After reading this chapter, you should understand the nature of criminal law, why it is important to
business, and the potential consequences of committing criminal acts. You will become familiar with
white-collar crimes, blue-collar crimes, and crimes committed by businesses. You will also learn about
the constitutional protections aﬀorded to those accused of committing a crime, and the purpose of
punishments for committing crimes. This chapter will explore corporate liability as well as individual
liability for corporate actions. It also will examine strategies to minimize corporate criminal liability
exposure or losses attributed to criminal activities. At the conclusion of this chapter, you should be able
to answer the following questions:
Why is crime relevant to business?
How does criminal law diﬀer from civil law?
What constitutional protections are aﬀorded to those accused of committing a crime?
What are some relevant defenses to crime?
What are the consequences of committing a crime?
What are the goals of punishment for committing a crime?
Which crimes must businesses be concerned about?
What strategies exist for businesses to minimize exposure to criminal liability or to loss asso-
ciated with criminal activities?
Consider the photo in Figure 10.1. It is probably not the usual image conjured by most business
students who dream of success in the business world. Yet it becomes a sad reality for too many
managers and executives who commit crimes in the context of their professional lives. How can
the path from business success lead to a criminal conviction? Click on any credible news source
today, and you will ﬁnd among the headlines a story in which this photo would ﬁt.
Of course, there are many reasons why something like this happens. People sometimes fall
into the “wrong crowd” at work, and they do not know how to walk away. Sometimes corporate
culture and leadership can contaminate a work environment, causing people to disregard ethical
behavior or to ﬂagrantly ignore the laws. If “everyone is doing it,” then someone might believe
that it’s OK for him or her to do it, too. Being part of an organization has a way of making
someone feel insulated and “safe” when committing wrongdoings. For example, some members
of the Enron workforce seemed to be swept up in a culture of corporate greed, and they did not
know how to walk away. Other people are opportunists, and their moral compass or ethics do not
lead them away from temptation. Bernie Madoﬀ may be a prime example of such an opportunist in today’s news.
Sometimes, criminal behavior results from the emphasis of proﬁt over ethical behavior. For example, we might
think of corporate environmental crimes, in which corporations decide not to follow regulatory requirements
regarding hazardous waste disposal or storage. In the end, of course, the reasons for the criminal behavior do not
matter. When a crime is committed, others will be injured, and the wrongdoer will be subject to criminal