An introduction to the fundamentals of dynamic business law and business ethics chap005

Local police investigators are curious whether Townsend has truly learned from “the error of his ways.” The local sheriff has received a number of complaints from area citizens, who are

Chapter 5

Criminal Law and Business

Chapter 5 Case Hypothetical and Ethical Dilemma

Warren Delaney believed that his home was his “castle,” and during the summer months every year,

his “castle” was a tiny cabin nestled in the woods of upstate New York Delaney was an Economics

professor at a small college in Florida, and for him, there was no better way to “rest and recharge”

after a hectic academic year than to head north for the cozy confines of his cabin.

For several consecutive years, Warren’s cabin had been vandalized and/or burglarized during the

winter months while he was in Florida During the winter of 2006, several windows had been

shattered In the winter of 2007, several pieces of furniture had been stolen At some point during

the winter of 2008, the bedroom mattress had been ripped apart for some unexplained reason, with

foam and fabric scattered about the bedroom floor On each of these occasions, the perpetrator had forced the front door lock open, and had entered the cabin through the front door.

Warren envisioned a way to stop the criminal(s) responsible for these violations He spring-loaded a

shotgun in the living room of the cabin, and pointed it directly at the front door The shotgun was

configured so that if someone opened the front door while he was away, it would fire at the intruder.

Warren returned to his cabin in May 2010 and came upon a grisly scene The front door had been

opened, and at the threshold was the partially-decomposed body of what appeared to be a

middle-aged man, dead of a shotgun blast to the chest Warren immediately called the local sheriff, Officer

Brian Mulholland Upon arriving at the scene and briefly questioning Warren, Officer Mulholland

arrested him.

Was the arrest valid? Did Warren Delaney commit first-degree murder? Did Warren use justifiable

force in this situation?

Chapter 5 Case Hypothetical

Thomas Townsend has an embarrassing criminal past In 1985, he was convicted of pedophilia, having had

sexual relations with a 15-year-old child (at the time, Townsend was 29 years old.) By all accounts, Townsend has led a relatively uneventful life over the years since 1985, spending most of his time building and selling

musical instruments to earn a living, and reclusively “keeping to himself” on his property on the edge of town

Local police investigators are curious whether Townsend has truly learned from “the error of his ways.” The

local sheriff has received a number of complaints from area citizens, who are appalled that a child sex offender

is “among their midst.” Working in collaboration with the Federal Bureau of Investigation (FBI,) local police

authorities devise and implement a plan to determine whether Thomas is leading an innocent life Over the

course of an eighteen-month period, police investigators mail Townsend a circular they have created,

advertising a fictitious publication called “Lustful Lads and Lasses.” Among other pronouncements, the

circular entices readers to “order now before publication ceases; see young boys and girls aged 12-16

engaged in all sorts of acts only big boys and girls should be allowed to do!”

Having received the circular each month and having declined on seventeen occasions, Townsend finally

responds to the circular on the eighteenth occasion, mailing in the $39.95 purchase price Local, state and

federal authorities immediately intervene, arresting Townsend for solicitation of child pornographic materials

At Townsend’s arraignment hearing, his attorney moves for immediate dismissal of the charges, arguing

entrapment Do the police efforts described constitute entrapment? Does entrapment justify dismissal of all

charges against the accused? Rather than dismissal of charges, why not simply sanction those authorities

responsible for the entrapment?

Elements of a Crime

• “Actus Reus”—Wrongful behavior

(guilty act)

• “Mens Rea”—Wrongful state of

mind, such as purpose, knowledge,

recklessness, or negligence (guilty

mind)

Classification of Crimes

• Felonies—Serious crimes punishable by

imprisonment for greater than one year, or

death

• Misdemeanors—Less serious crimes

punishable by fines, or imprisonment for

less than one year

• Petty Offenses—Minor misdemeanors

punishable by small fines or short jail

sentences

White Collar Crime

Definition: A variety of nonviolent

illegal acts against society that

occur most frequently in the

business context

Crimes Affecting Business: “White

Bribery

Definition: The offering, giving,

soliciting, or receiving of money or any

object of value for the purpose of

influencing the judgment or conduct of

a person in a position of trust

Extortion (Blackmail)

Definition: The making of threats

for the purpose of obtaining

money or property

Fraud

Definition: A variety of means by

which an individual intentionally

uses some sort of misrepresentation

to gain advantage over another

person

Elements of Fraud

• A material false representation

made with intent to deceive;

• A victim’s reasonable reliance

on the false representation; and

• Damages

Definition: The wrongful conversion

of another’s property by one who is

lawfully in possession of that

property

Computer Crime

Definition: Any wrongful act that is

directed against computers, uses

computers to commit a crime, or

involves computers

Criminal Procedure

Differences Between Criminal and Civil

Procedure

Criminal Procedure

• The government, through a

prosecutor, always brings the

criminal case

• The objective is punishment, in

the form of a criminal fine and/

• The objective is to remedy a wrong done to the plaintiff, so the defendant will either have

to pay money damages, or be subject to an equitable remedy (injunction or specific

performance)

Constitutional Safeguards: The

Fourth Amendment

• Protection from “unreasonable

search and seizure”

• Restrictions on warrants

Constitutional Safeguards: The

Fifth Amendment

• Prohibition of “double jeopardy”

• Right not to incriminate oneself

• Right to “due process”

Constitutional Safeguards: The Sixth

Amendment

• Right to a speedy and public trial

• Right to a trial by an impartial jury of one’s peers

• Right to be informed of the accusations against

oneself

• Right to confront witnesses

• Right to have witnesses on one’s side

• Right to counsel at various stages of the

Constitutional Safeguards: The Eighth

Amendment

• Freedom from excessive bail

• Freedom from excessive fines

• Freedom from cruel and unusual

punishment

Constitutional Safeguards: The

Fourteenth Amendment

• Extension of the right to due process

to all state matters

• Extension of most constitutional

rights to defendants at the state level

“Miranda Rights” Before a law enforcement officer engages

in “custodial interrogation,” he/she must inform the defendant

• “You have the right to consult an attorney before speaking

to the police and have an attorney present during any questioning now or in the future”

• “If you cannot afford an attorney, one will be appointed for

you before the questioning begins”

• “If you do not have an attorney available, you have the

right to remain silent until you have had an opportunity to consult with one”

• “Now that I have advised you of your rights, are you

willing to answer any questions without an attorney present?”

Criminal Procedure: Posttrial

Procedure

• If jury returns verdict of not guilty,

government (prosecution) cannot appeal

the acquittal

• If jury returns verdict of guilty, defendant

may appeal verdict by claiming prejudicial

error of law at trial

• If no appeal, defendant sentenced after

judge receives additional information

relevant to sentencing

The Racketeer Influenced and

Corrupt Organizations Act (RICO)

• Prohibits persons employed by or

associated with an enterprise from

engaging in a pattern of racketeering

activity

• Anyone whose business or property has

been damaged can sue to recover treble

damages and attorney fees in a civil action

The False Claims Act

• Allows employees to sue employers on

behalf of the federal government

• Employee retains share of recovery

The Sarbanes-Oxley Act

• Passed by Congress in response to the business

scandals of the early 2000s (Examples: Enron,

WorldCom, Global Crossing, Arthur Anderson)

• Criminalizes specific non-audit services when

provided by a registered accounting firm to an

audit client

• Increases the punishment for a number of

white-collar offenses

• Extends the statute of limitations regarding the

discovery of fraud (two years from the date of

discovery of the fraud, five years from the date of

the criminal act)