Chapter 6
CRIMINAL LAW
A. Nature of Crimes 5. Burglary
1. Essential Elements 6. Extortion and Bribery
2. Classification 7. Forgery
3. Vicarious Liability 8 Bad Checks
4. Liability of the Corporation D. Defenses to Crimes
B. White-Collar Crime 1. Defense of Person or Property
1. Computer Crime 2. Duress
2. Racketeer Influenced and 3. Mistake of Fact
Corrupt Organizations Act (RICO) 4. Entrapment
C. Crimes Against Business E. Criminal Procedure
Cases in This Chapter
People v. Farell State of South Dakota v. Morse State v. Kelm
Chapter Outcomes
After reading and studying this chapter, the student should be able to:
Describe criminal intent and the various degrees of mental fault.
Identify the significant features of white-collar crimes, corporate crimes, and Racketeer Influenced and
Corrupt Organizations Act (RICO).
List and define the crimes against business.
Describe the defenses of person or property, duress, mistake of fact, and entrapment.
List and explain the constitutional amendments affecting criminal procedure.
TEACHING NOTES
Criminal law is designed to punish the wrongdoer, in contrast to civil law, which
compensates the victim. In a criminal case, the defendant is prosecuted by the
government, who must prove the defendant’s guilt beyond a reasonable doubt.
The defendant is presumed innocent until proven guilty.
Criminal law is relevant to business law both because businesses can receive
criminal sanctions for wrongdoings and because businesses sustain considerable
losses as the victims of crimes.
A. NATURE OF CRIMES
A crime is any act or omission forbidden by public law designed to protect
society. Punishment includes fines, imprisonment, probation, or death.
Crimes are prohibited in order to protect and safeguard the government (as in
treason), human life (as in murder), and property (as in larceny). Criminal law
today is almost exclusively defined by legal statute.
*** Chapter Outcome***
Discuss criminal intent and the various degrees of mental fault.
Essential Elements
Two elements must be present to define an act as a crime: (1) the wrongful, or
overt, act (known as actus reus), and (2) the criminal, or mental, intent (known
as mens rea).
Actus reus refers to all elements of a crime that are not mental, including the
physical act that must be performed, the circumstances under which it must be
performed, and the consequences of the act.
Mens rea, or mental fault, refers to all mental elements of a crime, either
subjective or objective. Most common law and some statutory crimes require
subjective fault. Some crimes only require objective fault, whereas other
statutory crimes require no fault at all.
Types of subjective fault: purposeful, knowing, and reckless.
• A person acts purposely, or intentionally, if his conscious goal is to engage
in a prohibited conduct or to cause a prohibited result.
• A person acts knowingly if he is aware that his conduct is prohibited, and
he realizes that a prohibited result is almost certain to occur.
• A person acts recklessly if he consciously disregards a substantial and
unjustifiable risk that his conduct is prohibited or that it will cause the
prohibited result.
CASE 6-1
PEOPLE v. FARELL
Supreme Court of California, 2002
48 P.3d 1155, 28 Cal.4th 381, 121 Cal.Rptr.2d 603
http://scholar.google.com/scholar_case?case=12312804905483823177&q=28,+Cal.4th+381&hl=en&as_sdt=2,34
George, C. J.
In this case we determine whether [California] Penal Code section 1203.044, which requires the
imposition of a minimum county jail sentence as a condition of probation upon conviction of
certain theft offenses, applies to the theft of property other than money, including trade secrets.
We conclude that it does.
I
On April 18, 1997, [a] * * complaint was filed charging defendant with the theft of a trade secret
* * *. It was further alleged as a sentence enhancement that the loss exceeded $2.5 million * * *,
and as a restriction on the granting of probation that the theft was of an amount exceeding
$100,000 within the meaning of sections 1203.044 * * *. Defendant pleaded no contest to the
theft charge, * * *. He objected, however, to the potential application of section 1203.044 to his
sentence. * * *
The Court of Appeal reversed, concluding that section 1203.044 applies only to the theft of
what it termed “monetary property.” We granted the Attorney General’s petition for review.
II
Defendant stands convicted of theft, specifically a violation of [California statute] which
provides:
“(b) Every person is guilty of theft who, with intent to deprive or withhold the control of a
trade secret from its owner, or with an intent to appropriate a trade secret to his or her own
use or to the use of another, does any of the following:
1. Steals, takes, carries away, or uses without authorization, a “trade secret.” The statute
defines the term “trade secret” as follows: “information, including a formula, pattern,
compilation, program, device, method, technique, or process, that:
[Citation.]
The trial court determined that section 1203.044 applies to such a theft. This statute, entitled
The Economic Crime Law of 1992, requires that a defendant who is convicted of certain theft
offenses and is granted probation shall be sentenced to at least 90 days in the county jail as a
condition of probation. * * *
As relevant to the present case, the statute provides: “This section shall apply only to a
defendant convicted of a felony for theft of an amount exceeding fifty thousand dollars ($50,000)
in a single transaction or occurrence. This section shall not apply unless the fact that the crime
involved the theft of an amount exceeding fifty thousand dollars ($50,000) in a single transaction
or occurrence is charged in the accusatory pleading and either admitted by the defendant in open
court or found to be true by the trier of fact. * * *
* * *
Our task is one of statutory interpretation and, “as with any statute, [it] is to ascertain and
effectuate legislative intent. [Citations.] We turn first to the words of the statute themselves,
recognizing that ‘they generally provide the most reliable indicator of legislative intent.”’
