White Collar Crime Outline
Format
I. Corporate Criminal Liability
II. Conspiracy
III. Mail Fraud
IV. The Hobbs Act
V. Official Bribery and Gratuities
VI. Drug Offenses
VII. Currency Reporting Offenses & Money Laundering
VIII. RICO
IX. False Statements
X. Perjury & False Declarations
XI. Obstruction of Justice: Interference with Witnesses
XII. Sentencing
Corporate Criminal Liability
v The Model Penal Code
o MPC not the federal law, but it is very influential.
o § 2.07
§ A corporation may be convicted of the commission of an offense if:
- A. The offense is a violation
o if defined by a statute not in the penal code
o And legislative purpose to impose liability on corporation plainly appears.
- B. A corporation may be convicted of an offense if:
o The offense consists of
§ An omission
§ To discharge a specific duty of
§ Affirmative performance
§ Imposed on corporations by law
§ (an example of this- corporations have duty to file income tax)
§ C. A corporation may be convicted of an offense if:
- The offense consists of
o Its commission is
§ Authorized
§ Requested
§ Commanded
§ Performed
§ Recklessly tolerated- there is a mens rea requirement.
o By
§ Board of directors or
§ High managerial agent
- Acting for the corp.
- Within the scope of her office or employment
o Subparagraph (2)
§ When absolute liability is imposed
- A legislative purpose to impose liability on a corporation shall be assumed. Unless the contrary plainly appears.
v The Respondeat Superior Rule
o The federal courts observe the respondeat superior rule of corporate liability. Under the federal rule, a corporation is liable for the acts of its agents without regard to their status in the corporate hierarchy, and liability attaches without a showing of managerial complicity. Although the efforts of corporate management to prevent criminal misconduct may affect a prosecutor’s decision whether to prosecute, management’s due diligence is not a defense to a federal charge.
o Commonwealth v. Beneficial Finance Co.
§ Burden of proof to convict a corporation for the acts of its agents is sufficiently met if it is shown that the corporation has placed the agent in a position where he has enough authority and responsibility to act for and in behalf of the corporation in handling the particular corporate business, operation or project in which he was engaged at the time he committed the criminal act.
o United States v. Central National Bank
§ In this case, it was held that the resulting corporation is criminally liable for the criminal conducts of one of the corporations that merged.
o Dollar Steamship Co. v. United States
§ Law prohibited throwing garbage into harbor waters. ?’s ship employee threw garbage into the water even though ? had prohibited such conduct and signs were posted. But still liable. According to the Court, “having committed his ship to the seas, an owner takes the risk of much which he cannot easily control. Any other construction would change the statute from one of prohibition to that requiring merely due care.”
o United States v. Hilton Hotels Corp.
§ A corporation is liable under the Sherman Act for the acts of its agents in the scope of their employment, even though contrary to general corporate policy and express instructions to the agent.
o Due Diligence Defenseà Company’s good faith compliance efforts. Not really accepted defense anymore.
v Development of Corp crim liability
o NY Central & HudsonàCorporation punished under criminal law. Corp argued that this punished innocent shareholders, also no evidence that board of directors had authorized the illegal acts.
o SC affirmed conviction. Ct. reasoned that to not apply crim provisions to corporations wouldn’t work and applied the respondeat superior doctrine of tort in criminal context
v Respondeat Superior (followed by the Feds)
o Corporate liability for acts committed corporate agents acting
§ On behalf of the corporation
§ To benefit the corporation, and
§ Within the scope of the agent’s authority (actual or apparent)
o Liability even for the lowest level employees. Corp liability may be imposed even when agent has been acquitted
o Central National Bankàsuccessor corporation can be held liable for actions committed by agents of predecessor corporations. Also corporation can be indicted for a crime even if it is dead.
v MPC
o MPC 2.07(1)- corporation may be convicted where
§ A. The offense is a violation or the offense is defined by a statute other than the Code in which a legislative purpose to impose liability on corporations plainly appears and the conduct is performed by an agent of the corporation action on behalf of the corporation within the scope of his office or employment. or
§ B. the offense consists of an omission to discharge a specific duty of affirmative performance imposed on corporations by law, or
§ C.the commission of the offense was authorized, requested, commanded, performed or recklessly tolerated by the board of directors or by a high managerial agent acting in behalf of the directors or by a high managerial agent acting in behalf of the corporation within the scope of his office or employment.
o MPC provides “due diligence” defense where not contrary to legislative purpose.
v Respondeat Superior v. § 2.07
o MPC provides a more restrictive test for corp liability. (a) applies to criminal cases where MPC general interpretative principles apply but where the specific criminal offense is not itself defined under the MPCàthere must be a clear legislative intent to impose liability on corps. Such clear intent is not a requirement in respondeat superior.
o (c) gov must show that agent’s act was approved or recklessly tolerated by high level management. No such requirement in RS.
o A. Legislative Intent to impose liability
§ State v. Shepard
- Corporation convicted under antitrust law. ? argued that it cold not be guilty under statute because statute only provided imprisonment and corp can be imprisoned.
- Court rejected: 1. statute provided that a person could be convicted, 2. the statute defined the term person to include corporations, and 3. the law provided that a fine could be imposed.
o C. approval by high managerial agent
§ State v. Chapman Dodge
- In this case, car dealership owned by close corp owned by one person. General manager committed license fraud not known to the owner. Court held that general manager was not a high managerial agent.
§ State v. Christy Pontiac
- In this case, car salesman and mid level manager filled out rebate forms. An officer signed the rebate applications and the president was aware of the dispute. Benefited the corp, so held liable.
§ People v. Lessofàlaw firm partner= high managerial agent.
v Acting on Behalf of the Corp
o Both MPC and RS require that agent have been acting on behalf of the corporation.
v Commonwealth v. BeneficialàCt. rejected the high managerial requirement of MPC and instead adopted RS because MPC too lenient and allows coprs to hide behind actions of low level employees.
v Court has held under RS that corps can be held responsible for agents acts which are on behalf of the corp even where the acts are contrary to explicit corporate policy. Even when there is a corp compliance program
o Dollar SteamshipàCorp held liable for employee’s act of throwing refuse into harbor. Company showed that its employees were advised of its policy against such dumping, ships officers had no knowledge, company had taken reasonable steps to prevent the dumping. Ct. rejected because statute imposed strict liability and due care no defense.
o US. v. Hilton HotelsàAgent involved in antitrust despite the company program and manager’s instructions. But ct. still affirmed corp conviction because corp not the employee benefited.
v Actions not taken for the benefit of the Corp
o Under RS, Corp not liable where acts not intended to benefit corp. But where agent and corp both benefit= liable. Actual benefit not needed. Agent’s intent rules.
o Standard Oilàemployees actions solely for personal benefit and actually harmed the corp. Therefore, corp not liable.
o Steere Tank LinesàHere also, actions of truckers in falsifying records solely for personal benefit. But here corp held liable because the work environment fostered such reporting and the management knew of this practice, so sufficient to show company’s intent.
v Corp mens rea
o What happens when corp liability doctrine applied to crimes other than strict liability.
o Under strict RS, proof of mental state of the agent who committed the wrongdoing is all that is needed and no need to show that management possesses this.
o But some fed courts require more especially when crimes require knowledge or willfulnessàso not really applying RS.
o Collective Knowledge
§ Corporate mens rea can be shown through collective knowledge.
§ Dotterwich and Park Cases
Conspiracy
v 1. An agreement by two or more persons
v 2. To commit an unlawful act (target offense) or a lawful act, by unlawful means
v Like attempt, conspiracy is an inchoate crime. Crime is complete when two or more people agree to commit a crime. Unlike attempt, conspiracy doesn’t require a substantial step toward the crime.
v Why conspiracy loved by prosecutors
o Joinder of all ?s in the conspiracy
o Venue flexibility
o Pinkerton Rule
§ Theory that co-conspirators are responsible for each other’s acts.
§ Under this rule, a ? may be guilty of his co-conspirator’s offenses if
- ? was a party to that conspiracy
- the offense was within the scope of the unlawful protect
- the offense was in furtherance of the conspiracy, and
- the ? could have reasonably foreseen the offense as a necessary or natural consequence of the unlawful agreement
o Conspiracy, unlike attempt, does not merge with the object crime.
v § 371
o makes it a crime for two or more persons to conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose
o Offense clauseà crime whenever the ? has agreed with one or more people to violate other federal laws
o Defraud clauseàcriminalizes conspiracy to defraud the US. Includes both schemes to deprive the US of money or property (e.g. taxes), and schemes to obstruct or interfere with government functioning or to deprive the government of information.
§ US v. Licciardi
- ? intended to defraud the wineries by mislabeling grapes. Court said that no conspiracy to defraud the US because ? intended to defraud the wineries not the US.
§ US v. Hay
- US made loans and ? tried to misuse loans. Conspiracy conviction upheld because US has a fundamental interest in the manner in which projects receiving its aid are conducted.
