Legal Environment of Business. Chapter 5, Legal Envoirment Of Business 13th edition ch. 4 (The Constitution: Focus on Application to Business) , Chapter 5 (Criminal Law and Business), chapter 6 (Elements of Torts)

Civil Law

(1) Laws, written or unwritten, that specify the duties that exist between and among people, as opposed to criminal law, 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 United Kingdom and the United States

Federal Supremacy: The Supremacy ClauseArticle VI, Paragraph 2

*"The Constitution, and the Laws of the United States . . . Shall be the supreme Law of the Land; and the judges in every State shall be bound thereby. . . . " *McCulloch v. Maryland states that when the federal government has power to act under the Constitution, its actions are "supreme." *In such a case, federal government actions take precedence over actions of other governments.

The Constitution of the United States

*"We the people of the United States, in Order to form a more perfect a Union, establish Justice, insuredomestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."

White Collar Crime

*1939 reputed origination of term: "Crime committed by a person of respectability and high social status in the course of his occupation." *Criminal activity for financial advantage occurring in business. *FBI estimates such crimes create 1/3 of a trillion dollars in losses each year. *Most cases are against individuals; corporations may also be prosecuted.

Statute of Limitation

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

Mail Fraud

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

Criminal Negligence

Gross negligence so extreme that it is punishable as a crime. For example, involuntary manslaughter can be based on criminal negligence, such as when an extremely careless automobile driver kills someone.

Anti-Money Laundering

Regulations making money laundering more difficult Banks (and any other organization receiving cash) must comply with federal regulations. Require financial organizations to use Know Your Customer (KYC) or Customer Due Diligence (CDD) Programs Track It Down: Tracing asset flows - large cash transactions are suspect Who Is Up to What? Must suspicious transactions - cash deposited over certain amounts ($10,000) and unusual activities.

Anti-Money Laundering

rules designed to restrict the use of money obtained from illegal activities so the funds are not transferred into legitimate activities so as to disguise the origins of the funds

embezzlement

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

Exclusionary Rule

under the Fourth 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.

Crime

violation of the law that is punishable by the state or nation; classified as felonies or misdemeanors

Economic Espionage

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

Argument

*Accused is placed under arrest based on a warrant. *In non-violent matters, accused turns herself in, rather than be taken into custody by the police. *Suspect is booked at police station, photographed, finger printed, and searched. *Chance given to the accused to contact an attorney. *Arraignment - court appearance of the accused (before a judge or magistrate). *Accused may plead guilty, nolo contendere (no contest) or innocent. *Judge may release accused or require bail and will set a court date. *Violent criminals, or those who court fears might flee before trial are held without bail, or bail is set very, very high. *Often defendants plea bargain - allow matter to be settled under court supervision. *Defendant pleads guilty to charges or lesser charge or pleads no contest in exchange for agreed punishment.

Elonis v. U.S.

*After wife left him, Elonis used Facebook to post rap lyrics *Contained violent language; images of wife; co-workers at amusement park; a kindergarten class & law enforcement *He was fired for threats to co-workers. *Wife was granted a "protection-from-abuse" order against him. *FBI arrested him. *Charged him federal crime: transmitting in interstate commerce "communication containing any threat . . . To injure the person of another." *Trial Court: Instructed jury that Elonis could be found guilty if a reasonable person would foresee his statements were a threat. *Jury convicted him.

Elonis v. U.S., cont.

*Appeals court affirmed. He appealed. *Defense by Elonis: Indictment failed to allege he intended to threaten anyone. *At trial Elonis testified: *His posts emulated rap lyrics of Eminem, which involve fantasies about killing his ex-wife. *Said he posted "nothing. . .that hasn't been said already." *All victims said they were afraid & viewed posts as serious threats. *Court said: Defendant must be "blameworthy in his mind." *Such as scienter or mens rea *Must consider defendant's mental state *"Wrongdoing must be conscious to be criminal. . . ." *HELD: Conviction cannot stand.

