Business Crime and
Criminal Procedure
A criminal act is a behavior that society
defines as an intolerable threat to the social order. Torts, as we learned in
an earlier chapter, involve the breach of duties between private individuals
that culminates in private litigation. Crimes, however, are prosecuted by the
state, which represents all the people.
There are two basic philosophical
perspectives on the objectives of punishment for committing a crime: the
utilitarian and the retributive. Under the utilitarian view, the goal of
punishment is to prevent or reduce the likelihood the crime will be committed
in the future. The retributive view is less instrumental. It views punishment
in ethical terms as the necessary outcome of committing a moral wrong.
Penologists and criminal law experts have
also identified six specific goals of punishment. These are general deterrence,
special deterrence, rehabilitation, incapacitation (restraint), social
condemnation, and retribution. Each form of punishment, ranging from monetary
fines to the death penalty, satisfies some of these goals and fails to achieve
others.
Since crimes are punished by depriving a
person of property (when a fine is imposed) or freedom (when a jail term is
imposed), the Constitution and the statutes have established a set of
procedural rules to ensure that those accused of committing crimes are treated
fairly. The Constitution protects people from unreasonable searches and
seizures, double jeopardy, excessive bail, and cruel and unusual punishment,
while guaranteeing the right to a fair trial and an attorney. Additionally, the
federal government and each state has established a system of stages through
which those suspected of committing crimes pass. For purposes of crimes are
categorized by severity. Felonies are the most severe, misdemeanors fall in the
middle, and violations are the least serious.
The necessary elements of each crime are
defined by federal and state statutes. Each crime requires the commission of,
or failure to commit, an act and a specified state of mind.
Within the business world, crimes
generally fall into one of several categories of "white collar"
crimes. Such crimes involve (1) violating a statute that regulates a business,
(2) neglecting a statute's disclosure requirements, or (3) committing an act
that has been specifically made illegal by a statute. The statutes that are
most frequently used to prosecute business crimes are: The 1984 Federal
Computer Crime Statute, which outlaws computer crimes; the mail and wire fraud
laws, which prohibit the use of the postal system and electronic communications
networks to commit a fraud; and RICO, which makes it illegal to use a legitimate
business for racketeering. In addition to being a criminal law, RICO has a
civil component that enables a private suit against a business or individual
that has engaged in racketeering. The other crimes that occur, with some
frequency, within business are crimes against property (e.g., embezzlement and
arson).
Corporate crime presents a challenge to
traditional notions of criminal responsibility. At common law, corporations
were not considered to be distinct entities, and, thus, were considered to be
incapable of acting or formulating a state of mind. Instead, they acted only
through their agents.
By the turn of the century, however,
courts eliminated this impediment to holding corporations liable for committing
criminal acts by deeming them persons under the law. In addition to holding a
corporate entity criminally liable, agents of a corporation, such as corporate
officers, may be held personally liable.
Although rarely relevant in criminal
proceedings involving businesses, the most frequently invoked criminal defenses
are: insanity, infancy, entrapment, and mistake of fact.
