Business Law Exam III

Sarbanes-Oxley Act of 2002

Created in response to Enron and WorldCom scandal

Increases criminal sanctions

Expands SEC and makes CEOs more accountable

Whistleblower protection under Sarbanes-Oxley Act

Prohibits retaliation against employees who report fraudulent activity or violations of securities laws and encourages reporting. Civil damages.

White collar crime

Occurs in a business or professional setting: comitted to harm business or for personal gain. Ex: Bribery, conspiracy, forgery, false statements, counterfeiting.

How does a an arrest start?

Arrest on the scene, warrant, indictment/accusation

Warrant, arrest, indictment/accusation

Indictment/accusation, arrest

Citation

District attorney

Prosecutes felonies and misdemeanors (assistants are ADAs)

US Attorney General

Federal level (assistants are AUSA)

Solicitor

In some states- prosecutes misdemeanors, traffic

Grand jury

16-23 people, indictments; Grand jury decides if there is probable cause for a case to move to trial, they indict a case and issue an indictment. Grand juries are typically used for serious offenses and consist of citizens convened to review evidence presented by the prosecutor.

Mens rea and actus rea

Guilty mind and guilty act required for a crime to occur. Mens rea refers to the mental state or intention behind committing a crime, while actus reus refers to the physical act or conduct that constitutes a criminal offense.

Intent

Specific intent: Willfully or knowingly

Reckless or negligent (criminal)

How does burden of proof work in US criminal trials?

Defendant has no burden of proof, they are presumed innocent until proven guilty beyond a reasonable doubt, burden of proof is on prosecution.

Pleas in criminal cases

Guilty

Not guilty

Nolo contendere (no contest)

Alford

Fraud

Intentional deception aimed at obtaining financial gain unlawfully, prosecutors must establish a scheme to defraud

Intent element: Willfully or knowingly

Ponzi Scheme

A fake investment in which new people’s money is used to pay off previous investors, no real profits being made, no actual investments in capital.

Mail and wire fraud

Unlawful to willingly use U.S. postal service or electronic means of interstate communication to defraud a person or business.

Larceny

Unlawful taking of property or money with intent to deprive owner of it. Ex: embezzlement

Embezzlement

Illegal misappropriation or theft of funds entrusted to someone.

Trusted relationship (ex: employer/employee)

Access to funds

Use of funds for personal gain

Intentional

Money laundering

Disguising origins of money to make it appear legitimate or from another source.

Conspiracy

Agreement or partnership for criminal purposes

Each member becomes agent or partner of every other member

All charged as co-defendants

Overt act

Withdrawing

Overt act

An action that furthers a conspiracy or demonstrates that the agreement is being acted upon. It is necessary for prosecution in conspiracy cases.

Aiding and Abetting

Person acting under direction of someone accused of criminal activities can be held responsible.

Obstruction of Justice

Commission of an act or statement with intent to obstruct legal process

Mark-to-market accounting

Accounting system allowing companies like Enron to book potential future profits on day of signing, regardless of how much profit actually came through.