Corporate and white collar crime: simplifying the ambiguous.

• Author: Podgor, Ellen S.
• Position: Ninth Survey of White Collar Crime

1. INTRODUCTION

   Although law is constantly evolving, taking on new perspectives as legislatures redefine its bounds and as courts reinterpret its scope, the law relating to white collar crime is different from some other areas of law. Where property and contract law, for example, possess a stability that makes it easier to grasp their fundamentals, white collar crime is changing so rapidly that it is difficult to provide a firm or constant setting for its understanding.(1) One observes an increased breadth in the form of new statutes,(2) as well as extensions offered via case interpretations.(3) Also apparent is the expansion of federal power, now entering the realm of state and local law,(4) as well as international law for acts outside the United States.(5)

   Whether white collar crime has truly increased I cannot say since I am not a sociologist, nor a criminologist. I am uncertain whether crime has actually increased or perhaps the informational basis for detecting crime has reached a level of sophistication that permits us to see that which we were unable to see before. It is, however, evident that the federal government has made white collar crime a priority(6) and that as a result of this focus, corporations and their personnel have become subject to increased scrutiny.

   The interrelationship between white collar crime and corporate criminal liability merits consideration in light of the fluctuating nature of white collar crime and its increased breadth in the federal arena. Ambiguity in the law and its application is an outgrowth of these concerns. Ambiguity is not, however, a new topic to criminal law as vague terms exist throughout our statutes.(7) What is noteworthy is that issues of vagueness are more problematic here as a result of the frequency of occurrence and the environment surrounding the realm of white collar crime.(8)

   White collar crime's eclectic(9) personality also raises concern in the areas of corporate criminal liability and personal liability in the corporate setting. White collar crime's incorporation of both civil and criminal law, as well as subjects such as property and securities, emphasizes its spaciousness.(10) The vast knowledge required of those seeking to abide by existing law presents a Herculean task. Simplification of the law, coupled with clarification of existing ambiguities, would significantly assist in providing law that would be accessible to corporations and their personnel.(11)

2. Development of White Collar Crime And Corporate

   Criminal Liability

   The term white collar crime was coined by sociologist Edwin Sutherland. He used the term in a speech he gave to the American Sociological Society in 1939.(12) He was criticizing those who premised their theories of crime on a belief that crime resulted from poverty or psychopathic and sociopathic conditions.(13) He saw another aspect to crime; crime committed by those in power. As opposed to being merely a subject of civil sanction, Sutherland expressed the view that this activity was criminal.(14) In his later book, White Collar Crime,(15) he defined the term as "crime committed by a person of respectability and high social status in the course of his occupation.""' Sutherland concentrated on the offender and the class or social status of that offender, as opposed to the criminal offense involved.

   Today, it appears that the definition of white collar crime has taken a new stance.(17) The term white collar crime, in the minds of many today, reflects an examination of both the individual and the crime. In some instances, the term is defined solely from the perspective of the crime.(19) I personally find a definition that encompasses class, social status, race, or gender of a person to be a biased methodology for examining criminality.(20) More befitting, it seems to me, is an approach that looks to the activity involved and classifies that activity based upon its attributes as opposed to the socio-economic status of the individuals who engage in the acts.

   Corporate criminal liability can be seen as an aspect of white collar crime. But corporate criminal liability existed well before the coining of the term "white collar crime" by Sutherland.(21) At common law, corporations could not be held liable for criminal acts.(22) Because a corporation had no mind, it could not form the mens rea necessary to commit a criminal act. This did not preclude criminal actions predicated upon acts committed personally by members of the corporation both inside and outside the corporate realm. Those involved in criminality would be charged irrespective of the fact that they acted on behalf of a corporation. The corporation, however, would not be the defendant in the indictment.

   The development of corporate criminal liability came in several stages.(23) Initially, acts of omission that were regulatory offenses brought criminal liability upon the corporation. These were strict liability crimes, crimes such as environmental offenses where the person failed to act. These crimes of omission do, however, require that there be a duty to act. This extension of corporate criminal liability to strict liability crimes involving acts of omission was in keeping with the basic premise of not punishing crimes of intent by a corporation in that the corporation was incapable of forming any intent. Since no intent was required by the statute, punishing a corporation in this context was considered legitimate.(24)

   Corporate criminal liability's barriers further disintegrated when courts started to reach acts of misfeasance.(25) Although still applicable only to strict liability crimes or regulatory type offenses, courts were unable to find a rationale for distinguishing between acts of nonfeasance, a failure to act, and those of misfeasance.

   Corporate criminal liability was further extended when it eventually was held to reach acts outside the strict liability realm. Pivotal in this development was the 1909 Supreme Court case of New York Central & Hudson River Railroad v. United States.(26) This case did not limit corporate criminal liability to acts of omission, but included affirmative conduct by "any director or officer thereof, or any receiver, trustee, lessee, agent or person acting for or employed by such corporation."(27)

   The development of corporate criminal liability is highlighted by the fact that today corporations are subject to explicit federal sentencing guidelines as a result of the passage of the sentencing guidelines for organizations.(28) This new set of guidelines, effective November 1, 1991, provides for fines, probation, and even community service as sanctions for organizations that commit criminal offenses.

   The extension of corporate criminal liability has not been without criticism. Some critics question whether there is any deterrent effect to punishing a corporation.(29) After all,a corporation cannot be put in jail. Others question this application based on its effect of punishing the innocent shareholders and thus eventually the consumers who will pay the price by an increase in the cost of goods provided to them.(30) The deficiencies inherent in measuring the criminal intent of a corporation have also caused some scholars to question whether corporate criminal liability is an appropriate use of the criminal law.(31) Whether or not one finds merit in the concept of corporate criminal liability, it is apparent that it is here and that corporations are readily being prosecuted.(32)

   As currently...