Business Law - Chapter 7

Inevitability Exception

illegally obtained evidence may be used at trial if it would have been obtained "inevitably" by law enforcement officials using lawful means

Insider Trading

the buying or selling of a security in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, non-public information about the security

Forgery

the fraudulent making or altering of any writing in a way that changes the legal rights and liabilities of another

False Pretenses

the illegal obtaining of property belonging to another through materially false representations of an existing fact, with knowledge of their falsity and intent to defraud -a designed misrepresentation of existing facts or conditions by which a person obtains another's money or goods, such as the writing of a worthless check

Extortion

the making of threats for the purpose of obtaining money or property --> blackmail

Defalcation

the misappropriation of trust funds or money held in a fiduciary capacity

Fraud

an individual uses misrepresentation to gain an advantage over another -3 elements: 1) a material false representation made with intent to deceive ("scienter": mental state required for fraud) 2) victim reasonably relies on the false representation 3) damages

Ponzi Scheme

an investment swindle in which high profits are promised from ficticious sources and early investors are paid off with funds raised from the later ones

Actus Reus

wrongful behavior or a guilty act -to prosecute: gov't must establish the non-mental elements of crime and demonstrate that a prohibited act or consequence resulted because of the defendant's actions

Mens Rea

wrongful state of mind or a guilty mind -most crimes fall into this category -to prosecute: gov't must prove that the defendant acted with purpose, knowledge, recklessness, or negligence, depending on which of these states of mind required by the law defining the relevant offense Types of wrongful states: -purposefully: commit a crime -knowingly: commit a wrongful act -reckless: if a criminal act occurs when the individual consciously ignores substantial risk -negligent: if he or she does not meet the standard care a reasonable person would use under the circumstances

Irresistible Impulse Test

you know the act is wrong, but you cannot stop engaging in the act anyway -ex) mother murdered her 5 children because she was a bad mother and they would burn in hell later in life so she wanted to alleviate their suffering later, so she murdered them

Virus

a computer program that rearranges, damages, destroys, or replaces computer data

Responsible Corporate Officer Doctrine

a court may assess criminal liability even on a corporate executive or officer who did not engage in, direct, or know about a specific criminal violation

False Token

a false document or sign of existence used to perpetuate a fraud, such as counterfeit money

Cyber Terrorist

a hacker who intends to exploit a target computer or network to create a serious impact, such as crippling a communications network or sabotaging a business or organization

Model Penal Code

a person is not responsible for criminal conduct if at the time of such conduct as a result of mental disease or defect he lacks substantial capacity either to appreciate the wrongfulness of his conduct or to conform his conduct to the requirements of law

Hackers

a person who illegally accesses a computer system to obtain information or steal money

White-Collar Crime

a variety of nonviolent illegal acts against society that most often occur in the business context

Exclusionary Rule

all evidence obtained in violation of the constitutional rights spelled out in the Fourth, Fifth and Sixth amendments is normally not admissible at trial

M'Naghten Test

allows defendant to not be guilty if they didn't understand what they were doing was wrong -also called the "right-wrong" test

False Entry

an entry in the books of a bank or corporation designed to represent funds that do not exist

Infancy

someone who committed a crime that is under the age of majority cannot be tried as an adult in trial

Elements of Crime

1) Actus Reus 2) Mens Rea

Tools for Fighting Business Crime

-RICO -False Claims Act -Sarbanes-Oxley Act

U.S. v. Park

-U.S. Supreme Court 1975 -General rule that corporate executives may be held accountable for crimes arising from their failure to meet their responsibility -sanitation standards were not being followed -criminally charged the grocery store -Responsible Corporate Officer Doctrine

Consequences of White Collar Crimes

-costly -when company employees commit the crimes, many companies fail to report it to avoid publicity and the offense goes unpunished -costly to the environment

Corporate Criminal Liability

-courts imposed liability on corporations by imputing the state of mind of the employees to the corporation -corporations can be held criminally accountable for almost any crime except those punishable only by a prison sentence -must show that... 1) the individual was acting within the scope of his or her employment 2) the individual was acting with the purpose of benefiting the corporation 3) the act was imputed to the corporation

Insanity

-defendant can claim insanity if their mental condition when the crime was committed was so impaired that they could not... 1) understand the wrongful nature of the act 2) distinguish between right and wrong in a general sense -not a medical term, it's a legal term

