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Chapter 9
Criminal Law and Cyber Crime
See Separate Lecture Outline System
INTRODUCTION
This chapter may be the first, and will probably be the last, study of criminal law for most of your students.
Nevertheless, it may also be one of the most interesting chapters for them.
Sanctions used to maintain a peaceful and ordered society, in which businesses can compete and flourish, include
damages for tortious conduct and breaches of contract. Courts of equity may restrain certain unlawful conduct or require that
things done unlawfully or having certain unlawful effects be undone by tailoring other relief to fit the circumstances.
Cyber crime, which is a category that groups crimes according to a particular means of commission, is also discussed in
this chapter.
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ADDITIONAL RESOURCES—
VIDEO SUPPLEMENTS
The following audio and video supplements relate to topics discussed in this chapter—
PowerPoint Slides
To highlight some of this chapter’s key points, you might use the Lecture Review PowerPoint slides compiled for
Chapter 9.
Business Law Digital Video Library
CHAPTER OUTLINE
I. Civil Law and Criminal Law
Civil law relates to duties between persons or between citizens and their governments, except for the duty not to
commit crimes. Criminal law concerns crime—wrongs against society declared in statutes and punishable through
fines, imprisonment, or death. Crimes are offenses against society as a whole and are prosecuted by public officials
(local district attorneys, for example), not by victims.
A. MAJOR DIFFERENCES BETWEEN CIVIL AND CRIMINAL LAW
1. Burden of Proof
ANSWER TO VIDEO QUESTION LTR. A
The jurors are deliberating on whether to convict the defendant. One juror says that at the beginning of the trial he
felt that the defendant was guilty and that “nobody proved otherwise.” Does a criminal defendant have to offer
evidence of his or her innocence? What must the prosecution show to establish that a defendant is guilty? How does
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the burden of proof differ in criminal and civil cases? In a criminal case, a defendant does not have to offer any
evidence at trial. The prosecution has the burden of proving the defendant’s guilt beyond a reasonable doubt. If the
jury views the evidence in the case as reasonably permitting either a guilty or a not guilty verdict, then the jury’s verdict
must be not guilty. In other words, the government (prosecutor) must prove beyond a reasonable doubt that the
ANSWER TO VIDEO QUESTION LTR. B
It is clear that all of the jurors except one (Henry Fonda) believe that the defendant is guilty. How many jurors does
it usually take to render a verdict in a criminal case? Usually, criminal cases require a unanimous verdict by the jury.
ANSWER TO VIDEO QUESTION LTR. D
Is it wrong for a group of jurors to bully or persuade another juror of the defendant’s guilt or innocence? Explain.
2. Criminal Sanctions
Criminal sanctions are intended to punish those who commit crimes and to deter others from committing
similar acts. Sanctions include fines, imprisonment, and death.
B. CIVIL LIABILITY FOR CRIMINAL ACTS
Criminal acts may also be subject to civil liability.
C. CLASSIFICATION OF CRIMES
II. Criminal Liability
Crime requires (1) the performance of a prohibited act and (2) a specified state of mind. All criminal statutes prohibit
certain behavior.
A. THE CRIMINAL ACT
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Most crimes require an act of commission—an actus reus, or guilty act. Some acts of omission are crimes.
Attempting certain acts (murder, for example, or robbery) may also be crimes, if substantial steps toward a
criminal objective are taken.
1. Criminal Negligence or Recklessness
The requisite mental state can be attributed to acts of negligence or recklessness. Criminal recklessness is
2. Strict Liability ad Overcriminalization
Strict liability crimes do not require a wrongful mental state to establish criminal liability. These include
C. CORPORATE CRIMINAL LIABILITY
1. Liability of the Corporate Entity
2. Liability of the Corporate Officers and Directors
Corporate directors and officers are personally liable for the crimes they commit, and may be liable for the
actions of employees under their supervision under the “responsible corporate officer” doctrine.
III. Types of Crimes
Criminal acts can be grouped into the following categories.
B. PROPERTY CRIME
2. Larceny
3. Arson
4. Receiving Stolen Goods
6. Obtaining Goods by False Pretenses
Obtaining goods by false pretenses is representing as true some fact or circumstance that is not true, with
the intent of deceiving and with the result of defrauding an individual into relinquishing property without
adequate compensation.
