Business law principles for todays commercial environment 5th edition twomey solutions manual

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Chapter 7

CRIMES RESTATEMENT Society sets standards of conduct and labels breaches of those standards crimes which are punishable by fines or imprisonment or both. Crimes are classified as felonies (the more serious crimes) and misdemeanors. State statutes classify crimes and provide penalties. A crime consists of two elements: the mental state and the actual act or omission that constitutes the subject of the crime. Employers, including corporations, can be held liable for facilitating or encouraging an employee to commit a crime or for their failure to take action when it is required.

Planning to commit a crime is also a form of criminal activity and can be prosecuted as attempts or conspiracies. In some situations, part of the penalty for criminal conduct is restitution for victims. The victims may also seek recovery in a civil case. Because criminal penalties often involve fines, the government is given authority to ask for forfeiture of the defendant’s property in certain circumstances.

Crimes that do not cause injury to persons or physical damage to property are called white-collar crimes. There are many forms of white-collar crimes including securities fraud, racketeering, bribery, extortion, blackmail, improper influence, counterfeiting, forgery, perjury, fraud, bad check writing, swindles, mail and credit card fraud, lotteries and gambling, and embezzlement.

Computer crime as a form of criminal activity is still evolving as the technology and use of computers evolves.

Crimes include damage to the computer, unauthorized use of computers, EFT crimes, and spamming.

There are certain procedural rights guaranteed to those charged with crimes. Those rights include protection against warrantless searches under the Fourth Amendment and protections against self-incrimination under the Fifth Amendment. The Fifth Amendment also guarantees due process.

STUDENT LEARNING OUTCOMES LO.1:

Discuss the nature and classification of crimes.

LO.2:

Describe the basis of criminal liability.

LO.3:

Identify who is responsible for criminal acts.

LO.4:

Explain the penalties for crimes and the sentencing for corporate crimes.

LO.5:

List examples of white-collar crimes and their elements.

LO.6:

Describe the common law crimes.

LO.7:

Discuss crimes related to computers.

LO.8:

Describe the rights of businesses charged with crimes and the constitutional protections afforded them.

INSTRUCTOR’S INSIGHTS Break the chapter down into four components – related Learning Outcomes are indicated in ( ): 1.

What are the nature and definition of crimes and criminal penalties?

• • • •

Describe the various types of crime (LO.1) Explain when and how criminal liability is imposed (LO.2) Define the parties to a crime and their responsibilities (LO.3) Discuss the types of penalties for crimes, including indemnification (LO.4)

2.

What are the types of white-collar crimes?

• • • • • • • • • • • • • • • • • •

3.

What are computer crimes?

• • • • • • • • •

4.

Define and discuss conspiracies (LO.5) Cover the crimes related to production, competition and marketing (LO.5) Define money laundering (LO.5) Explain racketeering (LO.5) Explain bribery (LO.5) Define commercial bribery (LO.5) Discuss extortion and blackmail (LO.5) Discuss corrupt influence (LO.5) Describe the requirements for proving counterfeiting (LO.5) Describe the requirements for proving forgery (LO.5) Define perjury (LO.5) Discuss false claims and pretenses (LO.5) Present the requirements for the crime of writing a bad check (LO.5) Discuss credit card crimes (LO.5) Define and describe the crime of embezzlement (LO.5) Describe obstruction of justice: Sarbanes-Oxley (LO.5) Describe corporate fraud: Sarbanes-Oxley (LO.5) Explain the common law crimes (LO.6)

Define computer crimes (LO.7) Explain the computer as the victim (LO.7) Discuss the unauthorized use of computers (LO.7) Define computer raiding (LO.7) Explain diverted delivery by computer (LO.7) Discuss economic espionage by computer (LO.7) Cover electronic fund transfer crimes (LO.7) Discuss circumventing copyright protection devices via computer (LO.7) Define spamming (LO.7)

What are the steps and rights of those charged with crimes?

• • •

Explain the Fourth Amendment protections (LO.8) Describe the protections of the Fifth Amendment (LO.8) Define and explain due process (LO.8)

CHAPTER OUTLINE I.

What are the Nature and Definitions of Crimes and Criminal Penalties?

A.

Nature of crimes 1.

Crimes are conduct prohibited and punished by government

2.

Various degrees of criminal activity a. b.

B.

Felonies: serious crimes – bribery; embezzlement Misdemeanors: no sales tax license

Basis for criminal liability 1.