§ Tanner v. US
- SC held that just because a private corp received gov. funding doesn’t make scheme to defraud that private corporation a crime against the US.
v Elements of Conspiracy
o Actus Reus- The agreement
§ The actus reus is the agreement itself.
§ Plurality requirementà agreement has to be between two or more people
§ It is not necessary that all co-conspirators be charged or convicted or even known to the government for an individuals to be found guilty of conspiracy.
§ Can’t have conspiracy with undercover agent because for conspiracy need both
- Parties intended to enter into conspiracy and
- That the object crime or crimes be committed.
§ Wharton’s Rule
- Can’t be guilty of crimes that require 2 or more actors (e.g. adultery, bigamy)
- Under Fed law, Wharton Rule is a presumption (conspiracy unless Congress intended that no conspiracy charge should lie)
o Unlawful Object
§ Fed law criminalizes both civil and criminal offenses
o Mental State- Mens Rea
§ Need intent to agree and intent that the object offenses be committed.
§ Specific intent crime therefore ? must consciously desire the criminal result.
§ US v. Dimeck
- Mere knowledge of illegal activity, even in conjunction with participation in a small part of the conspiracy is not enough sufficient to establish that minor participant knowingly joined the conspiracy.
§ Need purpose and mere knowledge not enough
§ ? need not specifically intend that all the object crimes be committed.
§ ? need not know all the details of the object crimes. General knowledge ok.
§ Need not know the identities of all the co-conspirators, so long as ? generally aware of the co-conspirators’ existence
o Overt Act
§ The general federal conspiracy statute requires the government to prove an overt act in furtherance of the conspiracy.
§ Overt act is any act, or failure to act, by any co-conspirator during and in furtherance of the conspiracy.
§ Very easy to meet this requirement (e.g. a phone call can be considered an overt act)
§ Need not show overt act by each co-conspirator. Act by one attributable to others.
Mail Fraud
v Mail and wire fraud very often used because statutes are relatively simple requiring in the most basic terms a scheme to defraud and the use of mail and wires. Also statutes are extremely flexible.
v § 1341
o whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises,… for the purpose of executing such scheme or artifice or attempting so to do, places in any pose office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing.
v § 1343- Fraud by wire, radio, or television
o Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice…
v Elements
o ? engaged in scheme to defraud
o ? made material misstatements or omissions
o ? used, or cause the use of, (a) the United States mail, (b) a private courier service, or (c) interstate or international wires;
o The use of the mails, courier, or wires was in furtherance of the scheme to defraud; and
o The scheme resulted, or would result upon completing, in the loss money or property, or in the deprivation of honest service
v Mail fraud is inchoate crime so gov. need not prove that intended victim was deprived of money, property or the right to honest services
v Jurisdiction
o Any use of US mail- inter or intra state- provides federal jurisdiction
o Wire fraud relies on commerce clause so must be interstate or international. ? doesn’t have to know that wire would cross state lines.
v Scheme to defraud
o Intent to defraud
§ Durland v. United Statesà Court concluded that “any scheme or artifice to defraud” includes everything designed to defraud by representations a to the past or present, or suggestions and promises as to the future. The significant fact is the intent and purpose.
o Deception relating to the economic bargain
§ ? must intend that deception go to the substance of the bargain between the defendant and the intended victim.
§ Economic substance requirement. Mere puffing will not support mail fraud “e.g. this is the best car.”
§ US v. Regent office SupplyàSalesperson tells receptionist that knows the boss and this way sells the items. But not mail fraud because legit items sold at legit price.
o Literally True and Misleading Statements
§ Lustiger v. USà ad to sell property went beyond puffing so false and misleading.
o Omissions and Concealment
§ Material acts of omission or concealment can give rise to mail fraud.
§ US v. Siegelà?s made scheme to misuse proceeds form sale of employer’s products. Since breached their fiduciary duties to the corporation by failing to reveal their scheme to the company and its auditors, met the deception element of the wire fraud statute.
§ Intent to defraud is the key. Mail fraud requires proof of a specific intent to defraud. So if ? acted in good faith (e.g. acted with good will and without intent to harm) will provide a complete defense to the charge.
o Materiality
§ Nader v. United Statesàthe mail and wire fraud statutes require that the scheme to defraud involve a material deception. ? convicted for mail fraud for fraudulent bank loans applications. ? argued on appeal that trial judge erred by failing to require that the jury find the ?’s misstatements were material to the transactions. SC agreed.
§ Reasonable Reliance Issue
- Some circuits rule that material if a reasonable person would believe the fraudulent statements. Other disagree.
v The Use of the Mails and Wires
o In furtherance requirement
§ A mailing need not be essential to the fraudulent scheme and may even be incidental to the scheme.
§ United States v. Schmuckà? sold cars to used car dealers and rolled back the odometer. Dealers not involved in this. Dealers when selling cars mailed change forms to the state. Ct. held that this was sufficient for mail fraud. According to the Court, a failure in this passage of title would have jeopardized ?’s relationship of trust and goodwill with the dealers upon whose unwitting cooperation is scheme depended.
§ US v. Mazeà?s committed credit card fraud and the merchants who accepted cards mailed bills for payment to the credit card issuer. Ct. found that such mailing were not in furtherance of the underlying fraud.
§ If mail and wires are too far removed from ?’s plan, they mail fail even if the se of the mails and wires is in support of ongoing schemes (e.g. the NCAA case).
o The Lulling Rule
§ Even after fraud complete, if mail used to cover up or delay the detection, then the condition of use of mail suffices. E.g. case where burned house and got insurance money. But then sent false invoice to insurance company. Also case where fraudulently got money from people promising them that they will help obtain loans. After got the money from victims kept sending them letters that they will help them with the loans soon.
o Legally required mailings (e.g. Income tax return- if file false tax, are you liable not only under the tax statute but also the mail fraud statute? Split of authority on this. Probably it is the ):
The false-statement rule (in some circuits- Note a on 184)- if the legally required mailing has the false statement in it, you are dead. You were legally required to make the statement but not lie in it. So it is sufficient mailing hook. This results in stacking of charges. But attorney general manual says that US attys shouldn’t stack charges this way.
§ The other view: Esterbrook in Green (184 note b)- If legally required mailings are important to the success of scheme, so looks at the intent. But this opinion is not being followed much.
o The Causation Requirement
§ In addition to requiring that the mail was in furtherance of the fraud, the courts have also required proof that the ? caused the mailing.
§ Causation requirement is usually proven by showing that ? knew or should have reasonably foreseen that the mail would be used as part of the scheme.
§ Pereira v. USà? induced the V to make some payments to him. ? deposited the check and check mailed to the bank in CA. ? claimed that didn’t cause the check to be mailed. The court disagreed. It is in common knowledge that checks are sent to the banks on which they are drawn, and ? knew or should have known that the Texas bank would mail the check to the CA bank.
§ SO GOVERNMENT HAS TO PROVE BOTH IN FURTHERANCE OF FRAUD AND THE CAUSATION ELEMENTS.
v Deprivation of Money, Property, or Honest Services
o US v. Carpenterà? working for Wall Street Journal and issued articles that affected stock prices and before publishing, traded stocks and made profits. ? argued that he did not deprive Wall Street of any property or money. Court disagreed. Paper was deprived of the rights to keep the information confidential and to have exclusive use of the information prior to its publication.
o Licenses and Permits
§ Cleveland v. United States
- ? lied in his application for a gambling license. Court held that unissued permits or licenses are not property. Even if a license may become property owned by the recipient after the license is issued, it is not property of the state or local authority that has the power to issue the license or permit.
§ The Right to Control Property Interests
- US v. Evans
o ? lied to US that weapons will be sold to some other county than Iran. Court held that this scheme did not involve a loss of money or property. The only right gov. had was to restrict the weapons’ destination, which was akin to a regulation but was not a property right.
o Section § 1346
§ For purposes of this Chapter, the term “scheme or artifice to defraud” includes a scheme or artifice to deprive another of the intangible right of honest services.
o The reach of § 1346
§ Three possible interpretations
- Only applies to public officials
- Only applies to private employees
- Applies to both public officials and private employees (majority of cts. have accepted this definition)
§ Definition of Honest Services
- Majority rule: no violation of state law is required in an honest service prosecution
- Minority Rule: Brumleyàviolation of state law required. Federalism concerns.
v Prosecutions of Public Officials
o Approaches
§ Limiting honest service to misuses of public positions for personal gains;
§ Limiting honest services to schemes that violate state law
§ Limiting honest services to schemes that violate state criminal law; or
§ Limiting honest services to cases involving serious
v Prosecution of Private Employees
o US v. Vinyard
§ Fifth circuit affirmed the ee’s conviction for defrauding his er, a manufacturer, by arranging for it to buy raw materials from a firm in which ? had an interest. Even if no actual economic harm is shown, an ee can be liable so long as such harm was reasonably foreseeable. Because the er was deprived of the benefit of choosing among competitive suppliers, such harm was foreseeable.
o US v. Jain
§ Eighth Circuit required proof of intent to cause tangible harm from the fraudulent scheme. A psychologist was convicted for a receiving kickbacks from a psychiatric hospital. Court found that though the government had strong evidence of a patient referral kickback scheme, it had no evidence of tangible harm to the patients. The court rejected the argument that this case fell within the honest services provision of § 1346 noting that such cases are generally been brought against public employees.
o So the duty of honest service is pretty limited in private sectoràCts require actual harm.
v US v. Maze- when statute covers specific type of mail fraud, can you be charged with both it and mail fraud?
o Common law found them to be exclusive, an in some cases, such as IRC, that is still the case
o But mostly now they can be charged with one or both.
