White-collar crime

  • August 4, 2014
    Guest Post

    by Reuben A. Guttman, Director, Grant & Eisenhofer; Member, ACS Board of Directors

    *This post originally appeared on The Global Legal Post.

    The ‘Hide No Harm Act’ is to be welcomed but why should corporate offenders be treated any differently from street criminals.

    'The Hide No Harm Act' puts a duty on a corporate officials not to knowingly conceal a corporate action that would pose a danger of death or injury to consumers and workers. United States Senators Richard Blumenthal (D-Conn), Tom Harkin (D-Iowa) and Bob Casey (D- Pennsylvania) have introduced legislation that, according to their press statement, 'would  make it a crime for a corporate officer to knowingly conceal the fact that a corporate action or product poses a danger of death or serious injury to consumers and workers.' The Senators call the Bill the 'Hide No Harm Act.' According to Senator Blumenthal 'this measure would criminally punish corporate officials who conceal that a product is dangerous.'  The proposed legislation would impose penalties of up to five years in prison because – as the Senators noted in their press statement – concealment by corporations has 'resulted in deaths and injuries.'

    Kudos to the three Senators for introducing this legislation. But wait just a second – I thought it was already a crime to intentionally injure or even negligently kill someone. Do not most, if not all, of the State penal codes make negligent homicide a crime? Surely the three Senators do not mean to say that absent this legislation, there is no vehicle – at least for some state prosecutors – to initiate a criminal prosecution of corporate officials who place revenue over safety and cause injury or death?  

    Do not misunderstand what I mean; the Hide No Harm Act is needed. In an age where we depend on corporations to provide the basic necessities of life, including food, health care, transportation and energy, the proposed legislation is an attempt to punish those who – perhaps for direct, or even indirect, economic gain – have compromised the delivery of life’s essentials and placed workers and consumers at peril. This legislation will be a powerful tool for federal prosecutors. And like any new tool, someone may pick it up and try it.  

    Corporations are fictions

    Yet, while the legislation is a positive step, it is thought provoking. Corporations, of course, are what lawyers call fictions; it is those individuals who control them that steer these global enterprises toward wrongdoing. Often these titans of capital do so because it is in their own economic interest. In an era where multinationals from drug companies to auto makers have knowingly concealed the risks of their products or the deficiencies of their services, why have state prosecutors been reluctant to pursue individual culprits with zeal? It is almost as if there is an unwritten rule that those who commit crimes in the course of their employment should be treated differently from the street criminal whose crime is so transparent that there actually may be a 'smoking gun'.  

  • May 24, 2012

    by Jeremy Leaming

    JPMorgan Chase CEO Jamie Dimon has been a loud, at times obnoxious, critic of serious efforts to strengthen regulations of the financial industry. Specifically he has fought the Volcker rule, which would bar federally insured banks from risky trading ventures, similar to the ones that Dimon’s bank engaged in that led to a multi-billion dollar loss.

    Dimon is also on the board of the Federal Reserve Bank of New York, which is instrumental in supervising and regulating financial institutions. A growing number of people, including Treasury Secretary Timothy Geithner, are suggesting that Dimon is unfit to serve on the board of an institution that is charged with checking the actions of JPMorgan, which as The New York Times has noted emerged from the Great Recession as “the nation’s biggest bank.”  

    Simon Johnson, former chief economist of the International Monetary Fund, is the latest influential voice to call for Dimon to go.

    Writing for The Baseline Scenario, Johnson noting that the NY Fed is a “key part of our regulatory and supervisory apparatus,” concludes that it makes no sense for Dimon to remain a part of the apparatus that “oversees his activities, decisions, and potential losses.” Johnson is asking others to join the effort urging Dimon to resign from the board.

    The JPMorgan debacle centers on a trader in London dubbed the “London Whale,” apparently for playing a central role in a risky hedging strategy that led to the announcement of a $2 billion, likely far higher, trading loss.

    In a post for his Rolling Stone blog, Matt Taibbi says, “If you’re wondering why you should care if some idiot trader (who apparently has been making $100 million a year at Chase, a company that has been the recipient of at least $390 billion in emergency Fed loans) loses $2 billion for Jamie Dimon, here’s why: because J.P. Morgan Chase is a federally-insured depository institution that has been and will continue to be the recipient of massive amounts of public assistance. If the bank fails, someone will reach into your pocket to pay for the cleanup. So when they gamble like drunken sailors, it’s everyone’s problem.”