Need proper mental state a. b.

2.

Voluntary conduct Knowledge of guilt is not required

Act or omission: conduct prescribed as an offense by statute

CASE BRIEF:

United States v. Ahmad 101 F.3d 386 (5th Cir. 1996)

FACTS:

Ahmad owns a Spin-N-Market in Texas, a convenience store and gas station. One of the Spin-NMarket’s gasoline tanks developed a leak. Jewel McCoy of CIT Environmental Services inspected the tank, said it needed to be drained and then pumped. McCoy gave Ahmad the cost of draining and he suggested he would do it himself despite McCoy’s warning about violations of the law.

Ahmad rented a pump at the local hardware store and pumped over 5,000 gallons into a manhole near his store (4,690 of those gallons were gasoline.) The gasoline made its way to the storm sewer system and then a creek as well as the city sewage treatment center. While firemen were working to divert the gasoline, the treatment center and two nearby school had to be evacuated.

Ahmad was charged with violation of the Clean Water Act and was convicted of two charges.

ISSUE:

Did Ahmad have intent to violate the statute (CWA)?

HOLDING:

No.

REASONING:

He thought he was discharging water, not gasoline. There is more knowledge required for CWA violations, not just strict liability.

ANSWERS TO DISCUSSION QUESTIONS 1.

2.

3.

Of what significance is Jewel McCoy's testimony in establishing mens rea? Jewel McCoy’s testimony was needed to show Ahmad had knowledge of the law and his desire to avoid paying to have the draining done properly. Jewel McCoy testified that he knew the risk and spoke of being caught.

What is the difference between knowledge of the law and knowledge of conduct? What is the significance of Mr. Ahmad's testimony that he thought he was discharging water? Knowledge of law means defendant knows right vs. wrong; illegal vs. legal. Knowledge of conduct means that they understand that what they are doing violates the law. Because Ahmad believed that he was discharging water, his belief mitigates intent and without intent there is no criminal violation.

What does the court explain is required for the state of mind under the Clean Water Act? Something more than strict liability is required for a Clean Water Act violation. More than knowledge of the discharge is required. The court states that full knowledge of the law and their actions is necessary.

C.

Responsibility for criminal acts 1.

Corporate liability a. b.

2.

Corporation is liable to extent they facilitated the crime – e.g., employer gives employee money for the bribe Corporation can be liable for failure to take action – e.g., failure to correct safety problem

Responsibility for criminal acts a. b.

Corporate liability – for example, Siemens was held liable for the bribery of employees Officers and agents are held accountable for conduct of or failure to act by employees

CASE BRIEF:

United States v. Park 421 U.S. 658 (1975)

FACTS:

The federal Food and Drug Administration (FDA) had inspected the Philadelphia warehouses of Acme Markets, Inc., a food retailer with 36,000 employees, in 1970, 1971, and 1972 and had found the same problem with rodent infestation. The FDA, frustrated with the lack of response by warehouse employees, sent a letter to John Park, the president of Acme detailing the problems in the warehouse.

We note with much concern that the old and new warehouse areas used for food storage were actively and extensively inhabited by live rodents. Of even more concern was the observation that such reprehensible conditions obviously existed for a prolonged period of time without any detection, and were completely ignored.

We trust this letter will serve to direct your attention to the seriousness of the problem and formally advise you of the urgent need to initiate whatever measures are necessary to prevent recurrence and ensure compliance with the law.

Park asked his vice president to take care of the problem. Two months after the letter was sent, the FDA inspected the warehouse again and still found rodent infestation. Acme and Park were charged with violations of the federal pure food laws. Acme pleaded guilty, and Park was found guilty and fined $500. Park appealed his conviction because he was not responsible for the warehouse.

ISSUE:

Can an officer be held criminally liable for the failure of employees to correct a violation?

HOLDING:

Yes.

REASONING:

The court affirmed Park’s conviction on the grounds that he was told of a serious situation at one of his facilities that constituted a violation of federal law and that after two months he had failed to get the situation corrected. His knowledge of the problem and his inaction were sufficient to hold him criminally liable.

ANSWERS TO DISCUSSION QUESTIONS 1.

2.

3.

How long had Mr. Park known about the rats in the warehouse? Rodent infestation – repeated violations were the problems the FDA uncovered from 1970-1972.

