“White Collar” Crimes

In addition to serving as a précis of the subject of ‘white collar’ crime, this chapter does three things. First, it deals with white collar crime’s longstanding definitional problem, rejecting several standard approaches and arguing that the category is most usefully understood according to the conceptual legal problem these offenses generate. White collar crimes, much more than other offenses, are committed in social settings in which undesirable behaviors are embedded within socially welcome conduct. Thus they are difficult to set apart and extract through clearly specified ex ante rules of law. Second, the chapter illustrates this definitional claim, and discusses its limitations, through a brief description of this field’s large and highly active enforcement landscape, primarily in the United States. Third, the chapter relates the definitional claim to persistent public debate about white collar crime and explains why equilibrium in that discussion is not likely given ambivalence toward the criminal justice system’s treatment of socially advantaged persons

Is the White Collar Offender Privileged?

Much public commentary has asserted or implied that the American criminal-justice system unjustly privileges individuals who commit crimes in corporations and financial markets. This Article demonstrates that this claim is not accurate—at least not in the ways commonly believed. Law and practice of sentencing, evidence, and criminal procedure cannot persuasively be described as privileging the white collar offender. Substantive criminal law makes charges in white collar cases easier to bring and harder to defend against than in other cases. Enforcement institutions, and the political economy in which they exist, include features that both shelter corporate offenders and heighten their exposure to criminal liability. Corporate actors enjoy a large advantage in legal-defense resources relative to others. That advantage, however, does not pay off quite as one might expect. A fully developed claim of privilege can be sustained only by showing that basic American arrangements of criminal law and policing have been misguided. This argument would fault the justice system for failing to treat illegal behavior within firms as requiring omnipresent policing, looser definitions of criminality, the harshest of punishments, and rethinking of the right to counsel. Those who believe corporate offenders are privileged should confront the difficulties that argument entails. And they should be aware of the complications that follow from overreliance on punishment to deal with intractable problems of ex ante regulatory control

Criminal Procedure Within the Firm

It seems improbable that the theoretical and doctrinal framework of criminal procedure, developed mostly through a binary model of the individual and the state, would fit without modification in the tripartite model of the state, the firm, and the individual that characterizes the investigation and sanctioning of criminal conduct within legal entities. This intuition—which has been underexplored in spite of heated public debate about the state’s practices in this area—proves correct. I develop some components of a framework for understanding procedure for individual cases of criminal wrongdoing within firms and generating insights to guide reform. The process of pursuing individual cases within firms (as opposed to firm cases against firms) is distinctive for at least three reasons: in terms of causation and incentives, the presence of an organization materially alters the incidence of individual misconduct ex ante and the efficiency and efficacy of investigating and prosecuting that conduct ex post; the nature of the applicable substantive criminal violations (white collar crimes) causes such cases to ripen into criminal cases more slowly than those outside business firms; and lawyers have multiple roles in such cases not only ex post but also ex ante. I evaluate two current practices in light of these structural differences: state use of the fruits of employer coercion of employees’ waivers of the right to silence; and state negotiation with firms over the scope of firms’ indemnification of their agents for litigation costs. I conclude that some reforms of current practices in these areas would be beneficial but that calls for abolition of those practices are misguided

The Responsibility Gap in Corporate Crime

In many cases of criminality within large corporations, senior management does not commit the operative offense — or conspire or assist in it — but nonetheless bears serious responsibility for the crime. That responsibility can derive from, among other things, management’s role in cultivating corporate culture, in failing to police effectively within the firm, and in accepting lavish compensation for taking the firm’s reins. Criminal law does not include any doctrinal means for transposing that form of responsibility into punishment. Arguments for expanding doctrine — including broadening of the presently narrow “responsible corporate officer” doctrine — so as to authorize such punishment do not fare well under the justificatory demands of criminal law theory. The principle obstacle to such arguments is the large industrial corporation itself, which necessarily entails kinds and degrees of delegation and risk-taking that do not fit well with settled concepts about mens rea and omission liability. Even the most egregious and harmful management failures must be addressed through design and regulation of the corporation rather than imposition of individual criminal liability