C. PUBLIC ORDER CRIME
These include public drunkenness, prostitution, gambling, and illegal drug use.
ENHANCING YOUR LECTURE—
THE CASE OF THE “CUSSING CANOEIST”
Timothy Boomer, then a twenty-eight-year-old engineer, went on a swearing rampage when his canoe tipped over
on the Rifle River in Michigan. Others heard the swearing, including a couple and their two children, and a sheriff, who
wrote him a ticket for violating an 1897 Michigan law that banned cursing in front of women and children. Specifically,
the law made it illegal for anyone to use indecent, immoral, obscene, vulgar, or insulting language near children and
THE BOTTOM LINE
Eight other states—Louisiana, New Mexico, Oklahoma, South Carolina, South Dakota, Texas, Virginia, and
Wisconsin—also have “swearing laws.” Whether these laws will survive challenges remains to be seen.
D. WHITE-COLLAR CRIME
1. Embezzlement
Embezzlement is the fraudulent conversion of property or money owned by one person but entrusted to
another. Intending to ultimately return embezzled property is not a defense.
a. Embezzlement Takes Many Forms
Funds may be taken in small amounts over long periods, from individuals, businesses, or the
government.
CASE SYNOPSIS—
Case 9.1: People v. Sisuphan
Lou Sisuphan was the director of finance at Toyota of Marin in California. To purportedly jeopardize the
employment of a subordinate finance manager, Sisuphan kept a payment of nearly $30,000 from one of the
subordinate’s customers. More than two weeks later, Sisuphan told the dealership’s general manager what he had
done, adding that he had “no intention of stealing the money.” The general manager terminated Sisuphan, who
returned the cash. He was subsequently convicted of embezzlement in a California state court and appealed, arguing
that his return of the cash negated the element of fraudulent intent.
…………………………………………………………..……………………………………………………………………
Notes and Questions
In this case, the customer had given the payment to the finance manager who soon left it in Sisuphan’s charge
atop his safe in his office at the dealership. Suppose that the customer had handed the payment directly to Sisuphan,
without the intermediation of the subordinate, off the premises and after hours. Would the result in this case likely
have been different? No. Embezzlement is the fraudulent conversion of property or money owned by one person but
ANSWERS TO QUESTIONS AT THE END OF CASE 9.1
1. Given that Sisuphan returned the cash and the checks, was it fair of the dealership’s general manager to terminate
Sisuphan’s employment? Why or why not? It is hard to imagine that Sisuphan’s employer would ever be criticized on
2. Why was Sisuphan convicted of embezzlement instead of larceny? What is the difference between these two
crimes? One of the key differences between embezzlement and larceny has to do with the element of possession.
Larceny involves the wrongful taking of property in the possession of another, as does robbery (the latter crime
ADDITIONAL BACKGROUND—
The Creation of Embezzlement
In 1799, in England, a bank clerk received from a depositor money for deposit in the bank. The bank clerk put the
money in his pocket instead of the cash drawer, intending to misappropriate it. He was caught and charged with
larceny.
The Doctrine of Constructive Possession. Larceny was a common law crime (that is, it had been invented by judges
rather than Parliament). Larceny was committed when one person misappropriated the property of another by taking
the property from the owner’s possession without his or her consent. Requiring that the property be taken from the
owner’s possession proved to be a difficult element. For example, if a master gave property to his servant to keep for
him, the servant’s subsequent misappropriation could not qualify as larceny. Thus, the courts invented the doctrine of
constructive possession, under which, when an employer handed property to an employee, the employee was con-
sidered to have mere custody of the property and the employer impliedly remained in possession.
The court held, however, that the constructive possession idea did not apply to property coming to an employee
for an employer from a third person until the employee handed the property to the employer or put it in a receptacle,
such as a cash drawer, provided by the employer for safe-keeping. The result was that the bank clerk was not held
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guilty of larceny—and there was then no other crime that covered his conduct.a
Embezzlement Statutes. Of course, it was the turn of the eighteenth century, and the times were changing. Shops
and banks were growing into something more than one-person and one-family operations. It was necessary to make
conduct such as the bank clerk’s criminal. Accordingly, in the same year as the court’s decision in the bank clerk’s case,
Parliament enacted the first of a long line of embezzlement statutes.