Does it matter that a subordinate did not respond? Yes, a letter from the FDA’s chief of compliance was sent to Mr. Park to make him aware of the problem that his subordinates were not taking appropriate action. Mr. Park met with his vice president and asked that action be taken.

Do officers need to be certain their subordinates are reliable in order to avoid criminal liability? The issue was whether Park had a responsible relationship to the situation. And the instruction did not make all corporate officers automatically liable on the basis of their position, but in that there was liability on the basis of responsibility, it was correct.

DISCUSSION POINTS:

Discuss with the students who can be held liable for criminal violations using the United States v. Park case.

Use Figure 7-1 to show penalties for corporations and individuals.

c.

Federal laws targeting officer and director criminal responsibility i. ii.

d.

Penalties for crimes: forfeiture i. ii.

e.

Dodd-Frank Wall Street Reform and Consumer Protection Act – increases penalties Honest services fraud has been refined – officers cannot be convicted just because something goes wrong at their company – fraud requires proof of active engagement by the officers

Taking fruits of the crime, e.g., they took Madoff’s homes and yacht Forfeiture: property that is an instrument of a crime (auto; computer)

Penalties for business and white-collar crimes i. ii.

New penalties – increase under Dodd-Frank Corporate integrity agreement aa. Can defer prosecution bb. Can avoid felony on company record cc. Have to behave for the period of the agreement and put prevention steps in place

iii. iv. f. g.

Fine is a percentage of profits Federal Sentencing Guidelines

U.S. Sentencing Commission developed uniform guidelines Federal sentencing guidelines; apply to i.

Securities violations

ii. iii. iv. v.

3.

Antitrust violations Bribery Money laundering Employment and contract crimes

Mandatory sentences for officers of corporation who mastermind crime a. b.

SOX mandates penalties – see Figure 7-1 Fines and damages to investors who lose money i.

ii.

iii.

Students always ask about the concept of plea bargaining. Structure a hypothetical case to show how it works. Have the students list the advantages and disadvantages of plea bargaining. Ask them what would happen if all defendants accused of a crime insisted on a jury trial. The public has the idea that plea bargaining is done behind closed doors. Discuss the concept of a requirement that all plea bargaining must be done after public notice and at a public hearing. Have the students list the strategies of the prosecutor and the defense attorney in negotiating a plea bargain.

It is said that the theory behind imprisonment is to punish as well as reform an individual.

Many people believe that this does not work. Criminals are returned to the streets after being paroled or after completing their sentences, only to repeat criminal acts. Have the students discuss whether our justice system works in terms of reforming and penalizing convicted criminals or whether it needs to be changed. If students believe the system needs to be changed, ask them how they would reform it. Should convicted criminals be paroled? Should criminals be turned loose because correctional facilities are filled to capacity? How is it that convicted criminals can be sentenced to thirty years in jail and be out in seven? Have your students discuss “Three strikes and you’re out.”

Have the students discuss whether “an eye for an eye and a tooth for a tooth” is an appropriate means of dealing with criminal behavior.

DISCUSSION POINTS:

Thinking Things Through Can a Pharmacy's License Be Revoked for Too Many Cash Sales of Oxycodone?

The corporation can be held liable if it did not have adequate internal controls in place that would track the levels of narcotic drugs being dispensed at its locations. Lax internal controls can be used to impute knowledge to the company and result in liability. The goal of the criminal statutes is to require companies to have internal mechanisms to trigger questions and then to ask those questions.

4.

SOX reforms a. b. c. d.

Part of these post-Enron and WorldCom reforms was the White-Collar Crime Penalty Enhancement Act Increased fines and prison sentences substantially U.S. Sentencing Commission has amended its guidelines Cover Booker case and requirement that sentencing be based only on crimes proved

DISCUSSION POINTS:

Ethics & the Law When Addictions Are Off and On Again

Those who have used the rehab loophole to reduce their prison terms have brought attention to the issue and the program has now been placed under greater scrutiny and includes more requirements. The support of the probation officer (who makes sentencing recommendations) is one requirement considered because that would bring in any information from the report about addictions or claims that they are not alcohol or drug abusers.

The actions are duplicitous. The prisoners are telling different stories in order to reduce their sentences.

D.

Indemnification of crime victims 1.

Statutory assistance a. b.

Victims of the Crime Act of 1984 Victim and Witness Protection Act of 1982

c.

2.

Action for damages a. b.

3.