FREEDOM TO CRITICIZE FREEDOM OF SPEECH VS. DISPARAGEMENT

*Bose Corp. v. Consumers Union *Consumer Reports gave bad review of Bose speakers. *Product disparagement or truthful reporting? To show defamation must show actual malice in publishing a knowing and reckless falsehood. *Supreme Court held: Review fine because no malice *Similar cases regarding material published on Internet

Bridge v. Phoenix Bond & Indemnity Co. Continued

*Bridge v. Phoenix Bond & Indemnity Co. *Supreme Court affirmed in plaintiff's favor. *Plaintiff asserting RICO claim based on mail fraud need not show reliance on defendantsmisrepresentations. *The basis of mail fraud is a mailing that furthers a scheme to defraud - even if the mailing does not contain false information. *Here, mail was used to submit false attestations of compliance with the Bidder Rule to the County. *RICO is strictly construed. Private plaintiffs may assert RICO claims. *Congress can change the statute, but Court will not change RICO's strict outcome.

McCulloch v. Maryland 1819

*Can Congress establish a National Bank? *Court Held: Yes, it is constitutional under the Necessary and Proper Clause, which EXPANDS, not restricts, Congress's powers. •Federal actions take precedence over actions of other governments under Federal Supremacy Clause. •Maryland wanted to regulate the National Bank •Court Held: No, under the Supremacy ClauseCongress has the power.

5TH AMENDMENT - JUST COMPENSATION OR TAKINGS CLAUSE "NOR SHALL PRIVATE PROPERTY BE TAKEN FOR PUBLIC USE, WITHOUT JUST COMPENSATION."

*Can government "take" property for public purposes - oil pipelines, schools, highways? Yes. *Eminent domain - the right of governments to condemn private property for public uses. *What is "just" compensation? Usually "fair market value." *Destruction of property value through takings must be almost complete to receive compensation. *i.e. 60% fall in value due to change in law does not require governmental compensation to affected owners. *Controversial economic development tactics: City uses power to piece together land desired by a private developer - Legal in some states; illegal in others

Kelo v. City of New London, Connecticut

*City put together property along riverfront for upscale housing, a shopping center, and a facility for the Pfizer Company. *Some home owners refused to sell, including Suzette Kelo, who wanted to keep her home. *City used power of eminent domain to buy property and sell to developers. *Homeowners claimed this was a 5th Amendment violation of "public use." *ISSUE Does the City's development plan serve a "public purpose"? *U.S. Supreme Court held: *The takings satisfy the Fifth Amendment requirements of "takings for a public purpose" (higher tax revenue from new development). City wins. *As a result of Kelo, many states passed laws to restrict use of eminent domain to benefit private developers.

Discovery In Criminal Cases

*Civil Law: To reduce surprises both sides must turn over anything requested by other side. *Criminal Law: Parties do their own investigations. Disclose only subset of what is found to the other side prior to trial. *Prosecution must disclose any exculpatory evidence *Evidence that may show defendant is not guilty *The choice to disclose left up to prosecutions lawyers *Defendant has no obligation to disclose to prosecution evidence showing guilt *5th Amendment protects defendants *Right before criminal trial, prosecution & defense exchange witness and exhibits lists.

Consolidated Edison Co. v. Public Service Commission of NY (political speech)

*Con Ed mailed controversial statement supporting nuclear power in monthly billing. *Public Service Comm. of NY said: Can not do it as customers are "captive audience" and should not be subjected to Con Ed's views. *Supreme Court set standard: Was the state's prohibition 1) reasonable as to time, place & manner of speech? 2) a permissible subject matter? 3) serving a "compelling state interest"? *HELD: Supreme Court reversed in favor of Con Ed. *Customers may choose not to be exposed to material by not reading it or throwing away.

Commerce Clause Art. I, Section 8

*Congress has power to: "Regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes" *Congress can regulate foreign trade and interstate commerce *Federal Government supreme in regulating business.

RICO

A law designed to attack organized criminal activity by prosecuting persons who participate or conspire to participate in racketeering. The federal RICO statute of 1970 applies to activity involving interstate or foreign commerce. Many states have adapted laws-"little RICO" acts provide for enforcement not only by criminal prosecution but also by civil lawsuit, in which plaintiffs can use for treble damages

Sentencing Guidelines and Compliance

*Congress mandated that courts be given clear rules about imposing sentences for criminal law violations. *Sentencing Commission created list of factors to consider for each conviction. *Punishment is reduced under Sentencing Guidelineswhen a company has a program in place to reduce chance of problems *DOJ has Guidelines for effective compliance programs. *Some companies have accounting and financial reporting to audit committees to reduce likely problems. *Other companies hire an outsider to be on the compliance committee. *Companies have whistleblower hotlines to encourage anonymous tips. *However, some European countries, such as France, prohibit hotlines saying person accused of impropriety has right to know who complained. *Supreme Court HELD: Guidelines are advisory, not mandatory, for judges to use, but judges are expected follow them closely.

