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date: 18 October 2017

Legal and Political Reponses to White-Collar Crime

Summary and Keywords

American responses to white-collar crime, especially corporate wrongdoing, passed a turning point in 1991 with the enactment of the U.S. Sentencing Guidelines for Organizations, which adopted a “carrot and stick” approach to sentencing corporate offenders, including big incentives for companies introducing compliance programs. In the 2000s, this approach was enhanced by the enactment of the Sarbanes–Oxley Act of 2002 and the Thompson memo of 2003. In addition to the effects of the Thompson memo, federal prosecutors, learning from the fate of Arthur Andersen, came increasingly to rely on deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs) after 2005. However, the Yates memo issued in September 2015 may change Department of Justice policy on corporate wrongdoing dramatically, particularly regarding investigation and prosecution of individuals.

In thinking about and conceptualizing legal and political responses to white-collar crime, two main actors are meaningful: the corporation and the individual. Today, a corporation is criminally liable under the respondeat superior doctrine in federal criminal law, and corporate offenders are sentenced under the Organizational Sentencing Guidelines, which provide for fines, restitution, and probation as possible criminal penalties. In recent years, around 150–200 organizations have been sentenced under the Sentencing Guidelines annually.

An individual white-collar criminal may be personally liable for their unlawful acts even if the corporation itself is convicted too. Individuals may be convicted absent any showing of mens rea in rare cases (strict liability crime and “willful blindness”). In the last decade, more than 8,000 individuals were prosecuted and convicted, for around a 90% conviction rate. One effect of the Yates memo may be to shift the main target of legal and political response to white-collar crime from the corporation to the individual. New policies under the Yates memo also come with new problems, for instance, that companies may lose incentive to introduce a compliance program or may look for scapegoats to escape prosecution themselves.

Keywords: Federal Sentencing Guidelines for Organizations, Thompson Memo, Yates Memo, deferred prosecution agreement, non-prosecution agreement, corporate criminal liability, willful blindness

A Brief History of Legal and Political Responses to White-Collar Crime

Until the 1950s

In the late nineteenth and early twentieth centuries, the U.S. Congress legislated against white-collar crime in a fragmentary fashion (e.g., the Sherman Antitrust Act of 1890 or the Security Exchange Act of 1933). The U.S. Supreme Court found that in general a corporation could be criminally liable in 1909.1 However, these laws and rulings were exceptions—generally speaking, legal and political responses to white-collar crime were very passive at that time. Needless to say, the level of social concern about white-collar crime played a role in driving (or not driving) action, and Americans did not generally consider white-collar crime including corporate wrongdoing to be serious or see it as important for it to be a target of criminal law until the 1950s because, as Edwin Sutherland pointed out (Sutherland, 1949), white-collar crime had not been considered a serious crime.

From the 1960s to the 1980s

In the 1960s and 1970s, several serious scandals in which social elites or companies were implicated—for instance, the heavy electrical equipment antitrust cases, the Watergate affair, and the Ford Pinto cases—triggered public concern and criticism. People increasingly tended to view white-collar crimes as having greater moral and economic costs than street crimes and to support more and harsher criminal sanctions for white-collar offenders (Cullen, Clark, Mathers, & Cullen, 1983). In compliance with public opinion, legal and political responses to white-collar crime became severer also.

In the 1980s, various major white-collar crime cases, such as the Wall Street insider trading scandal, savings and loan scandal, Bank of Credit and Commerce International (BCCI) debacle, and Exxon Valdez marine pollution debacle—continued to occur. However, white-collar criminal law had not yet developed enough to reflect public pressure for more stringent treatment of those crimes at that time (Simon & Eitzen, 1982). For example, in the cases that emerged out of the savings and loan scandal the average sentence given for major defendants was 36 months, compared to 38 months for car thieves and 56 months for burglars (Calavita, Pontell, & Tillman, 1997).