Racketeer Influenced and Corrupt Organizations Act (RICO) – allows suits for recovery Must show pattern of corruption

Indemnification of unjustly convicted a. b.

II.

Designed to compensate victims

Statutory right Recovery for conviction, not imprisonment during trial which produces an acquittal

What are the Types of White-Collar Crimes?

A.

B.

C.

Conspiracy 1.

Agreement between two or more persons to commit a crime

2.

The agreement is the crime

Crimes related to production, competition, and marketing 1.

Improper use of interstate commerce – shipment of goods or transmission of improper information

2.

Securities crimes – regulate public sale of stocks and bonds

Money laundering 1.

Money Laundering Control Act

2.

Financial transactions to conceal source of funds

3.

USA Patriot Act (2001) imposed more restrictions and greater penalties for money laundering a. b.

Applies to more than banks now Regulations apply to all banks, even small ones

4. Bank Secrecy Act – coordinates with Money Laundering Control Act to be sure large deposits and movement of funds is covered D.

E.

F.

Racketeering 1.

RICO – Racketeer Influenced & Corrupt Organizations Act

2.

Criminal liability for pattern of racketeering

3.

Carries civil liability if part of a pattern

4.

Securities fraud is no longer a RICO crime (predicate act)

5.

Covers activities in many categories

Bribery 1.

Giving property to a person to influence that person’s judgment

2.

Paying a competitor’s employee money for information

3.

Covers both giving and receiving a bribe

Commercial bribery – paying to obtain business

G. Extortion and blackmail

H.

1.

Extortion – illegal demand by a public officer; obtaining anything of value by threat

2.

Blackmail – extortion by nonpublic official

Corrupt influence 1.

Improper political influence – holding an interest in an enterprise seeking favor

2.

Lobbyists and foreign agents must register

3.

Foreign Corrupt Practices Act a. b.

Making or authorizing payment to a government official with intent to corrupt or influence Grease or facilitation payments are permitted i. ii. iii. iv.

I.

J.

K.

L.

Can pay to secure a permit or license Can pay to obtain paper processing Can pay to secure police protection Can pay to obtain phone, water, or power services

Counterfeiting 1.

Making, with fraudulent intent, a document or coin that appears to be genuine, but is not

2.

Also cover mutilation

Forgery 1.

Fraudulently making or altering an instrument of commercial paper

2.

Must be done with knowledge and intent to defraud

Perjury 1.

Knowingly giving false testimony under oath

2.

Called false swearing in some jurisdiction

False claims and pretenses 1.

False claims: making a claim for payment – e.g., false claim file with an insurance company

2.

Obtaining goods by false pretenses a. b.

Getting goods with bad check or fraudulent credit card Trademark Counterfeiting Act of 1984 – obtaining payment for counterfeit goods

3.

Unauthorized use of an ATM

4.

Furnishing false information to banks

M. Bad checks

N.

1.

Knowledge of insufficient funds with intent to defraud

2.

Can also be prosecuted under false pretenses statutes

Credit card crimes 1.

Theft or unauthorized use

2.

Credit Card Fraud Act of 1984 – federal crime for credit card fraud over $1,000

O. Embezzlement – conversion of another’s property by a person to whom it has been entrusted

P.

Obstruction of justice – Sarbanes-Oxley 1.

Increases penalty for destroying documents and evidence, i.e., obstruction of justice

2.

Specifically addresses audit records because of Arthur Andersen case in Enron collapse

Q. Corporate fraud – Sarbanes-Oxley 1.

Creates new form of mail and wire fraud

2.

Certification of false financial information constitutes fraud

3.

Substantial penalties for such fraud

DISCUSSION POINTS:

Sports & Entertainment Law Cycling Through Federal Funds

Discuss with the students the false claims act and the fact that Mr. Armstrong had certified that he was in compliance with the rules of cycling all throughout USPS sponsorship. He was receiving money under false pretenses. The federal government is unforgiving when it has paid believing the recipient to be honest – hence the treble damages.

Mr. Armstrong’s defense in the case is that the federal government had to know, but just did not want to investigate.

However, the judge has ruled that the case could proceed because of Mr. Armstrong’s signature on the agreement regarding following the rules.

R.

The common law crimes 1.

Larceny a. b.

2.

Robbery a. b.

3.

Breaking and entering of dwelling of another with intent to commit a felony Can be aggravated by nature of building

Arson a. b. c.

5.

Taking of personal property by force or fear Particular robbery statutes: car theft

Burglary a. b.