State Taxes May Not Impede Foreign Trade

*Constitution gives Congress power to regulate international trade. *State may not interfere with international commerce through taxation. *Japan Line v. County of Los Angeles: California cities imposed property tax on cargo-shipping containers used in international shipping and owned by Japanese companies. Tax was unconstitutional. Power over foreign commerce rests with Congress.

Necessary and Proper Clause(Clause 18, Article I, Section 8)

*Constitution lists specific Congressional powers and grants *Power "to make all Laws which shall be necessary and proper for carrying into Execution the forgoing Powers..." *This power, with the Commerce Clause, provides strong Congressional control of commerce. *Most things are necessary and proper

Bridge v. Phoenix & Bond Idemnity Co.

*Cook County, Illinois holds auctions for tax liens on delinquent taxpayers' properties. *Buyers must submit bids in own names. Cannot use "agents, employees or other related entities" to disguise the real bidder. *Phoenix Bond and other bidders sued Bridge for fraudulently getting tax liens by filing false documents about name of bidders. *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 not protected by mail fraud statute because scam not directed at them. *If there was a scam, it was directed at County & property owners (not plaintiffs) so plaintiffs had no cause of action. *Appeals court reversed in favor of plaintiffs. Defendant appealed.

Bridge v. Phoenix Bond & Idemnity Co.

*Cook County, Illinois holds auctions for tax liens on delinquent taxpayers' properties. *Buyers must submit bids in own names. Cannot use "agents, employees or other related entities" to disguise the real bidder. *Phoenix Bond and other bidders sued Bridge for fraudulently getting tax liens by filing false documents about name of bidders. *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 not protected by mail fraud statute because scam not directed at them. *If there was a scam, it was directed at County & property owners (not plaintiffs) so plaintiffs had no cause of action. *Appeals court reversed in favor of plaintiffs. *Defendant appealed. Continued

Crime

*Crime: Positive or negative action that violates a penal law *Not civil law *Acts against a state, local, or federal government *Congress and state legislatures decide the criminality of actions - by statute - including punishment possibilities. *Computer and technology have created new versions of old criminal laws. *e.g. Unauthorized entry into computer systems is the new version of the old "breaking and entering" laws

Horne v. Department of Agriculture, Cont.

*Ct. of Appeals: Personal property, such as raisins, receive little constitution protection. Hornes can plant other crops - such as grapes to make wine. *Hornes appealed to U.S. Supreme Court. *Reversed. *Grapes are private property under "Takings Clause." It does not distinguish among different types of property. *Fact that they could plant other crops to avoid being regulated is not good excuse by government. *Hornes relieved of paying fine.

5th Amendment: Right Against Self Incrimination "No person shall be. . . compelled in any criminal case to be a witness against himself."

*Does not apply to public records. *Corporate executives cannot be made to testify against themselves—but must testify about corporate matters. *Business records must be produced even if might incriminate the corporation. *Does self-reporting violate 5th Amendment? *No, it applies to persons, not Corporations *Braswell v. U.S.: President & sole stockholder of company must report about company, even if it incriminates him

Wickard v. Filburn

*Federal controls on production of wheat *Farmer Filburn produced 239 bushels more than he was allowed. Sold none. *He was fined and ordered not to plant more. *Filburn argued that production was used to feed his chickens and cows and for making bread - all consumed on the farm. No commerce. *HELD: Although this appears to be "intrastate" and "trivial," all small farmers together would impact "interstate commerce" and "market conditions." *Congress may regulate all production. *Almost all business is defined as "interstate."

Home and Department of Agriculture

*Federal law allows Dept. Of Agriculture to issue "marketing orders" to maintain stable markets for ag products. *Raisin Administrative Committee could require raisin growers to "reserve" part of crop with no payment. *Raisins usually destroyed. *One year, growers required to give to government 47% of crop. *The Hornes refused. *Contended this was unconstitutional taking of property. *For public use without just compensation. *Government fined Hornes $680,000. They appealed. Court of Appeals upheld the regulation.