Earlier, English judges had not hesitated in the face of the need to create the common law crimes of murder,
manslaughter, burglary, arson, robbery, larceny, and others. Why did the judges hesitate in the late 1700s to expand
larceny to include embezzlement? At the end of the eighteenth century, Parliament was advancing in power and
prestige. Also, increasingly, the courts were coming to be seen as interpreters of custom rather than as framers of
Parliament, too, elected not to alter the old crime of larceny to cover embezzlement. Instead, it created a new
a. Bazeley’s Case, 2 East King’s Bench Reports, Pleas of the Crown 571 (Crown Cases Reserved, 1799).
2. Mail and Wire Fraud
3. Bribery
• Bribery of public officials is a crime. The bribe can be of anything that the official considers valuable.
Commission of the crime occurs when the bribe is tendered—the official does not have to agree to do
4. Bankruptcy Fraud
5. Insider Trading
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6. Theft of Other Intellectual Property
The Economic Espionage Act of 1996 made the theft of trade secrets a federal crime. The act also made it a
crime to buy or possess trade secrets of another, knowing that they were acquired without the owner’s
E. ORGANIZED CRIME
Organized crime operates illegitimately to supply illegal goods and services.
1. Money Laundering
2. RICO
To curb the entry of organized crime into legitimate business, the Organized Crime Control Act of 1970
included the Racketeer Influenced and Corrupt Organizations Act (RICO).
a. Prohibited Activities
It is a federal crime (1) to use income obtained from racketeering activity to purchase any interest in
an enterprise, (2) to acquire or maintain an interest in an enterprise through racketeering activity, (3)
to conduct or participate in the affairs of an enterprise through racketeering activity, or (4) to conspire
to do any of these things.
b. Criminal Provisions
IV. Defenses to Criminal Liability
Prosecutorial procedural violations are also defenses.
A. JUSTIFIABLE USE OF FORCE
Generally, people can use the amount of force that is reasonably necessary to protect themselves, their dwellings
or other property, or to prevent the commission of a crime. Deadly force can be used in self-defense if there is a
reasonable belief that imminent death or great bodily harm will otherwise result, if the attacker is using unlawful
force, and if the person has not initiated or provoked the attack. Deadly force can be used to defend a dwelling
only to prevent imminent death or great bodily harm, or (in some states) to prevent a felony in the dwelling.
B. NECESSITY
ENHANCING YOUR LECTURE—
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STAND-YOUR-GROUND LAWS
Traditionally, the justifiable use of force, or the self-defense, doctrine required prosecutors to distinguish between
deadly and nondeadly force. In general, state laws have allowed individuals to use that amount of nondeadly force
that is necessary to protect themselves, their dwellings, or other property, or to prevent the commission of a crime.
THE DUTY–TO-RETREAT DOCTRINE
In the past in most states, deadly force could be used in self-defense only if there was a reasonable belief that
imminent death or bodily harm would otherwise result. Additionally, the attacker must have been using unlawful force
and there had to have been no other possible response or alternative way out of the life-threatening situation.a
Further, many states, particularly in the Northeast, have on their statute books “duty–to–retreat” laws that require an
juries have not consistently followed the duty-to-retreat doctrine. One famous case in the 1980s involved Bernard
STAND-YOUR-GROUND LEGISLATION ON THE INCREASE
On October 1, 2005, Florida became the first state to enact a statute allowing the use of deadly force to prevent
the commission of a “forcible felony,” such as robbery, carjacking, and sexual battery.c The law allows Floridians to use
deadly force without proving that they feared for their safety. This law extends to homes and vehicles. The law also
prohibits the arrest, detention, or prosecution of individuals covered by the law. Additionally, the law prohibits civil
suits against said individuals. The trend here is clearly to expand the right to shoot home and vehicle intruders who
pose no physical threat to the occupant’s safety.
The following states have enacted or considered enactment of similar laws: Alabama, Alaska, Arizona, Georgia,
Indiana, Kentucky, Michigan, Mississippi, Missouri, Montana, Pennsylvania, Oklahoma, South Dakota, Washington, and
IMPLICATIONS FOR THE BUSINESSPERSON
States that have enacted stand-your-ground laws often include places of business as well as homes and vehicles.
