyber Crime
False
Statement
Endangering Workers
• Larceny – unlawful taking of property
•Robbery•Burglary•Embezzlement
•Examples:•Use of companyproperty withoutpermission
•Padding expenseaccounts
•Falsifying timerecords
Larceny
Specific Business Crimes
13-24
9
Fraud Larceny
Conspiracy RICO
Obstruction of Justice Cyber Crime
False
Statement
Endangering Workers
Liability•Use/invest income from
prohibited activities
•Acquire/maintain interest
in prohibited enterprise
•Conducts/participates in
prohibited enterprise
Prohibited activity•Pattern of racketeering
•Collection of unlawful
debt
RICO
Specific Business Crimes
13-25
Fraud Larceny
Conspiracy RICO
Obstruction of Justice Cyber Crime
False
Statement
Endangering Workers
• Hacker (cracker) –unlawful access to electronic information
• Id theft
• Electronic theft•Trade secrets•Personnel records•Customer lists
Cyber Crime
Specific Business Crimes
13-26
Fraud Larceny
Conspiracy RICO
Obstruction of Justice Cyber Crime
False
Statement
Endangering Workers
• Assault & Battery
• Accidental Homicide
• Safety Precautions
• Occupational SafetyAnd Health Act
Endangering
Workers
Specific Business Crimes
13-27
10
Aiding And Abetting
Federal charge
Assist in criminal act
Participating in conspiracy
State charge = accessory
Before crime
After the fact
13-28
Bribery and Kickbacks
Of a public official = Federal charge
Illegal both domestically and internationally
Foreign Corrupt Practices Act
“Fixing” a college or professional sporting
event
FBI Sports Bribery Program
Giving money back to someone
who made a decision that
benefited you or your company.13-29
Sentencing Guidelines
Judges
•Loss of control
•Complexity
Supreme court made advisory
Reversed if unreasonable
13-30
11
Trends
Sarbanes-Oxley Act
Plea bargaining with mid-level
employees in exchange for
testimony against top-level
employees
Forfeiture of assets
13-31