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The Criminalization of Business Behaviors

Between a long law school clerkship at the US Department of Justice Federal Bureau of Prisons, a month inside nearly a dozen British prisons in graduate school, and visiting some former clients in federal institutions, I’ve probably spent more time inside of prisons than most. I am certainly no expert on any aspect of the criminal justice process, but I’ve likely read more letters from prisoners – certainly into the many hundreds – and had more direct eye contact with the incarcerated than most readers of this newsletter. I know there is always a story – not always believable – behind those eyes.

I also know that we teach our children “right from wrong,” we learn the difference between civil and criminal behavior, and we espouse the importance of “Rule of Law.” Those used to seem like bright lines. Now, I’m not so sure. Other than watching Law & Order’s Jack McCoy, I don’t think we spend too much time considering the extraordinary power of prosecutorial discretion, particularly in an age of the “personal brand.” Jack – Sam Waterston – didn’t have to worry about that. For the rest of us, well, as my late father used to say, “If you looked closely enough at any NFL game, you could call holding on every play.” The bright lines between a crime, a civil fine, and no action at all seem increasingly vague and discretionary.

Have we reached the point where ordinary business conduct is at risk of potential criminalization? Where little or no notice is required as to what conduct is criminal? Or where mens rea – the criminal intent that the government must prove beyond a reasonable doubt in criminal cases – is reduced to “deliberately indifferent?” Are we blurring the lines between legal, civil, and criminal so much that a jury can convict based upon negligence or recklessness, rather than criminal intent or “guilty knowledge?” Are we entering an age where any executive making decisions in a regulated industry where legal and regulatory interpretations are required is subject to opaque new standards imposed by prosecutors after the fact? 

When we started the first Forbes article on the criminalization of the boardroom, it was inspired by an Andy Fastow speech (formerly the CFO of Enron) where he talked about following top outside legal and accounting advice throughout the entire process and being fully transparent and none-the-less serving six years in prison. He wasn’t excusing his actions, just explaining that sound legal and accounting advice and good faith decisions are not necessarily a get-out-of-jail-free card. What started as a single article in Forbes turned into a series. Now the Corporate Counsel Business Journal (CCBJ) has started running the series. It will soon be an eBook with two broadcasts planned over the next two months. One reader and trusted advisor in Berlin recently wrote of the over-criminalization of business activities as a growing trend in Germany and other parts or Europe.

We can no longer take comfort in the old adage, “If you didn’t do anything wrong you have nothing to worry about.” And in an age when the Internet of Things captures our every move, written, and spoken word – and soon, if technology futurists are accurate, our every thought – now might be a good time to consider the ambitious prosecutor and the power of their unbridled discretion. Already, board seats are harder to fill due to fears of liability. How long before CEO chairs are as well?

We hope you enjoy the series. Here are Parts I and II from the CCBJ.

Richard Levick



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