The Hobbs Act
v The Hobbs Act, 18 U.S.C. § 1951, criminalizes three distinct forms of criminal conduct:
v 1. robbery,
v 2. extortion by force, threat or fear
o Extortion by using physical force, or exploiting fear of physical harm, and
o Extortion by exploiting fear of economic harm.
v 3. Extortion committed under color of law
o public official used the power of a public office to obtain payment from a victim
o Unlike federal crimes of bribery and gratuity, the federal crime of extortion under color of official right is not limited to federal public officials. So Hobbs can be applied to state and local officials.
v Elements of Extortion
o The ?’s acts affected interstate commerce;
o The ? obtained, or attempted or conspired to obtain, property of another;
o The property was obtained, or would have been obtained, with the other person’s consent[1],
o The defendant acted with the required mens rea; and
o The property was obtained, or would have been obtained, by either
§ Wrongful use of fear; or
§ Under color of official right
v Extortion is an inchoate crimeà so covers inchoate conduct of conspiring or attempting to commit extortion. Because no general attempt statute under fed law, the crime of attempted extortion exists only because the statute itself contains this provision. But the conspiring to commit extortion could be charged under the extortion statute or under § 371, the general federal conspiracy statute.
v Effect on Interstate Commerce
o Courts have held that any moiré, or de minimis, effects on commerce will suffice. Under the depletion of assets theory, almost any extortionate activity will produce federal jurisdiction.
v Obtaining Property From Another
o Gov must show that ? obtained, or attempted or conspired to obtain, property from another. This has rarely provided a barrier to extortion prosecutions. E.g. interference with the right to participate in labor unions constitutes property deprivation. Anti-abortion activities implicate Hobbs Act.
v Mens Rea
o No mens rea required with respect to the jurisdictional requirement.
o Where fear- gov has to show that ? purposefully or knowingly used force, induced fear, or exploited the victim’s fear.
o Where color of law, gov must show that ? purposefully or knowingly used an official position to obtain property.
v Extortion by the Use of Fear
o May be by fear of physical or economic harm. ? must intend to take advantage of the victim’s fear. The prosecution need not show that ? created or attempted to create the fear.
o United States v. Capoà?s involved in job selling scheme. The plant needed large number of new employees. Prospective Ees paid ? who used their influence to ensure that these applicants received jobs. ?s charged for extortion based on theory that created fear of economic harm.
§ Second circuit ruled that there was insufficient evidence that victims acted out of fear. Whether there is fear must be viewed form the victim’s perspective. Gov. must show that the victim both actually and reasonably believed first that the ? had the power to harm the victim and that ? would exploit that power to the victim’s detriment. Here the activity was bribery and not extortion.
§ Principleàwhere a payer seeks to obtain an economic benefit rather than to avoid an economic loss, it is briber not extortion.
v Extortion under color of official right
o The government need not prove that victim acted out of fear
o Inducement in Extortion Under Color of Official Right
§ Evans v. United States
- ? elected county official. Undercover FBI agent sought ?’s help in zoning matter and gave ? $7K cash and 1K in check. ? only reported 1K. ? argues that no extortion because did not induce. Court rejected. The gov. need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts. Here although ? did not initiate the transaction, his acceptance of the bribe constituted an implicit promise to use his official position to serve the interests of the bribegiver.
o Distinction between bribery and extortion under color of law
§ After Evans, line has become really blurry.
o Extortion vs. Fundraising
§ McCormick v. United States
- Receipt of campaign contributions may constitute extortion only where 1. the payments were induced by the use of force, violence, or fear, or 2. the payments were made under color of official right, i.e. in return for an explicit promise or undertaking by the official to perform or not to perform an official act.
o Most courts agree that quid pro quo is required in color of law extortion cases.
Official Bribery and Gratuities
v § 201 criminalizes both the receipt of bribes and gratuities by, and the giving of bribes and gratuities to, federal public officials.
v Bribery
o Applies to one whom directly or indirectly, corruptly gives, offers or promises anything of value to any public official or person who has been selected to be a public official, or offers or promises any public official or any person who has been selected to be a public official to give anything of value to any other person or entity, with intent-
§ To influence any official act; or
§ To influence such public official or person who has been selected to be a public official to commit or aid in committing, or collude in, or allow, any fraud, or make opportunity for the commission of any fraud, on the United States; or
§ To induce such public official or such person who has been selected to be a public official to do or omit to do any act in violation of the lawful duty of such official or person;
o Being a public official or person selected to be a public official, directly or indirectly, corruptly demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally or for any other person or entity, in return for:
§ Being influenced in the performance of any official act;
§ Being influenced to commit or aid in committing, or to collude in, or allow, any fraud, or make opportunity for commission of any fraud, on the United States; or
§ Being induced to do or omit to do any act in violation of the official duty of such official or person;
v Gratuity
o Applies to one who otherwise than as provided by law for proper discharge of official duty-
§ Directly or indirectly gives, offers, or promises anything of value to any public official, former public official, or person selected to be a public official, for or because of any official act performed or to be performed by such public official, former public official, or person selected to be a public official; or
§ Being a public official, former public official, or person selected to be a public official, otherwise than as provided by law for the proper discharge of official duty, directly or indirectly demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally for or because of any official act performed or to be performed by such official or person;
v Elements
o Bribery
§ Elements of giving or offering to give a bribe:
- The ? gave or offered o give something of value;
- The recipient or offeree was (or was selected to be) a federal public official;
- The defendant acted with corrupt intent; and
- The ?’s scheme was designed to influence the public official in an official act.
§ Receiving or agreeing to receive a bribe
- The ? received or agreed to receive something of value;
- The ? was (or was selected to be) a federal public official;
- The ? acted with corrupt intent; and
- The scheme’s design was that the ? be influenced in an official act.
o Gratuity
§ Giving or offering to give an illegal gratuity
- The ? gave or offered to give something of value;
- The recipient or offeree was (or was selected to be) a federal public official;
- The ? intended that the thing of value be given as compensation for an official act already performed or to be performed otherwise than as provided by law for the proper discharge of the ?’s official duty.
§ Receiving or agreeing to receive an illegal gratuity
- The ? received or agreed to receive something of value;
- The ? was (or was selected to be) a federal public official; and
- The ? received or agreed to receive the thing of value as compensation for an official act already performed or to be performed, otherwise tan as provided by law for the proper discharge of the ?’s official duty.
v Bribery vs. Gratuity
o Party’s intention provides the key distinction between bribery and gratuity.
o Briberyèintent that the public official be influenced in a particular way in connection with a particular official act.
o Gratuityèno quid pro quo requirement. Only requires that the payment be intended as compensation for an official act
o Timingà if ? formulates an intent to give the payment knowing that public official has already performed or decided to perform the official act, then only a gratuity charge is appropriate. Timing of the intent to pay is important, not the payment itself.
v Bribery is an inchoate crimeà the payment need not actually influence the public official so long as it was made with the necessary intent.
v Something of value
o Gov. must show that ? in a bribery or gratuity case offered to give or receive something of value.
o US v. Williamsà2nd circuit held that value is defined by ?’s subjective view, not by an objective measure. In this case, even though stock offered worthless, still he personal belief was controlling.
o US v. Gormanà? charged with gratuity for receiving a loan and future employment. ? argued no value because repaid loan with interest and any salary from employment in exchange for his work. Ct. said value because at the time he couldn’t get loan form anyone else and also employment at substantially higher salary than his gov. position.
v Federal Public Officials
o Any federal officer or employees will generally qualify.
o Employees of entities other than Fed Government
§ Dixon v. USà?s employees of a corporation that received portion of federal housing block grants given to the city of Peoria. SC found them to be federal public officials. Whether ?s occupied a position of public trust with official federal responsibilities. YES.
§ To date lower courts applying Dixson have found that private actors and state and local employees are federal public officials if they have any responsibilities relating to federal matters. (e.g. a state deputy sheriff with authority over federal and state prisoners in a county jail, a lower-level corporate employee responsible for determining eligibility for federally-subsidized housing.
o Definition of Official Act
§ Gov. must show that the bribing party intended to influence a public official in an official act. In gratuity, must show that payment was intended as compensation for an official act.