Criminally Bad Management

Because of their leverage over employees, corporate managers are prime targets for incentives to control corporate crime, even when managers do not themselves commit crimes. Moreover, the collective actions of corporate management — producing what is sometimes referred to as corporate culture — can be the cause of corporate crime, not just a locus of the failure to control it. Because civil liability and private compensation arrangements have limited effects on management behavior — and because the problem is, after all, crime — criminal law is often expected to intervene. This handbook chapter offers a functional explanation for corporate criminal liability: individual criminal liability cannot effectively address the relationship between senior managers and corporate crime but corporate criminal liability can, at least in part. Thus the practice of corporate criminal liability has grown and will continue to do so, at least in the absence of major restructuring of criminal law

Liability and Admission of Wrongdoing in Public Enforcement of Law

Some judges and scholars have questioned the social value of the standard form in which the Securities and Exchange Commission settles its corporate enforcement actions, including the agency’s use of essentially unreviewed consent decrees that include no admission of liability or wrongdoing. This essay for a symposium on SEC enforcement provides an analysis of the deterrent effects of the three main components of settlements in public enforcement of law: liability, admission, and remedy. The conclusions are the following. All three components have beneficial deterrent effects. Cost considerations nonetheless justify some settlements that dispense with liability or admission, or even both. But a practice like the SEC’s of uniformly institutionalizing settlements without admissions, such that the deterrent effects of admissions are never realized, even for bargaining leverage, is not justified. Further, there is reason to believe that some form of judicial review of enforcement settlements would contribute to deterrence. To put the argument another way, the SEC and other agencies engaged in public civil enforcement could learn something from contemplating why the federal criminal justice system strongly disfavors nolo contendere pleas and why a plea bargaining system dominated by nolo pleas would be so undesirable as to be unthinkable

The Blaming Function of Entity Criminal Liability

Application of the doctrine of entity criminal liability, which had only a thin tort-like rationale at inception, now sometimes instantiates a social practice of blaming institutions. Examining that social practice can ameliorate persistent controversy over entity liability\u27s place in the criminal law. An organization\u27s role in its agent\u27s bad act is often evaluated with a moral slant characteristic of judgments of criminality and with inquiry into whether the institution qua institution contributed to the agent\u27s wrong. Legal process, by lending clarity and authority, enhances the communicative impact, in the form of reputational effects, of blaming an institution for a wrong. Reputational effects can flow through to individuals in ways that reduce probability of future wrongdoing by altering individual preferences and forcing reevaluation and reform of institutional arrangements. Blame and utility are closely connected here: the impulse to blame organizations and the beneficial effects of doing so both appear to depend on the degree of institutional influence on the agent. These insights imply that the doctrine should be tailored, unlike present law, to more fully exploit criminal law\u27s expressive capital by selecting cases according to entity blameworthiness. Barriers to describing the phenomenon of organizational influence and culture prevent discovery of a first-best rule of institutional responsibility. A second-best step would be to enhance the existing doctrine\u27s examination of agent mens rea, to impose fault only if the agent acted primarily with the intent to benefit the firm

Culpability and Modern Crime

Criminal law has developed to prohibit new forms of intrusion on the autonomy and mental processes of others. Examples include modern understandings of fraud, extortion, and bribery, which pivot on the concepts of deception, coercion, and improper influence. Sometimes core offenses develop to include similar concepts, such as when reforms in the law of sexual assault make consent almost exclusively material. Many of these projects are laudable. But progressive programs in substantive criminal law can raise difficult problems of culpability. Modern iterations of criminal offenses often draw lines using concepts involving relative mental states among persons whose conduct is embedded within socially welcome activities. With such offenses, legal institutions struggle in borderline cases to locate sufficient fault to satisfy the demands of justification for punishment. This Article demonstrates this problem through exploration of the law of each of these offenses in modern form. To address the problem, the Article turns to criminal law theory, finding a connection between culpability and the principle of notice in criminal law. Rather than its absence serving to exculpate, notice can profitably be understood to inculpate. To manage the problem of culpability in modern crime, the Article concludes, legal institutions should attend more explicitly — in both criminalization and adjudication — to the questions whether the actor was aware of the normative wrongfulness of her conduct and, if not, whether punishment is justified on a negligence level of fault. This orientation is especially advisable when further expansive moves in American criminal justice are now difficult to justify