Reforms often came in the wake of these major scandals and legal cases. In particular, the Sentencing Reform Act of 1984 created the sentencing commission that produced the U.S. Sentencing Guidelines—rules that set out a uniform sentencing policy for individual offenders convicted of felonies and serious misdemeanors, including white-collar crime, in the federal criminal courts. The sentencing guidelines, which provided for harsh sentences of individual white-collar offenders, went into effect on November 1, 1987. However, their actual effect was limited, because federal prosecutors often resorted to plea-bargaining in those cases.

In the 1990s

The Sentencing Guidelines for Organizations (U.S. Sentencing Guidelines, Chapter Eight), enacted on September 1, 1991, constituted a turning point in the treatment of white-collar crime in the United States. Because enacting that guidelines meant that at last, the U. S. Government came to be able to have an effective weapon fighting for the corporate wrongdoing that had been generally recognized as one of the most serious white-collar crimes. In the Sentencing Guidelines, fines, restitution, and probation were set out as potential criminal penalties; conditions of probation under the Guidelines included remedial orders, community service orders, and “notices to crime victims” for corporate offenders.

The Organizational Sentencing Guidelines adopted a “carrot and stick” approach to sentencing corporate offenders, with the threat of heavy criminal fines for violators constituting the “stick” and the “carrot” being the opportunity for very substantial fine mitigation if the convicted corporation instituted an effective compliance program or promptly reported its wrongdoing and fully cooperated with a government investigation. Thus, incentives were imparted to America’s companies to introduce compliance programs.

The Organizational Sentencing Guidelines set forth minimum criteria for such a program to be deemed effective: (1) compliance standards and procedures must be established to deter crime; (2) high-level personnel must be involved in oversight; (3) substantial discretionary authority must be carefully delegated; and (4) compliance standards and procedures must be communicated to employees (§8B2.1). This new prevention-oriented legal and political response to white-collar crime had been highly evaluated by legal and business professionals so that it could reform corporate culture effectively.

After the 2000s

In the wake of the Enron debacle of 2001, Congress enacted the Sarbanes–Oxley Act of 2002 and proceeded to punish corporate wrongdoing more harshly than before while simultaneously maintaining incentives for good acts. The U.S. Sentencing Commission modified the provisions of the Sentencing Guidelines for Organizations that set forth the attributes of effective compliance programs more practically. By doing this, the “carrot and stick” approach was thus preserved.

The government in this period increased incentives to introduce compliance programs. In January 2003, Larry D. Thompson, then–United States Deputy Attorney General, issued an internal Justice Department document entitled “Federal Prosecution of Business Organizations” but more commonly known as the “Thompson memo” to the heads of Department of Justice components and United States Attorneys.2 It advised prosecutors to consider an illustrative but not exhaustive list of nine factors dealing with alleged corporate wrongdoing: (1) the nature and seriousness of the offense, including the risk of harm to the public; (2) the pervasiveness of wrongdoing within the corporation; (3) the corporation’s history of similar conduct; (4) the corporation’s timely and voluntary disclosure of wrongdoing and its willingness to cooperate; (5) the existence and adequacy of the corporation’s compliance program; (6) the corporation’s remedial actions; (7) collateral consequences; (8) the adequacy of the prosecution of individuals responsible; and (9) the adequacy of remedies such as civil or regulatory enforcement actions. That is to say, the government permitted prosecutors not only to mitigate a fine but also to defer prosecution of companies that had committed an offense in spite of having adopted a putatively adequate compliance program.

Under the Thompson memo, federal prosecutors increasingly used deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs) as alternatives to prosecution for corporate offenders. These are informal agreements between the prosecutor and defendant (corporate offender) that defer prosecution on the condition that the offender will admit wrongdoing, pay a monetary penalty, cooperate with government investigations, and/or reform a company’s compliance program.

The fate of Arthur Andersen, one of the “Big Five” accounting firms and Enron’s auditors, strongly influenced developments in the use of DPAs and NPAs. Andersen was prosecuted along with David Duncan, who had been in charge of the Enron account and had shredded documents to keep them out of government hands, was tried and convicted for obstruction of justice in 2003, and served as the government’s star witness under a plea bargain. Although the Supreme Court eventually overturned the Andersen conviction,3 Andersen was already substantially dead—the taint of indictment and conviction in the lower court was insurmountable. It was recognized again that a corporate conviction had terrible effects on innocent people: employees, clients, and the public. The government came increasingly to regard corporations as “too big to jail” (Garrett, 2014).