Consequently, businesspersons in those states can be less concerned about the “duty to retreat” doctrine. Presumably
in stand-your-ground states, business liability insurance will eventually be less costly.
FOR CRITICAL ANALYSIS
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Those who are against stand-your-ground laws argue that they encourage vigilantism and preemptive shootings.
Do you agree? Explain. “A person’s home is his or her castle.” Does this traditional saying justify the use of deadly
force against an intruder under all circumstances? Why or why not?
a. State v. Sandoval, 342 Or. 506. 156 P.3d 60 (2007).
c. Florida Statutes, Title XLVI, Chapter 776.
d. One reference to the Castle doctrine can be found in Book Four, Chapter 16, of Commentaries of the Laws of England, by William Blackstone.
e. Utah Code, Title 76, Chapter 2, Sections 402 and 407.
C. INSANITY
To defend against charges on this ground, a defendant must meet a test for legal insanity. Most federal courts
and some states use the test in the Model Penal Code: “A person is not responsible for criminal conduct if . . . as
a result of mental disease or defect he lacks substantial capacity either to appreciate the wrongfulness of his
conduct or to conform his conduct to the requirements of the law.” Other states use the M’Naghten test. Some
states use the irresistible impulse test.
D. MISTAKE
A mistake of fact will operate as a defense if it negates the required mental state.
F. ENTRAPMENT
This occurs when a government officer suggests that a crime be committed and pressures or induces an
individual to commit it. The important issue is whether a person who committed a crime was predisposed to do
so.
G. STATUTE OF LIMITATIONS
Most crimes, with the exception of murder, must be prosecuted within a certain time.
H. IMMUNITY
To obtain information, the state can grant immunity from prosecution. A person may then be compelled to
answer questions (under the Fifth Amendment a person can refuse to answer questions only on the ground of
self-incrimination). Often a grant of immunity is part of a plea bargain under which a defendant may be convicted
of a lesser offense, and the state uses his or her testimony to prosecute accomplices for more serious crimes.
ADDITIONAL BACKGROUND—
Plea Bargaining
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In most criminal cases, defendants plead guilty. Usually, this is after the prosecutor promises that concessions will
be granted (or at least sought). This is known as plea negotiation, or plea bargaining. Sometimes a defendant agrees
to plead guilty to a charge less serious than the evidence supports because the consequences are not as undesirable.
A lesser penalty will result, for example. In other cases, a defendant pleads guilty to the original charge in exchange for
V. Criminal Procedures
Criminal procedures protect the rights of the individual and preserve the presumption of innocence.
A. CONSTITUTIONAL SAFEGUARDS
These safeguards apply in all federal courts. The United States Supreme Court has ruled that most of them also
apply in state courts (by virtue of the due process clause of the Fourteenth Amendment). They include—
• The Fourth Amendment protection from unreasonable searches and seizures.
• The Fourth Amendment requirement that no warrants for a search or an arrest can be issued without
probable cause.
• The Fifth Amendment requirement that no one can be deprived of “life, liberty, or property without due
process of law.”
• The Fifth Amendment prohibition against double jeopardy.
• The Sixth Amendment guarantees of a speedy trial, trial by jury, a public trial, the right to confront
witnesses, and the right to legal counsel.
• The Eighth Amendment prohibitions against excessive bail and fines and cruel and unusual punishment.
ANSWER TO VIDEO QUESTION LTR. C
When the holdout juror says that under the U.S. Constitution, “the defendant does not even have to open his
mouth,” to which provision is he referring? The juror is referring to the Fifth Amendment, which guarantees the
Case 9.2: Herring v. United States
The Dale County, Alabama, sheriff’s office maintains copies of arrest warrants in a computer database. A warrant
clerk in a neighboring county asked if there were any warrants for the arrest of Bennie Herring and was told there was.
On Herring’s arrest, a search revealed methamphetamine and an illegal gun. Meanwhile, it was learned that the
warrant for Herring’s arrest had been recalled. Herring was charged in a federal district court but filed a motion to
exclude the evidence. The court denied the motion, the U.S. Court of Appeals for the Eleventh Circuit affirmed, and
Herring appealed.
