White Collar Crime Outline – Prof.

Ken Levy, Fall 2013

I. Chapter 1. Overview of White Collar Crime (pp. 1-14)
a. White Collar Crime is by definition non-violent, and the line to draw between lawful, if
shady, behavior and actual crime.
i. Characteristics
1. Who is the victim? Is it the gov’t? Where is the harm? Should offenders really
be jailed?
2. Corporate and Financial Fraud
3. Political Corruption
4. Certain crimes committed by defendants with high social status, usually non-
violent that cause economic harm or hinder the government.
ii. Generally distinguished from common or street crime and crimes that are assigned to
special agencies.
1. Common theft
2. Vice crimes like gambling, prostitution
3. Crimes that necessarily involve physical harm or assault
iii. Potential Problems
1. Overcriminalized – because many of the laws are politically popular, although
possibly not morally bad enough to deserve criminal punishment.
iv. Definitional issues – blurry line with torts, crimes are inherently vague, line between
criminal behavior and acceptable business practices is blurred.
v. Enforcement Issues – difficult to detect, requires lots of resources to prosecute and
investigate.
vi. Over-federalization – Federal police power, which used to be auxiliary to state power,
now duplicates it and in some cases overtakes it.
1. Could burden the federal courts system.
2. States usually can respond more readily to local concerns.
3. States lose some authority and cannot serve as “laboratories of change.”
vii. Over-deterrence – could have a chilling effect on legitimate business activity.
b. Mens Rea
i. Purpose – conscious object
ii. Knowledge – awareness or practical certainty
iii. Recklessness – conscious disregard of a substantial and unjustifiable risk
iv. Criminal Negligence – inadvertent disregard of subst. and unjust. risk; gross deviation
from std of care of reas. person in similar situation.
v. Willfulness – gov’t must prove
1. law imposed duty on defendant,
2. defendant knew of this duty, and
3. defendant voluntarily and intentionally violated that duty.
c. Punishment
i. Monetary fines, forfeitures, debarment/suspension, dissolution.

II. Chapter 2. Corporate and Individual Liability (pp. 15-50)

a. Respondeat Superior – corporation can be liable for the actions of its agents.
i. Elements:
1. Acting on behalf of the corporation,
2. Acting to benefit the corp., and
3. Acting within the scope of his authority.
 ii. Civil law tort doctrine, seems unfair to impute criminal liability. Corporations could
be punished for acts it didn’t necessarily approve, know about, or have the ability to
prevent. This is strict liability.
iii. It helps incentivize corporations to supervise their employees and develop policies to
deter wrongdoing.
iv. Model Penal Code – on corporate criminal liability
1. Offense is a violation or is defined by a statute other than the MPC in which a
legislative purpose to impose liability appears, and the conduct is performed
by an agent of the corp acting on behalf of the corp within the scope of his
office or employment.
2. The offense consists of an omission to discharge a specific duty of affirmative
performance imposed on corporations by law.
3. Commission of offense was authorized, requested, commanded, performed or
recklessly tolerated by the board of directors or by a high managerial agent
acting on behalf of the corp within scope of office or employment.
v. MPC 2.07(4)(c) – High managerial agent – officer of a corporation... or any other
agent of a corporation... having duties of such responsibility that his conduct may
fairly be assumed to represent the policy of the corporation.

MPC 2.07 Respondeat Superior

(1) A corporation may be convicted of the Acts committed by corporate agents acting:
commission of an offense if:
(a) the offense is violation or is defined by statute On behalf of the corporation;
other than MPC where legislative purpose plainly
appears to impose liability on corps
and
conduct is performed
 by agent of corp acting
 in behalf of corp
 within scope of office/employment, or
(b) the offense consists of an omission to discharge To benefit the corporation; and
specific duty of affirmative performance imposed
on corporations by law; or
(c) commission of offense authorized, requested, Within the scope of the agent’s authority.
commanded, performed, or recklessly tolerated by
board of directors or High Managerial Agent
acting in behalf of corp within scope of
office/employment.