§ § 201 defines official act as any decision or action on any question, matter, cause, suit, proceeding or controversy, which may at any time be pending, or which may by law be brought before any public official, in such official’s official capacity, or in such official’s place of trust or profit.
§ United States v. Arroyo
- ? a US Small Business Administration loan officer solicited money form person in order to approve loan. But had already approved loan and argued that he could not be convicted of bribery because he cold not actually be influenced in his official act because he had already undertaken the act when he solicited the money.
- 7th circuit upheld the conviction. The key point is the ?’s understanding of what the payer believes he is paying for.
§ But if public official receives something of value in a purely private venture, then there is not official act.
o Definition of Criminal intent
§ Gov must prove that the briber giver or receiver acted corruptly
§ Often met by showing that payment made to influence official act
§ It is not necessary that both parties have same intent. So donor may be convicted of giving a bribe despite the fact that the recipient had no intention of altering his official activities or even lacked the power to do so.
§ Gratuities
- US v. Sun-Diamond Growers
o Sun-Diamond was trade association engaged in marketing and lobbying on behalf of members. Chard with paying gratuities to Secretary at the time payments made, two matters of importance to ? were pending before secretary. The gov. did not prove any specific connection between these official matters and payments.
o Court reversed. Simply finding that a payment was made to create goodwill, which might affect future official acts, is insufficient. To obtain a gratuity conviction, the government must show that the party intended to make the payment for specific official acts.
v Federal Program Bribery
o § 666 See Text Pg. 157
o Elements of § 666
§ The ? solicited, received, offered, or gave a thing of value;
§ The thing of value was solicited or received by, or offered or given to benefit, an agent of a listed entity
§ The thing of value was given in connection with any business, transaction, or series of transactions of a listed entity involving anything of value of $5,000 or more,
§ The ? acted corruptly
§ The entity for which the ? acted as an agent received more than $10,000 a year in federal assistance.
o Salinas v. United States
§ ? a local sheriff who received bribes from prisoner for contact visits. Prison also held fed prisoners and that’s why received >$10K fed funding.
§ Supreme Court held that in a § 666 case, the government is not required to prove that the bribes affected federal funds by, for example, diverting or misappropriating them. Court held that statute prohibits bribery in connection with any business, transaction, or series of transactions. The statute does not require that the bribe divert, misappropriate, or otherwise directly affect federal funds.
o Fischer v. USàSC held that a health care provider who received Medicare payments received benefits and thus was subject to prosecution under § 666 even though the individuals were the beneficiaries of the program.
v An Overview of Federal Crimes Dealing with Political Corruption
o I skipped
Drug Offenses
v § 841
o It shall be unlawful for any person knowingly or intentionally-
§ To manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense a controlled substance; or
§ To create, distribute, or dispense or possess with intent to distribute or dispense, a counterfeit substance.
v Manufacturing of a controlled Substance
o Manufacturing: The production, preparation, propagation, compounding, or processing of a controlled substance, either directly or indirectly or by extraction from substance of natural origin, or independently by means of chemical synthesis (§ 21 USC § 802(15))
§ Growing? Production includes the manufacture, planning, cultivation, growing, or harvesting of a controlled substance
o Controlled Substance: the term controlled substance means a drug or other substance or immediate precursor, included in schedule I, II, III, IV, or V of part B of this subchapter. The term does not include distilled spirits, wine, malt beverages, or tobacco, as those terms are defined or used in subtitle E of the Internal Revenue Code of 1986. (21.U.S.C. § 802(6))
o Knowingly or intentionally
§ The typical criminal law meaning, together with the “willful blindness” doctrine:
- This doctrine willful blindness doctrine follows the MPC:
o When knowledge of the existence of a particular fact is an element of an offense, such knowledge is established if a person is aware of a high probability of its existence, unless he actually believes it does not exist
- D must know that the material is controlled substance but need not know the specific identity of the substance.
v Possessing a Controlled Substance with Intent to Manufacture
o 1. possessing 2. a controlled substance, 3. knowingly or intentionally 4. with intent to manufacture constructive possession- either sole or joint.
§ Actual possession: Physical dominion and control over property
§ Constructive possession: the ability to obtain actual physical possession of property by ownership or by dominion and control over the person with actual possession or the property’s situs.
o Controlled substance- as above
o Knowingly or intentionally- as above
o With intent to manufacture:
§ See above. Neither quantity or quality are an issue.
v Distributing a controlled substance
o 1. distributing, 2. a controlled substance, 3. knowingly or intentionally
§ 1. distributing: the term distribute means to deliver (other than by administering or dispensing) a controlled substance… The term distribute means a person who so delivers a controlled substance or a listed chemical.
- Broadly construed to include act or aiding or abetting e.g. the “go between.”- Participation in the transaction viewed as a whole. A sale transaction is not required. It includes all exchanges of possession (e.g. mules) and other activity needed to get the substance to market or to the consumer (non-commercial)- e.g. negotiations for a sale, or giving it away
o 2. controlled substance- as above
o knowingly or intentionally- as above
v Possessing a controlled substance with intent to distribute
o Possessing- as above
o A controlled substance- as above
o Knowingly or intentionally- as above
o With intent to distribute- see above
v Dispensing a controlled substance
o 1. dispensing 2. a controlled substance 3. knowingly or intentionally 4. without a legitimate medical purpose or outside the scope of normal medical practice.
o 1. dispensing: the term dispense means to deliver a controlled substance to an ultimate user or research subject by, or pursuant to the lawful order of, a practitioner, including the prescribing and administering of a controlled substance and the packaging, labeling or compounding necessary to prepare the substance for such delivery. The term dispenser means a practitioner who so delivers a controlled substance to an ultimate user or research subject.
§ Preventing physicians and pharmacists from becoming conduits for prescription drug
§ A majority of the circuits hold that distribute and dispense are interchangeable terms
§ Examples: a. prescribing a controlled substance for someone who is not ill; b. filling a fraudulent (or counterfeit) prescription, c. repackaging or relabeling a controlled substance contrary to the statute.
o 2. a controlled substance- as above
o 3. knowingly or intentionally- as above
o Without a legitimate medical purpose or outside the scope of normal medical practice
§ US v. Rosen
- Inordinately large quantity prescribed
- Large number of RX’s issued
- No physical exam given
- Warning to fill at different pharmacies
- Issuing RX’s to person known to be delivering to another
- Issuing RX’s at intervals inconsistent with legitimate medical treatment
- Use of street slang (rather than medical terminology) in RX
- Lack of relationship between malady and drug
- Writing more than one RX at a time to spread them out
v Possessing a controlled substance with intent to distribute
o Possession- as above
o A controlled substance- as above
o Knowingly or intentionally- as above
o With intent to distribute- see above- no cases
v Jurisdiction
o All circuits that have been presented with the issue have held that, even after Lopez, that purely local drug activity is within the scope of the CC. Interstate drug transactions are clearly within the scope and purely local activities are within the clause of activities, etc.
v United States v. Chapman
o Court held that the statute requires the weight of the carrier medium to be included when determining the appropriate sentence for trafficking in LSD, and this construction is neither a violation of due process, nor unconstitutionally vague.
v United States v. Smith
o 100:1 sentencing ration for crack and powdered cocaine is constitutional and based on societal needs and concerns. Court’s reasoning based on 3 premises:
§ crack cocaine is a substance that is distinguishable from other forms of cocaine based on appearance, texture, price, means of consumption, the character and immediacy of effects of use and chemical composition.
§ Crack is a purer drug than cocaine and the speed with which it progresses to the brain produces a significantly different effect that increases the likelihood of addiction
§ Cheapness and accessibility of crack could create other societal problems which required remedying.
o Concurrence: this ration is adversely affecting the black communities around the country.
Currency Reporting Offenses & Money Laundering
v 31 USC § 5313 requires that banks and other financial institutions file with the IRS currency transaction reports (CTRs) of all case transactions of more than $10K.
v § 6050 of IRS Codeàanyone in a trade or business must report to the IRS cash receipts of more than $10K.
v § 5316- requires filing of Currency or Monetary Instrument Report y persons who transport more than $10K
v Structuring to avoid these requirements is also a crime
v The Elements of Section 6050I
o Section 6050I requires persons who receive over $10K in cash in the course of their trade or business to report the transaction to the government on IRS Form 8300. Filing a false report or failing to file is a crime.
§ Failure to File
- A duty to file
o Any person (legal entities included, etc.)
o Who receives
o Cash
§ Coins & currency
§ Certain monetary instruments (a) of a face amount of $10,000 or less [if whole transaction is $10K or more] [monetary instruments do not include instruments that have paperwork trail e.g. a cashier check], (b) provided there are not drawn on the account of the writer in specified financial institutions (e.g. a personal check)
- Bank Drafts, Traveler’s Checksànot included because paper trail
§ These monetary instruments are considered to be cash only if 1. they were received during designated reporting transactions or 2. where the recipient knows that the instrument is being used to avoid the reporting requirement.
