Chapter 07Chapter 07

Crime and the Crime and the Business Business

CommunityCommunity

Elements of a CrimeElements of a Crime

““Actus Reus”—Wrongful behavior (guilty Actus Reus”—Wrongful behavior (guilty act)act)

““Mens Rea”—Wrongful state of mind, Mens Rea”—Wrongful state of mind, such as purpose, knowledge, such as purpose, knowledge, recklessness, or negligence (guilty mind)recklessness, or negligence (guilty mind)

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Classification of CrimesClassification of Crimes

Felonies—Serious crimes punishable by Felonies—Serious crimes punishable by imprisonment for greater than one year, or deathimprisonment for greater than one year, or death

Misdemeanors—Less serious crimes punishable Misdemeanors—Less serious crimes punishable by fines, or imprisonment for less than one yearby fines, or imprisonment for less than one year

Petty Offenses—Minor misdemeanors punishable Petty Offenses—Minor misdemeanors punishable by small fines or short jail sentencesby small fines or short jail sentences

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Crimes Affecting Business: Crimes Affecting Business: Property CrimesProperty Crimes

RobberyRobbery

BurglaryBurglary

LarcenyLarceny

ArsonArson

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Crimes Affecting Business: “White Crimes Affecting Business: “White Collar” CrimesCollar” Crimes

BriberyBribery

ExtortionExtortion

FraudFraud

EmbezzlementEmbezzlement

Computer CrimesComputer Crimes

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Exhibit 7-1: Selected Types of Exhibit 7-1: Selected Types of Fraudulent CrimesFraudulent Crimes

ForgeryForgery DefalcationDefalcation False EntriesFalse Entries False TokenFalse Token False PretensesFalse Pretenses Fraudulent Fraudulent

ConcealmentConcealment

Mail FraudMail Fraud Health Care FraudHealth Care Fraud Telemarketing Telemarketing

FraudFraud ““Ponzi Schemes”Ponzi Schemes” Check “Kiting”Check “Kiting” ““Pretexting”Pretexting” Mortgage and Real Mortgage and Real

Estate FraudEstate Fraud

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Defenses to CrimesDefenses to Crimes

InfancyInfancy

MistakeMistake

IntoxicationIntoxication

InsanityInsanity

DuressDuress

EntrapmentEntrapment

NecessityNecessity

Justifiable Use of Justifiable Use of ForceForce

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Constitutional Safeguards: The Constitutional Safeguards: The Fourth AmendmentFourth Amendment

Protection from “unreasonable search and Protection from “unreasonable search and seizure”seizure”

Restrictions on warrantsRestrictions on warrants

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Constitutional Safeguards: The Constitutional Safeguards: The Fifth AmendmentFifth Amendment

Prohibition of “double jeopardy”Prohibition of “double jeopardy”

Right not to incriminate oneselfRight not to incriminate oneself

Right to “due process”Right to “due process”

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Constitutional Safeguards: The Constitutional Safeguards: The Sixth AmendmentSixth Amendment

Right to a speedy and public trialRight to a speedy and public trial

Right to a trial by an impartial juryRight to a trial by an impartial jury

Right to be informed of the accusations against Right to be informed of the accusations against oneselfoneself

Right to confront witnessesRight to confront witnesses

Right to have witnesses on one’s sideRight to have witnesses on one’s side

Right to counsel at various stages of the proceedingsRight to counsel at various stages of the proceedings

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Constitutional Safeguards: The Constitutional Safeguards: The Eighth AmendmentEighth Amendment

Freedom from excessive bailFreedom from excessive bail

Freedom from excessive finesFreedom from excessive fines

Freedom from cruel and unusual Freedom from cruel and unusual punishmentpunishment

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Constitutional Safeguards: The Constitutional Safeguards: The Fourteenth AmendmentFourteenth Amendment

Extension of the right to due process to all Extension of the right to due process to all state mattersstate matters

Extension of most constitutional rights to Extension of most constitutional rights to defendants at the state leveldefendants at the state level

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Exclusionary Rule Exclusionary Rule (Definition):(Definition):

All evidence obtained in All evidence obtained in violation of the Fourth, Fifth violation of the Fourth, Fifth and Sixth Amendments is not and Sixth Amendments is not

admissible in courtadmissible in court

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Criminal Procedure: Pretrial Criminal Procedure: Pretrial ProcedureProcedure

ArrestArrest

BookingBooking

First AppearanceFirst Appearance

IndictmentIndictment

ArraignmentArraignment

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““Miranda Rights”--Before a law enforcement Miranda Rights”--Before a law enforcement officer engages in “custodial interrogation,” officer engages in “custodial interrogation,”

he must inform the defendant of the following:he must inform the defendant of the following:

““You have the right to remain silent and refuse to answer You have the right to remain silent and refuse to answer any questions”any questions”

““Anything you say may be used against you in a court of Anything you say may be used against you in a court of law”law”

““You have the right to consult an attorney before speaking You have the right to consult an attorney before speaking to the police and have an attorney present during any to the police and have an attorney present during any questioning now or in the future”questioning now or in the future”

““If you cannot afford an attorney, one will be appointed for If you cannot afford an attorney, one will be appointed for you before the questioning begins”you before the questioning begins”

““If you do not have an attorney available, you have the If you do not have an attorney available, you have the right to remain silent until you have had an opportunity to right to remain silent until you have had an opportunity to consult with one”consult with one”

““Now that I have advised you of your rights, are you willing Now that I have advised you of your rights, are you willing to answer any questions without an attorney present?”to answer any questions without an attorney present?”

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Criminal Procedure: Trial Criminal Procedure: Trial ProcedureProcedure

Jury SelectionJury Selection

Trial (with burden of proof on prosecution)Trial (with burden of proof on prosecution)

Jury DeliberationsJury Deliberations

Jury VerdictJury Verdict

Sentencing Hearing (if Defendant found Sentencing Hearing (if Defendant found guilty)guilty)

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The Racketeer Influenced and The Racketeer Influenced and Corrupt Organizations Act Corrupt Organizations Act

(RICO)(RICO) Prohibits persons employed by or Prohibits persons employed by or

associated with an enterprise from associated with an enterprise from engaging in a pattern of racketeering engaging in a pattern of racketeering activityactivity

Anyone whose business or property has Anyone whose business or property has been damaged can sue to recover treble been damaged can sue to recover treble damages and attorney fees in a civil damages and attorney fees in a civil actionaction

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The False Claims ActThe False Claims Act

Allows employees to sue employers on Allows employees to sue employers on behalf of the federal governmentbehalf of the federal government

Employee retains share of recoveryEmployee retains share of recovery

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The Sarbanes-Oxley ActThe Sarbanes-Oxley Act

Passed by Congress in response to the business Passed by Congress in response to the business scandals of the early 2000s (Examples: Enron, scandals of the early 2000s (Examples: Enron, WorldCom, Global Crossing, Arthur Anderson)WorldCom, Global Crossing, Arthur Anderson)

Criminalizes specific non-audit services when Criminalizes specific non-audit services when provided by a registered accounting firm to an audit provided by a registered accounting firm to an audit clientclient

Increases the punishment for a number of white-Increases the punishment for a number of white-collar offensescollar offenses

Extends the statute of limitations regarding the Extends the statute of limitations regarding the discovery of fraud (two years from the date of discovery of fraud (two years from the date of discovery of the fraud, five years from the date of the discovery of the fraud, five years from the date of the criminal act)criminal act)

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