Sunday, August 10, 2014
Court E. Golumbic & Albert D. Lichy, The 'Too Big to Jail' Effect and the Impact on the Justice Department's Corporate Charging Policy, ssrn abstract -
In the wake of the 2008 financial crisis, the failure of the Department of Justice (“Justice Department” or “DOJ”) to bring criminal charges against any financial institutions prompted critics to question whether
the DOJ maintained a policy that certain corporations are “too big to jail.” The criticism piqued after the DOJ announced that it had entered into a deferred prosecution agreement (“DPA”) with HSBC to resolve a massive money laundering and government sanctions investigation.
This wave of criticism is the backdrop for what the Authors call the “too big to jail” effect — two related developments, each of which has the potential to impact the future of DPAs in the corporate crime context. The first is a willingness on the part of at least one federal district court to inject a level of judicial intervention into the process of structuring DPAs. In approving the HSBC, Judge John Gleeson issued a groundbreaking opinion articulating, for the first time, a standard for district court review of the terms of a DPA. The second is an emerging willingness on the part of the DOJ to pursue criminal charges over DPAs in high-profile cases involving financial institutions. In a strong departure from past practice, the DOJ recently secured guilty pleas from the foreign subsidiaries of UBS and RBS, SAC Capital Advisors and three related entities, and the parent of Credit Suisse.
This Article examines the impact of the “too big to jail” effect on the Justice Department’s corporate charging practices. The Authors argue that DPAs should not be abandoned. Instead, Congress should amend the Speedy Trial Act to require substantive, judicial review of the terms of DPAs. To
this end, the Authors propose a standard of review that is designed to maximize the benefits of DPAs, while minimizing the concerns that have historically accompanied their use.
Sunday, August 3, 2014
Article by Sara Sun Beale (Duke) - The Development and Evolution of the U.S. Law of Corporate Criminal Liability (SSRN)-
In the United States, corporate criminal liability developed in response to the industrial revolution and the rise in the scope and importance of corporate activities. This article focuses principally on federal law, which bases corporate criminal liability on the respondeat superior doctrine developed in tort law. In the federal system, the formative period for the doctrine of corporate criminal liability was the early Twentieth Century, when Congress dramatically expanded the reach of federal law, responding to the unprecedented concentration of economic power in corporations and combinations of business concerns as well as new hazards to public health and safety. Both the initial development of the doctrine and the evolution in its use reflect a utilitarian and pragmatic view of criminal law.
This article describes the evolution of the practice of corporate criminal liability and sentencing, arguing that administrative responses by the Department of Justice and the U.S. Sentencing Commission have responded to widespread criticism of the existence of corporate liability as well as the breadth of the respondeat superior standard of liability. As a result of this evolution in enforcement, only a very small number of corporations are convicted, and the penalties imposed on those that are convicted are adjusted to reflect corporate culpability. Nevertheless, the broad potential for criminal liability has significant consequences for a wide range of corporate behavior. Corporations have powerful incentives to perform internal investigations, cooperate with both regulators and prosecutors, and actively pursue settlement of claims of misconduct. To avoid criminal liability, corporations also enter into deferred prosecution agreements that often require changes in corporate business practices and governance as well as monitoring to ensure compliance. The purpose of these administrative responses attempt is to reduce or eliminate the negative effects of imposing criminal liability while exploiting the law’s power to deter criminal behavior, improve corporate citizenship, and bring about beneficial structural reforms.
The persistence of the doctrine of respondeat-superior-based corporate criminal liability and its limitation in practice shed light on three key aspects federal criminal law. First, the Sentencing Guidelines have served as a more limited substitute for comprehensive criminal code reform. Second, the federal justice system lacks the resources to process the vast majority of cases falling under the criminal code, and prosecutorial discretion is relied upon to select a small fraction of cases for prosecution. Finally, like corporations, all defendants receive incentives for cooperation that may effectively compel them to plead guilty and/or assist in the investigation and prosecution of others.
Friday, August 1, 2014
New Article by Professor Lucian Dervan - White Collar Over-Criminalization: Deterrence, Plea Bargaining, and the Loss of Innocence published in 101 Kentucky Law Journal. The abstract states:
Overcriminalization takes many forms and impacts the American criminal justice system in varying ways. This article focuses on a select portion of this phenomenon by examining two types of overcriminalization prevalent in white collar criminal law. The first type of over criminalization discussed in this article is Congress’s propensity for increasing the maximum criminal penalties for white collar offenses in an effort to punish financial criminals more harshly while simultaneously deterring others. The second type of overcriminalization addressed is Congress’s tendency to create vague and overlapping criminal provisions in areas already criminalized in an effort to expand the tools available to prosecutors, increase the number of financial criminals prosecuted each year, and deter potential offenders. While these new provisions are not the most egregious examples of the overcriminalization phenomenon, they are important to consider due to their impact on significant statutes. In fact, they typically represent some of the most commonly charged offenses in the federal system.
