White Collar Crime Prof Blog

Stetson Law Symposium - Elon Musk and the Law

Elon Musk and the Law

Stetson Law Review Symposium

March 24th

8:30 a.m. -4:30 p.m.

Virtual or In-Person at Stetson's Gulfport Campus

Admission - $50 - Legal Practitioners & Others; $40 Stetson Alumni; Free- Stetson Law Students and Faculty

For More Information and to register - here

 

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"Designing Corporate Leniency Programs"

Professor Miriam H. Baer of Brooklyn Law School recently posted on SSRN a chapter titled Designing Corporate Leniency Programs, to be published in the forthcoming book Cambridge Handbook on Compliance (D. Sokol & B. van Rooij eds.).  The Abstract states:

"Corporate leniency programs promise putative offenders reduced punishment and fewer regulatory interventions in exchange for the corporation’s credible and authentic commitment to remedy wrongdoing and promptly self-report future violations of law to the requisite authorities.

Because these programs have been devised with multiple goals in mind—i.e., deterring wrongdoing and punishing corporate executives, improving corporate cultural norms, and extending the government’s regulatory reach—it is all but impossible to gauge their “success” objectively. We know that corporations invest significant resources in compliance-related activity and that they do so in order to take advantage of the various benefits promised by leniency regimes. We cannot definitively say, however, how valuable this activity has been in reducing either the incidence or severity of harms associated with corporate misconduct.

Notwithstanding these blind spots, recent developments in the Department of Justice’s stance towards corporate offenders provides valuable insight on the structural design of a leniency program. Message framing, precision of benefit, and the scope and centralization of the entity that administers a leniency program play important roles in how well the program is received by its intended targets and how long it survives. If the program’s popularity and longevity says something about its success, then these design factors merit closer attention.

Using the Department of Justice’s Yates Memo and FCPA Pilot Program as demonstrative examples, this book chapter excavates the framing and design factors that influence a leniency program’s performance. Carrots seemingly work better than sticks; and centralization of authority appears to better facilitate relationships between government enforcers and corporate representatives.

But that is not the end of the story. To the outside world, flexible leniency programs can appear clubby, weak and under-effective. The very design elements that generate trust between corporate targets and government enforcers may simultaneously sow credibility problems with the greater public. This conundrum will remain a core issue for policymakers as they continue to implement, shape and tinker with corporate leniency programs."

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NACDL Trial Penalty Report and White Collar Crime

The NACDL recently released an important report detailing the impact of the trial penalty, which is the difference between the sentence a defendant receives in return for pleading guilty and the often much larger sentence he or she receives in return for exercising his or her constitutional right to trial. 

From the NACDL press release:

The ‘trial penalty’ refers to the substantial difference between the sentence offered in a plea offer prior to trial versus the sentence a defendant receives after trial. This penalty is now so severe and pervasive that it has virtually eliminated the constitutional right to a trial. To avoid the penalty, accused persons must surrender many other fundamental rights which are essential to a fair justice system

This report is the product of more than two years of careful research and deliberation. In it, NACDL examines sentencing and other data underlying the fact that, after a 50 year decline, fewer than 3% of federal criminal cases result in a trial. With more than 97% of criminal cases being resolved by plea in a constitutional system predicated upon the Sixth Amendment right to a trial, the fact of imbalance and injustice in the system is self-evident. The report identifies and exposes the underlying causes of the decline of the federal criminal trial and puts forth meaningful, achievable principles and recommendations to address this crisis. With its release, NACDL intends to launch a sustained effort to rein in the abuse of the trial penalty throughout federal and state criminal justice systems. The Trial Penalty report, and the principles and recommendations it puts forward, seeks to save the right to a trial from extinction.

The entire report is well worth reading.  For those in the white collar field, I'll note that the report contains a specific section on economic crimes.  This portion of the report focuses on Section 2B1.1 of the Federal Sentencing Guidelines.  The report discusses the role of 2B1.1 and loss calculations in creating incentives for defendants to plead guilty.  You can access the entire NACDL report here.