As a result, since the mid-2000s, the government has tended to apply DPAs and NPAs in cases of corporate crime (Figure 1). From 2004 to 2012, DOJ entered into 242 DPAs and NPAs (average over 30 per year), in contrast from 1992 to 2004, when it entered into 26 DPAs and NPAs (average over 2 per year). The Criminal Division of DOJ entered DPAs and NPAs in more than two-thirds of the corporate defendant cases it resolved between 2010 and 2012 (Uhlmann, 2016) and conducted twice as many DPAs and NPAs as plea agreements (Uhlmann, 2013). As a result, corporations, especially large ones, were able to receive a bigger carrot to avoid the ignominy of criminal conviction than before.

Legal and Political Reponses to White-Collar CrimeClick to view larger

Figure 1. Number of DPAs and NPAs (2000–2015)

Source: Gibson Dunn, 2015 Year-End Update on Corporate Non-Prosecution Agreements (NPAs) and Deferred Prosecution Agreements (DPAs) (2016), available at http://www.gibsondunn.com/publications/Pages/2015-Year-End-Update-Corporate-Non-Prosecution-Agreements-and-Deferred-Prosecution-Agreements.aspx.

It may thus be unsurprising that at the same time, the number of corporations prosecuted and convicted for federal crimes has decreased steadily since 2005 (Table 2). The number of prosecuted corporations in 2014 was 237, a more than 40% decrease from 2005, when 398 corporations were prosecuted.

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Figure 2. Numbers of Corporations Prosecuted and Convicted for Federal Crimes (1996–2014)

*Full data are not available from the source.

Source: TRAC Reports, Justice Department Data Reveal 29 Percent Drop in Criminal Prosecutions of Corporations, available at http://trac.syr.edu/tracreports/crim/406/#figure1.

However, on September 9, 2015, DOJ policy regarding corporate prosecutions changed again. Sally Q. Yates, United States Deputy Attorney General, issued a new memorandum, “Individual Accountability for Corporate Wrongdoing” (the “Yates memo”), to Assistant Attorney Generals of various divisions of DOJ and all U.S. Attorneys. In that memo, several changes to DOJ policy are articulated, particularly regarding investigation and prosecution of individuals for corporate wrongdoing. The Yates memo sets forth the following six key steps: (1) in order to qualify for any cooperation credit, corporations must provide to DOJ all relevant facts relating to the individuals responsible for the misconduct; (2) criminal and civil corporate investigations should focus on individuals from the inception of the investigation; (3) criminal and civil attorneys handling corporate investigations should be in routine communication with one another; (4) absent extraordinary circumstances or approved departmental policy, the Department will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation; (5) Department attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases, and should memorialize any declinations as to individuals in such cases; and (6) civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay. To reflect these policy principles, DOJ revised §9-28.000 of the U.S. Attorney’s Manual (USAM), titled “Principles of Federal Prosecution of Business Organizations,” in November 2015.

In the Yates memo and the new §9-28.000 of USAM, DOJ places a focus on investigating and prosecuting individuals suspected of involvement in corporate wrongdoing and defines what level of cooperation by corporate targets is sufficient to trigger credit in charging or settlement decisions. The Yates memo and USAM revisions make clear that cooperation credit is now largely an “all or nothing” proposition for corporations (U.S. Chamber Institute for Legal Reform, 2016).

Under this new “all or nothing” policy, corporations must identify all individuals involved in potential wrongdoing and provide DOJ with all relevant facts relating to the misconduct. In §9-28.700 of USAM, it is prescribed that if a company meets the threshold requirement of providing all relevant facts with respect to involved individuals, it will be eligible for consideration for corporation credit.