Crime Categories

*Felonies more serious than misdemeanors *Classifications (Class A, Class B) and degrees (First degree, Second degree) denote seriousness of criminal charge. *Violent crimes - murder, manslaughter, forcible rape, aggravated assault *Non-violent victim crimes - vehicle theft, burglaries *Victimless crimes - i.e., possession of illegal drugs *White collar crimes - embezzlement, bribery, fraud *Punishment depends on the category under which a person is convicted *A few crimes may be punished by death *Most crimes: Imprisonment/Fines *If convicted of a felony—unable to own a firearm, removed from public office and disqualified from voting in most states.

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.

Crimes and Elements of Crime

*Government agencies decide who will be charged with a crime. Prosecutors receive reports of alleged crime and results of investigation. Prosecutors decide whether or not to bring charges. *Not all claims of criminal activity are investigated. *Politics & personal preference may affect prosecutors' decisions. Process not perfect. *Standard for criminal conviction: "Beyond a reasonable doubt." *Corporations cannot be sent to prison: May pay fines or be subject to various controls if culpability is assigned. May be barred from public contracts. *Criminal negligence: "a degree of carelessness amounting to a culpable disregard of rights and safety of others" ¢Example: Drunk driver drives wrong way down highway and kills a person *Requirements for prosecution: *Actus reus - the guilty act Mensrea -criminal intent

Limits of Searches & Inspections

*Government inspectors who come to business for a warrantless inspection: *Marshall v. Barlow *OSHA inspector asks to search work areas. Barlow refused admission unless inspector got a warrant. *HELD: Inspector must get a warrant. *Skinner v. Railway Labor Executives' Assn.: RR employees involved in train accidents or safety violations can be searched (including blood tests) for alcohol or drugs - closely regulated industry.

Trail

*If matter goes to trial, government attorney (often district attorney) presents prosecution's case. *Defendant must be found guilty "beyond a reasonable doubt." *If jury finds defendant innocent - trial ends. Double jeopardy prevents a defendant from being tried a 2nd time for same criminal charges. But new charges can be brought and another trial occur. *If jury can't agree on verdict, there is a mistrial, and prosecutor will decide whether to proceed again. *If guilty, there may be prison time, jail time (usually less than a year), probation, fines, restitution to victim

White Collar Crimes

*Internal Fraud: ¢Many small businesses do not know they are defrauded ¢Study shows 1/4 of companies with fewer than 100 employees suffered from check tampering (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 (such as for travel) are common *Securities Fraud: Different kinds *Misinformation or omission of information *Insider trading gets a lot of press *Market rigging *Theft from accounts of clients of securities firms

Labrayere v. Bohr Farms

*Missouri enacted statute eliminating right to common law action for private nuisance when "alleged nuisance emanates from property use for crop or animal productions purposes." *Purpose: Preclude damages for loss from odors from concentrated animal feeding operations. *Bohr had hog farm. *On-site sewage treatment and system for composting dead hogs. *Nearby property owners sued for: "Offensive odors, particulate pathogens, hazardous substances, flies, and manure" *Contended state statute was a violation of due process and equal protection. Lower Courts: Held for Bohr.

14th Amendment

*No state . . . shall 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." *U.S. v. Virginia: Supreme Court held Virginia violated equal protection clause by excluding women from attending the Virginia Military Institute *14th Amendment incorporates protections from the Bill of Rights & applies them to state governments. *Due process: *Is violated when state infringes on fundamental liberty interests without narrowly tailoring to meet the compelling state interest *Is offended when state action shocks the conscience or offends judicial notions of fairness and human dignity *Equal Protection: Governments must treat people equally.

