Prepared by McGuire, Woods, Battle & Boothe LLP Government
Investigations & Enforcement Team
At common law, corporations were not generally subject to criminal
liability. The oft-stated reason for this rule was that corporations
lacked the "soul" necessary to form the guilty mind or mens rea
upon which criminal liability was based. In 1909, the Supreme Court
abandoned that view, holding in the case of New York Central
& H.R. Co. v. United States, 212 U.S. 481 (1909), that the
guilty intent of a corporations employees could be imputed
to the corporation itself.
Ninety years after New York Central, the United States
Department of Justice ("DOJ") has adopted, for the first time, a
set of internal guidelines entitled simply "Federal Prosecution
of Corporations" (the "Guidelines"). This memorandum summarizes
and analyzes the Guidelines with an emphasis on identifying
those areas in which the Guidelines may prove helpful to
corporations and their counsel in arguing against prosecution.
The Guidelines are significant for several reasons:
- The Guidelines frequently mention "corporate
culture" and the power of prosecutors to affect such culture.
This concept is not defined in the Guidelines and thus
raises questions concerning the proper aim of federal law enforcement.
The danger exists that this concept may be interpreted either
generally, or, in particular cases, to mean that a prosecutor
has license to threaten prosecution in order to coerce a corporation
to modify a practice that, while legal, may conflict with DOJs
concept of acceptable "culture."
- The Guidelines reveal that the twin
concerns raised by the petitioner in the New York Central
case (the absence of due process in taking property from shareholders
and the unfairness of charging the corporation for acts that
were not approved by its governing body) remain relevant. These
twin concerns appear in various forms throughout the Guidelines,
and corporations seeking to avoid criminal charges may make
arguments in those and similar terms. While such arguments are
not likely to convince a prosecutor that she has no power to
charge a corporation, that may will affect her willingness to
- They provider valuable insights into the thought
processes by which federal prosecutors decide whether or not
to prosecute a corporate entity.
- In describing the considerations that a prosecutor
should or may weigh in making such a decision, they provide
a partial catalog of arguments that can be made on behalf of
a corporation seeking to avoid prosecution.
- The existence of such a formal policy may strengthen
the willingness of prosecutors to consider charging corporations.