Through examination of the Sarbanes-Oxley Act of 2002 and examples of these two types of over criminalization within that law, this article seeks to understand whether new crimes and punishments really achieve their intended goals and, if not, what this tells us about and means for the over criminalization debate and the criminal justice system as a whole.
Tuesday, May 13, 2014
Josh Greenberg and Ellen Brotman have written a timely and informative article entitled Strict Vicarious Liability for Corporations and Corporate Executives-Stretching the Boundaries of Criminalization for Volume 51 of the American Journal of Criminal Law. The article, and related pieces on criminal liability in the corporate context by Mark Filip, Julie O'Sullivan, Barry Pollack and others, can also be found on the Journal's website at http://www.americancriminallawreview.com/.
Friday, November 22, 2013
Catherine Martin Christopher has a new article titled, "Whack-a-Mole: Why Prosecuting Digital Currency Exchanges Won't Stop Online Laundering." The SSRN abstract states:
Law enforcement efforts to combat money laundering are increasingly misplaced. As money laundering and other underlying crimes shift into cyberspace, U.S. law enforcement focuses on prosecuting financial institutions’ regulatory violations to prevent crime, rather than going after criminals themselves. This article will describe current U.S. anti-money laundering laws, with particular criticism of how attenuated prosecution has become from crime. The article will then describe the use of Bitcoin as a money-laundering vehicle, and analyze the difficulties for law enforcement officials who attempt to choke off Bitcoin transactions in lieu of prosecuting underlying criminal activity. The article concludes with recommendations that law enforcement should look to digital currency exchangers not as criminals, but instead as partners in the effort to eradicate money laundering and — more importantly — the crimes underlying the laundering.
Thursday, November 14, 2013
Todd Haugh (Illinois Institute of Technology - Chicago-Kent College of Law) has a new forthcoming article in the Fordham Law Review - here. The SSRN Abstract states -
“So why did Mr. Gupta do it?” That question was at the heart of Judge Jed Rakoff’s recent sentencing of Rajat Gupta, a former Wall Street titan and the most high-profile insider trading defendant of the past 30 years. The answer, which the court actively sought by inquiring into Gupta’s psychological motivations, resulted in a two-year sentence, eight years less than the government requested. What was it that Judge Rakoff found in Gupta that warranted such a modest sentence? While it was ultimately unclear to the court exactly what motivated Gupta to commit such a “terrible breach of trust,” it is exceedingly clear that Judge Rakoff’s search for those motivations impacted the sentence imposed.
This search by judges sentencing white collar defendants — the search to understand the “why” motivating defendants’ actions — is what this article explores. When judges inquire into defendants’ motivations, they necessarily delve into the psychological justifications defendants employ to free themselves from the social norms they previously followed, thereby allowing themselves to engage in criminality. These “techniques of neutralization” are precursors to white collar crime, and they impact courts’ sentencing decisions. Yet the role of neutralizations in sentencing has been largely unexamined. This article rectifies that absence by drawing on established criminological theory and applying it to three recent high-profile white collar cases. Ultimately, this article concludes that judges’ search for the “why” of white collar crime,
which occurs primarily through the exploration of offender neutralizations, is legally and normatively justified. While there are potential drawbacks to judges conducting these inquiries, they are outweighed by the benefits of increased individualized sentencing and opportunities to disrupt the mechanisms that make white collar crime possible.
Wednesday, August 14, 2013
Call for Papers from the Notre Dame Jrl of Law, Ethics, and Public Policy -
The Notre Dame Journal of Law, Ethics & Public Policy is currently accepting articles and essays from professors, practitioners, and public officials for publication in its symposium issue, which will focus on the legal, moral, and ethical considerations of white-collar crime in the twenty-first century, which will be published early next year. Articles should be approximately 9,000 to 15,000 words and in Bluebook Citation format. Additionally, symposium authors will be among those selected to participate in our symposium event, which will be scheduled during the Spring 2014 semester.
The law student-edited Journal is unique among legal periodicals because it examines public policy and legal questions within the framework of the Judeo-Christian intellectual and moral tradition. The Journal has a national audience of persons actively involved in the formulation of public policy, and often includes timely pieces from a broad spectrum of prominent scholars and officials. The Journal’s unique focus is widely recognized, as demonstrated in citations to the Journal by various state and federal courts, including the United States Supreme Court. More information on the Journal is available at https://law.nd.edu/publications/journals/notre-dame-journal-of-law-ethics-public-policy/.