§ A designated reporting transaction is defined as the retail sale of a consumer durable, a collectable or a travel or entertainment activity.
§ A consumer durable is personal property suitable for ordinary consumption with a sale value of more than 10K
§ A collectible includes any work of art, antique, metal, gem, stamp or coin.
§ A sale of travel or entertainment activity is a designated transaction if 1. the amount received or the aggregate amount of several items received pertains to a single trip or event, and 2. the total amount received exceeds $10K
- 4. in the course of a trade or business (the primary purpose of the enterprise must be to make a profit)
- 5. In one transaction or in two or more related transactions in a 24-hour period.
o The trade or business knows or has reason to know that each transaction is part of a series of transactions.
- 6. Over $10K
o applies to a single transaction or the aggregation of two or more related transactions
§ Failure to file
- Not filing Treasury Form 8300 within fifteen days of receipt (with aggregation, within fifteen days of the qualifying receipt)
§ Willfully
- Knowledge of the facts giving rise to the duty (ignorance of the facts is a defense)
- Ratzlaf v. US
o SC ruled that the term willful in the statute requires proof that the ? knew structuring he undertook was unlawful. But later Congress removed the willfulness requirement from structuring. Courts have held that intent to violate the law is not an element of structuring under § 5324, but is an element of structuring under 6050I.
- Knowledge of the law giving rise to the duty (the reporting requirement) (ignorance of the law is a defense)
- Intentionally fail to file
- REMEMBER, NO ATTEMPT PROVISION HERE! FED LAW DOESN”T HAVE GENERAL ATTEMPT CRIME!
§ Scope: conspiracy law applies, but there is no attempt provision.
v Elements of Section 5313
o This section creates two offenses: 1. failure to file and 2. false filing. There are no cases (and apparently no prosecutions) dealing with false filing. Accordingly, we focus on the failure to file offense.
§ A duty to file
- Financial institution
o Banks (except credit card systems)
o Brokers or dealers in securities
o Currency dealers or exchangers, including check cashers
o Funds transmitters
o Telegraph companies
o Casinos with annual revenue over $1,000,000, including tribal casinos and others
§ Persons subject to supervision by any state or federal bank supervisory authority
- The definitions include formal entities and any person acting in one of the above listed capacities whether or not on a regular bais or as an organized business concern. (31 C.F.R. Section 1-3.11(n).
- Currency: coin or paper money of any county (clean or dirty)
- Transaction: a currency transaction is a transaction involving the physical transfer of currency from one person to another, excluding the transfer of funds by bank check, bank draft, wire transfer or other written order.
- By through or to an Institution (compare a safe deposit withdrawal)
- Over $10,000: the aggregation rule:
o The transaction must be by or on behalf of any person
o The transaction must amount to over $10,000 of cash in or out in a single day.
o The institution must have knowledge of both a & b.
§ Failure to file
- Not filing treasury form 4789 within 15 days of the transaction.
§ Willfully
- 1. Knowledge of the facts giving rise to the duty (ignorance of the facts is a defense)
- 2. knowledge of the law giving rise to the duty (the reporting requirement) (ignorance of the law is a defense)
- 3. intentionally fail to file
- COLLECTIVE KNOWLEDGE DOCTRINE!
§ Scope: conspiracy law applies, but there is not attempt provision.
v Structuring § 5324
o No person shall for the purposes of evading the reporting requirements:
§ Cause or attempt to cause a domestic financial institution to fail to file a report required under… (rarely Used)
§ Cause or attempt to cause a domestic financial institution to file a report required under § 5313 that contains a material omission or misstatement of fact, or (rarely used)
§ Structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions.
o Main elements:
§ Mens rea requirement= intending to evade
- It is a specific intent crime
- The usual defense apply
§ There are 3 clauses, but 1st two are virtually never used. #3 is the important one
§ Congress removed the willfulness requirement from the law in response to Ratzlaf, because it was too hard to prove
- Ratzlaf was overruled for 5324 and now only applies to § 5313
v Attorney-clt privileges
o Courts have held that clt can just avoid the § 6050I’s reporting requirement by paying atty other than by cash.
v Money Laudering: §§1956 & 1957
o § 1956
§ whoever knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity-
- with the intent to promote the carrying on of specified unlawful activity; or
- with intent to engage in conduct constituting a violation of section of Internal Revenue code or
- Knowing that the transaction is designed in whole or in part
o To conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or
o To avoid a transaction reporting requirement under State or Fed Law
§ Shall be punished according to the statute
o Financial transaction includes broad range of financial dealings that affect interstate or foreign commerce e.g. transfers of money, property, and gifts
o Specified unlawful activities include wide range of white collar crimes and other crimes. Mostly drugs.
o Statute defines “knowing that property involved in a financial transaction represents the proceeds of some form of unlawful activity” where the ? knew the property involved in the transaction represented proceeds form some form, though not necessarily which form, of activity that constitutes a felony under State, Federal, or foreign law.
o Elements of 1956(a)(1)
§ ? conducted or attempted to conduct a financial transaction
§ the ? knew that the financial transaction involved the proceeds of some type of unlawful activity, which activity constitutes a felony under state, federal, or foreign law.
§ The funds in fact were proceeds from an specified unlawful activity, and
§ Any one of the following:
- The ? engaged in the transaction done with the intent to further a specified unlawful activity;
- The ? engaged in the transaction with the intent to commit tax fraud
- The ? engaged in the transaction knowing that the transaction is designed in whole or in part to disguise, conceal, or hide the source of the money; or
- The ? engaged in the transaction knowing that the transaction is designed in whole or in part to avoid the currency transaction reporting laws.
o § 1956(a)(2)
§ Whoever transports $ in or outside the US
- With the intent to promote the carrying on of specified unlawful activity, or
- Knowing that the monetary instrument or funds involved in the transportation represent the proceeds of some form of unlawful activity and knowing that such transportation, transmission, or transfer is designed in whole or in part-
o To conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of the specified unlawful activity; or
o To avoid a transaction reporting requirement under State or Federal law
§ Shall be punished according to the statute.
o Elements of § 1956(a)(2)
§ The ? moved or attempted to move monetary instruments or funds;
§ The movement or attempted movement was out of or into the United States; and
§ Either (a) or (b)
- The ? acted with the intent to promote a specified unlawful activity; or
- The ? acted with the knowledge that
o The monetary instrument or funds were from some form of unlawful activity, which activity constitutes a felony under state, federal, or foreign law, and
o The movement of funds was designed in whole or in part either to:
§ Conceal the source of the funds, or
§ Avoid a currency transaction reporting requirement.
o NOTE 1956a1 deals with domestic whereas 1956a2 deals with foreign transport. A1 deals broadly with “financial transactions” whereas a2 only deals with transactions involving “monetary instruments”
v § 1957
o unlike 1956, 1957 doesn’t deal with attempts to hide the source of dirty money, but focuses on the use of such funds within the financial system.
o Elements of § 1957
§ The defendant engaged or attempted to engage in a monetary transaction
§ The monetary transaction involved criminally-derived property;
§ The monetary transaction was of a value greater than $10K
§ The transaction was derived from specified unlawful activity
§ The transaction took place in the United States or the ? is a “US person”
§ The ? had knowledge that the property was derieved from some form of unlawful activity.
o NOTE: 1957 makes exception for drug ?s when states that “such term does not include any transaction necessary to preserve a person’s right to representation as guaranteed by the 6th amendment to the Constitution.”
v Proof of ?’s mental state
o 1956 requires the gov. to prove two levels of mens rea
§ knowledge that the financial transaction represented the proceeds of unlawful activity, and
- only need to prove that knew the laundered money or property come from some kind of unlawful activity. Actual knowledge or willful blindness will work but negligence or recklessness will not.
- US v. Campbellà? real estate agent and clt represented himself as bizman and then told the home seller to take $60K under the table. ? helped in this transaction. Ct. said that willful blindness. Also, whether ? knew is a jury question.
§ one of four alternative theories.
- Evidence of a design to conceal or disguise dirty money (most often used)
o Mere spending of dirty money in the absence of design to conceal not enough. Remember “money launder” not “money spending”
o US v. Jacksonà? was minister + drug dealer[2] and deposited dirty money in church account and used it for personal expenses. Court said that both elements met. ? knew that money dirty and deposited it in the church account with the clean money to conceal dirty money.
- Evidence of Intent to Promote Unlawful Activity
o The government must rove that the defendant intended that the illegally-derived money be used to further the activity.
o Johnson case where investor fraud and ? bought house and expensive car and ct. said to promote unlawful activity because were used to impress investors.
o § 1957 only requires the government to show that ? engaged in a monetary transaction of more than $10K derived from specified unlawful activity, and that ? knew the money was derived from some form of unlawful activity.