The Yates memo was issued to answer the criticism against DOJ (and the Securities and Exchange Commission) for the lack of criminal and civil cases brought with regard to the financial crisis that began in 2007–2008. It has brought public opinion largely onto DOJ’s side, since DOJ has shown willingness to inquire into individual criminal responsibility for white-collar and corporate crime. However, not all corporations will always cooperate with prosecutors and sacrifice individual personnel; some may choose to fight back. Moreover, limited government resources and politics may preclude individual prosecutions and reverse this current emphasis in the future. Thus, the real impact of the Yates memo cannot be fully determined at the time of this writing.

Legal and Political Reactions for Corporate Criminals

Corporate Criminal Liability

Throughout the present federal system, a corporation is criminally liable when corporate agents acting (1) on behalf of the corporation, (2) to benefit the corporation, and (3) within the scope of the agent’s authority commit a federal crime (because the Supreme Court in New York Central & Hudson River Railroad v. United States in 1909 extended the tort doctrine of respondeat superior to criminal cases and approved the broad use of criminal sanctions against corporations (Brickey, 2001). Thus, corporations have been prosecuted and convicted even if a corporate agent would not be prosecuted or convicted.4 When acts of corporate agents have been contrary to explicit corporate policy, courts may also nevertheless hold that they have been performed “on the corporation’s behalf.”5 Under this doctrine, a corporate defendant is disallowed from using an effective compliance program as a due diligence defense,6 and can remain liable in such a case. Today, under these broad and moderate conditions, corporations can be prosecuted and convicted for various kinds of federal crimes including Antitrust; Public Corruption and Bribery; Environmental Crime; Food, Drugs, Agricultural, and Consumer Products; Fraud; Money Laundering; Racketeering; and Tax Evasion.

Corporate Sentencing

A corporation convicted of felony and Class A misdemeanor offenses, including the various white-collar crimes listed above, is generally sentenced according to the “Federal Sentencing Guidelines for Organizations” (United States Sentencing Guidelines, Chapter Eight). Those guidelines are applied both to corporate defendants convicted through trial by jury and to those who plead guilty. The guidelines stipulate fines, restitution, and probation as the potential criminal sanctions for organizations. Around 150–200 organizations have been sentenced under the guidelines every (fiscal) year since 2005. In most of these cases, the sentenced organizations pled guilty (Figure 3).

Organizational Fines

An organizational fine is calculated by multiplying a base fine by a culpability score assigned to the organization. The base fine is determined on the basis of the “offense level,” as per a table located in the Sentencing Guidelines and the pecuniary loss or gain to the organization from the offense (§8C2.4). The organization’s culpability score is calculated from a base score of 5 points by adding or subtracting points for actions that reflect upon the organization’s culpability. For example, the level of authority personnel of the organization who participated and the size of an organization can increase its culpability score. The score also goes up when the organization is involved in or tolerates criminal activity, has a history of criminal activity, violates a judicial order, and/or obstructs justice. On the other hand, the score goes down when the organization has an effective compliance program to prevent and detect violations of law, reports the offense to appropriate governmental authority, and/or accepts responsibility for the criminal conduct and/or fully cooperates in government investigations (§8C2.5). For two corporations convicted of similar offenses, differences in culpability scores can produce large differences in recommended fines (Gruner, 2006).

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Figure 3. Disposition of Organizations Sentenced Under the United States Sentencing Guidelines, Chapter 8 (1998–2015)

Source: U.S. Sentencing Commission Sourcebook of Annual Sentencing Statistics (1998–2015).

The number of organizations fined is more than 100 annually over the last decade, while the proportion of organizations fined has remained similar at around 70% (Figure 4). The average organizational fine amount ordered under the guidelines has gradually increased over the years (Table 1). The largest mean amount ordered over the past two decades has been $22,955,664, in 2015, and the lowest ($242,892) has been 1995. The former is about 95 times higher than the latter. However, this large difference depends on whether the specific case that brought the pecuniary loss or gain was caused by organization in that year or not: the median fine in 2015 ($325,000) is only a bit less than eleven times that of 1995 ($30,000).