If you are interested in submitting a piece, please contact the Journal’s Executive Articles Editor, Angela Johnson at email@example.com or (574) 238-9225. Please submit by November 1, 2013. The Executive Board will consider submissions for publication immediately and would appreciate hearing of an author’s intent to submit as soon as possible.
Tuesday, June 25, 2013
Washington University Law School reports the passing of Kathleen F. Brickey here. The New York Times here called her " the dean of the field." She authored the first casebook in this area, wrote an incredible treatise on Corporate Criminal Liability, a book on Environmental Crimes and authored many articles in the white collar field. (see here). She served as the model professor and author for so many of us that came after her, entering a white collar scholarship world that was carved by her work. R.I.P.
Sunday, March 31, 2013
Maurice E. Stucke (University of Tennessee) authored an article titled, "Should Competition Policy Promote Happiness?" The SSRN abstract states:
What, if anything, are the implications of the happiness economics literature on competition policy? This Paper first examines whether competition policy should promote (or at least not impede) citizens’ opportunities to increase well-being. The Paper next surveys the happiness literature on five key issues: (i) What constitutes well-being; (ii) How do you measure well-being; (iii) What increases well-being; (iv) Do people want to be happy; and (v) Can and should the government promote total well-being? Although the happiness literature does not provide an analytical framework for analyzing routine antitrust issues, this does not mean that competition officials should discount or ignore the literature altogether.
The findings of the happiness literature, as this Paper argues, offer some helpful insights on the current debate over competition policy's goals. The literature suggests that competition policy in a post-industrial wealthy country would get more bang (in terms of increased well-being) in promoting economic, social and democratic values, rather than simply promoting a narrowly-defined consumer welfare objective.
Sunday, March 24, 2013
Daniel Sokol (UF & Minn) has a new piece titled, Policing the Firm. SSRN states:
Criminal price fixing cartels are a serious problem for consumers. Cartels are hard to both find and punish. Research into other kinds of corporate wrongdoing suggests that enforcers should pay increased attention to incentives within the firm to deter wrong-doing. Thus far, antitrust scholarship and policy have ignored this insight. This article suggests how to improve antitrust enforcement by focusing its efforts on changing the incentives of internal firm compliance.
Sunday, February 10, 2013
A recent publication in the Case Western Reserve Law Review by Dain C. Donelson and Robert A.
Prentice, Scienter Pleading and Rule 10b-5: Empirical Analysis and Behavioral Implications. From the abstract:
Pleading requirements are the keys to the courthouse. Nowhere is this more true than with rule 10b-5 class action securities fraud claims. Provisions of the Private Securities Litigation Reform Act of 1995 impose special pleading burdens upon plaintiffs regarding the scienter element and bar them from discovery when defendants file a motion to dismiss. This Article begins with a doctrinal history of the scienter element of a rule 10b-5 claim that indicates that many key legal questions remain unsettled and that application of legal rules to specific factual allegations regarding a particular type of defendant—external auditors—is extraordinarily muddled. To determine whether the impression arising from this extensive but nonsystematic examination of the case law is accurate, we also empirically examine rule 10b-5 claims against auditors and confirm that few facts are consistently viewed by the courts as indicating the presence (or absence) of scienter. This lack of clarity in the law and its application makes it difficult for either plaintiffs or defendants to evaluate the settlement value of claims. Furthermore, the law’s excessive vagueness affords judges virtually untrammeled discretion. The literature of behavioral psychology and related fields indicates that excessive discretion exacerbates problems that arise from unconscious judicial bias.
Thursday, February 7, 2013
Though extensive due process protections apply to the investigation of crimes, and to criminal trials, perhaps the most important part of the criminal process -- the decision whether to charge a defendant, and with what -- is almost entirely discretionary. Given the plethora of criminal laws and regulations in today's society, this due process gap allows prosecutors to charge almost anyone they take a deep interest in. This Essay discusses the problem in the context of recent prosecutorial controversies involving the cases of Aaron Swartz and David Gregory, and offers some suggested remedies, along with a callfor further discussion.
Monday, February 4, 2013
Announcement from the Fordham Law Moot Court Board
Each spring, Fordham University School of Law hosts the Irving R. Kaufman Memorial Securities Law Moot Court Competition. Held in honor of Chief Judge Kaufman, a Fordham Alumnus who served on the United States Court of Appeals for the Second Circuit, the Kaufman Competition has a rich tradition
of bringing together complex securities law issues, talented student advocates, and top legal minds.