  • May 8, 2012
    Guest Post

    By Reuben Guttman and Traci Buschner. Mr. Guttman is a Senior Fellow and Adjunct Professor at the Emory Law School Center for Advocacy and Dispute Resolution, and a partner at the firm of Grant & Eisenhofer where he heads the firm's whistleblower practice. He is a founder of the website, Whistleblowerlaws. Ms. Buschner is a Senior Counsel with Grant & Eisenhofer. Mr. Guttman and Ms. Buschner were lead counsel for the lead whistleblower, Meredith McCoyd, in U.S. ex rel. McCoyd v. Abbott Labs.

    Abbott Labs has agreed to pay $1.6 billion dollars to settle criminal and civil allegations that it engaged in the unlawful marketing of its anti-epileptic drug Depakote.

    The settlement arose out of a False Claims Act (FCA) case filed in the fall of 2007.  Whistleblower or "Relator" Meredith McCoyd, alleged that the company marketed Depakote to elderly nursing home patients and to children for purposes that had not been approved by the Food and Drug Administration (FDA).  Ms. McCoyd also alleged that Abbott made misrepresentations about the safety and efficacy of the drug and paid kickbacks to doctors and others.

    This case was not just about lost government dollars. It was about a company that placed money over medicine by marketing unlawfully to vulnerable patient populations. And we still don't know what the long-term consequences are for those patients who took Depakote as a result of marketing improprieties.

    Unfortunately, Abbott is not the first pharmaceutical company to face allegations of unlawful marketing tactics. Astra Zeneca, Johnson & Johnson and Pfizer have all paid hefty fines following allegations of marketing derelictions.

  • October 19, 2011

    by Jeremy Leaming

    The U.S. Chamber of Commerce, the nation’s leading lobbyist for corporate America, is feverishly working to alter a federal law that has, as noted in a recent report published by the Open Society Foundations, helped spur a global effort to fight corrupt business practices.

    In “Busting Bribery: Sustaining the Global Momentum of the Foreign Corrupt Practices Act,” scholars David Kennedy and Dan Danielsen write that the United States “has been a global leader in the fight against corruption,” citing the enactment in 1977 of the FCPA.

    Early in the report Kennedy, a Harvard Law School professor, and Danielsen, a Northeastern University School of Law professor, note that the U.S. took the lead in fighting corrupt business practices overseas because its leaders realized that far-reaching “corruption abroad imposes enormous costs on American business, damages the global business environment and undermines the integrity and effectiveness of governments. A culture of corruption raises the costs of penetrating foreign markets and undermines predictability and business confidence. It imposes particular hardships on small and medium sized American enterprises seeking to participate in the global economy.”

    Government and businesses had joined together to work to end corrupt business practices, which hobble efforts of smaller corporations to engage the global market. The passage of the FCPA, the authors write, “represented an alliance between the government and the American business community, driven by a shared recognition of the harms inflicted on American business by foreign corruption. The Act raised the cost of corruption and encouraged sound business practice. By criminalizing the payment of bribes abroad, the FCPA strengthened the hand of American business in refusing the demands of foreign officials. By requiring that listed companies maintain records and file reports, the FCPA encouraged internal vigilance by leading business actors.”

  • July 11, 2011

    Not long after the U.S. Supreme Court limited securities fraud lawsuits against a mutual fund’s investment adviser in its June 5 – 4 opinion in Janus Capital Group v. First Derivative Traders, Howard A. Fischer wrote that the decision may have left another avenue open to pressing a securities fraud claim.

    Fischer, a senior trial counsel in the New York Regional Office of the Securities and Exchange Commission (SEC), wrote for Thomson Reuters Accelus that the Janus opinion may have opened the door for actionable claims to be lodged pursuant to the Racketeer Influenced and Corrupt Organizations Act (RICO).”

    The New York Law Journal reports, however, that at least one federal appeals circuit has “rebuffed” an attempt by investors harmed by the Bernard Madoff Ponzi scheme to use a RICO action to recover some of their loses.

    The U.S. Court of Appeals for the Second Circuit, Mark Hamblett for the Journal reports, held that the “RICO claim was precluded by § 107 of the Private Securities Litigation Reform Act, 18 U.S.C. § 1964, as the court adopted a restrictive analysis on the bar against RICO actions in securities cases.”

    The Journal notes that Circuit Judge Robert D. Sack “said the scope of that bar is unsettled in the circuit, so the question was whether it bars all RICO claims involving the purchase or sale of securities “or only RICO claims in cases where that plaintiff could have asserted a fraud claim against the named defendant.”