LAW 3220 Chapter 5

exception when you don't need a warrant

"hot pursuit"

How much money is laundered worldwide each year?

$1 to $2 trillion

Civil Law

(1) laws, written or unwritten, that specify the duties that exist between and among people, as opposed to criminal matters; or (2) codified or statutory law, used in many Western European countries and Japan, as distinguished from the common or judge-made law used in the UK and the US

Misdemeanor (Petty Offense)

A lesser crime that is neither a felony nor treason, punishable by a fine and/or imprisonment in other than state or federal penitentiaries (Class A, B, and C)

Plea Bargin/Negotiated Plea

A negotiated agreement between a prosecutor and a criminal defendant for the defendant to plead guilty to a lesser offense or to only one of the multiple charges in exchange for concessions such as a lighter sentence or a dismissal of the other charges

Racketeering

A pattern of illegal activity, such as bribery, that is part of an operation owned or controlled by those engaged in the illegal activity. RICO intends it it include activities such as mail fraud and securities fraud

Felony

A serious class of crime-such as rape, murder, or robbery-that may be punishable by imprisonment in excess of one year or death

Statute of Limitations

A statute setting maximum time periods from the occurrence of an event, during which certain actions can be brought or rights enforced. If an action is not filed before the expiration of that time period, the statute bars the use of the courts for recovery

Pasquantino v. U.S.

American bought liquor in U.S. and smuggled it into Canada for resale, avoiding high Canadian taxes. Since electronic communications were used that originated in the U.S., two people sent to prison for 5 years each

Mail Fraud

An act of fraud using the Postal Service, as in making false representations through the mail to exploit another party

Convicted

Being found by a court to have committed a crime

Government Fraud

Governs contracts with public agencies - Billing for goods not delivered - Double billing - Inferior goods - Government payment programs (Farm subsidies, Public housing, Educational programs)

Criminal Law

Governs or defines legal wrongs, or crimes, committed against society. Wrongdoers are punished for violating the rules of society. A person found guilty is usually fined or imprisoned

Who is up to what?

Reporting suspicious transactions - cash deposited over certain amounts ($10,000)

vicarious liability

liability through the acts of their employees

Racketeering=

mail, wire, phone fraud

nolo contendere

no contest; Latin for "I do not wish to contend"' that is, a party pleads no contest

self defense is justifiable when?

using reasonable force

Ordinances

usually deal with zoning, building regulations, and local safety issues. In most instances, violations may be punished only by a fine or by a short amounts of jail time, much like a misdemeanor

CASE: Commonwealth vs Angelo Todesca Corp: SUBJECT?

vicarious liability

Insurance fraud

• Insurance companies commit fraud, charging higher rates than allowed by state regulators. • Policy holders lie about condition of property to get lower rates. • Policy holders pad their claims to get more money.

Internal Fraud

• Many small businesses don't know they are defrauded • Study shows 1/4 of companies with fewer than 100 employees suffered from check tampering where company checks used for improper purposes • 21% suffered from skimming - when cash is taken before it is recorded on the books • Rigging Payroll/Falsifying Reimbursement Expenses (i.e. travel) are common

Prosecution process

• Occurs when prosecuting attorney has enough evidence to make criminal charges • Will be either a misdemeanor or felony • In some cases, a grand jury will review a potential felony case. • If grand jury determines probable cause, usually it will issue an indictment against the accused

CASE: United States vs Allmendinger: RESULTS?

• Oncale was confronted by the gov't early in the investigation. Admitted culpability and immediately agreed to plead guilty. He liquidated his assets; gave them to the govt. and cooperated extensively • Allmendinger refused to accept responsibility for his actions. Hid cash in violation of restraining order, lived lavish lifestyle with the money, oney in violation of the restraining order, attempted to flee right before the trial. • HELD: No error in Allmendinger's convictions and sentence

Healthcare Fraud

• Over-billing and scams by hospitals, doctors ambulance services, laboratories, pharmacies, extended care facilities

Discovery: Criminal Law Purpose

• Parties do their own investigations • Disclose only subset of what is found to the other side prior to trial

Bankruptcy Fraud

• Person or corporation hides or lies about assets in bankruptcy proceeding • also applies to creditors giving false information or illegal pressure to bankruptcy petitioners

Insider Trading

• Person trades a security while in possession of material, non-public information

CASE: Bridge vs Pheonix Bond & Industry Co.: SUBJECT?