Table 1. Mean and Median Fines Imposed on Sentenced Organizations (FY1995–2015) (US$)

FY

Mean

Median

FY

Mean

Median

FY

Mean

Median

1995

242,892

30,000

2003

1,702,897

108,650

2009

17,292,538

119,000

1996

1,120,023

89,000

2004

8,214,456

75,000

2010

16,305,534

180,000

1997

1,475,312

48,262

1,241,408

136,000

2011

12,712,222

100,000

1998

1,762,250

64,000

2005

8,980,039

85,000

2012

11,207,081

200,000

1999

6,136,57

75,000

3,870,330

82,409

2013

21,057,499

200,000

2000

1,595,836

100,000

2006

5,890,259

50,000

2014

27,501,125

300,000

2001

2,154,929

60,000

2007

7,329,196

131,500

2015

22,955,664

325,000

2002

2,815,154

96,000

2008

5,735,867

60,000

* The data for 2004 are shown separately “pre-” and “post-” U.S. Supreme Court decision in the Blakely case and the data for 2005 are shown separately “pre-” and “post-” U.S. Supreme Court decision in the Booker case.

Source: U.S. Sentencing Commission Sourcebook of Annual Sentencing Statistics (1995–2015).

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Figure 4. Number and Proportion of Organization Offenders Fined (FY1995–2015)

Source: U.S. Sentencing Commission Sourcebook of Annual Sentencing Statistics (1995–2015).

Organizational Restitution

The restitution order under the organizational sentencing guidelines aims to make the victim whole for the harm caused by an offense (Wilkins, 1990; Gruner, 2006). In the 2000s, the number of applications for restitution orders decreased in comparison to the 1990s, while the proportion of sentenced organizations that ordered restitution has remained similar at around 30% (Figure 5). The mean restitution amount ordered has varied by year (Table 2), from $26,407,298 in 2015 to $232,988 in 1995; the former is more than one hundred times higher than the latter. However, individual cases yielding high damages can give a misleading impression; the highest median, in 2015 ($494,268), was just less than eighteen times higher than in 1995 ($27,912).

Table 2. Mean and Median Restitution Imposed on Sentenced Organizations (FY1995–2015)

FY

Mean

Median

FY

Mean

Median

FY

Mean

Median

1995

232,988

27,912

2003

2,256,237

147,000

2009

1,591,395

310,395

1996

566,839

58,151

2004

7,204,524

73,500

2010

17,839,888

150,000

1997

873,416

100,000

1,241,408

136,000

2011

2,289,575

233,125

1998

728,887

63,987

2005

3,371,659

193,375

2012

447,440

138,802

1999

601,434

100,000

569,042

100,000

2013

3,236,012

494,268

2000

775,845

127,264

2006

1,976,593

362,775

2014

1,152,721

215,423

2001

4,081,994

177,072

2007

3,090,742

245,716

2015

19,471,980

407,541

2002

6,292,650

200,000

2008

6,232,971

175,000

* The data for 2004 are shown separately “pre-” and “post-” U.S. Supreme Court decision in the Blakely case, and the data for 2005 are shown separately “pre-” and “post-” U.S. Supreme Court decision in the Booker case.

Source: U.S. Sentencing Commission Sourcebook of Annual Sentencing Statistics (1995–2015).

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Figure 5. Number and Population of Organization Offenders Imposed Restitution Orders (FY1995–2015)

Source: U.S. Sentencing Commission Sourcebook of Annual Sentencing Statistics (1995–2015).

Organizational Probation

Two types of probation are provided for in the Federal Sentencing Guidelines for Organizations: remedial probation and preventive probation. In the former, a remedial order, community service order, or “notice to crime victims” impacted by the organization’s crime is imposed as a special condition of probation, to help remedy or repair the harm caused by the offense, whereas in the latter, implementation of effective compliance and ethical programs to reduce the chance of future crimes is required. The Sentencing Guidelines for Organizations consider compliance efforts made by organizations both before and after the crime was committed.