*Business Implications From Money Laundering

*Obligations exist in normal business operations *$1 to $2 trillion laundered worldwide each year *Money laundering is taking proceeds of criminal activities (i.e. drug smuggling) & transforming cash in the appearance of legitimate business by putting in bank, buying real estate, etc. to try to avoid law enforcement attention. *Tony Soprano example: *Tony earns $1 million from loan sharking and drug dealing *He creates Soprano Coin Laundry, Inc. *Deposits cash into corporate bank account as income from laundry *Pays himself a salary *Looks like legitimate income

Hughes v. Oklahoma

*Oklahoma prohibits shipping or selling minnows out of state to protect Oklahoma minnows. Hughes bought minnows in Oklahoma and took them to Texas. *Convicted of violating state law. OK Supreme Court upheld statute as constitutional to protect OK natural resources. Hughes appealed. *U.S. Supreme Court reversed. Court Set Guideline: *1) Does statute regulate evenhandedly with only "incidental" effects on interstate commerce? *2) Does statute serve a legitimate "local purpose," and if so, *3) Could "alternative means" promote local purpose as well "without discriminating against interstate commerce?" *Fine to protect wildlife, but could be done in less discriminatory way.

KATZENBACH V. MCCLUNG (USE OF COMMERCE CLAUSE IN NON- DISCRIMINATION) 1964 CASE

*Ollie's Bar-B-Q, a family-owned local restaurant in Birmingham, AL. Only white customers served. *Title II of newly enacted 1964 Civil Rights Act prohibits racial segregation in public accommodations such as restaurants if in interstate commerce. *Is Title II constitutional? *HELD: Yes, activity may "exert a substantial economic effect on interstate commerce."Even if customers all in-state, goods used in restaurant come from elsewhere.

BUSINESS AND FREE SPEECH 1st AMENDMENT and FREEDOM OF SPEECH

*One area of cases: Commercial Speech (advertisements) *Other area of cases: Political statements by corporations (public issues) *Usually allowed *Unless "compelling state interest" to prohibit *For example: public health or safety *Controversial: Supreme Court struck down parts of McCain-Feingold Act prohibiting for-profit and non-profit corporations and unions from broadcasting "electioneering communications."

TAXING POWERART. I, SECTION 8, CLAUSE 1

*Power to "lay and collect taxes" *16th Amendment gave federal government power to impose income taxes. *Taxes used to raise revenue and /or deter/punish/encourage certain behavior. *Supreme Court: "the power to tax includes the power to destroy." *Supreme Court upheld taxes on illegal activities (such as sale of narcotics) *If report income: evidence of illegal activity *If don't report, violate tax laws

Defenses

*Raise doubts in jurors' minds through alibi *Evidence that crime was not committed *Affirmative Defenses: Even if prosecution's claims are true, other facts prevent the claims from constituting the crime. *Intoxication and insanity (rarely successful). *Improper procedure (such as tainted evidence) in prosecution *Statute of Limitations expired (time varies by crime) *Unsolved murders - statute of limitations may never end *Statute of limitations can "toll" to stop the running of time (e.g. if criminal flees country to avoid prosecution) *Action was justifiable, i.e. self defense with reasonable force *Self-defense in violent crimes cases (use of force justifiable to protect oneself against another) *Entrapment (Law enforcement sets a trap to lure someone into committing a crime he/she had no intention of committing

2nd Amendment Right to Bear Arms

*Restrictions government may place on gun ownership and possession - not settled area *Some jurisdictions (i.e. NYC) have very tight controls. *Some employers & business ban the possession of firearms anywhere on company property. *State of Oklahoma: Passed statute prohibiting employers from preventing employees from storing firearms in their personal, locked vehicles on company property.

When State law impedes Interstate Commerce Some Supreme Court Cases:

*Southern Railway Co v. Arizona - Court struck down Arizona law which required trains to be shortened for safety reasons. Said interstate commerce should be "free from interferences." *Chemical Waste Management v. Hunt - Violates Commerce clause to charge more for out-of-state generated hazardous waste than for in state waste. *U.S. vs. Locke - Supreme Court struck down WA state regss regarding tanker design and operation. Congress has uniform rules re: tanker operations in all waters. States can not intervene. *Wyoming v. Oklahoma - Oklahoma law requiring coal-burning power plants to burn at least 10% Oklahoma-mined coal was discriminatory & interfered with interstate commerce. ¢States have legitimate interest in protecting public health, safety & other public policies ¢However, regulation for these goals must be designed to achieve its legitimate interest with minimal impact on interstate business. ¢In some areas, states may add their own rules to strengthen impact of federal rule ¢As long as no conflict or intent to impede interstate commerce.

