CORPORATE CRIMINAL LIABILITY
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487
II. ELEMENTS OF THE OFFENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488
A. Employee Acts Within Scope of Employment . . . . . . . . . . . . . 489
B. Benefit to the Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 491
C. Corporate Mens Rea. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491
D. Specific Applications of Corporate Criminal Liability . . . . . . . 493
1. Conspiracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493
2. Mergers, Dissolutions, and Liability . . . . . . . . . . . . . . . . 494
3. Misprision of Felony . . . . . . . . . . . . . . . . . . . . . . . . . . . 494
III. DEPARTMENT OF JUSTICE ENFORCEMENT POLICIES . . . . . . . . . . . . . 495
A. Controls on Prosecutorial Discretion. . . . . . . . . . . . . . . . . . . 495
B. Deferred Prosecution Agreements and Non-Prosecution
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496
C. Corporate Enforcement Policy . . . . . . . . . . . . . . . . . . . . . . . 498
IV. ORGANIZATIONAL SENTENCING GUIDELINES . . . . . . . . . . . . . . . . . . 499
A. Introduction: Purpose and Scope of the Organizational
Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499
1. General Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
2. Organizations Covered by Chapter Eight of the Guidelines 501
3. Purpose and Effect of the Organizational Guidelines . . . . 501
B. Offenses Covered and Sanctions Permitted under the Guidelines 502
1. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
2. Probation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
3. Imposition of Fines . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505
a. Base Offense Level . . . . . . . . . . . . . . . . . . . . . . . . . 506
b. Base Fine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507
c. Culpability Score . . . . . . . . . . . . . . . . . . . . . . . . . . 507
i. Calculation: Aggravating Factors . . . . . . . . . . . 508
ii. Calculation: Mitigating Factors . . . . . . . . . . . . . 509
(1) Effective Corporate Compliance Programs 509
(2) Cooperation. . . . . . . . . . . . . . . . . . . . . . . 512
d. Multipliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
e. Disgorgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
f. Implementation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
g. Departures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 515
487
I. INTRODUCTION
Corporate criminal liability, also called entity liability, developed as courts
struggled to overcome the problem of assigning criminal blame to fictional entities
based on the moral accountability of individuals.
1
In 1909, for the first time, the
Supreme Court clearly held a corporation liable for a crime of intent, motivated in
part by the need for effective enforcement of laws intended to curb corporate
abuses.
2
Fast forward almost a century, in 2002, Congress passed the Sarbanes-
Oxley Act (“Sarbanes-Oxley”), which exposed corporations to increased criminal
liability for the actions of their employees in response to corporate scandals at the
turn of the millennium.
3
Then, following the 2008 global financial crisis, Congress
passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-
Frank”) in 2010 to “promote the financial stability of the United States by improv-
ing accountability and transparency in the financial system, to end ‘too big to fail,’
to protect the American taxpayer by ending bailouts, to protect consumers from
abusive financial services practices, and for other purposes.”
4
Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376
(2010); see also Damian Paletta & Aaron Lucchetti, Law Remakes U.S. Financial Landscape, WALL ST. J. (July
16, 2010), http://online.wsj.com/article/SB10001424052748704682604575369030061839958.html.
Dodd-Frank intro-
duced significant changes to financial regulation by altering more than two dozen
criminal offenses, extending criminal liability to additional types of financial
instruments, and criminalizing other conduct for the first time.
This article outlines the principles that guide the law of corporate criminal liability.
Section II describes the three elements required to incur corporate criminal liability.
Section III addresses federal prosecutorial discretion and the government’s use of
deferred prosecution agreements (“DPA”) or non-prosecution agreements (“NPA”).
Section IV addresses the United States Sentencing Guidelines’ (“Guidelines”) mecha-
nism for sentencing organizations, the requirements of Dodd-Frank and Sarbanes-
Oxley,
5
and the effect of the Supreme Court’s decision in United States v. Booker.
6
II. ELEMENTS OF THE OFFENSE
A corporation can be held vicariously criminally liable for the acts, omissions,
or failures of employees acting as its agents.
7
The nature of legal entities requires
1. See generally Kathleen F. Brickey, Corporate Criminal Accountability: A Brief History and an
Observation, 60 WASH. U. L.Q. 393 (1982).
2. Id. at 413–14; N.Y. Cent. & Hudson River R.R. v. United States, 212 U.S. 481, 494–95 (1909).
3. See Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, §§ 802–807, 116 Stat. 745 (2002); Valerie Watnick,
Whistleblower Protections Under the Sarbanes-Oxley Act: A Primer and a Critique, 12 FORDHAM J. CORP. &
FIN. L. 831, 831 (2007).
4.
5. See Dodd-Frank, supra note 4, §§ 922, 748, 1057 (codified at 7 U.S.C. § 26 (2010) and 12 U.S.C. § 5567
(2010)); 18 U.S.C. §§ 3551–3742; 28 U.S.C. §§ 991–998.
6. 543 U.S. 220 (2005).
7. See N.Y. Cent., 212 U.S. at 491–95 (1909). For an in-depth discussion of the development of corporate
criminal liability before New York Central, see generally Shaun P. Martin, Intracorporate Conspiracies,
50 STAN. L. REV. 399, 406 (1998).
488 AMERICAN CRIMINAL LAW REVIEW [Vol. 62:487