The number of organizations ordered probation under the Federal Sentencing Guidelines has increased and decreased over the years, but has remained steady in proportional terms, at over 70% of organizational offenders per year (Figure 6). Among organizations ordered probation, the proportion that had introduced or reformed compliance programs as required remained around 15% from 2000 to 2003 and then rose rapidly to 28% in 2005; after that, it dropped to 6.2% in 2006 and 5.0% in 2007, but rose to over 20% in 2010 and has recently hovered around 25%.

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Figure 6. Number and Rate of Organizational Offenders Ordered Probation (FY1998–2015)

*Full data are not available from the source.

Source: U.S. Sentencing Commission Sourcebook of Annual Sentencing Statistics (1995–2015).

Legal and Political Responses to Individual White-Collar Criminals

Under current law, corporate officers, employees, or agents are personally liable for their unlawful acts or omissions even if the corporation itself is convicted too.7 That is, the fact that they may have acted on behalf of a corporation or merely followed orders does not release them from being held criminally responsible. In some major corporate fraud cases, high-level executives were personally prosecuted for their role in a criminal scheme—for instance, Kenneth Lay and Jeffrey Skilling, former CEOs of Enron; Bernard Ebbers, former CEO of WorldCom.

Generally, individuals in a corporation are criminally liable when a prosecutor can prove that they possessed the mens rea necessary for conviction for the specific crime at issue. However, in rare cases they may be convicted absent any showing of mens rea. First, prosecutors need not show awareness of wrongdoing in strict-liability crime cases because the threat to the public welfare created by the violation is taken to justify imposition of liability without such any proof.8 In such cases, prosecutors need only show that in spite of having the authority to prevent or correct the violation, the defendant did not do so—the so-called responsible corporate officer doctrine. Second, it is enough for prosecutors to prove that a defendant deliberately closed his or her eyes to what should otherwise have been obvious, even if he or she actually did not know that a crime was being committed. This is often called the “willful blindness” doctrine (O’Sullivan, 2012).9

Including both mens rea and non–mens rea convictions, more than 8,000 individuals have been prosecuted and convicted for white-collar crimes in the United States in the last decade, amounting to around 90% of defendants convicted every year (Figure 7). The majority of those convicted consistently received prison sentences, in every year from 1996 to 2010 (Figure 8), with an increase in rate of convictions receiving prison sentences over that period from 53% to 65%.

As mentioned above, DOJ has come increasingly to use deferred prosecution agreements and non-prosecution agreements in white-collar crime cases. From 2001 to 2014, a total of 306 deferred and non-prosecution agreements with corporations were entered into by federal prosecutors. In two-thirds of those cases, no individual was prosecuted; thus, not only corporations but also individuals within them avoided prosecution in many cases. In the remaining 34% of cases, or 104 companies, 414 individuals, including 13 presidents, 26 CEOs, 28 CFOs, and 59 vice-presidents, were prosecuted. Of these 414 individuals, 266, or 65%, pled guilty, while 42, or 10%, were convicted at a trial (Garrett, 2015). Despite the low prosecution rates, individual white-collar offenders were sentenced increasingly harshly—for example, the average prison sentence for antitrust violations increased from 8 months in 1990–1999 to 25 months in 2010–2014. We may wonder how the Yates memo has changed and is changing this situation.

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Figure 7. Number of Individual White-Collar Defendants Terminated and Convicted (FY1996–2015)

Source: United States Attorney’s Annual Statistical Reports (FY1996–2015).

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Figure 8. Rate of White-Collar Offenders Sentenced to Prison (FY1996–2010)

Source: United States Attorney’s Annual Statistical Reports (FY1996–2010).