…………………………………………………………..……………………………………………………………………
Notes and Questions
Is the test applied in this case an objective test, or does it require an “inquiry into the subjective awareness of
arresting officers?” The Court held that “our good-faith inquiry is confined to the objectively ascertainable question
whether a reasonably well trained officer would have known that the search was illegal in light of all of the
circumstances. These circumstances frequently include a particular officer’s knowledge and experience, but that does
not make the test any more subjective than the one for probable cause, which looks to an officer’s knowledge and
experience.”
Does the holding in this case indicate that all recordkeeping errors by the police are immune from the exclusionary
rule? No. If recordkeeping errors result from flagrant constitutional violations or constantly recurring negligence, the
exclusionary rule would likely apply. At least, it would not be reasonable for the police to rely on a recordkeeping
If the police in Dale County had been reckless in maintaining the warrant system or had intentionally made false
entries to lay the groundwork for future false arrests, should the evidence in this case have been excluded? Most likely,
yes. The exclusion of the evidence could be justified because the misconduct would probably constitute a violation of
the Fourth Amendment. Its application could have the deterrent effect to which the Court refers.
If systemic errors consistently recurred in a police computer database, would it be reckless for officers to rely on
warrants listed in that database? Yes. At least, it would not be reasonable for the police to rely on a recordkeeping
ANSWER TO “WHAT IF THE FACTS WERE DIFFERENT?” IN CASE 9.2
Suppose that the warrant for Herring’s arrest had still been outstanding, but had been based on false information.
Should the standards applied in this case apply in those circumstances? Explain. Yes. To support the recall of a warrant,
ANSWER TO “THE LEGAL ENVIRONMENT DIMENSION”
QUESTION IN CASE 9.2
What does the decision in this case mean for businesses that are subjected to searches by law enforcement
personnel? Businesses may be subject to warrantless administrative searches. Evidence gleaned from searches
performed in good-faith reliance on information that later proves to have been as false as the existence of the warrant
in this case, due to similar causes, may likewise be admissible. In other words, the principles declared in this case would
also apply in the context of searches of businesses.
ADDITIONAL CASES ADDRESSING THIS ISSUE —
Recent cases considering whether evidence is admissible under the exclusionary rule include the following.
• United States v. Hinson, __ F.3d __ (10th Cir. 2009) (even if the defendant’s arrest was not supported by probable
cause, the exclusionary rule did not bar the court from considering at sentencing cash found in the defendant’s car at
the time of arrest, absent evidence that police officers intended to wrongfully obtain that evidence to increase
defendant’s sentence).
• Delker v. State, __ So.3d __ (Miss.App. 2009) (even if the arrest of the defendant by a police chief acting outside
prosecution for felony driving under the influence of alcohol (DUI), because the police chief believed he was within his
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C. THE MIRANDA RULE
Individuals who are arrested must be informed that they have a right to remain silent and a right to legal counsel.
These rights may be waived if the waiver is knowing and voluntary.
CASE SYNOPSIS—
Case 9.3: Miranda v. Arizona
Ernesto Miranda was arrested for kidnapping and raping an eighteen-year-old girl near Phoenix, Arizona. During
the police interrogation, Miranda, who was not informed of his right to remain silent or his right to counsel, confessed
to the crime. The confession was introduced at trial, and Miranda was convicted. Miranda appealed, claiming that he
had not been informed of his constitutional rights. His case was consolidated with three other cases involving similar
issues and reviewed by the United States Supreme Court.
The United States Supreme Court reversed Miranda’s conviction, ruling that he could not be convicted of the crime
on the basis of his confession because his confession was inadmissible as evidence. As a prerequisite to the
was done knowingly and intelligently.
Notes and Questions
Why wasn’t the paragraph at the top of Miranda’s signed confession, stating that he had “full knowledge of [his]
legal rights,” sufficient to waive those rights? This paragraph was not in sufficiently “clear and unequivocal terms.” The
United States Supreme Court stated, “From the testimony of the officers and by the admission of respondent, it is clear
that Miranda was not in any way apprised of his right to consult with an attorney and to have one present during the
interrogation, nor was his right not to be compelled to incriminate himself effectively protected in any other manner.
