CORPORATE CRIMINAL LIABILITY
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494
II. ELEMENTS OF THE OFFENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494
A. Employee Acts Within Scope of Employment . . . . . . . . . . . . . 495
B. Benefit to the Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 497
C. Corporate Mens Rea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497
D. Specific Applications of Corporate Criminal Liability . . . . . . . 499
1. Conspiracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499
2. Mergers, Dissolutions, and Liability . . . . . . . . . . . . . . . . 500
3. Misprision of Felony . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
III. DEPARTMENT OF JUSTICE ENFORCEMENT POLICIES . . . . . . . . . . . . . 501
A. Controls on Prosecutorial Discretion . . . . . . . . . . . . . . . . . . . 501
B. Deferred Prosecution Agreements and Non-Prosecution
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502
C. Corporate Enforcement Policy . . . . . . . . . . . . . . . . . . . . . . . 504
IV. ORGANIZATIONAL SENTENCING GUIDELINES . . . . . . . . . . . . . . . . . . 505
A. Introduction: Purpose and Scope of the Organizational
Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505
1. General Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506
2. Organizations Covered by Chapter Eight of the Guidelines 507
3. Purpose and Effect of the Organizational Guidelines . . . . 507
B. Offenses Covered and Sanctions Permitted under the Guidelines 508
1. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509
2. Probation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510
3. Imposition of Fines . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511
a. Base Offense Level . . . . . . . . . . . . . . . . . . . . . . . . . 512
b. Base Fine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
c. Culpability Score . . . . . . . . . . . . . . . . . . . . . . . . . . 513
i. Calculation: Aggravating Factors . . . . . . . . . . . 514
ii. Calculation: Mitigating Factors . . . . . . . . . . . . . 515
(1) Effective Corporate Compliance Programs 515
(2) Cooperation . . . . . . . . . . . . . . . . . . . . . . . 518
d. Multipliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520
e. Disgorgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520
f. Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520
g. Departures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521
493
I. INTRODUCTION
Corporate criminal liability, also called entity liability, developed as courts strug-
gled to overcome the problem of assigning criminal blame to fictional entities in a
legal system based on the moral accountability of individuals.
1
The Supreme Court
did not clearly hold a corporation liable for a crime of intent until 1909, when it was
motivated in part by the need for effective enforcement of laws intended to curb cor-
porate abuses.
2
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
Similarly, in the wake
of the 2008 global financial crisis, Congress passed the Dodd-Frank Wall Street
Reform and Consumer Protection Act (“Dodd-Frank”) in 2010 to “promote the finan-
cial stability of the United States by improving 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 introduced significant changes to financial regulation by
altering more than two dozen criminal offenses, extending criminal liability to addi-
tional 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. & Hudson River R.R. v. United States, 212 U.S. 481, 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).
494 AMERICAN CRIMINAL LAW REVIEW [Vol. 61:493
