Civil Enforcement or Criminal Penalties – A Toss of the Coin

Criminal DefenseWhite-Collar

I recently attended a conference at New York University on “Drawing the Line Between Civil and Criminal Punishment.” The conference brought together scholars, practitioners, and government lawyers to consider the distinctions between civil or regulatory sanctions and criminal penalties in our omnipotent regulatory environment. In other words, investigations into alleged regulatory misconduct can often result in a range of outcomes, including administrative proceedings, civil complaints, or even criminal indictments.  How exactly are these decisions made, and more importantly, why?

To begin with, no one had any simple answers, but the general consensus was that there is almost always a way that a purported civil misdeed can be prosecuted as a crime in our overcriminalized society. Put simply, our criminal law is overwhelming our civil law and there is no longer a clear dividing line between the two.  This reality has enormous consequences for C-Suite executives. For example, a C-Suite executive facing a breach of contract suit with a government entity can easily see that dispute twisted into an alleged criminal fraud case, complete with its disastrous consequences. How can that be?

Well, a vast array of criminal laws expose C-Suite executives to jail time for alleged misconduct that could easily be dealt with in a civil lawsuit or administrative hearing. Ultimately, these expansive laws give prosecutors the complete discretion to determine how a case should proceed. High-level Department of Justice officials who attended the conference conceded as much. More often than not, the only difference between one executive dealing with a civil lawsuit and another executive facing jail time is nothing more than “a toss of the coin.” It depends largely on who the prosecutor happens to be and what his or her agenda may be.

Leaving this enormous power in the hands of prosecutors is a scary notion. Prosecutors may be motivated to bring cases for reasons completely unrelated to justice. Legal careers can be made by going after “big” C-Suite targets, and often prosecutors are pushed to bring cases for political or statistical reasons, including pressure from law enforcement agencies.

The sad reality is that nothing will change without a profound political realignment. Prosecutors will continue to use the broad power given to them by our criminal law, and there are few checks and balances on how they do so. Sure, the courts are there, purportedly, to protect individual rights. But, for the most part, they merely acquiesce to the overcriminalization of American business. Something greatly transformative must take place in order for this conduct to change.

We are, however, seeing the tide turning ever so slowly. There are important public interest groups like the Heritage Foundationthe Cato Institute, and the Manhattan Institute, that are coming to the forefront and are pushing for political reform in this area. To support this movement, C-Suite executives need to be more vigilant and involved. They can no longer remain silent and on the sidelines. It is crucial that they participate in the political reform process to ensure that change takes place and that their rights are protected.


Remember, be careful out there.


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