§ Proof of knowledge
- Gov. can prove knowledge by actual knowledge or willful blindness
v Proof that Property was the Product of Criminal Activity
o Issues Relating to Timing
§ § 1957
- gov has to prove that ? engaged in a monetary transaction in criminally derived property. Criminally derived prop defined as any prop constituting, or derived from, proceeds obtained from a criminal offense.
- If at the time of the monetary transaction, the ? had not actually completed the crime and received the illegally-obtained funds, can’t be held liable. Only transactions occurring after the proceeds have been obtained from the underlying unlawful activity are covered.[3]
o § 1956
§ requires that financial transactions at issue in fact involve the proceeds of specified unlawful activity. Timing defense less successful under 1956.
o Commingling
§ Under 1956, gov. need not trace illegal proceeds that have been commingled with legitimate funds. E.g. Jackson case
§ Under 1957, courts are split. Us v. Rutgardà? surgeon who operated two eye care clinics that served Medicare patients. Gov showed that clinic routinely submitted fraudulent claims for Medicare payments. Convictions based upon two large wire transfers out of Rutgard’s account. 9th circuit reversed conviction because gov was required to trace the transferred funds to MedCare fraud. Unlike 1956 with two level mens rea requirement, 1957 merely requires proof of knowledge that the funds were tainted. So where commingling, 1956 better route to take.
§ According to the court, commingling would not frustrate the purpose of 1957 because to prevail, the gov need to show only a single $10K deposit of criminally-derived proceeds. Commingling will frustrate statute if criminal deposits have been kept under $10K. But that is the way the statute is written, to catch only large transfers.
RICO
v RICO does not create any new underlying crime but criminalizes repeated predicate acts. Therefore, there is not separate mens rea requirement for RICO.
v Elements
o A RICO enterprise existed
o The ?s committed two or more predicate acts within 10 years (the racketeering activity)
o The commission of the predicate acts constituted a pattern of racketeering activity
o And using the predicate crimes or proceeds thereof to (4 theories):
§ A. invest in the enterprise, or
§ B. acquire an interest in, or maintain control of, the enterprise, or
§ C. conduct the affairs of the enterprise
§ D. Conspired to do any of a-c; and
o The racketeering activity affected interstate commerce.
v RICO Theory
o A-C are considered substantive RICO theories.
o Subsection A
§ Prohibits any person from using or investing any income derived from a pattern of racketeering activity in an enterprise.
§ E.g. Mislabeling crude oil and using the profits to invest in a company ?s had established, the enterprise. Investing proceeds from narcotics offenses in an Alaskan gold mine, the enterprise.
o Subsection B
§ Prohibits any person from acquiring or maintaining control of an enterprise through a pattern of racketeering activity. Least frequently used.
§ E.g. ?s members of ongoing criminal confederation who had acquired interest in and control of a labor union through acts of extortion and murder.
o Subsection C
§ Makes it unlawful for any person employed by or associated with any enterprise to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity. Most often used and covers issues such as Medicare fraud, bankruptcy fraud.
o Subsection D
§ Conspire to commit A-C. Thus a ? violates RICO itself, and not only § 371 if ? enters into an agreement to violate any of the three substantive subsections of § 1962. Unlike § 371, no overt act requirement.
§ Salinas v. US
- The main sheriff took bribes from prisoner for contact visits. ? was a deputy at the prison and he made some of these visits possible. Gov. said that ? conspired to commit Càconduct the activities of the enterprise (prison) through racketeering activity. Court upheld his conviction even though he personally didn’t agree to commit all of the acts needed for C. As long as the sheriff and ? had common goals, D met.
v The Enterprise
o Enterprise- any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.
o United States v. Turkette
§ Enterprise was a group of individuals associated-in-fact for the purpose of conducting various illegal activities. Court held that enterprise includes both legal and illegal associations
o National Organization of Women v. Scheidlerà No economic motive requirement.
o Association-in-fact enterprise
§ An AIF can not only include individuals but also legal entities (e.g. corporation and sole proprietorship)
§ US v. ConsoleàLaw firm and medical group involved in insurance fraud and considered enterprise. Need three things:
- An ongoing organization
- Proof that associates in the enterprise functioned as a continuing unit
- Enterprise must be an entity separate and apart from the pattern of activity in which it engaged
o Here it met because medical group and law firm provided other lawful services other than the fraudulent ones.
§ Circuits are split on whether the enterprise structure can be shown by proof of the illegal activity itself or whether the government must show that the enterprise had a structure distinct from the illegal activity.
- US v. Beldose (majority view)
o Gov alleged that ?s violated 1962(c) by associating with an enterprise “described as a group of individuals associated in fact to fraudulently sell securities of agricultural cooperatives. Court rejected this as an enterprise because statue designed to protect against infiltration of illegal activities into legit biz and not to prohibit individuals who simply associate for purposes committing the predicate acts.
- US v. Pherholtz
o Proof of an enterprise separate form the racketeering activity can be inferred from proof of that activity. Existence of a group of individuals repeatedly committing predicate offenses alone does not constitute an enterprise absent some proof of organization. That proof can be inferred from the racketeering activity itself.
| Beldose (8th Cir) majority | Perholtz (DC Cir) minority | Comparison |
| A common or shared purpose | A common or shared purpose | No distinction, except (perhaps) for a difference in the type of proof required. |
| Functioning as a continuing unit | Organization | The majority focuses on the durability beyond the predicate acts, whereas the minority focuses on the existence of an organization. |
| Must have an ascertainable structure | Must have continuity which may be proved from predicate acts | The majority focuses on the organization of the unit, whereas the minority focuses on the continuity of the organization |
| Usually, must have evidence beyond the predicate acts | Proof of the predicate acts may suffice | The majority focuses on the distinction between the enterprise evidence and the predicate acts evidence, whereas the minority allows the proof to completely overlap. |
v Naming the enterprise as ?
o Courts agree that no barrier against this under subsec a and b.
o Most courts hold that enterprise cannot be named as ? under c. Language of this section requires a relationship between the person and the enterprise so separate.
o Sole Proprietorships
§ Under C, a person who runs a solely owned corporation, biz be the ?.
§ Cedric Kushner v. King
- ? president and sole shareholder of a closely held corporation. SC held that the C applies when a corporate employee unlawfull conducts the affairs of the corporation of which he is the sole owner, whether he conducts those affairs within the scope, or beyond the scope, of corporate authority.
§ Can a corporation be the enterprise and its employees be the ?? OF COURSE! Under Subsection A, could you have sued Corp,YES.
§ Can a wholly owned subsidiary be the enterprise and the parent corporation be the ?? YES.
§ Compare Cedric Kuhner with Fitzgerald [Chrysler corp issuing warranties but not paying. Chrysler is the ? here and enterprise is the relationship between Chrysler and the Chrysler family (dealers). Court said can’t do it. Can’t sue Chrysler under these circumstances because Chrysler is the enterprise. Now what about the previous example where subsidiary and corp as ?. Prof thinks that Cedric Kushner is more likely to be the law.]
§ McCullough v. Suteràsole proprietorship can be an enterprise that the proprietor can be associated with, as long as that sole proprietorship has existing employees.
§ Some courts have held that employers and its employees can’t constitute an enterprise
§ Fitzgerald v. Chrysler Corpàcourt held that it was not appropriate to name Chrysler and various of its subsidiaries and agents as an enterprise under Subsection 1962(c). Court noted that this is not a normal subsidiary context. “we cannot imagine is applying RICO to a free-standing corporation such as Chrysler merely because Chrysler does business through agents, as virtually every manufacturer does.” If Chrysler was conducting all biz through employees, then couldn’t have been held liable.
o Operation or Management Test Under 1962c
§ Proof must show that ? conducted or participated, directly or indirectly, in the conduct of such enterprise’s affairs
§ Reves v. Ernst & Young
- Accounting firm conducted one audit for the cooperative. Supreme Court held that this wasn’t enough.
- For one to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs, one must participate in the operation or management of the enterprise itself. Thus RICO violation requires that ?s have taken some part in directing the enterprise’s affairs through the operation or management of the enterprise. This not only includes high management but also other low ranked officials
- In order for an outside firm to be liable, it must have associated with the enterprise and must also have had some part in directing its affairs.
v The Racketeering Activity
o RICO does not require a ? to have been separately convicted of the predicate acts in order for the acts to qualify as racketeering activity. Only need to be chargeable, indictable or punishable
o State crimeàwill not qualify as a RICO predicate if maximum penalty for a state crime is one year or less.
o In General
§ State offenses: ten offenses listed generically: “any act or threat involving…” the ten.