• RICO

CASE: United States vs Young: SUBJECT?

• RICO • No expectation to privacy

Toll

• Refers to a time period, usually set by a statute, required to meet an obligation or to be met for a right to exist, such as a statute of limitation that must be met to have the right to have a cause of action. If this happens, the right has been lost • to stop the running of time (e.g. if criminal flees country to avoid prosecution); the legal clock stops running under certain circumstances

Financial Fraud

• Regulation of banks and financial institutions • Firms and employees subject to criminal liability • Fraud in loans, financial documents, mortgages, etc.

Anti-money Laundering Measures

• Regulations making money laundering more difficult • Require financial organizations to use Know Your Customer (KYC) or Customer Due Diligence (CDD) Programs

Embezzlement

• Statutory offense when a person fraudulently appropriates for her own use the property or money entrusted to her by another

Bribery

• The offering, giving, receiving, or soliciting of something of value for the purpose of influencing the action of an official in the discharge of public or legal duties • US Code Section 201

Arraignment

• This is the initial step in a criminal prosecution; the defendant is brought before the court to hear the charges and enter a plea • Judge will release accused or require bail • *set a court date*

Discovery: Civil Law Purpose

• To reduce surprises • Both sides must turn over anything requested by other side

Credit card fraud

• Unauthorized use of a credit card

Racketeer Influenced and Corrupt Organizations (RICO) Act

A law designed to attack organized criminal activity by prosecuting persons who participate or conspire to participate in racketeering. The federal statute of 1970 applies to activity involving interstate or foreign commerce. Many states have adopted laws based on the federal statute. The federal and most state acts provide for enforcement not only by criminal prosecution by also by civil lawsuit, in which plaintiffs can sue for treble damages

Entrapment

A law-enforcement officer's inducement of a person to commit a crime, by fraud or undue persuasion, in an attempt to bring a criminal prosecution against that person. It provides an affirmative defense that the crime would not have been committed but for the set up

Sentencing Guidelines

A federal statute that provides detailed instructions for judges to determine appropriate sentences for federal crimes; it includes factors such as the nature of the crime and the history of the defendant

Indictment

A formal written charge issued by a grand jury asserting that the named person has committed a crime

To prove corporation is guilty of criminal offense, must prove (3)

1. individual committed a criminal offense 2. at the time of committing offense, person "was engaged in some particular corporate business" 3. individual had authority to act for corporation on its behalf to carry out particular business when offences occurred

Grand Jury

A body of people, often 23, who are chosen to sit periodically for at least a month and as long as a year to decide whether to issue indictments. If evidence presented by the prosecutor is sufficient, an indictment will issue. They may screen possible charges and may participate in an investigation that may lead to an indictment

Warrant

A judicial authorization for the performance of an act that would otherwise be illegal

Crime

A violation of the law that is punishable by the state or nation (felonies or misdemeanors)

White-collar Crime

A wide range of nonviolent crimes, often involving cheating or dishonesty in commercial matters (EX: fraud, embezzlement, insider trading)

AML=

Anti-money Laundering Measures

Counterfeiting

The copying of a genuine item without authorization, especially when it is passed off for the genuine item - money - designer clothing

Affirmative Defense

Defendant's response to plaintiff's claim that attacks the plaintiff's legal right to bring the action rather than attacking the truth of the claim. (EX: the running of the statute of limitations)

Wire Fraud

Fraud involving the use of electronic communications, such as by making false representations on the telephone or the Internet to obtain money. The federal act holds that any fraud by wire or other electronic communications, such as radio or television in foreign or interstate commerce is a crime