State Taxation

*State taxes cannot impede interstate or international commerce. *Northwestern States Portland Cement Co. v. Minnesota: State cannot impose taxes upon person passing through the state or coming into it merely for a temporary purpose. *Baccus Imports v. Dias: Court struck down Hawaii's 20% tax on all alcoholic beverages except for local products. Same tax must be imposed on all. *Davis v. Michigan Dept. of Treasury: Michigan exemption from state income taxed the retirement benefits paid to state employees. *All other retirement income (i.e. federal government benefits) taxed. *Taxes must apply equally to all retirement benefits. *Comptroller v. Wynne: In 2015 the Court struck down Maryland income tax scheme that allowed counties to impose higher taxes on income earned outside the sate of Maryland than income earned within the state. *Apportioning state tax burden: Supreme Court held business income may be taxed by states as long as they use formulas that divide a company's income fairly in the portion attributable to its state.

Labrayere v. Bohr Farms cont.

*Statute must survive "strict scrutiny" of constitutional claim. *Two Steps: *1) Identify the classification to ascertain appropriate level of scrutiny. *2) Does law make distinction on basis of suspect classificationand exercise of fundamental right? THEN strict scrutiny applies. *If no suspect classification, the court applies rational basis review to see if law is related to a legitimate end. *Rural landowners suffering from the smell are not a "suspect class"—those are race, religion, etc. *No fundamental rights violation such as movement, free speech or voting. *Land use regulation not subject to heightened judicial scrutiny under equal protection. *Issue: Not that law is wise or desirable but if law is completely irrational. *Affirmed.

Evidence

*Strict standards for gathering and presentation at trial *Evidence was handled properly in the "chain of custody" *If improperly obtained or presented, evidence is excluded (under procedural due process) *Called the exclusionary rule (a 4th Amendment protection) *May be referred to as "fruit of the poisonous tree" *Authorities may *Search property *Seize documents and other physical items *Warrants usually needed for search of property, persons, or seizure of property. *Warrant issued by a judge or magistrate *There is a "hot pursuit" exception. *Also a plain view exception *Law enforcement officials must show probable cause to a judge to obtain a warrant.

Bridge v. Phoenix Bond & Indemnity Co. Continued

*Supreme Court affirmed in plaintiff's favor. *Plaintiff asserting RICO claim based on mail fraud need not show reliance on defendantsmisrepresentations. *The basis of mail fraud is a mailing that furthers a scheme to defraud - even if the mailing does not contain false information. *Here, mail was used to submit false attestations of compliance with the Bidder Rule to the County. *RICO is strictly construed. Private plaintiffs may assert RICO claims. *Congress can change the statute, but Court will not change RICO's strict outcome.

White Collar Crime

*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 *Fraud on the Internet: Essentially the same as telephone & telemarketing fraud ¢Chat rooms, e-mail, message boards or Websites presenting fraudulent solicitations to victims

6th, 7th, and 8th Amendments

6th Right to trial by jury in criminal cases 7th Right to trial by jury in common law cases 8th Limits cruel & unusual punishments and excessive fines

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 whether to issue indictments. If evidence presented by the prosecutor is sufficient, an indictment will issue. The jury may screen possible charges and may participate in an investigation that may lead to an indictment

White Collar Crimes

A wide range of nonviolent crimes, often involving cheating or dishonesty in commercial matters. Examples would be fraud, embezzlement, and insider trading.

Whit Collar Crimes

Antitrust: Violation under the Sherman Act and Clayton Act. May be prison terms involved especially for in price fixing 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). Bribery: Offer or taking of money, goods, services, etc. to influence official actions or decisions. Counterfeiting: Copying of genuine items without authorization - money, designer clothing, other products. Credit Card Fraud: Unauthorized use of a credit card.

White Collar Crime

Antitrust: Violation under the Sherman Act and Clayton Act. May be prison terms involved especially for in price fixing 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). Bribery: Offer or taking of money, goods, services, etc. to influence official actions or decisions. Counterfeiting: Copying of genuine items without authorization - money, designer clothing, other products. Credit Card Fraud: Unauthorized use of a credit card.

White Collar Crime

Environmental Law Violations: Federal (EPA) and state laws Data fraud, e.g. 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 1,500 criminal investigations/year; hundreds of years of prison and jail time imposed Financial Fraud: Regulation of banks and financial institutions Firms and employees subject to criminal liability Fraud in loans, financial documents, mortgages, etc.