- Must only be chargeable (a state conviction is not required):
- Statute of limitations- only the conduct, not the individual
- Punishable by imprisonment for more than one year
§ Federal offenses:
- Indictable: B, c, e, f and G (s. 54)
- Any offense involving fraud…D
- Remember NOW v. Scheidler (the Hobbs Act)
- Conspiracy as a predicate offense:
o State (conspiracy)no problem- see language above
o Federal
§ Subsection D- no problem
§ All others: depends on whether conspiracy is included in the definition of the offense. If yes, no problem. If no (371 alone) not possible.
v Patter Requirement
o ? must engage in a pattern of racketeering activity: requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within 10 years (excluding any period of imprisonment) after the commission of the prior act of racketeering activity.
o Northwestern Bell Telephoneà ? alleged that ? bribed public officials over a six-year period in order to influence phone rates.
o Minimum number of predicate acts (2) are needed to establish a pattern but something more is needed. That requirement is met if relationship plus continuity.
o Relationship is established if acts have same or similar purposes, results, participants, victims, or methods of commission or otherwise are interrelated by distinguishing characteristics and are not isolated events.
o Continuity can be demonstrate in either two ways. By proving a sequence of predicate acts related to each other extending over a substantial period of time, more than few weeks or months. CLOSED-ENDED PATTERN
o OPEN-ENDED Pattern- even if racketeering activity has occurred only over a short time, continuity can be demonstrated by the implicit or explicit threat of repetition extending into the future.
o Multiple schemes not needed.
o Often cases struck down on continuity requirement
§ 1 victim ok.
§ For closed-ended, most cts will reject RICO if lasted for less than 1 year.
v RICO Conspiracies
o A RICO Conspiracy
§ 18 U.S.C. § 1962(d):
- It shall be unlawful for any person to conspire to violate any of the provisions of subsections (a), (b), or (c) of this section.
§ Unlike a 371 conspiracy, no overt act is required for a RICO conspiracy
§ The principle issue concerns the RICO conspiracy’s agreement:
§ The ACTUS REUS OF CONSPIRACY- THE AGREEMENT (371)
- Substance: to commit a target offense, but each conspirator need not agree to commit all of the acts necessary to complete the target crime.
- Formality: none- a tacit “meeting of minds” suffices
- Detail- an agreement on the essentials suffices
- Plurality- a bilateral concept (two or more)
- Wharton’s Rule: there is no conspiracy when the crime necessarily requires the participation of two persons for its commission. Now a presumption in federal courts.
- The split in the circuits: MAJORITY: RICO is the same as 371; Minority: Each RIOCO conspirator must commit or agree to commit the required two or more predicate acts.
- Salinas (495): Adopted the majority rule
o The impact of Salinas on the issue of the application of the Reves “operation or management” requirement. Majority: NA; Minority (including 9th circuit) is applicable. SEE note 2, 499-500
- The relationship between 371 & a RICO conspiracy: cumulative!
v Civil RICO
o In terms of substantive law, there’s no distinction between this and criminal RICO. (One of the only areas in civil cases are cited for criminal principles)
o Procedural issues
§ Burden of proof
- Criminal: beyond a reasonable doubt
- Civil: preponderance of the evidence
§ Standing: (Civil RICO only)- In general, alleged RICO conduct must be proximate cause of ?’s damages
§ Statute of limitations
- Criminal: 5 years- accrues (starts running_ when the last act of racketeering activity is performed
- Civil: 4 years- accrual is uncertain
o Majority rule: when ? discovers the RICO injury
o US Supreme Court has disapproved all other tests, but has not approved this
§ Preemption: RICO action may be preempted by various comprehensive administrative schemes
- NLRA
- FEHA, etc.
§ Class Actions: Civil RICO claims ma be brought as these
§ Rule 11 Sanctions: applies to Civil RICO.
False Statements
v § 1001 applies to unsworn statements made to the government.
v This statute criminalizes the act of knowingly and willfully engaging in:
o Falsifying, concealing, or covering up a material fact by any trick, scheme, or device;
o Making any materially false, fictitious, or fraudulent statement, or representation; or
o Making or using any false writing or document knowing it to contain ay materially false, fictitious, or fraudulent statement or entry.
v Gov must prove that:
o ? made a statement
o the statement was false or fraudulent
o the statement was material
o the ? acted knowingly or willfully; and
o the ? made the statement within the jurisdiction of the executive, legislative, or judicial branch of the federal government.
v Meaning of Statement
o Oral, written, sworn, unsworn, past, present, future, voluntary or coerced by law, and silence when one has a duty to speak (e.g. when carrying >$10 out of country and not report, can be convicted of false statement).
o The Exculpatory No Doctrine
§ Brogan v. USà Exculpatory No is covered under the false statement law and is not prohibited by the 5th Amendment. Person has to right to keep quiet but not lie. But A.G. Manual discourages this.
v Falsity and Concealment
o Falsity can be proven by
§ The ? made an untrue statement, or
§ The ? concealed a material fact
§ True & misleading statements
- True: not suffice
- Implied falsity[4] (dicta note 6, 584)- contrast incomplete, misleading, or deceptive statements (note 1, 607)
- Where statement is subject to two plausible interpretations, the burden on gov. to prove that ?’s intended to use the false one.
v Materiality
o Materiality is an element of every case brought under the statute.
o Materiality: a natural tendency to influence, or be capable of influencing, the decision of the decisionmaking body to which it is addressed.
o Materiality is a jury issueà some judges are still not doing this, so if prosecutor, have to insist.
o Rationale? This is a conduct crime.
v Mens Rea
o Knowingly
§ ? had the knowledge at the time statements made. Knowledge can be established by evidence of actual knowledge or by evidence that ? intentionally or recklessly avoided learning whether the statement was true or false.
§ Knowledge of facts giving rise to federal jurisdiction
- The gov need not prove that the ? knew that the statement fell within a matter of federal jurisdiction.
- US v. Yermianà? applied for employment with private defense K and K forwarded application to defense department and ? lied in application. ? argued that didn’t know app would go to fed gov. SC rejected this argument and ruled that no knowledge needed in regard to the jurisdictional requirement. SO strict liability with jurisdiction.
o Willfully- intent to deceive
§ Gov. must also prove that the ? acted with the intent to deceive.
§ To deceive the listener [the purpose of the lie]
§ Conceal: a. knew of duty to disclose, and b. intentionally failed to do so
§ Hilderbrant, Note 590àMistake of law is not applicable. So mistake has to be as to the facts, not law.
§ Causing another to file a false statement? Does Cheek or Ratzlaf apply?- a split. Under Cheek
v Jurisdiction
o Matters within the jurisdiction of the executive, legislative (some), or judicial (some) branch of the U.S. Government
o Feds need not be directly muced- a muc to a private party that is material to the fed jurisdiction suffices. LUTZ
o US v. Rodgersà? lied to FBI and Secret Service that wife kidnapped and planning to kill wife. SC held that this was within the jurisdiction of these federal agencies. Ct. gave a wide definition to this element.
o US v. Lutzà violation of § 1001 does not require that the false statement be made directly to, or received by, the federal department or agency. The statute only requires the false statement to have the natural tendency to influence or be capable of influencing a federal agency.
o The unemployment split- Note 5, 584. LOOK AT IT.
v Relationship to other crimes: Double Jeopardy [stacking]
o Blockburgerà same conduct can give rise to multiple charges so long as
§ Each crime requires proof of an element that the other does not, and
§ There is no clear congressional intent to prohibit multiple charges.
o US v. Woodwardà Prosecution for both 1001 and 5316. ? lied and said not transporting over $5K but in fact transporting $20K. Charged with § 1001 and currency reporting. Court said ok because 1. § 1001 prohibits the failure to by any trick, scheme, or device to conceal a material fact. But in the currency reporting, a person could simply and willfully fail to file a currency disclosure report. Also second prong met because no intent on part of the Congress.