Eighth Amendment Protections

-excess bail shall not be required -no excess fines imposed -no cruel and unusual punishment inflicted

Robbery

-forceful and unlawful taking -of personal property of another -aggravated robbery: if they have a weapon -theft: if there is no force or fear -deals with personal property

Post-Trial Procedure

-intermediate: judges allowed but no required to engage in free-form fact finding before selecting the appropriate punishment within broad statutory ranges -determine sentencing: under which federal sentences are determined largely by sentencing guidelines prescribing a specific range of possible penalties for each crime

Fourteenth Amendment Protections

-no state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the U.S. -nor shall any state deprive any person of life, liberty or property, without due process of law -nor deny to any person within its jurisdiction the equal protection of the laws

Liability of Corporate Executives

-responsible corporate officer doctrine -vicarious liability -U.S. v. Park -when a lower level employee commits a crime he or she will be individually liable for the crime, and under the responsible corporate officer doctrine, the employee's manager, and any other corporate official who could have prevented the crime, can also be held vicariously liable for the crime

Criminal Procedure

-the gov't, the prosecutor, always brings the criminal case, whereas in a civil case the plaintiff filing the case can be an individual business, or government entity -the objective is punishment, so the defendant may be fined or imprisoned

Arson

-the intentional burning and destruction of a building -burning, explosives etc. -deals with real property

Fifth Amendment Protections

-the prohibition on double jeopardy: a person is retired for the same criminal offense after being declared not guilty -the right not to incriminate yourself: a criminal defendant does not have to, and cannot be forced to, testify against himself or herself -the right to due process: ensures that a defendant may not be stricken of life, liberty, or property without first going through the appropriate legal actions (typically a trial or plea bargaining)

Larceny

-the secretive and wrongful taking of the personal property of another -with intent to permanently deprive the rightful owner of its use or possession -ex) accidentally picked up a computer from Copley that wasn't yours, but you didn't realize it wasn't yours -grand larceny: items of greater value -deals with personal property

Burglary

-unlawful entry into a building -with intent to commit a felony -deals with real property

Computer Crimes

-wrongful act that... 1) directed against computers 2) uses computers to commit a crime 3) involves computers

Embezzlement

-wrongful conversion of another's property -by one in lawful possession of the property ex) bank teller, CFO, hedge fun manager etc.

Pre-Trial Procedure Steps

1) arrest 2) magistrate: the lowest ranking judicial official that issues the warrant (obtain necessary warrant by demonstrating probable cause) 3) miranda rights: your rights before a trial 4) booking: the procedure during which the name of the defendant and alleged crime are recorded in the investigating agency's or police department records 5) first appearance: defendant makes an appearance before a magistrate, who determines whether there was a probable cause for the arrest 6) bail: the amount of money defendants pay the court on release from custody as security that they will return for trial 7) decision to prosecute: 2 primary factors: -whether the evidence is sufficient to obtain a conviction -whether prosecuting the case serves a federal interest 8) information: going to prosecute --> a formal written accusation stating the facts and specifying the violation of criminal law 9) indictment: if grand jury agrees that the evidence is adequate --> a written accusation against the defendant 10) arraignment: defendant appears in court to answer the indictment -nolo contendre: not admitting guilt but agreeing not to contest the charges -petit jury: if defendant pleads not guilty, his case will be heard before a petit jury, a fact-finding jury 11) option to make a plea bargain: an agreement in which the prosecutor agrees to reduce charges, drop charges, or recommend a certain sentence if the defendant pleads guilty

Types of White-Collar Crime

1) bribery 2) extortion 3) fraud 4) embezzlement 5) computer crimes

Crime Classifications

1) felony 2) misdemeanor 3) petty offenses

Categories of Punishment for White-Collar Crime

1) fines 2) removing person from employment: remove one's ability to make a living 3) confinement: imprisonment, incarceration 4) house arrest 5) mandated community service

Affirmative Defense Crime

1) infancy 2) mistake of fact 3) intoxication 4) insanity 5) Duress 6) Entrapment 7) Necessity 8) Justifiable use of Force

CFAA

Counterfeit Access Device and Computer Fraud and Abuse Act

Fourth Amendment Protections

Protection from unreasonable search and seizure -gov't officials are not allowed to perform any searches without a proper warrant or without probable cause for a search Restrictions on warrants -must be specific about who is to be arrested and on what cause or what objects are to be sought and in which locations