I found the NACDL report particularly interesting as I've engaged in much research on the issue of plea bargaining and sentencing differentials, including the impact of such incentives on innocent defendants.  In one study, we found that 56% of innocent participants were willing to falsely confess guilt and "plead guilty" in return for a bargain.  You can read more about those findings and the issue of plea bargaining's innocence issue here. 

(LED)

When Does Corporate Criminal Liability for Insider Trading Make Sense?

John P. Anderson (Mississippi College School of Law) has a new Article titled, When Does Corporate Criminal Liability for Insider Trading Make Sense? published in 46 Stetson L. Rev. 147 (2016). The abstract reads -

Corporations are subject to broad criminal liability for the insider trading of their employees. Critics have noted that this results in a harsh irony. “After all,” Professor Jonathan Macey argues, “it is generally the employer who is harmed by the insider trading.” In the same vein, former chairman of the Securities and Exchange Commission (SEC) Harvey L. Pitt and Karen L. Shapiro point out that, “[f]ar from being responsible for their employees’ violations of the law…most of the employers who have had the unfortunate experience of employing [insider traders] are in fact the only true victims, in an otherwise victimless crime.”

It is clear that not all insider trading is victimless, and not all employers of insider traders are innocent. But I am convinced that these critics are correct to point out that the current enforcement regime is absurdly overbroad in that it affords no principled guarantee to corporate victims of insider trading that they will not be indicted for the crimes perpetrated against them.

The law should be reformed to insure that corporations are only held criminally liable where they are guilty of some wrongdoing. Section I of this Article outlines current law in the United States concerning corporate criminal liability in general. Section II then looks at corporate liability for insider trading under the current regime. Section III explains why the current regime is absurdly overbroad and in dire need of reform. Section IV then points the way to some reforms that would render corporate criminal liability for insider trading more rational, efficient, and just.

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Prosecutorial Accountability 2.0 - Green & Yaroshefsky

Check out this forthcoming article by Bruce Green and Ellen Yaroshefsky that is forthcoming in Notre Dame Law Review -  

Abstract:     

"This article examines prosecutors’ accountability for professional misconduct. It begins by identifying a significant evolution since the Warren Court era both in the rhetoric regarding prosecutorial misconduct and in how prosecutors are regulated. Prior to the information age, the public and the judiciary largely accepted prosecutors’ contention that prosecutorial misconduct should be narrowly conceived as intentional lawbreaking, and that isolated and aberrational instances of misconduct could be addressed by disciplining rogue prosecutors. In contrast, in the shift to “Prosecutorial Accountability 2.0,” increasing segments of the public and judiciary now accept that prosecutorial misconduct is systemic; it calls for systemic remedies; and it includes negligent wrongdoing, abuses of discretion, and failures of supervision."

"The article rejects suggestions that the rhetorical and regulatory changes occurred because prosecutorial misconduct has become more prevalent. It identifies other social causes: a public awakening to criminal justice problems for which prosecutors bear responsibility; revelations, in particular, regarding the role of prosecutorial misconduct in wrongful conviction cases; new social science understandings about social and psychological predicates for prosecutorial wrongdoing; and reform organizations’ inclusion of systemic prosecutorial reform on their agenda. The article shows how the internet has served as the essential catalyst for shifting public and judicial attitudes. The article concludes by predicting that the old and new approaches to prosecutorial accountability will coexist into the foreseeable future, and that the implications will include both a more active judicial role in critiquing and overseeing prosecutors and increased self-regulation by prosecutors’ offices."

 

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Textualism and White Collar Crime

A wonderful article appeared in the NYLJ back in March concerning textualism in white collar law.  Authors Elkan Abramowitz and Jonathan Sack remark on the broadly worded statutes one finds in the white collar arsenal, and how Justice Scalia was a leader in using a textualist approach in interpreting these statutes.   The authors of this article reflect on the "exculpatory no" and obstruction of justice as two examples in demonstrating the use of textualism.