Miranda Rights

From a 1966 Supreme Court case, the doctrine that a criminal suspect in police custody must be informed of certain constitutional rights before interrogation. The suspect must be advised of the right to remain silent, the right to have an attorney present during questioning, and the right to have an attorney appointed if he cannot afford one. If not advised of these rights, evidence obtained from the suspect during the interrogation cannot be used

Anti-money Laundering (AML)

Identify the beneficial owner of assets; trace the transmission of assets; and report suspicious transactions

actus reus

In Latin, "guilty act"; the wrongful deed that constitutes the physical component of a crime; • THE EXISTENCE OF THE CRIME) *the important part*

mens rea

Latin for "the state of mind" of the actor; the criminal intent that must be established

Chain of Custody

Proof that the evidence in a criminal trial was gathered, handled, and presented properly

X3 damages + attorney fees

RICO

RICO=

Racketeer Influenced and Corrupt Organizations

Probable Cause

Reasonable ground to believe the existence of facts warranting the undertaking of certain actions, such as the arrest or search of a person

CASE: United States vs Allmendinger: SUBJECT?

Sentencing guidelines

Money Laundering

The act of transferring illegally obtained money through legitimate people or accounts so that its original source cannot be traced; a federal crime that is often involved in illegal international transactions

Track it down

Tracing asset flows - large cash transactions are suspect

Exclusionary Rule

Under the 4th amendment, as interpreted by the courts, evidence that has been gathered in violation of the search-and-seizure rules cannot be used against a defendant at trial

Double Jeopardy

When a defendant is prosecuted or sentenced twice for the same offense, it is prohibited by the 5th amendment

Economic Espionage

When commercial trade secrets are stolen for use by a competitor; this is specifically in violation of federal law

Alibi

evidence you did not commit the crime

"fruit off the poisonous tree"

exclusionary rule

CASE: United States vs Young: RESULTS?

• He was convicted • FedEx told customers (1) do not ship cash, and (2) we may open and inspect your packages at our option. • Because of this, Young had no expectation of privacy of packages being x-rayed by IRS agents with FedEx permission

CASE: United States vs Allmendinger: WHAT HAPPENED?

• Allmendinger, Oncale and others ran investment scam • When federal investigators began to poke around, Allmendinger began to hide assets • Court ordered them to freeze all accounts. • Allmendinger didn't; transferred more money to secret accounts. • After convictions, judge imposed sentences based on Sentencing Guideline measures. • Due to size of loss, lack of cooperation with investigators by Allmendinger, and hiding his money, he was given a 45-year sentence. • Oncale was given a 10-year sentence.

White Collar Crimes (21)

• Antitrust • Bankruptcy Fraud • Bribery • Counterfeiting • Credit Card Fraud • Computer Fraud • Espionage • Embezzlement • Environmental Law Violations • Financial Fraud • Insider Trading • Insurance Fraud • Internet Fraud • Mail Fraud • Money Laundering • RICO • Internal Fraud • Securities Fraud • Tax Evasion • Telephone & Telemarketing Fraud • Wire Fraud

Telephone & Telemarketing Fraud

• Any scheme to defraud using the telephone as means of communication with victims - Trying to persuade them to send money to scheme - Solicits people to buy goods and services, invest money or donate to bogus charitable causes

CASE: Commonwealth vs Angelo Todesca Corp: RESULTS?

• Because corporation is not a living person, can only act through its agents. Liability is therefore vicarious (liability through the acts of their employees) • Corporations can be held criminally liable for acts performed by employees "within the scope of their employment" and "on behalf of the corporation"

Internet fraud

• Chat rooms, e-mail, message boards or Web sites presenting fraudulent solicitations to victims • (Is essentially the same as telephone & telemarketing fraud)

Sentencing guidelines and compliance

• Controversial aspect of federal criminal law • Congress mandated that courts be given clear rules about imposing sentences for criminal law violations • Punishment is reduced under the Sentencing Guidelines when company has a program in place to ensure problems won't happen again • Supreme Court HELD: Guidelines are advisory, not mandatory, for judges to use, but judges are expected follow them closely. (PRACTICALLY MANDATORY)

CASE: Bridge vs Pheonix Bond & Industry Co.: WHAT HAPPENED?