4.

Taking personal property of another with wrongful intent to deprive the owner of title Shoplifting – a form of larceny; is at epidemic proportions

Malicious burning Burning to defraud (insurance) Felony-murder (if someone is killed in the fire)

Riots and civil disorders

III. What are Computer Crimes?: Criminal Law and the Computer A.

What is a computer crime?

Crime committed using a computer or by a person with knowledge of a computer

B.

Computer as victim 1.

Theft of hardware

2.

Theft of software

3.

C.

Intentional damage: malicious damage

“virus” damage – computer statutes provide greater penalties than traditional

Unauthorized use of computers 1.

Taking information

2.

Raiding data banks

3.

Delivery of funds or authorized diverted

CASE BRIEF:

New Jersey v. Riley 988 A.2d 1252 (N.J. 2009)

FACTS:

Sergeant Kenneth Riley used videos of a fellow officer, not for training purposes, but for purposes of getting a fellow officer disciplined. He showed the videos to those within the department who would not have authorization to view them. Riley was indicted for unauthorized use of a computer and unauthorized access and disclosure of computer data. Riley moved to have the indictment dismissed.

ISSUE:

Did Riley’s access and use of computer data constitute the crime of unauthorized use of computers?

HOLDING:

No.

REASONING:

The court held that what Riley did was a violation of workplace policies but did not fit within the criminal conduct intended to be covered by the statute. The judge was concerned about arbitrary definitions and enforcement and a criminal statute being used for retaliatory purposes.

ANSWERS TO DISCUSSION QUESTIONS 1.

2.

What is the distinction between access and authorized use made by this case? Access means that the individual has a password, for example in this case, to obtain the information, videos, data bases. However, authorized use is what can be done with those materials once the user has accessed them. The debate in this case is whether to extend unauthorized use criminal statutes to situations in which those who have legal access use the information obtained for unlawful or unreasonable uses in the workplace or, perhaps, even publicly.

What issues would a broad scope of unauthorized use have for prosecutors? The court notes that such a broad definition would put the prosecutors in the awkward and inconsistent spot of trying to decide which cases to prosecute and there would be some inconsistencies. The court feels that unauthorized uses by those who have access is best handled in the workplace with the usual disciplinary measures used when employees violated workplace rules.

D.

Computer raiding

E.

Diverted delivery by computer 1.

Goods

2.

Funds

3.

Really is fraud or theft, just done by computer

DISCUSSION POINTS:

E-Commerce & Cyberlaw They Were Bullies: Mean Girls in Cyberspace

Discuss with the students how the law had to catch up with technology. Discuss the ethical issues in such conduct.

F.

Economic espionage by computer

1.

Economic Espionage Act (EEA) – federal law makes it a crime to copy, duplicate, sketch, draw, photograph, download, upload, alter, destroy, replicate, transmit, deliver, send, mail or communicate a trade secret

2.

Penalties of $500,000 and/or 15 years for individuals; $10 million for organizations

G. EFT crimes – unauthorized use or transfer H.

I.

Circumventing copyright protection device 1.

Digital Millennium Copyright Act makes it a federal crime to circumvent encryption devices on film’s music

2.

First person arrested was Russian programmer who was arrested for giving a speech on circumvention

Spamming 1.

New statutes are evolving

2.

Cover unsolicited bulk mail

3.

Penalties vary

IV. Criminal Procedure for Business: What are the Steps and Rights of Those Charged With Crimes?

A.

Fourth Amendment rights 1.

Search warrants must be based on probable cause required for searches

2.

Exceptions include plain view or public domain (garbage on the curb)

3.

Business records subject to search

4.

Protections for privileges

CASE BRIEF:

U.S. v. King 509 F.3d 1338 (11th Cir. 2007)

FACTS:

In February 2003, while serving as a civilian contractor, Michael D. King resided in a dormitory at the Prince Sultan Air Base in Saudi Arabia. During his stay in the dormitory, King kept his personal laptop computer in his room and connected it to the base network. All users of the base network signed agreements indicating that they understood their communications over and use of the base network were subject to monitoring.

An enlisted airman was searching the base network for music files when he came across King’s computer on the network. The airman was able to access King’s hard drive because it was a “shared” drive. The airman discovered a pornographic movie and text files “of a pornographic nature.” The airman reported his discovery to a military investigator who in turn referred the matter to a computer specialist. This specialist located King’s computer and hard drive on the base network and verified the presence of pornographic videos and explicit text files on the computer.

