1. McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 22 Criminal Law and Procedure in Business

2. 22-2 Burden of Proof In a civil case, plaintiffs need only to prove that the defendant had committed a civil wrong by a preponderance of the evidence. In criminal cases, where the stakes may involve an individual’s liberty, the standard of proof is much higher; the government must prove their case beyond a reasonable doubt.

3. 22-3 Individual Liability for Business Crimes In 2002, the Sarbanes-Oxley Act imposed significant individual criminal liability for officers, directors, and majority shareholders of corporations that falsify financial disclosures. Provides up to 20 years of incarceration for any employee that destroys documents relevant to a government agency investigation.

4. 22-4 Fraud In 1990, Congress passed the Mail Fraud Act to give federal prosecutors significant leverage in prosecuting white-collar criminals. The statute criminalizes any fraud where the defrauding party uses the mail or any wire, radio, or television.

5. 22-5 Ponzi Schemes Fraudulent investment operation that pays returns to investors from their own money or money paid by subsequent investors rather than from any actual profit earned.

6. 22-6 Racketeer Influenced and Corrupt Organizations Act (RICO) The modern trend is for authorities to use the RICO statute in an expansive manner, including criminal business conduct that is not traditionally related to organized crime. RICO laws define racketeering in broad terms, including crimes such as wire fraud, mail fraud, and securities fraud.

7. 22-7 Insider Trading SEC Act and Insider Trading and Securities Fraud Enforcement Act Tough criminal and civil penalties for insider trading, and wrongful acts of their employees of brokerage houses. Government has strong authority to pursue insider-trading violations.

8. 22-8 Bribery Bribery is covered in both federal and state statutes. Note that bribery is an offense that requires only the offer of a bribe. It is not necessary that the transaction actually took place.

9. 22-9 Foreign Corrupt Practices Act (FCPA) The Foreign Corrupt Practices Act (FCPA) of 1977 is a criminal statute that was enacted principally to prevent corporate bribery of foreign officials in business transactions.

10. 22-10 Obstruction of Justice (1) lying to investigators, (2) altering documents, (3) shredding or concealing documents or any media such as videotape, and (4) inducing other witnesses to lie or refrain from cooperating with authorities.

11. 22-11 Searches and Arrests The Fourth Amendment to the U.S. Constitution protects individuals (and businesses) from unreasonable search and seizure. A warrant is usually required before a search takes place (with certain exceptions). A warrant for arrest is generally not required in order to take a suspect into custody.

12. 22-12 Self-Incrimination The Fifth Amendment provides that no person “shall be compelled in any criminal case to be a witness against himself.” An important element to this protection is that it is limited to custodial interrogations.

13. 22-13 learning outcomes checklist 22 - 1 Explain the origins and sources of criminal law and procedure. 22 - 2 Distinguish between criminal law and criminal procedure. 22- 3 Compare criminal law with civil law.

14. 22-14 learning outcomes checklist 22- 4 Articulate the underlying tenets of criminal law and requirements for criminal liability. 22- 5 Identify circumstances when business managers and owners may be liable for criminal violations by a corporation. 22- 6 Give specific examples of white-collar crime laws that may impact a business entity and/or its owners/managers.

15. 22-15 learning outcomes checklist 22- 7 Explain the steps in the criminal justice system. 22- 8 Name and explain the various constitutional procedural protections afforded to those accused of a crime. 22- 9 Understand the exclusionary rule and how it applies to business.