White Collar Crimes

Environmental Law Violations: Federal (EPA) and state laws Data fraud, e.g. 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 1,500 criminal investigations/year; hundreds of years of prison and jail time imposed Financial Fraud: Regulation of banks and financial institutions Firms and employees subject to criminal liability Fraud in loans, financial documents, mortgages, etc.

Consewuences for Non-Compliance

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

Constitutional Right: 5thAmendment

Miranda Rights must be read if a person is accused of or held in suspicion of a crime Right to remain silent (under the 5th Amendment) Statements made can be used as evidence against you in court Right to be represented by counsel If accused cannot afford an attorney, one will be provided by the court

Indictment

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

Nolo Contendere

Latin for "I do not wish to contend;" that is, a party pleads no contest. It is often shortened to nob.

Actus Reus

Latin for "guilty act"; a wrongful deed that constitutes the physical component of a crime; usually must be joined with means mens rea to establish criminal liability.

Mens Rea

Latin term for "the state of mind" of the actor

Misdemeanor

Less than a year of jail, an offense less serious than a felony and which may be punished by a fine or sentence to a local prison for less than one yearterm-3

Warrant

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

White Collar Crimes

Racketeer Influenced and Corrupt Organizations (RICO) Act *Originally an extra weapon against organized crime, such as the Mafia *Racketeering meant activities such as bribery or extortion. *Meaning expanded to include activities such as mail fraud, etc. *Successful RICO claim receives triple actual damages + attorneys' fees through civil claims *Government can seek injunction, seize defendant's assets, prevent asset transfer, or require defendant to post a performance bond. *Government may press for imprisonment. *Complicated and unpredictable area of the law now used in suits against persons, businesses, political protest groups and terrorist organizations by government and private parties.

White Collar Crimes

Racketeer Influenced and Corrupt Organizations (RICO) Act *Originally an extra weapon against organized crime, such as the Mafia *Racketeering meant activities such as bribery or extortion. *Meaning expanded to include activities such as mail fraud, etc. *Successful RICO claim receives triple actual damages + attorneys' fees through civil claims *Government can seek injunction, seize defendant's assets, prevent asset transfer, or require defendant to post a performance bond. *Government may press for imprisonment. *Complicated and unpredictable area of the law now used in suits against persons, businesses, political protest groups and terrorist organizations by government and private parties.

Probable Cause

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

Toll

Refers to a time period, usually set by 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 something has tolled, the right has been lost

White Collar Crimes

Tax Evasion: Failure to file tax returns Failure to report income Overstating expenses Not reporting illegal income IRS devotes significant resources to track down violators - jurisdiction can be international, i.e. money hidden in foreign bank accounts. Hundreds of billions recovered in thousands of cases annually. Whistleblowers may collect percent.

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

Central Hudson Gas & Electric v. Public Service Comm. of NY (commercial speech)

The NY PSC ordered the end of advertising that promoted the use of electricity because it was contrary to public interest. Central Hudson contested the regulation. NY courts upheld. U.S. Supreme Court held: Commercial speech receives less protection than political speech but the ban was more extensive than necessary to achieve the state's objective and thus was unconstitutional. Reversed in favor of Central Hudson. *Court set the standard for review in such cases: 1) Does the speech concern a lawful matter and is it truthful? 2) Does the government have a substantial interest? 3) Does the restriction directly advance the public interest? 4) Is the restriction no more extensive than is necessary?

Arraignment

The initial step in a criminal prosecution; the defendant is brought before the court to hear the charges and enter a plea

Bribery

The offering, giving, receiving, or soliciting of something of value for the purpose of influencing the action of an official in the discharge if public or legal duties

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 extends it to include activities such as mail fraud and securities frauds.

Felony

a serious crime (such as rape, murder, or robbery ) that may be punishable by impresionment to excess of one year or death

Double Jeopardy

When a defendant is prosecuted or sentenced twice for the same offense. Double jeopardy is prohibited by the Fifth Amendment

Plea Bargin

also called 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 multiple charges in exchange for concessions such as a lighter sentence or a dismissal of the other charges.