• Cook County, Illinois holds public auctions for tax liens on delinquent taxpayers' properties. County requires buyers to submit bids in their own names. Cannot use "agents, employees or other related entities" to submit bids for same property by disguising the real bidder • Phoenix and others sued Bridge for fraudulently getting tax liens by filing false documents. • Plaintiffs lost possible tax lien purchases. • Claimed defendants violated RICO through racketeering involving mail fraud by sending false documents related to tax lien purchases. • District court dismissed RICO claims. Held that plaintiffs were not protected by mail fraud statute since scam was not directed at them. (but they do)

Computer Fraud

• Credit card fraud involving a computer/internet • Unauthorized access to financial accounts • Unauthorized use of computers and computer files

Criminal Negligence

• Criminal conduct that is not intentional, but occurred because one failed to act with reasonable care that is expected under the circumstances • "a degree of carelessness amounting to a culpable disregard of rights and safety of others" • *UNINTENTIONAL* • Example: Drunk driver drives wrong way down highway and kills a person in an accident

Bond set by?

• Danger to society • Flight risk

Environmental Law Violations

• Data fraud cases, e.g. private laboratories submit false environmental data • Hazardous waste dumping • Ocean dumping by cruise ships • Oil spills • International smuggling of CFC's • Illegal handling of hazardous substances (pesticides, asbestos, etc.) • EPA averages 300 criminal prosecutions per year--150-200 years of prison and jail time.

Punishment if convicted (7)

• Death • Imprisonment • Fines • Probation • Unable to own a firearm • Removal from public office • Disqualified from holding office or voting

Consequences for non-compliance (6)

• Failure to File suspicious activity report • Civil/criminal penalties, or both • Civil penalties - willful violation of reporting requirements • Civil penalties can be up to the greater of the amount involved in a transaction • Willful violations may lead to criminal penalties • Fines up to $250,000 or 5 years in prison

Tax Evasion

• Failure to file tax returns • Failure to report income • Overstatement of expenses • Not reporting illegal income • IRS devotes significant resources to track down violators - jurisdiction can be international, i.e. Swiss bank accounts

CASE: Commonwealth vs Angelo Todesca Corp: WHAT HAPPENED?

• Gauthier, a truck driver, drove dump truck full of asphalt for Angelo Todesca • Police officer directing traffic was run over and killed as Gauthier backed up to deliver asphalt. Back-up horn on the truck was not working. • Commonwealth of MA charged Todesca w/vehicular homicide. • Jury convicted company and fined $2,500. • *To prove corporation is guilty of criminal offense, must prove:* 1. individual committed a criminal offense; 2. at the time of committing offense, person "was engaged in some particular corporate business"; and 3. individual had authority to act for corporation on its behalf to carry out particular business when offences occurred

CASE: United States vs Young: WHAT HAPPENED?

• Under IRS regulations gasoline/diesel fuel may be sold tax free if for marina use • IRS believed he never used fuel for marina purposes, he sold it in cash deals to truck stops and service stations that should have paid federal taxes on the fuel • FedEx agreed to let the IRS x-ray packages shipped by Young • Based on x-rays, IRS obtained a warrant to seize and open Young's packages indeed they contained the suspected cash • At trial, Young moved to suppress the evidence (Said that IRS did not originally obtain a warrant to x-ray FedEx packages)

Antitrust

• Violation under the Sherman Act and Clayton Act • Prison terms involved in price fixing and anti-competitive practices

CASE: Bridge vs Pheonix Bond & Industry Co.: RESULTS?

• mail was used to submit false attestations of compliance with the Bidder Rule to the County. • Plaintiff may assert RICO claims