[Citation.] We examine the meaning of the phrase “convicted of a felony for theft of an amount
exceeding fifty thousand dollars,” keeping in mind that the words must be interpreted in context.
[Citation.] In outlining the circumstances under which a person given a probationary term for a
theft offense must be sentenced to a minimum period in custody * * * does not specify that the
theft must involve cash—or that it must involve what is referred to by the Court of Appeal as
“monetary property” and by defendant as a “cash equivalent.”
* * *
To interpret section 1203.044 as limited to the theft of cash or cash equivalents also would be
inconsistent with express legislative intent. The Legislature addressed problems of certain white
collar crimes, specifically theft, in enacting section 1203.044. As the Legislature’s own statement
of intent discloses, that body intended to remedy the perceived relative unfairness arising from
the light probationary sentences meted out to white collar criminals, as well as to provide reliable
tools to ensure that victims of white collar criminals receive restitution, and to provide financial
support for investigation and prosecution of white collar crime.
The Legislature declared in enacting section 1203.044: “[M]ajor economic or ‘white collar’
crime is an increasing threat to California’s economy and the well-being of its citizens. The
Legislature intends to deter that crime by ensuring that every offender, without exception, serves
at least some time in jail and by requiring the offenders to divert a portion of their future
resources to the payment of restitution to their victims.”
We observe that the term “white collar crime” is a relatively broad one and is not limited to
losses involving cash or cash equivalents. It generally is defined as “[a] nonviolent crime
usu[ally] involving cheating or dishonesty in commercial matters. Examples include fraud,
embezzlement, bribery, and insider trading.” [Citation.] The Legislature has applied the term
“white collar crime” to fraud and embezzlement * * *, a statute that provides for enhanced prison
terms for recidivists committing these offenses when the offense involves a pattern of “taking of
more than one hundred thousand dollars.” Like the crime of theft, fraud and embezzlement are
not limited to the unlawful acquisition of cash or cash equivalents. [Citations.] Indeed, frequently
fraud and embezzlement simply are methods by which a charged theft is accomplished.
[Citations.] Because the crime of theft includes a wide range of property and the term “white
* * *
For the foregoing reasons, the judgment of the Court of Appeal is reversed.
Classification
Mala in se — wrongs in themselves or morally wrong, such as murder.
Mala prohibita — not morally wrong but declared wrongful by law, such as the
failure to drive on the right side of the road.
From the standpoint of an o/ense’s seriousness:
Felony — a serious crime (punishable by death or imprisonment in the
penitentiary).
Misdemeanor — a less serious crime (punishable by a fine or imprisonment in a
local jail).
Vicarious Liability
The term vicarious liability refers to liability imposed upon one person for
another person’s acts. Employers are vicariously liable for their employees’
criminal acts if they have participated in or otherwise authorized the act.
Liability of a Corporation
Historically, corporations were not held criminally liable because of the
corporation’s inability to possess criminal intent. Today, corporate liability may
exist for the violation of a statute that imposes liability without fault or when a
high corporate o4cer or the board of directors perpetrates the o/ense.
Of course, corporations are punished for crimes by fines rather than
imprisonment. Nonetheless, individuals a4liated with the corporation who bear
responsibility for a criminal act may face either fines or imprisonment, or both.
NOTE: See textbook for a description of an adequate compliance program.
*** Chapter Outcome***
Identify the significant features of white-collar crimes, corporate crimes, and Racketeer
In9uenced and Corrupt Organizations Act (RICO).
B. WHITE-COLLAR CRIME
The U.S. Justice Department defines white-collar crime as any nonviolent crime
that involves deceit, corruption, or a breach of trust — includes acts committed
by individuals, such as embezzlement and forgery, as well as crimes committed
on behalf of a corporation, such as commercial bribery, false advertising,
antitrust violations, and safety and health crimes related to consumer and
business products.
In response to the business scandals involving companies such as Enron, WorldCom,
Global Crossing, Adelphia, and Arthur Andersen, in 2002 Congress passed the
Sarbanes-Oxley Act.
Computer Crime
A special type of white-collar crime that involves the use of a computer to steal
money or services, to remove personal or business information, or to tamper
with such information.
Computer crime, or cybercrime, is best categorized based on whether the
computer was the instrument or the target of the crime. Examples of
cybercrimes using computers as the instrument of the crime include the
computer that is used in interstate commerce or communications (1) to access
or damage it, without authorization; (2) to access it with the intent to commit
fraud; (3) to traffic in passwords for it; and (4) to threaten to cause damage to it
with the intent to extort money or anything of value.
Spam — unsolicited commercial electronic mail—has become the most
prevalent method used for distributing pornography, perpetrating fraudulent
schemes, and introducing viruses, worms, and Trojan horses into personal and
business computer systems. In response, Congress enacted the Controlling the
Racketeer Influenced and Corrupt Organizations Act (RICO)
RICO was enacted in 1970 with the stated purpose of terminating organized
crime’s infiltration of legitimate businesses. The act imposes severe civil and
criminal penalties for enterprises that engage in a pattern of racketeering, which
is defined as the commission of two or more predicate acts within a ten-year
period. A predicate act is any of several criminal o/enses listed in RICO.
Nine major categories of state crimes and 26 federal crimes are defined,
including murder, kidnapping, arson, extortion, drug dealing, securities fraud,
mail fraud, and bribery. RICO is controversial because businesses that are not
involved in organized crime may still meet the “pattern of racketeering” test and