RICO

Racketeer Influenced and Corrupt Organizations Act: enacted to combat organized crime -prevents businesses from serving as covers for racketeering -racketeering: includes almost all criminal actions, such as acts of violence, fraud, bribery, securities fraud, and the provision of illegal goods and services -good at combating white-collar crime

Mortgage and real estate fraud

any fraudulent act committed by anyone involved in a real estate transaction, including sellers, buyers, mortgage brokers, title closers, land developers, and real estate lawyers

Health Care Fraud

any fraudulent act committed in the provision of health care products or services

Telemarketing Fraud

any scheme, including cramming and slamming, that uses telephone to commit a fraudulent act

Criminal Procedure Steps

arrest --> booking --> first appearance --> information (for misdemanor) and indictment by grand jury (or felony) --> arraignment --> trial --> appeal

Vicarious Liability

courts have held employers liable for the wrongful acts of their employees if the employer directed, partook in, or authorized the wrongful act

Felony

crime is punishable by one or more year or death in prison

Misdemeanor

crime punishable by fines or imprisonment for less than one year

Entrapment

defense applies if the idea of a crime originated with a police officer or some other government official who suggested it to the defendant, who would not otherwise have committed the crime -preventing law enforcement officials from committing crime

Mistake of Fact

defense tries to prove the defendant made an honest and reasonable mistake that negates the guilty-mind element of a crime -fact: defense -law: not a defense

Check Kiting

drawing checks on an account in one bank and depositing them in an account in a second bank when neither account has sufficient funds to cover the amounts drawn ("float": creating an artificial balance in the account)

Sixth Amendment Protections

ensure fair proceedings in a criminal trial -the right to a speedy and public trial -the right to a trial by an impartial jury -the right to be informed of the accusations against you -the right to confront witnesses -the right to have witnesses on your side -the right to counsel at various stages of the proceedings

Good faith Exception

evidence found when an official acts in good faith is admissible

Bench Trial

if the defendant waives the right to a jury trial, a judge will hear the case and act as a fact finder in a bench trial

Burden of Proof

in a criminal trial, prosecutor has the burden of proof and defendant doesn't have to prove anything -2 elements: 1) to meet the burden of production of evidence (the prosecution must produce any tangible evidence and testimony that proves the elements of the crime the defendant allegedly committed) 2) to meet the burden of persuasion (the prosecutor must persuade the jury beyond reasonable doubt that the defendant committed the crime)

Intoxication

involuntary: maybe a defense -unable to determine that your act was wrong voluntary: not a defense

Sarbanes-Oxley Act

makes it illegal for registered public accounting firms to provide certain non-audit services to an audit client

Petty Offenses

minor misdemeanors punishable by jail sentence of less than 6 months or a small fine ex) your shop doesn't have updated fire extinguishers and safety precautions so you get charged

Justifiable use of Force

physical violence as a defense -self-defense -deadly force is unjustifiable where the threat of deadly force does not exist

Duress

someone threatens another with immediate bodily harm or loss of life unless the other performed a wrongful act to claim duress... -involve serious bodily harm or loss of life -harm must be more serious than the harm caused -the threat must be immediate and inescapable ex) get phone call that there's a gun to your daughter's head and he's going to shoot her if you don't rob the bank

Bribery

the offering, giving, soliciting, or receiving of money or any object of value for the purpose of influencing the judgement or conduct of a person in a position of trust -must show 3 elements: 1) something of value was offered 2) a federal public official with 3) intent to influence that person's judgement or conduct -commercial bribery: a bribe in exchange for information or payoffs

Fraudulent Concealment

the suppression of material fact that a person is legally bound to disclose

Mail Fraud

the use of mail to defraud the public, which is a federal crime -must demonstrate: 1) an intent to defraud 2) the use of or causing the use of mail to further the fraudulent scheme

Necessity

to say a crime was necessary to prevent a more severe crime from occurring

False Claims Act

to sue the employers for fraud against the government

Property Crime Against Business

typically not committed by employee, crimes committed against the business and can involve violence 1) robbery 2) burglary 3) larceny 4) arson

Pretexting

using fraudulent means to obtain information about someone's phone use