Without these warnings the statements were inadmissible. The mere fact that he signed a statement which contained
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a typed-in clause stating that he had ‘full knowledge’ of his ‘legal rights’ does not approach the knowing and intelligent
waiver required to relinquish constitutional rights.” [Emphasis added.]
Is the Miranda decision an unnecessary burden on law enforcement? The actual reading of the Miranda rights
takes less than a minute. It is possible, however, that fewer confessions and self–incriminating statements have been
made by criminal suspects since Miranda than before that decision was rendered. Given that the decision has survived
largely intact for over thirty-five years, there appears to be substantial support among judges, lawyers, and law
enforcement officials for the proposition that the gain in procedural fairness outweighs any reduction in the efficiency
of law enforcement.
Although the Supreme Court has held that the remedy for the failure to read the Miranda warnings is to make the
defendant’s pre-warning statements inadmissible as evidence, alternative remedies could be imagined. Should the
suppression-of-evidence remedy be abolished and criminal defendants given instead a cause of action for civil damages
against police departments whose officers fail to read defendants their rights? Such an alternative approach might
modestly increase conviction rates. The civil damages remedy, however, would not address the procedural unfairness
of convictions based on defendants’ ignorance of their rights.
Should illegally seized evidence be excluded from a criminal trial even if the evidence clearly shows the guilt of the
person charged? Why should defendants who have admitted that they are guilty be allowed to avoid criminal liability
because of procedural violations? The Bill of Rights was enacted to protect all citizens’ civil rights from the potential
the rights of all citizens, including criminal defendants, against the need to protect all citizens from crimes. The ethical
ANSWER TO “THE GLOBAL DIMENSION” QUESTION IN CASE 9.3
The right to remain silent has long been a legal hallmark in Great Britain as well as in the United States. In 1994,
however, the British Parliament passed an act that provides that a criminal defendant’s silence may be interpreted as
evidence of his or her guilt. British police officers are now required, when making an arrest, to inform the suspect, “You
do not have to say anything. But if you do not mention now something which you later use in your defense, the court
may decide that your failure to mention it now strengthens the case against you. A record will be made of everything
you say, and it may be given in evidence if you are brought to trial.” Should U.S. law also change to allow a defendant’s
silence during questioning to be considered as an indication of guilt? Why or why not? Yes, because in combination
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ADDITIONAL CASES ADDRESSING THIS ISSUE —
Recent cases considering, in the context of the Miranda rule, whether an accused’s statements to the police are
admissible include the following.
• United States v. Abdulla, 294 F.3d 830 (7th Cir. 2002) (a defendant’s spontaneous statement to police officers,
while in custody, that “I robbed a bank, everyone knows I robbed a bank,” was voluntary, even though the statement
was made before the defendant was advised of his Miranda rights and even though he had previously responded with
an identical statement when the police asked him whether he knew why he was being arrested).
• People v. Sanders, __ A.D.2d __, 743 N.Y.S.2d 618 (3 Dept. 2002) (the failure of the police to readminister Miranda
warnings after a break in questioning a defendant did not render the defendant’s later statements involuntary, when
the defendant was continuously in custody, the statements were made no more than two and a half hours after the
Miranda warnings were administered, and there was no proof that the defendant exercised his right to remain silent or
that the officers used tactics that overbore his will).
• State v. Higgins, 2002 Me. 77, 796 A.2d 50 (2002) (“custodial interrogation,” for the purposes of determining
• State v. Pender, 181 Or.App. 559, 47 P.3d 63 (2002) (a police officer’s question to a defendant, as he was placing
knives, guns, or syringes, was permissible under the exception to the general rule that officers are required to deliver
Miranda warnings before subjecting suspects to custodial interrogation for considerations of public safety).
ADDITIONAL BACKGROUND—
The Miranda Rights
In Miranda v. Arizona, the United States Supreme Court held that the police must inform suspects, before
interrogation, of certain constitutional rights. These rights have become popularly known as the Miranda rights.
Voluntariness Test. Before the United States Supreme Court decided the Miranda case, the admissibility at trial of
a confession was governed by the voluntariness test—voluntary confessions were admissible; involuntary confessions