She also discovered a folder on the hard drive labeled “pedophilia.”

Military officials seized King’s computer and also found CDs containing child pornography.

Two years later, the government obtained an indictment charging King with possession of child pornography. After his arrest, the government searched his residence pursuant to a search warrant and found additional CDs and hard drives containing over 30,000 images of child pornography.

King entered a guilty plea and was sentenced to 108 months in prison. King then appealed his conviction on the grounds that there had been an illegal search and seizure of his computer and files.

ISSUE:

Was there an illegal search and seizure of King's dormitory and computer?

HOLDING:

No.

REASONING:

The court held that there was no Fourth Amendment violation because the investigators did not search King’s files or computer initially to discover the pornographic materials. They merely had to access the universally accessible files of the military base. King had no expectation of privacy in whatever was posted on the shared drive. The search of his home computer and files in his room was with a warrant that was based on probable cause obtained from public access to the files.

ANSWERS TO DISCUSSION QUESTIONS 1.

2.

Why does the court draw the comparisons with noncyber searches? Because the basic principles of search and seizure do not change just because the means do. The question is still one of expectation of privacy – cyber space just means what we put there has less privacy and computers at work are accessible by employers.

What lessons should contractors learn from this case? Be careful what you use your work computer for. Don’t write or use anything on your work computer you don’t want others to have.

B.

C.

Fifth Amendment rights 1.

Need not be a witness against yourself

2.

Right to be warned about Fifth Amendment rights: Miranda warnings

Due process 1.

Criminal procedure safeguards

2.

Right to know charges

3.

Right to know evidence

4.

Right to speedy trial

ANSWERS TO QUESTIONS AND CASE PROBLEMS 1.

Criminal culpability. No, ignorance of the law is not an excuse. Flinn is still liable. Before doing business, check the applicable laws. [Flinn v. Indiana, 563 N.E. 2d 536 (Ind.)]

2.

Crime v. civil action. No, the customers cannot bring a criminal action because enforcement of laws is the responsibility of the state. Enforcement of rights under the laws can be done by individual citizens. If the citizens have experienced harm as a result of the activities, they can bring a civil suit, but they cannot bring a criminal action – only agents of the state can do so. [H.J., Inc. v. Northwestern Bell Corp., 420 N.W. 2d 673 (Minn. App.)]

3.

Larceny. Yes. Although some people regard shoplifting as not serious, it comes within the definition of larceny. It is a taking of personal property from the owner with the intent to deprive the owner of that property. Leaving the store is often proof of intent; but, it is not the only proof. The use of the torch in this case shows intent. While there are separate statutes in most states that impose a lesser penalty for shoplifting than for larceny, these shoplifting statutes do not repeal the larceny statutes or remove shoplifting from the scope of the larceny statutes. Thus, an overlap of larceny and shoplifting occurs, and the district attorney has the discretion or choice of deciding for which crime a shoplifter should be prosecuted. The men were also convicted of possession of burglary tools. [Tennessee v. Baker, 751 S.W. 2d 154 (Tenn. App.)]

4.

Responsibility of intoxicated person for criminal acts. No. Voluntary intoxication is not a defense to the commission of a crime. There are some exceptions to this when the crime by its nature requires a specific intent, such as an assault with intent to kill. No specific intent is required for manslaughter, so Gail is guilty if her driving under all the surrounding circumstances was unreasonably indifferent to the welfare of others or, as often stated, was “grossly negligent.”

5.

Fraud; criminal intent. Yes, the good doctor committed the crimes of fraud and mail fraud. He knew that he had not performed the services, yet he billed for them anyway. The Medicare claim forms expressly required the doctor to certify that "the services shown on this form were medically indicated and necessary for the health of the patient." Thus, where a physician submits a Medicare claim to the government through an insurer, and the

physician knows that the treatments performed were unnecessary or non-therapeutic, he or she is criminally liable. [United States v. Campbell, 845 F. 2d 1374 (6th Cir.)] 6.

Fraud; criminal intent. No, they are not correct. Convictions for conspiracy to defraud the Food and Drug Administration (FDA) were sustained by evidence that defendant and coconspirator, knowing their marketing scheme contravened the law, repeatedly instructed persons to whom they sent unauthorized literature touting medicinal powers of their products to conceal use and possession of this information to prevent FDA's discovery of their unlawful activities, and that defendant helped to organize and became distributor in new company selling same products after FDA began investigating old company's distribution of those products, which showed defendant's agreement to obstruct FDA's lawful function of regulating marketing and distribution of medical devices and drugs; showing of actual contact.

