The Facts Behind the Fiction: Theories of Corporate Criminal Liability

• Author: Miriam Weismann
• Pages: 11-20

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THE FACTS BEHIND

THE FICTION

THEORIES OF CORPORATE

CRIMINAL LIABILITY

It was the sociologist Edw in Sutherland who fi rst coined the term “white- collar”

crime, in a  address to t he American Sociologic al Association. It was a new

idea in American jurisprudence. This is not surprising given the legal development

of entity liability in this country. Prior to the American industrial revolution in the

early th centur y, the notion of entity crimina l liability wa s unknown at common

law. Corporate charters were granted as a priv ilege from the sovereign and limited to

a particula r financial t ransaction. The cor poration was an extension or arm of t he

state.

With the onset of the indust rial revolution, the entire notion of corporate iden-

tity changed from a government entit y subject to external control to a pr ivate form

of business operation w ith internal management. T his dramatic change i n entity for-

mation and operation was at first not addre ssed by Congress because it was not a

“federal” phenomenon as such; t he corporation was an entity l icensed by the state

and under its jurisdic tion.

The development of a body of law explaining orga nizational liability ca me from

the Supreme Court and it remains t he law today. As the impact of corporate conduct

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