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Document Type

Article

Publication Date

Spring 2007

Publication Citation

82 Indiana Law Journal 411 (2007)

Abstract

Under current federal law, a corporation, no matter how large or small, is criminally liable if a member of the organization commits a crime within the scope of employment and at least in part with the intent to benefit the company. This Article challenges that doctrine and contends that where it seeks to charge a corporation criminally, the government should bear the burden of establishing as an additional criminal element that the corporation failed to have reasonable policies and procedures to prevent the employee 's conduct. Narrowing the scope of criminal corporate liability is supported by the reasoning of a series of Supreme Court decisions that curtailed the application of civil corporate vicarious liability in the context of punitive damages and certain claims under Title VII. This Article applies the logic behind those cases to the criminal context and argues that a similar rethinking of criminal corporate liability is long overdue. Far from giving corporations a shield to commit fraud, a system that ties criminal liability to the lack of an effective compliance program will do what the practical limitations on a prosecutor's time and resources could never permit-incentivize boardrooms around the country to devise, implement, and monitor compliance measures. Indeed, this Article demonstrates, through an examination of post-Enron deferred prosecution agreements, that the government has increasingly used criminal corporate liability to encourage reforms to internal corporate compliance measures that can best prevent and detect the crimes engaged in by company employees. Those agreements, as well as the Sentencing Guidelines and other government guidelines, provide the measure of what the government views as appropriate corporate behavior and providea template for corporations seeking to implement internal mechanisms that will satisfy law enforcement. Where a corporation has such policies and procedures to deter and detect criminal actions by its employees, none of the legitimate concerns animating criminal corporate liability is implicated.

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