That defendant be legally responsible party was not required element of offense of causing unapproved medical devices and drugs to be introduced into interstate commerce when defendant's own conduct of causing unapproved products to be introduced into interstate commerce provided basis for prosecution. [United States v.

Ballistrea, 101 F. 3d 827 (2d Cir.)]

7.

Criminal responsibility; corporate crime. Responsible-corporate-officer doctrine applied to impose misdemeanor criminal liability on president of corporate general contractor for the corporation's violation of state building code in providing inadequate foundation elevations, even if subcontractors on the construction project actually violated the code, where corporation pleaded guilty to same violation, president was sole shareholder and controlled corporation's policies and activities, city development director personally informed president in writing on several occasions that elevations violated building code, and president failed to ensure that violations were corrected.

[State v. Arkell, 657 N.W. 2d 883 (Minn. App.)]

8.

Money laundering. Durham should be concerned that his gallery and auctions are being used to launder money.

Remember that the Patriot Act extended liability for money laundering beyond just banks. The problem is a takeoff on Mickey Blue Eyes, a movie in which Hugh Grant’s art gallery is used for money laundering.

9.

Intent element of larceny. No. An intent to permanently deprive the owner of the owner’s property is essential to the crime of larceny. This intent was apparently lacking, as Jennings had always made payment of the proper amounts when due, so no conduct indicated an intent to deprive the owners permanently of their property.

Jennings made an unauthorized use of the property and kept the benefit for himself, but this did not constitute larceny. [New York v. Jennings, 504 N.E. 2d 1079 (N.Y.)]

10. Money laundering. The banks could be held liable if they were not following a money-laundering prevention program. Banks have to have programs that track such large transfers of cash in order to prevent the problems.

Banks need not have actual knowledge of the use of the funds in order to be required to raise questions of customers about the large transfers.

11. Actus reus. The court held that the revocation of the license was not justified because the toddler could not have the requisite mental intent to violate the gambling laws. Further, the actual act itself by the toddler was not a minor engaged in playing a slot machine but simply a small child interacting with noise, buttons, and colors.

There was no criminal activity necessary to support the revocation of the license. [Grabert v. Department of Public Safety & Corrections, 680 So.2d 764 (La. App) cert. denied; Grabert v. State through Dept. of Public Safety and Corrections, 685 So. 2d 126 (La.)] 12. RICO. No, proof of a tie-in to organized crime is not required, on-going crime of fraud is sufficient. [Banderas v.

Banco Central del Ecuador, 461 So. 2d 265 (Fla. App.)] 13. RICO. The shares of stock were not the instrumentality of a crime, but may have been property used in the pattern of racketeering. Yes, the court did have the discretion to seize the shares. [United States v. Kravitz, 738 F. 2d 102 (3d Cir.)] 14. Criminal Culpability. The jury returned a verdict of guilty against both Ms. Erickson and Mr. Mitchell on all three counts. The two appealed. The court affirmed the decision. There are three requirements for conviction of obstruction of justice: (1) There must be a pending judicial proceeding; (2) the defendant must have knowledge or notice of the pending proceeding; and (3) the defendant must have acted corruptly with the specific intent to obstruct or impede the administration of justice. The two had backdated the documents in order to cover up the fact that the contracts had expired. They had continued the contracts without authority and authorized or received payments above the $1,000 limit. They were responding to a grand jury subpoena and gave it false change orders. They did so in order to protect Ms. Erickson’s job and Mr. Mitchell’s company’s contracts and relationship with USSD. [U.S. v. Erickson, 561 F. 3d 1150 (10th Cir.)]

LAWFLIX Double Jeopardy (2000) (R) Have the students discuss whether Ashley Judd is indeed correct in saying she cannot be retried for the murder of her husband who faked his death and for which she was originally tried and convicted.

Columbo (1st – 6th Seasons) (NR) Detective Lieutenant Columbo is a brilliant sleuth, but there are portions in episodes that find him lax on Fourth and Fifth Amendment rights.

Firewall (2006) (PG-13) Harrison Ford plays a banker whose life and family are taken over by high-tech thieves who have tapped into his home and work computers. The importance of computer security systems is highlighted.

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