With Justice Scalia no longer with us, it will be interesting to see if others pick up this theme in current cases such as former Gov. McDonnell.

Article - Download Justice Scalia’s Approach to Textualism in White-Collar Law - Sack Abramowitz

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The Criminalization of Compliance

Todd Haugh, Indiana University - Kelley School of Business - has an interesting new article posted online entitled "The Criminalization of Compliance."

From the abstract:

Corporate compliance is becoming increasingly “criminalized.” What began as a means of industry self-regulation has morphed into a multi-billion dollar effort to avoid government intervention in business, specifically criminal and quasi-criminal investigations and prosecutions. In order to avoid application of the criminal law, companies have adopted compliance programs that are motivated by and mimic that law, using the precepts of criminal legislation, enforcement, and adjudication to advance their compliance goals. This approach to compliance is inherently flawed, however — it can never be fully effective in abating corporate wrongdoing. Explaining why that is forms this Article’s main contribution. Criminalized compliance regimes are inherently ineffective because they impose unintended behavioral consequences on corporate employees. Employees subject to criminalized compliance have greater opportunities to rationalize their future unethical or illegal behavior. Rationalizations are a key component in the psychological process necessary for the commission of corporate crime — they allow offenders to square their self-perception as “good people” with the illegal behavior they are contemplating, thereby allowing the behavior to go forward. Criminalized compliance regimes fuel these rationalizations, and in turn bad corporate conduct. By importing into the corporation many of the criminal law’s delegitimatizing features, criminalized compliance creates space for rationalizations, facilitating the necessary precursors to the commission of white collar and corporate crime. The result is that many compliance programs, by mimicking the criminal law in hopes of reducing employee misconduct, are actually fostering it. This insight, which offers a new way of conceptualizing corporate compliance, explains the ineffectiveness of many compliance programs and also suggests how companies might go about fixing them.

 (LED)

New Paper re Internal Investigations and Privilege

I have just published a new article in the Compliance Elliance Journal entitled "Internal Investigations and the Evolving Fate of Privilege."  

Abstract

In 1981, the United States Supreme Court delivered a landmark ruling in Upjohn Co. v. United States. The decision made clear that the protections afforded by the attorney-client privilege apply to internal corporate investigations. This piece examines the fundamental tenets of Upjohn, discusses some recent challenges to the applicability of privilege to materials gathered during internal investigations, and considers the manner in which the international nature of modern internal investigations adds complexity and uncertainty to the field.

The article is available for free download here. 

(LED)

Sentencing the Wolf of Wall Street

I have just released a new article discussing the sentencing of Jordan Belfort, better known as the "Wolf of Wall Street."  I use this case as a mechanism for considering how white collar sentencing has evolved from the 1980s until today.  In particular, the article examines the growth in uncertainty and inconsistency in sentences received by major white collar offenders over this period of time and considers some of the reasons for this trend.  The article also examines the impact of recent amendments adopted by the U.S. Sentencing Commission on white collar sentences.

Lucian E. Dervan, Sentencing the Wolf of Wall Street: From Leniency to Uncertainty, 61 Wayne Law Review -- (2015).

Abstract:

This Symposium Article, based on a presentation given by Professor Dervan at the 2014 Wayne Law Review Symposium entitled "Sentencing White Collar Defendants: How Much is Enough," examines the Jordan Belfort (“Wolf of Wall Street”) prosecution as a vehicle for analyzing sentencing in major white-collar criminal cases from the 1980s until today. In Part II, the Article examines the Belfort case and his relatively lenient prison sentence for engaging in a major fraud. This section goes on to examine additional cases from the 1980s, 1990s, and 2000s to consider the results of reforms aimed at “getting tough” on white-collar offenders. In concluding this initial examination, the Article discusses three observed trends. First, today, as might be expected, it appears there are much longer sentences for major white-collar offenders as compared to the 1980s and 1990s. Second, today, there also appears to be greater uncertainty and inconsistency regarding the sentences received by major white-collar offenders when compared with sentences from the 1980s and 1990s. Third, there appear to have been much smaller sentencing increases for less significant and more common white-collar offenders over this same period of time. In Part III, the Article examines some of the possible reasons for these observed trends, including amendments to the Federal Sentencing Guidelines, increased statutory maximums, and judicial discretion. In concluding, the Article offers some observations regarding what the perceived uncertainty and inconsistency in sentencing major white-collar offenders today might indicate about white-collar sentencing more broadly. In considering this issue, the Article also briefly examines recent amendments adopted by the U.S. Sentencing Commission and proposed reforms to white-collar sentencing offered by the American Bar Association.

(LED)

Call for Papers: 2015 ABA Criminal Justice Section Fall Institute Roundtables

Once again, the ABA Criminal Justice Section Academics Committee will host work-in-progress roundtables at the annual Criminal Justice Section Fall Institute in Washington, DC.  The roundtables will be held on Thursday, October 22, 2015 from 12:30-3:00pm at the Loews Madison Hotel, and the ABA will provide sandwiches and drinks for lunch.  The rest of the CJS Fall Institute programs will take place later in the day on Thursday, October 22 and on Friday, October 23 at the same hotel.

We hope you will consider workshopping your criminal justice works-in-progress at these roundtables.  Participants will present their work in a roundtable format, and abstracts or drafts will be shared among presenters and discussants in advance of the workshop. If you’re interested in participating, please email an abstract of your paper of no more than 500 words to Lucian Dervan at [email protected] by Sept. 15, 2015.  Space is limited, and presenters will be chosen by members of the organizing committee.

This is an excellent opportunity for academics at any stage of their careers, and for those who would like to transition to academia, to workshop pieces at an early stage of development or obtain feedback on more developed pieces. Workshop presenters will be responsible for their own travel and hotel costs, but there is no registration fee for participating in the roundtables.  If you decide to participate in the remainder of the ABA CJS Fall Institute, you will need to register for that event separately.

We are also excited to note that this year’s workshop will begin with a brief opening address by Professor Stephen A. Saltzburg of the George Washington University Law School.  Professor Saltzburg will discuss how to create and execute a productive and impactful research agenda.  Professor Saltzburg is one of the nation’s leading scholars and has authored over twenty books and over 100 articles.  Professor Saltzburg’s talk is not to be missed.

The Criminal Justice Section has secured a special room rate of $269 single/double per night at the Lowes Madison Hotel.  This rate can be reserved by calling 855-255-6397 and referring to the “ABA Criminal Justice Section Fall Institute.”  You can also book online.  Reservations must be made by Thursday, October 1, 2015 at 5:00pm EST to secure this rate.

Please spread the word to those who might be interested, including those not yet in academia.  We have included below some information regarding last year’s workshop.  We hope to see everyone in D.C. at the end of October.

All the best,

Lucian E. Dervan (SIU Law) and Meghan J. Ryan (SMU Law)

Co-Chairs, ABA CJS Academics Committee

Information Regarding Last Year’s Roundtable

On October 23, 2014, the ABA Criminal Justice Section Academics Committee hosted academic roundtables at the ABA Criminal Justice Section Seventh Annual Fall Institute. At these roundtables, scholars from across the country discussed papers on topics ranging from big data’s effect on jury selection to whether second-look sentencing is consistent with the asserted purposes of the Model Penal Code. Participants in the academic roundtables included Joanmarie Davoli (Florida Coastal, now Fed. Soc.), Cara Drinan (Catholic), Andrew Ferguson (Univ. of D.C.), Lea Johnston (Florida), Kevin Lapp (Loyola LA), Ion Meyn (Wisconsin), Steve Morrison (North Dakota), Anthony O’Rourke (Buffalo), and Meghan Ryan (SMU).