The Dilemma Between Individual and Corporate Criminal Liability

Today, many corporations are not easily prosecuted for their crimes, being “too big to jail” (Garrett, 2014). As a result, DOJ has made more use of deferred prosecution and non-prosecution agreements. At the same time, the Yates memo emphasizes an enhanced focus on holding executives criminally liable for corporate wrongdoing. Some lawyers say that the Yates memo did not change DOJ policy dramatically, because DOJ had already been focused on individual liability for white-collar crime before the Yates memo. However, the Yates memo clearly requires that corporations disclose all relevant facts regarding individuals’ misconduct to receive cooperation credit. Thus, the focus of legal and political action against white-collar crime emphatically shifted from corporate liability to individual liability.

However, it is often impossible to identify (a) culpable individual(s) in corporate crime, because, among other legal and social factors, such crime often results from structural defects in the corporation (“Structrual crime,” 1979). Furthermore, it has been noted that corporations might easily appoint someone who serves as a “vice-president responsible for going to jail,” not only as a “scapegoat,” but to prevent criminal liability from being imposed upon the company (Braithwaite, 1984). We have not yet solved those problems. Thus, in a sense, the legal and political responses to white-collar crime have remained largely in the 1980s, when prosecutors and policymakers were caught in a dilemma between individual and corporate criminal liability.

Review of the Literature and Primary Sources

It was Sutherland who initially raised the question of legal and political responses to white-collar crime. In Sutherland’s book, White-Collar Crime (1949), a classic of criminology, he not only advocated the definition of “white-collar crime” but also noted the lack of adequate legal and political responses to it. However, he did not provide prescriptions. Geis (1967), who researched the heavy electric equipment antitrust cases of 1961, Cullen (1987), who made an intensive investigation into the Ford Pinto cases, and Braithwaite (1984), who reported on the corporate culture of pharmaceutical companies, all directly or indirectly supported the strengthening of legal and political responses to white-collar crime. However, there were also no concrete proposals in those works.

Schlegel (1990) supported punishing white-collar offenders and corporations from the perspective of “just deserts.” In contrast, Braithwaite & Pettit (1990) opposed this justification, because punitive response under the “just desert” model in practice metes out harsher sanctions to conventional offenders than to white-collar and corporate offenders. Braithwaite & Geis (1982) and Simpson & Koper (1992) supported punishing these offenders from the perspective of “deterrence”; however, Coffee (1981) and Lederman (1985) were negative about this, because of the “spill over” problem (it is workers or consumers that are ultimately burdened with heavy fines); Coffee (1981), Fisse (1983), and Fisse & Braithwaite (1993) also opposed this rationale because of the “deterrence trap” (when a fine exceeds the corporation’s ability to pay, it no longer has an effect because imprisonment cannot be ordered as an alternative.). There have also been negative opinions with regard to punishing white-collar criminals or corporations in general: for example, Coffee (1991) argued that it should be an abuse of criminal process to prosecute and punish white-collar criminals and corporations who did not consciously choose to do harm, and Simpson (2002) argued the limitedness of the deterrence approach for corporate crime for several reasons and the necessity of cooperative crime-control methods.

Theoretical issues in corporate criminal liability have also been topics of heated argument. Developments in the Law (1979), Fisse (1983), Bucy (1991), and Laufer (2006) all point out that there is a limit on corporate criminal liability system under the present criminal law, while Gruner (2006) discusses today’s federal legal system of corporate criminal liability and sentencing corporate offenders comprehensively and in detail. We can understand the basic necessity of punishing corporations for their crime; however, these works preceded and therefore do not discuss the extensive use of DPAs and NPAs. Garrett (2014) produced the first comprehensive monograph on the prosecution of corporations in the United States; it points out problems with DPAs and NPAs and urges further consideration of the “too big to jail” problem. However, this work was published before the Yates memo, which was clearly designed to reduce the use of DPAs and NPAs. Finally, Yockey (2016) describes the background, impact, and future of the Yates memo. Taking into consideration the insights of these earlier works, the task remains of determining how to construct the best legal and political response to white-collar crime given present circumstances.