White Collar Crime

Wire Fraud: Any electronic communication involved in illegal activities (like mail & telephone/internet fraud) Traditionally only state prosecution Now often federal prosecution There is a sweeping nature to the statutes seen in cases Includes "a scheme or artifice to deprive another of the right to honest services" Ex: Pasquantino v. U.S.: Americans bought liquor in U.S. and smuggled it into Canada for resale, avoiding high Canadian taxes. Because electronic (wire) communications were used and originated in the U.S., two people convicted in the U.S. sent to prison for 5 years each for cheating the Canadian government.

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.

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 Wire Fraud 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.

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 of a criminal offense is usually fined or imprisoned.

Business & Commercial Speech

¢Bigelow v. Virginia: Court reversed conviction of VA newspaper editor who published ads about availability of abortions in NYC. ¢Virginia State Bd. Of Pharmacy v. Virginia Citizens Consumer Council: Court struck down VA law prohibiting advertising of prices of prescription drugs. *Shapiro v. Kentucky Bar Assn.: Court held state bar association violated 1st Amendment by restrictions on truthful advertising for professionals services (e.g.lawyers or doctors). *Bd. Of Trustees of the State University of NY v. Fox:Standard for judging commercial speech regulation is one that is "not necessarily perfect but reasonable" and "narrowly tailored to achieve the desired objective."

4TH AMENDMENT - UNREASONABLE SEARCH & SEIZURE "The right of the people to be secure in their persons, houses, papers and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue but upon probable cause...."

¢Does government (i.e. OSHA) need warrant? Usually, yes Exception: closely regulated businesses ¢However, business usually agrees to search. ¢Generally, closed places such as homes and businesses are not subject to random police searches. ¢Improperly obtained evidence may not be used in court under the exclusionary rule.

White Collar Crimes

¢Government Fraud: Based on contracts with public agencies Billing for goods not delivered Double billing Inferior goods Government payment programs ¢Farm subsidies ¢Public housing ¢Educational programs ¢Healthcare Fraud: Over-billing and scams by hospitals, doctors ambulance services, laboratories, pharmacies, extended care facilities ¢Insider Trading: Person trades a security while in possession of material, non-public information.

White Collar Crimes

¢Government Fraud: Based on contracts with public agencies Billing for goods not delivered Double billing Inferior goods Government payment programs ¢Farm subsidies ¢Public housing ¢Educational programs ¢Healthcare Fraud: Over-billing and scams by hospitals, doctors ambulance services, laboratories, pharmacies, extended care facilities ¢Insider Trading: Person trades a security while in possession of material, non-public information.

The Articles of the Constitution

¢I. Composition and powers of Congress ¢II. Selection and powers of the President ¢III. Creation and powers of the federal judiciary ¢IV. Role of the states in the federal system ¢V. Methods of amending the Constitution ¢VI. Declaring the Constitution to be supreme law of the land ¢VII. Method for ratifying the Constitution

Whit Collar Crimes

¢Insurance Fraud: Insurance companies commit fraud, charging higher rates than allowed by state regulators. Policy holders lie to get lower rates. Policy holders pad claims to get paid more. ¢Mail Fraud: Sending of fraudulent materials through U.S. Postal Service to communicate fraudulent activities. ¢Money Laundering: Hiding the truth about the origins of money, especially illegal activities. Obligation to report income even from illegal income for tax purposes.

White Collar Crimes

¢Insurance Fraud: Insurance companies commit fraud, charging higher rates than allowed by state regulators. Policy holders lie to get lower rates. Policy holders pad claims to get paid more. ¢Mail Fraud: Sending of fraudulent materials through U.S. Postal Service to communicate fraudulent activities. ¢Money Laundering: Hiding the truth about the origins of money, especially illegal activities. Obligation to report income even from illegal income for tax purposes.

Prosecution Process

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

Federal and State Regulatory Regulations

¢States often legislate on a matter on which Congress has legislated. ¢Federal regulation takes precedence over state regulation. ¢State regulations may not contradict federal law standards. ¢State may not enact laws that burden interstate commerce by imposing restrictions on business from other states.

The Constitutional Amendments

¢The constitutional amendments began almost immediately after it was ratified. ¢In 1791 the first 10 amendments were ratified by the States. Called the Bill of Rights. ¢Proposed amendments must be passed by 2/3 vote in the House and Senate. ¢Then ratified by 3/4 of state legislatures