Perjury and False Declarations
v Perjury Statute § 1621 and false declarations statute § 1623
v 3 major differences
o the perjury statute applies to a broader range of proceedings
§ § 1623 only applies to court and grand jury proceedings.
o 1623 allows the use of inconsistent statements to prove guilt, without requiring the government to prove which of the two statements was false, 1621 contains no such provision
o 1623 does away with the so-called two-witness rule which courts have imposed under 1621, which requires proof both by one witness and by additional corroborating evidence
o 1623 provides for a limited recantation defense, 1621 provides no such defense
v Elements of 1621
o The ? undertook an oath administered by one authorized by federal law to do so;
o The ? undertook the oath before a competent tribunal, officer, or person;
o The oath was administered in a case in which federal law allowed an oath to be administered;
o The ? made a false statement;
o The statement was material to the proceedings; and
o The ? acted willfully and with knowledge of the statement’s falsity
v Elements of 1623
o The ? under an oath
o The oath was administered before or ancillary to a court or grand jury proceeding
o The ? made a false statement or used false information;
o The false statement or information was material to the proceeding; and
o The ? knew the statement or information was false.
v Oath
v Tribunals and Proceedings
o 1623 only applies to proceedings before or ancillary to any court or grand jury. 1621 applies both to court and grand jury proceedings and to all other proceedings in which an oath is authorized under federal law, such as Congressional and administrative agency proceedings
v Making Material False Statements
o Test for materiality is not whether statement had any actual effect on the proceeding but whether the statement has the capacity or tendency to influence the outcome of the proceeding.
v Falsity
o Literally true or non-responsive answers
§ Gov must prove beyond a reasonable doubt that the statement was indeed false
§ BronstonàSC held that a literally true statement will not suffice for a conviction.
o Inconsistent statements
§ Under 1623 but not under 1621, the government may prove falsity by proving that the ? made two or more declarations which are inconsistent to the degree that one of them is necessarily false. In order for the inconsistency to suffice for conviction, each statement must be material to the point at issue and must have been made within the statute of limitations period.
v Intent
o Knowledge of falsity
§ Both 21 and 23 require that government prove beyond a reasonable doubt that the ? knew the statement was false at the time it was made.
o Willfulness
§ 1621 unlike 1623 requires that in addition to proof of knowledge, the gov prove that the ? acted willfully. As a practical matter, once it has been proved that ? knowingly made a false statement, a jury can naturally infer that the ? intended to deceive.
v Materiality
o Gov must prove beyond reasonable doubt that the false statement was material. Material statement is that which is capable of having an effect on the tribunal or proceeding. I.e. a statement is material if a truthful statement would assist in the matter. No showing needed that tribunal or proceeding was actually affected.
o Materiality is a jury question
v The Two-Witness Rule
o Only applies to 1621
o Needs one live witness + corroborating evidence
o US v. Davis
§ ? told gov investigator that G committed robber and signed a statement. Later at grand jury denied. At 1621 trial, gov presented the testimony of the investigator and the only the signed note as corroborating evidence. Court said that this was enough corroborating evidence because it doesn’t independently has to show perjury. Also, ct. rejected ?’s argument that his own acts could not provide the corroboration.
§ Therefore, corroborating evidence need not be strong nor even independently sufficient in itself, it may be supplied by ?’s own conduct.
o 1623 doesn’t follow this rule and gov can prove that the witness made two inconsistent declarations under oath, one of which is necessarily false, without proving which of the two statements is false.
v The Recantation Defense
o Recantation defense under 1623
o Recantation where:
§ In the same continuous court or grand jury proceeding in which a declaration is made
§ The person making the declaration admits such declaration to be false, such admission shall bar prosecution under this section, if at the time the admission is made,
- The declaration has not substantially affected the proceeding, OR
- It has not become manifest that such falsity has been or will be exposed.
o ? MUST ASSERT RECANTATION DEFENSE PRIOR TO TRIAL. OTHERWISE WAIVED. It is a question of law for the court to decide
o US v. Fornaro
§ ? lied and after found out that would be discovered, recanted.
§ Court ruled that recantation defense only where false statement has not substantially affected the proceeding and if it has not become manifest that the falsity has been or will be exposed.
o Smithà8th circuit held that or is or not and
v Immunity
o A ? can be charged with perjury even if the allegedly perjurious testimony was given under a grant of immunity.
o Immunity statute states that such testimony may be used for prosecution for perjury, giving false statement, or otherwise failing to comply with the order.
o United States v. Apfelbaum
§ Truth immunized statements can also be used in addition to the false immunized statements to show perjury. In this case, court used true immunized statements to place the false statements in contextàSC ruled it was OK.
v The Target Rule Defense
o The test for whether perjured testimony subsequently can be used despite the absence of target warning is whether, considering the totality of the circumstances, the free will of the witness was overborne.
v The Perjury Trap Defense
o The government creates a perjury trap when it calls a witness before the grand jury for the primary purpose of obtaining testimony to later use to prosecute the witness for perjury.
v READ WALSER CASE!!
Obstruction of Justice: interference with Witnesses
v Omnibus Clause of 1503
o Government must prove that the ?
§ Corruptly
§ Endeavored to interfere
§ With a pending
§ Judicial, administrative, or congressional proceeding, and
§ That the ? knew such proceeding was pending
o Actus Reus- Endeavor
§ Inchoate Liability- pre-attempt conduct v. attempt conduct- a split
§ Successful obstruction
§ Examples
- Interfering with production of documentsèeven documents that have not been subpoenaed may be covered so long as ? has the corrupt intent.
- Giving or encouraging false or evasive – “I do not remember,” when the witness does remember (e.g. case where ? gave evasive testimony and court said this was enough to impede justice)
- Making false statements to government agents. As in 1001.
o AguilaràSC held that simply lying to a government agent who may or may not testify before a court or grand jury does not constitute an endeavor to obstruct
- Encouraging witness to assert the 5th Amendment privilege
o An attorney who advises clt to take 5th though it is of no advantage to the clt, but will help another clt of the lawyer’s suffices as obstruction of justice- a lack of good faith grounds.
- Other witness tampering: e.g. hiding a witness and encouraging him/her not to testify- Lester at 631
- Threatening jurors or court officers. Though this conduct is explicitly covered by Clause One of 1503
o This shows that the Omnibus clause covers even those acts covered by the first clause of 1503 (remember case where conviction reversed because jury had already ruled and trial ended. But prosecutor different matter because still will be making motions)
o Nexus Requirement
§ US v. Aguilar
- Judge lied to FBI agent. Court held that merely lying to an FBI agent does not constitute obstruction. There must be a connection or nexus between the alleged endeavor to obstruct and the pending proceeding. The alleged obstructive act must have a relationship in time, causation, or logic with the judicial proceedings. Making false statements to FBI agent who might or might not testify at grand jury is not sufficient
- Scalia DissentàCt. interpreted endeavor far too narrowly leaving a prohibition of only actual obstruction and competent attempts
o Pending Proceeding
§ In addition to actus reus, gov must prove that a proceeding was indeed pending at the time of the endeavor.
§ Trial Proceedings: begin with the filing of complaint or indictment and end when the judgment is final (appeal, etc.)
§ Grand jury proceedings: Begin when the grand jury is impaneled and has acted in conjunction with an investigation
§ Magistrate: begin with the filing of a complaint and end when the judgment is final
v Mens Rea
o Know of the pending judicial proceeding; and
§ if interfering with witness, ? must know that person witness
o Perform the conduct corruptly
§ Intend (purposely) to improperly interfere with the judicial proceeding.
§ Ambiguity in the circuits (a few use negligence)
§ NOTE: IN aguilar, court required that ? knew that actions would affect pending proceeding.
v Witness Tampering Under 1512
o Conduct:
§ Killing or attempting to kill
§ Intimidating, forcing or coercing
§ Harassing (intentionally)
o Another (victim, witness and informant)
o To influence, prevent or engage such person in specified witness activities (including documentary evidence)
o In specified federal proceedings: Federal courts, grand juries, congress, and federal agencies
o Mens rea: a. knowingly engaging in the enumerated conduct (above) with b. the purpose of producing the enumerated results (to influence, prevent…)
v Relationship between 1503 and 1512
o A majority (following the 9th Circuit) concludes that there is overlap between two section. 9th Cir. Concluded that amendment of § 1512 in 1988 to cover non-coercive witness tampering did not repeal the application of the omnibus clause of § 1503 to witness tampering. A minority concludes that the two sections are mutually exclusive.
Sentencing
v Federal Sentencing Commission promulgates Federal Sentences Guidelines
v Sentencing Commission not violation of separation of powers doctrine
v Basic Method of sentence fixing
o Determining the base level offense
o Examining the specific offense characteristics
o Applying adjustments
o Counting multiple counts
o Assessing the ?’s acceptance of responsibility, and
o Assessing the ?’s criminal history
v A ? is not entitled to a downward motion if admits responsibility. But most courts allow it.
v Departures
o If aggravating or mitigating circumstance, the court may depart
o US v. KoonàAn appeals court should review sentencing departures based on an abuse of discretion standard, not upon de novo review. Next court laid down departure test. Before departure, ask:
§ What features of this case, potentially, take it outside the guidelines heartland and make of it a special, or unusual, case?
§ Has the commission forbidden departures based on those features?
§ If not, has the commission encouraged departures based on those features?
§ If not, has the commission discouraged departures based on those features?
v Apprendi
o The Supreme Court held that the Due Process Clause requires that any fact that increases the penalty for a crime beyond the prescribed statutory maximum, other than the fact of a prior conviction, must be submitted to a jury and proved beyond a reasonable doubt. Justice Stevens wrote for the Court that “the New Jersey procedure challenged in this case is an unacceptable departure from the jury tradition that is an indispensable part of our criminal justice system.”
[1] This is what separates extortion from robbery.
[2] Just another reason why I’m drifting away from religion. I still believe in God though.
[3] E.g. ct. held that wire fraud not complete and ? did not obtain the funds until they were actually deposited into his account.
[4] E.g. saying water is available but only ½ inch. You are implying that your statement means that water for use is available.