The Scourge of Overcriminalization

Criminal DefenseWhite-Collar

The Scourge of Overcriminalization


If you work in a C-Suite or work closely with those who do, then I need to introduce you to the concept of Overcriminalization of American business. Overcriminalization is why, I, as a criminal defense lawyer, never have to worry about finding gainful employment. Simply put, I represent folks who are under investigation or who are charged, with crimes even though they had no idea that their ordinary business conduct would place them in harm’s way. The system views every businessperson as a criminal or potential criminal– it is written into our laws.

There are literally thousands of federal crimes on the books that can be used by prosecutors to go after you. That’s right – thousands. And the number is growing at the rate of fifty per year. When you have some free time while running your business, you may want to take a quick look at the federal criminal code and see how it relates to what you are doing. Of course, I say that “tongue-in-cheek” since it would probably take you a year or more to try to figure it out. Even then you (along with the judges and lawyers who do the same thing professionally) would be thoroughly confused.

Prosecutors are armed with incredibly powerful tools – the federal mail and wire fraud statutes and the legal concept of “conspiracy.” The fraud statutes have been interpreted to prohibit “sharp business practices” (whatever that means), and the concept of what constitutes “fraud” has never been clearly defined by law. For the most part, prosecutors can take just about any “sharp practice” – which may not even be unethical or illegal – and turn it into a “fraud case.” Without any clear bounds or limitations, ordinary business activities can be subject to criminal prosecution. Meanwhile, the ultimate decision maker, empowered to send you to jail for a lifetime, turns out to be a jury composed of folks with limited business acumen, many of who undoubtedly hate your guts for being successful.

If you want to explore this topic in depth, there are some outstanding books and articles written about the overcriminalization of business. Georgetown business professor John Hasnas has a terrific book, “Trapped: When Acting Ethically is Against the Law” (Cato Institute). The Economist just published a wonderful article about the “Criminalization of American Business” in its August 30, 2014 issue. And Notre Dame law professor Stephen Smith has written an articleA judicial Cure for the Disease of Overcriminalization” that does a great job explaining the problem and calling for judges to be more vigilant in protecting our rights.

How did we get into this pickle? My take on it is that there are cultural, political, and structural reasons for this phenomenon.

CULTURAL – Let’s face it, Americans have a love/hate relationship with business. As a society, we love the idea of the courageous entrepreneur who goes from rags to riches by building some interesting company from the germ of an idea. On the other hand, Americans loathe (and perhaps envy) those who accumulate wealth from ordinary business activities. Go to any college classroom and you will quickly see what I mean. Business people are demonized, while community organizers, professor-types, and business protesters are lionized. The media helps with this framing as well. Just take a look how it covered “occupy Wall Street.” The protesters (many of whom have chosen to be unemployed and who have broken the law repeatedly) were portrayed as the heroes, while the men and women who were busting their humps in the office buildings were cast as the villains. Our society defaults to using the criminal system to deal with perceived wrongs.

POLITICAL – Politicians from both sides of the isle make careers from being “tough on crime.” Can you imagine a senator or congressman advocating a more balanced approach to the use of federal criminal laws, even where there is some doubt as to the propriety of a prosecution? Never going to happen. Whenever there is any economic crisis or high-profile case in the news, the knee-jerk political reaction is to “throw the rascals in jail” – even before the facts play out. Overcriminalization is also good business for prosecutors. The threat of a prosecution can force companies to settle disputes by paying whopping amounts to federal and state agencies, which can then use that money to fund their political and regulatory activities. Politics drives the criminalization of American business.

STRUCTURAL – The system is wired to overcriminalize business activities. Prosecutors make careers bringing cases against high-profile business folks. So you prosecute some low-life who steals a bunch of money—who really cares? But go after a big fish in the legitimate business community and bring him or her down; now we’re talking. It leads to promotions in government and a lucrative career or high political office. Given the ambiguity in the criminal law, a motivated and ambitious prosecutor can go after anyone he or she wants to. Sadly, there are not many judges who will put a stop to this. Although I know judges who are truly heroic in their dedication to the rule of law and upholding the Constitution, most judges simply go with the flow and give prosecutors what they want. After all, succeeding as a lawyer or judge means you have to play the game and certainly no judge wants to be perceived as “soft on crime.” The system is all about prosecution, and the higher up you are in the food chain, the more delicious a target you make.

So, where does this leave folks in the C-Suite? The Economist characterizes what I’ve just described as a huge shakedown where powerful prosecutors can threaten just about anyone to get what they want. That’s true. Prosecutors can extort and intimidate and get away with it. It’s legal for them, but it’s criminal for the rest of us. Sadly, things will not change any time soon. I believe that the cultural, political, and structural reasons for overcriminalization are deeply embedded and will be with us for a long time.

That’s why the C-Suite needs a strong defense.


Remember, be careful out there.


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