Key Takeaways

  • Corporations can face criminal charges under the doctrine of corporate criminal liability, holding them responsible for the actions of employees and agents.
  • Criminal acts must occur within the scope of employment and benefit the corporation to qualify for prosecution.
  • Common corporate crimes include fraud, antitrust violations, environmental violations, and securities fraud.
  • Prosecutors evaluate evidence, past misconduct, and corporate cooperation when deciding to charge a corporation.
  • Corporations can face penalties such as fines, restitution, compliance mandates, and loss of licenses, even though they cannot be incarcerated.Can a corporation be charged with a crime? As legal entities, modern corporations can be charged for the crimes they commit. They can also sue others and be sued, though historically, this was not the case. While they're independent entities, corporations can't act on their own behalf, so one of the corporation's agents — like a director or board member — has to perform any actions. When the action is done within the scope of that person's employment, then the corporation can be held liable for what the agent did.

Common Types of Corporate Crime

The prosecutor has to prove what was done illegally, that the agent of the corporation acted as part of his or her duties, and that it was done with the specific intention of providing benefit to the corporation. Corporate-level crimes are often white-collar offenses, such as:

Another common corporate crime is environmental, especially for manufacturing corporations in industrial settings.

Factors That Increase the Likelihood of Prosecution

While prosecutors have discretion when deciding whether to charge a corporation, certain factors can make prosecution more likely. These include:

  • Pervasiveness of Misconduct: Crimes committed at higher levels of the corporate hierarchy or those that reflect a culture of wrongdoing weigh heavily in favor of prosecution.
  • History of Violations: Repeated legal or regulatory violations can show a disregard for the law, increasing the chance of charges.
  • Obstruction of Justice: Attempting to hide or destroy evidence, intimidate witnesses, or mislead investigators is a major red flag.
  • Lack of Remedial Action: Failure to investigate internally, discipline responsible parties, or implement preventative measures may reflect poorly on the corporation.
  • Failure to Cooperate: A corporation's unwillingness to assist in investigations can increase the likelihood of charges being filed.

These factors guide prosecutors in applying the principles set out in frameworks such as the Department of Justice’s “Filip Factors” used to evaluate corporate criminal liability​.

Penalties for Corporate Crimes

One of the most effective ways to punish the corporation for corporate crime is by assessing a monetary fine and making the corporation pay restitution to the victims. The corporate agent, however, might face prison time for the crimes.

The Decision to Prosecute

The decision about who to charge, whether the agent or the corporation, falls on the prosecution. The prosecution does have the option to press charges against both the corporation and individual agents involved. However, the prosecutors are also required to prove which entity committed the crime, and they are also required to prove each detail of the crime beyond all shadow of a reasonable doubt.

Sanctions

The process of deciding to charge a corporation with a crime is similar to the process of deciding to charge an individual with a crime. The prosecution sifts through the information and details, considering things like whether the evidence is sufficient, whether the case would likely succeed if it goes to trial, and past crimes and unethical behavior the corporation might have committed. Sometimes sanctions, which are not criminal penalties, might be imposed.

Alternatives to Prosecution

In some cases, instead of criminal prosecution, corporations may enter into:

  • Deferred Prosecution Agreements (DPAs): These involve charges being filed but postponed pending compliance with certain terms like fines, reforms, or monitoring.
  • Non-Prosecution Agreements (NPAs): In these agreements, prosecutors agree not to file charges in exchange for cooperation and corrective actions.

These alternatives aim to avoid the collateral damage of criminal convictions—like layoffs or bankruptcy—while still holding corporations accountable and encouraging future compliance​.

Conditions of Finding a Corporation Guilty of a Crime

Even though corporations aren't people, legally a corporation is treated as if it were an individual in some cases. The corporation can be held liable for and found guilty of a crime if

  • If the corporation's agents do something criminal while working,
  • Are responsible for the details of the crime,
  • And commit the crime in question for the profit of the corporation rather than for their own profit.

The Role of Corporate Policies and Training

To mitigate the risk of criminal liability, corporations should implement and enforce internal policies that promote legal compliance. These include:

  • Clear Codes of Conduct: Clearly outlining prohibited behavior helps set expectations across all levels.
  • Employee Training Programs: Regular training on ethics, compliance, and specific legal duties can prevent misconduct.
  • Internal Reporting Mechanisms: Whistleblower programs and anonymous reporting channels allow for early detection of issues.
  • Compliance Officers: Having dedicated professionals to oversee legal compliance strengthens a corporation's defenses.

If a corporation can demonstrate that it made genuine efforts to prevent wrongdoing, this may reduce liability or penalties if an offense occurs.

Knowingly Engaging in Crime

For a corporation to be found guilty of a crime, every detail of the crime has to have been committed by the corporation's agents. The prosecution has to prove the corporation's agent, or agents, knowingly engaged in each of the crime's elements, if more than one person acted illegally on behalf of the corporation. When dealing with a small business, this is usually fairly simple.

As an example, if one of the small company's workers uses poor quality parts that were purchased by the business partner, with full knowledge of their substandard quality, then both the person who purchased the substandard parts and the one who installed them are performing a fraudulent act and are standing as agents of the corporation when committing the crime.

Even if the Owners Don't Know

If the corporation's owner embezzles from the company, the owner benefits from committing the crime but the company doesn't. That means the company isn't guilty of the crime. The owner is guilty of the crime. If one of the bosses, however, has the employees do something illegal, like dumping hazardous waste to save money on disposing of it, then the company benefits and is, therefore, the guilty entity in the crime.

The company is guilty even if the owners and shareholders don't know that the manager has done the illegal thing. If the company's agents commit a crime to benefit the company, then the company can still be held liable and found guilty, even if the owners had nothing to do with the crime.

Corporate Criminal Liability in Practice

Though corporations can't be jailed, they can be punished through legal avenues that impact their operations, finances, and reputation. Common real-world consequences include:

  • Criminal Fines: Fines can range from thousands to billions of dollars depending on the offense.
  • Probation and Monitoring: Courts may assign independent monitors to oversee corporate reform efforts.
  • Disqualification from Government Contracts: Convicted corporations may be barred from participating in public projects.
  • Reputational Damage: Criminal convictions can lead to loss of business, stock value decline, and damaged relationships with partners.

Frequently Asked Questions

1. How can corporations be charged with crimes if they aren’t people? Corporations are legal entities, and under the doctrine of vicarious liability, they can be held responsible for the criminal actions of employees or agents acting within the scope of their employment.

2. What crimes can corporations be charged with? Common corporate crimes include fraud, environmental violations, antitrust violations, bribery, and securities fraud.

3. Can a corporation go to jail? No, but they can face criminal fines, be placed under court supervision, and suffer significant financial and reputational damage.

4. Are corporate executives automatically liable if a corporation commits a crime? Not automatically. Liability depends on whether the executive was involved in or had knowledge of the crime.

5. How can corporations reduce the risk of being charged? Implementing strong compliance programs, training employees, encouraging whistleblowing, and cooperating with investigations can all help prevent criminal charges.

These consequences make criminal liability a serious threat to corporate longevity—even when the individuals directly responsible are also prosecuted​.

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