Here is a sampling of the great work they presented:

The Miller Revolution, by Cara Drinan (forthcoming in the Iowa L. Rev.)

In a series of cases culminating in Miller v. Alabama, the United States Supreme Court has limited the extent to which juveniles may be exposed to the harshest criminal sentences.  In this Article, I argue that the Miller trilogy has revolutionized juvenile justice.  While we have begun to see only the most inchoate signs of this revolution in practice, this Article endeavors to describe what this revolution may look like both in the immediate term and in years to come. Part I demonstrates how the United States went from being the leader in progressive juvenile justice to being an international outlier in the severity of its juvenile sentencing. Part II examines the Miller decision, as well as its immediate predecessor cases, and explains why Miller demands a capacious reading. Part III explores the post-Miller revolution in juvenile justice that is afoot. Specifically, Part III makes the case for two immediate corollaries that flow from Miller, each of which is groundbreaking in its own right: 1) the creation of procedural safeguards for juveniles facing life without parole (“LWOP”) comparable to those recommended for adults facing the death penalty; and 2) the elimination of mandatory minimums for juveniles altogether. Finally, Part III identifies ways in which juvenile justice advocates can leverage the moral leadership of the Miller Court to seek future reform in three key areas: juvenile transfer laws; presumptive sentencing guidelines as they apply to children; and juvenile conditions of confinement.

Strictissimi Juris, by Steve Morrison (67 Ala. L. Rev. __ (forthcoming 2015)

Guilt by association is universally rejected, but its criticisms are always based on the substantive due process right to individual, not imputed, liability.  The rule of strictissimi juris promises to be the procedural counterpart to the substantive right.  Its promise, however, has gone unfulfilled because it is little understood or developed. This article provides a descriptive, prescriptive, and contextual dissertation on strictissimi juris.  Descriptively, it provides the jurisprudential foundation and definition of strictissimi juris.  Prescriptively, it sets forth the purposes for which lawyers and courts have invoked strictissimi juris, thus providing a guide for how future lawyers might invoke strictissimi juris, and courts apply it.  Contextually, it analogizes strictissimi juris to substantive canons that play important roles in the separation of powers.

New Article Regarding How We Define White Collar Crime

Ellen Podgor and I have just released a new article discussing the complexities of defining the term “white collar crime.”  The ability to define and identify white collar offenses is vital, as it allows one to track, among other things, the number of these cases prosecuted each year, the frequency with which particular types of charges are brought in these matters, and the sentences imposed on those convicted.  This new article begins with a brief historical overview of the term “white collar crime.”  The piece then empirically examines several specific crimes to demonstrate that statutory approaches to defining and tracking white collar offenses are often ineffective and inaccurate.  The article then concludes by recommending that the U.S. Sentencing Commission adopt a new multivariate definitional approach that recognizes the hybrid nature of many white collar offenses.  The final version of the article will appear next year in Volume 50 of the Georgia Law Review. 

Ellen S. Podgor and Lucian E. Dervan, “White Collar Crime”: Still Hazy After All These Years, 50 Georgia Law Review -- (forthcoming 2016).

Abstract:      

With a seventy-five year history of sociological and later legal roots, the term “white collar crime” remains an ambiguous concept that academics, policy makers, law enforcement personnel and defense counsel are unable to adequately define. Yet the use of the term “white collar crime” skews statistical reporting and sentencing for this conduct. This Article provides a historical overview of its linear progression and then a methodology for a new architecture in examining this conduct. It separates statutes into clear-cut white collar offenses and hybrid statutory offenses, and then applies this approach with an empirical study that dissects cases prosecuted under hybrid white collar statutes of perjury, false statements, obstruction of justice, and RICO. The empirical analysis suggests the need for an individualized multivariate approach to categorizing white collar crime to guard against broad federal statutes providing either under-inclusive or over-inclusive examination of this form of criminality.