Further Reading

Braithwaite, J. (1984). Corporate crime in the pharmaceutical industry. London: Routledge & Kegan Paul.Find this resource:

Fisse, B., & Braithwaite, J. (1993). Corporations, crime, and accountability. Cambridge, U.K.: Cambridge University Press.Find this resource:

Garrett, B. (2014). Too big to jail. Cambridge, MA: Belknap.Find this resource:

Gruner, R. (2006). Corporate criminal liability and prevention. New York: Law Journal Press.Find this resource:

Laufer, W. S. (2006). Corporate bodies and guilty minds: The failure of corporate criminal liability. Chicago: Chicago University Press.Find this resource:

Simpson, S. (2002). Corporate crime, law, and social control. New York: Cambridge University Press.Find this resource:

References

Braithwaite, J., & Geis, G. (1982). On theory and action for corporate crime control. Crime & Delinquency, 28, 292–314.Find this resource:

Braithwaite, J., & Pettit, P. (1990). Not just deserts: A Republican theory of criminal justice. Oxford: Clarendon Press.Find this resource:

Brickey, K. F. (1992). Corporate criminal liability: A treatise on the criminal liability of corporations, their offenders, and agents vol. 1–3 (Suppl. 2001). New York: Clark Boardman Callaghan.Find this resource:

Bucy, P. A. (1991). Corporate ethos: A standard for imposing corporate criminal liability. Minnesota Law Review, 75, 1095–1184.Find this resource:

Calavita, K., Pontell, H. N., & Tillman, R. H. (1997). Big money crime: Fraud and politics in the savings and loan crisis. Berkeley, CA: University of California Press.Find this resource:

Coffee, J. C., Jr. (1981). “No soul to damn: No body to kick”: An unscandalized inquiry into the problem of corporate punishment. Michigan Law Review, 79, 386–459.Find this resource:

Coffee, J. C., Jr. (1991). Does “unlawful” mean “criminal”?: Reflections on the disappearing tort/crime distinction in American law. Boston University Law Review, 71, 193–245.Find this resource:

Cullen, F. T., Clark, G. A., Mathers, R. A., & Cullen, J. B. (1983). Public support for punishing white-collar crime: Blaming the victim revisited? Journal of Criminal Justice, 11, 481–493.Find this resource:

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Notes:

(1.) New York Central & Hudson River Railroad Co. v. United State (S. Ct. 1909).

(2.) The Thompson memo revised and clarified some aspects of the Holder memo, entitled “Bringing Criminal Charges against Corporations” which was issued by Eric Holder, then–Deputy Attorney General, on June 16, 1999. However, there was no mention of deferred prosecution in the Holder memo.

(3.) Arthur Andersen LLP v. United States, 544 U.S. 696 (2005).

(4.) Magnolia Motor and Logging Co. v. United States, 264 F.2d 950, 953 (9th Cir. 1959), cert. denied, 361 U.S. 815 (1959); American Medical Ass’n v. United States, 130 F.2d 233, 253 (D.C. Cir. 1942), aff’d, 317 U.S. 519 (1943); United States v. General Motors Corp., 121 F.2d 376, 411 (7th Cir. 1941), cert. denied 314 U.S. 613 (1941).

(5.) United States v. Hilton Hotels Corp., 467 F.2d 1000 (9th Cir. 1972), cert. denied, 409 U.S. 1125 (1973). See also, United States v. American Radiator and Standard Sanitary Corp., 433 F.2d 174 (3d Cir. 1970).

(6.) United States v. Twenty Century Fox Film Corp., 882 F.2d 656 (2d Cir. 1989), cert. denied, 493 U.S. 1021 (1990); 467 F.2d 1000, 1007 (9th Cir. 1972). See also, United States v. Armour & Co., 168 F.2d 342 (3d Cir. 1948). Against these cases, in Holland Furnace Co. v. United States, 158 F.2d 2 (6th Cir. 1946), the Sixth Circuit took the compliance program of the corporate defendant into consideration as a due diligence defense.

(7.) Cf. U.S. v. Wise, 370 U.S. 405 (1962).

(8.) United States v. Dotterweich, 320 U.S. 277 (1943); United States v. Park, 421 U.S. 658 (1975).

(9.) See also, Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060, 2064 (2011).