This year’s Kaufman Competition will take place on March 22-24, 2013. The esteemed final round panel includes Judge Paul J. Kelly, Jr., of the Tenth Circuit; Judge Boyce F. Martin, Jr., of the Sixth Circuit; Judge Jane Richards Roth, of the Third Circuit; and Commissioner Troy A. Paredes, of
the United States Securities and Exchange Commission. The competition will focus on two issues that arise in the fallout of Ponzi schemes: whether the “stockbroker safe harbor” of the Bankruptcy Code applies to Ponzi scheme operators, and the application of SLUSA, which was recently granted cert by the Supreme Court.
We are currently soliciting practitioners and academics to judge oral argument rounds and grade competition briefs. No securities law experience is required to participate and CLE credit is available.
Information about the Kaufman Competition and an online Judge Registration Form is available on our website, www.law.fordham.edu/kaufman. Please contact Michael N. Fresco, Kaufman Editor, at KaufmanMC@law.fordham.edu or (561) 707-8328 with any questions.
Thursday, January 3, 2013
Thursday, December 27, 2012
Prosecutors often express mistrust of professional regulators, their rules and their processes. This may have been more understandable twenty years ago, when prosecutors perceived that the organized bar had been captured by defense lawyers seeking to use professional regulation as a means of imposing limits on criminal investigative authority that the law did not otherwise recognize. Although that criticism no longer has much basis in reality, it has persisted in the rhetoric prosecutors employ in advocacy regarding their professional conduct. This article explores prosecutors’ public attitude toward professional regulation, beginning with a brief account of their responses two decades ago, then considering three recent examples: the NDAA’s opposition to a broad reading of Model Rule 3.8(d)’s disclosure obligation; some prosecutors’ opposition to states’ adoption of the post-conviction obligations of Model Rules 3.8(g) and (h); and the Queens County, NY, district attorney’s opposition to a trial court’s consideration of the ethical propriety of his office’s post-arrest interrogation practices. The article argues that prosecutors’ anti-regulatory rhetoric undermines the culture of prosecutors’ offices and is contrary to the public interest in other ways.
Gabriel Markoff has a piece titled, Arthur Andersen and the Myth of the Corporate Death Penalty: Corporate Criminal Convictions in the Twenty-First Century that is forthcoming in the University of Pennsylvania Journal of Business Law, April 2013 issue. The SSRN abstract states:
The conventional wisdom states that prosecuting corporations can subject them to terrible collateral consequences that risk putting them out of business and causing massive social and economic harm. Under this viewpoint, which has come to dominate the literature following the demise of Arthur Andersen after that firm’s prosecution in the wake of the Enron scandal, even a criminal indictment can be a "corporate death penalty." The Department of Justice ("DOJ") has implicitly accepted this view by declining to prosecute many large companies in favor of using criminal settlements called deferred prosecution agreements, or "DPAs." Yet, there is no evidence to support the existence of the "Andersen Effect" and the much-hyped corporate death penalty. Indeed, no one has ever empirically studied what happens to companies after conviction. In this Article, I do just that. Using the database of organizational convictions made publicly available by Professor Brandon Garrett, I find that no publicly traded company failed because of a conviction in the years 2001–2010. Moreover, many convictions included plea agreements imposing compliance programs that advocates have pointed to as a key justification for using DPAs. Because corporate convictions do not have the terrible consequences they were assumed to have, and because they can be used to obtain compliance programs just as DPAs can, the DOJ should prosecute more lawbreaking companies and reserve DPAs for extraordinary circumstances. In the absence of some other justification for using DPAs, the DOJ should exploit the stronger deterrent value of corporate prosecution to its full capacity.
Wednesday, December 12, 2012
Gregory M. Gilchrist (Todelo) has a forthcoming article in Hastings Law Journal titled, "Condemnation Without Basis: An Expressive Failure of Corporate Prosecutions." The abstract describes it as:
This is the second of two articles on the expressive aspects of corporate criminal liability. The first article argued that to justify imposing criminal liability on corporations we must refer to the expressive function of criminal liability. This Article considers the expressive function of actual corporate prosecutions, and identifies aspects of corporate prosecutions that generate expressive costs rather than benefits. These are the expressive failures of corporate prosecutions. The article identifies a number of these failures and introduces a model of perceived legitimacy and the expressive function of punishment that explains how expressive failures harm the legal system. Mere respondeat superior liability – holding corporations criminally liable where there is no basis to condemn the corporate qua corporation – is the most significant expressive failure. It is also the easiest to fix: allow corporations a good faith defense against criminal liability. Good faith defenses have been proposed before, but this is the first proposal based on the expressive impact of the defense. A good faith defense will limit the application of corporate criminal liability to those instances where there is a basis to condemn the corporation as a whole, thus realigning the expression inherent in criminal punishment with commonly-held views about blaming corporations.