(LED)

Prisonology

Walt Pavlo (500 Pearl Street) and Jack Donson (former BOP Case Manager) developed a unique interactive website to educate lawyers on what a client needs to know about the prison experience. Check it out here.   They state, "[p]risonology's intuitive website provides an easy to read narrative, a video interview with an expert on the topic, links to BOP and US Probation policies, tips, and written experiences from those who have gone through the process.  It has everything a client needs to be informed and prepared." It is wonderful to see technology being used to educate lawyers so that they can be in a better position to advise and inform their clients.

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"Should the Medium Affect the Message? Legal and Ethical Implications of Prosecutors Reading Inmate-Attorney Email"

New Student Note - Brandon P. Ruben (Fordham) - here

Abstract:     

The attorney-client privilege protects confidential legal communications between a party and her attorney from being used against her, thus encouraging full and frank attorney-client communication. It is a venerable evidentiary principle of American jurisprudence. Unsurprisingly, prosecutors may not eavesdrop on inmate-attorney visits or phone calls or read inmate-attorney postal mail. Courts are currently divided, however, as to whether or not they can forbid prosecutors from reading inmate-attorney email. This Note explores the cases that address whether federal prosecutors may read inmates’ legal email. As courts have unanimously held, because inmates know that the Bureau of Prisons (BOP) monitors all their email, their legal email is unprivileged. In addition, all courts have rejected the argument that prosecutors reading inmates’ legal email impermissibly restricts inmates’ Sixth Amendment right of access to counsel. Accordingly, despite questioning the practice’s propriety, four courts have ruled that there is no legal basis to prevent prosecutors from reading inmate-attorney email. Two courts, however, pursuant to no clear authority, prevented the prosecutors from doing so. This Note argues that prosecutors should abstain from reading inmate- attorney email as a matter of self-regulation because this behavior unjustifiably chills inmate-attorney communication. In addition, this Note asserts that BOP’s email monitoring policy unconstitutionally restricts inmates’ Sixth Amendment right of access to counsel, a challenge prisoners’ rights advocates have yet to bring. In cases where BOP’s email monitoring policy is not at issue, or where a court seeks to avoid a constitutional decision, this Note concludes that courts should prevent prosecutors from reading inmates’ legal email by exercising their delegated authority to enforce Rules of Professional Conduct. Specifically, courts should invoke Rule 8.4(d), which prohibits attorneys from engaging in conduct prejudicial to the administration of justice.

 

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Judge Rakoff and Professor Garrett on Deferred Prosecution Agreements

Judge Rakoff has authored an interesting article in the New York Review of Books examining Professor Brandon L. Garrett’s book entitled “Too Big to Jail: How Prosecutors Compromise with Corporations.”  Professor Garrett’s book looks closely at the use of deferred prosecution agreements by the government and includes a wealth of information and data.  While Professor Garrett concludes that deferred prosecution agreements have been “ineffective,” he also proposes a number of steps that might make them more efficient in the future.  Along with conducting a nice discussion of Professor Garrett’s book, Judge Rakoff offers his own perspective on these agreements in his review.  For those interested in deferred prosecution agreements, both Judge Rakoff’s article and Professor Garrett’s book are must reads.

(LED)

The 'Too Big to Jail' Effect and the Impact on the Justice Department's Corporate Charging Policy

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.

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The Development and Evolution of the U.S. Law of Corporate Criminal Liability

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.

(esp)

White Collar Over-Criminalization: Deterrence, Plea Bargaining, and the Loss of Innocence

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.

(esp)

Corporate Criminal Liability: Recent and Noteworthy

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/.

 

(wisenberg)

"Whack-a-Mole: Why Prosecuting Digital Currency Exchanges Won't Stop Online Laundering"

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.

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"Sentencing the Why of White Collar Crime"

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.

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