Friday, December 7, 2012
New Article - Unregulated Corporate Internal Investigations: Achieving Fairness for Corporate Constituents
Professor Bruce Green (Fordham) and I have a new article coming out in Boston Colleg Law Review, titled Unregulated Corporate Internal Investigations: Achieving Fairness for Corporate Constituents. You can download the article here. The SSRN abstract states:
This Article focuses on the relationship between corporations and their employee constituents in the context of corporate internal investigations, an unregulated multi-million dollar business. The classic approach provided in the 1981 Supreme Court opinion, Upjohn v. United States, is contrasted with the reality of modern-day internal investigations that may exploit individuals to achieve a corporate benefit with the government. Attorney-client privilege becomes an issue as corporate constituents perceive that corporate counsel is representing their interests, when in fact these internal investigators are obtaining information for the corporation to barter with the government. Legal precedent and ethics rules provide little relief to these corporate employees. This Article suggests that courts need to move beyond the Upjohn decision and recognize this new landscape. It advocates for corporate fair dealing and provides a multi-faceted approach to achieve this aim. Ultimately this Article considers how best to level the playing field between corporations and their employees in matters related to the corporate internal investigation.
New Article - Can the CEO Learn from the Condemned? The Application of Capital Mitigation Strategies to White Collar Cases
Todd Haugh has a forthcoming article in the American University Law Review titled, Can the CEO Learn from the Condemned? The Application of Capital Mitigation Strategies to White Collar Cases
. The Abstract states:
Ted Kaczynski and Bernie Madoff share much in common. Both are well-educated, extremely intelligent, charismatic figures. Both rose to the height of their chosen professions — mathematics and finance. And both will die in federal prison, Kaczynski for committing a twenty-year mail-bombing spree that killed three people and seriously injured dozens more, and Madoff for committing the largest Ponzi scheme in history, bilking thousands of people out of almost $65 billion. But that last similarity — Kaczynski’s and Madoff’s plight at sentencing — may not have had to be. While Kaczynski’s attorneys tirelessly investigated and argued every aspect of their client’s personal history, mental state, motivations, and sentencing options, Madoff’s attorneys offered almost nothing to mitigate his conduct, simply accepting his fate at sentencing. In the end, Kaczynski’s attorneys were able to convince the government, the court, and their client that a life sentence was appropriate despite that he committed one of the most heinous and well-publicized death penalty-eligible crimes in recent history. Madoff, on the other hand, with almost unlimited resources at his disposal, received effectively the same sentence — 150 years in prison — for a nonviolent economic offense. Why were these two ultimately given the same sentence? And what can Madoff, the financier with unimaginable wealth, learn from Kaczynski, the reclusive and remorseless killer, when it comes to federal sentencing?
The answer lies in how attorneys use sentencing mitigation strategies. This Article contends that federal white collar defendants have failed to effectively use mitigation strategies to lessen their sentences, resulting in unnecessarily long prison terms for nonviolent offenders committing financial crimes. The white collar defense bar has inexplicably ignored the mitigation techniques perfected by capital defense attorneys, and in the process has failed to effectively represent its clients. After discussing the development of the mitigation function in capital cases and paralleling it with the evolution of white collar sentencing jurisprudence, particularly post-Booker, this article will present seven key mitigation strategies currently used by capital defense teams and discuss how these strategies might be employed in federal white collar cases. The goal throughout this Article will be to highlight new strategies and techniques available in defending white collar clients and to enhance sentencing advocacy in federal criminal cases.
Sunday, November 4, 2012
T. Markus Funk, Perkins Coie Partner and former federal prosecutor, and Chicago Assistant U.S. Attorney Andrew S. Boutros examine the growing - but still largely under-recognized - international phenomenon of what Funk and Boutros term "carbon copy prosecutions." A country’s incentive to vindicate its own laws is not insubstantial, especially when a company or individual has already admitted, in a foreign proceeding, to having violated local law. With the increase in FCPA and money laundering cases, globalization presents many new concerns. Check out - Andrew S. Boutros & T. Markus Funk, "Carbon Copy" Prosecutions: A Growing Anticorruption Phenomenon in a Shrinking World