b. US v. AML – Are criminal acts within the scope of employment if employees performed them
not because they were instructed to but merely because they intended to benefit the
corporation?
i. Employees falsified records and logbooks, to conceal violations of FDA regulations
regarding plasmapheresis process.
ii. Scope of employment includes acts on behalf of corporation, and in performance of
agent’s general line of work.
iii. Agent must be performing the acts he is authorized to, and the acts must be motivated
at least in part by an intent to benefit the corporation.
 c. US v. Hilton Hotels – should corporation be liable for the criminal acts of its employee even
though the employee’s act violated company policy?
i. Boycott of companies who didn’t pony up for the convention association. Hotel
purchasing agent said he did it for spite.
ii. Hilton could not gain exculpation by issuing general instructions without undertaking
to enforce those instructions by means commensurate with the obvious risks.
iii. Upper management is likely to have participated in the violations, and pressure from
board and shareholders to increase profits often leads to violations and makes
directions to obey the law less likely to be followed.
d. Beneficial Finance – What evidence is necessary to establish corporate criminal liability for
actions of corporation’s employees? High managerial approval, or simply that the employee
was acting on behalf of the corporation?
i. Respondeat superior PLUS proof that the corporation has placed the agent in a
position where he has enough authority and responsibility to act for and on behalf of
corporation in handling the particular corporate business he was engaged in at the
time he did it.
ii. Proof of corporate policy still required. Jury can infer corporate policy from the
position in which the corporation placed the agent.
e. Todesca Corp. – driver hits a police officer because the backup alarm on his truck didn’t
work. Mass Sup Ct found the company guilty of vehicular manslaughter.
f. US v. Park – Is strict liability compatible with criminal liability? Do corporate officers need
to be conscious of their wrongdoing to be liable, or is being in a responsible position
sufficient for liability?
i. Ct says all you need is a responsible relationship to the situation.
g. People v. Lessoff & Berger – May a law partnership be indicted for crimes of fraud if only
one partner is involved in the alleged crimes?
i. Lawyer getting radiologist to touch up MRI reports.
ii. Partnership may be criminally liable even when only one partner is alleged to have
been culpable.
h. Collective Knowledge – each corporate agent’s knowledge is attributed to the corporation
itself. Even if no one corporate agent has the knowledge required for the crime, the collection
of different agent’s knowledge might qualify.

III. Chapter 3. Conspiracy (pp. 51-82)

a. Plurality requirement – must have agreement and therefore two actors. Traditionally, mere
agreement to commit crime was sufficient.
i. Can be two corporations.
ii. Can be a corporation and its subsidiary
iii. Can be a corporation and its agent, as long as there is one other agent/co-conspirator
b. Exceptions
i. In some jurisdictions, defendant may be convicted even if co-conspirator is acquitted.
ii. In others, defendant may be convicted even if his co-conspirator was actually an
undercover police officer. (Bi-lateral theory of conspiracy)
iii. The undercover officer has specific intent to enter the conspiracy but not to commit
the offenses.
c. Overt Act required by federal gov’t (and some state jurisdictions). An act by one co-
conspirator is enough to satisfy the requirement for all co-conspirators.
d. Conspiracy is the principal charge in federal law for those who attempt, but fail, to commit
white collar crime.
 i. In federal law, conspiracy does not merge with objects of conspiracy, so a defendant
can be found guilty of both conspiracy and the object crime.
e. Wheel-type Conspiracy v. Chain-type Conspiracy
i. Both require knowledge that other co-conspirators participated, even without
knowing their identities.
ii. Chain – Each participant in chain conspiracy is a link in the same chain
iii. Wheel – Different spokes all connected by the same rim.
f. Co-conspirators are only those who participate in the same conspiracy, act or transaction
or same series of actions or transactions constituting an offense(s).
i. Gov’t can often use conspiracy to criminalize conduct not otherwise subject to
prosecution (civil offenses) as well as to increase penalties for minor crimes.
ii. An overt act will interrupt the statute of limitations (prescription) for conspiracy on
all co-conspirators, up to 5 years after the last overt act.
iii. FRE 801(d)(2)(E) – statements offered against an opposing party, made by the party’s
co-conspirator during and in furtherance of the conspiracy.
g. Mens Rea
i. Must knowingly and intentionally enter an agreement to achieve illegal objectives
ii. And intend to achieve those objectives.
iii. Sometimes if the defendant consciously avoided knowledge of the scheme’s illegality
the mens rea will still be satisfied.
h. Withdrawal
i. US v. Gypsum – requires affirmative acts inconsistent with the object and
communicated in a manner reasonably calculated to reach coconspirators.
ii. Will be considered ineffective if defendant continues to benefit from conspiracy.
i. Corroboration
i. In federal practice there is no rule preventing conviction on uncorroborated testimony
of accomplices.
ii. Most courts now require the gov’t to corroborate co-conspirator’s statement that there
was indeed a conspiracy in the first place.
j. Complicity – Aiding and Abetting
i. Can be guilty of the substantive crimes committed by principal.
ii. Actus reus – aided or abetted principal’s commission of crime.
iii. Mens rea – acted with purpose to aid or abet, AND with purpose that principal could
commit object crime.
iv. MPC §2.06
1. A person is guilty of an offense if it is committed by his own conduct or by
the conduct of another person for which he is legally accountable, or both.
2. A person is legally accountable for the conduct of another person when:
a. Acting with the kind of culpability that is sufficient for the
commission of the offense, he causes an innocent or irresponsible
person to engage in such conduct; or
b. He is made accountable for the conduct of such other person by the
Code or by the law defining the offense; or
c. He is an accomplice of such other person in the commission of the
offense.
3. A person is an accomplice of another person in the commission of an offense
if:
a. With the purpose of promoting or facilitating the commission of the
offense, he
 i. Solicits such other person to commit it, or
ii. Aids or agrees or attempts to aid such other person in planning
or committing it, or
iii. Having a legal duty to prevent the commission of the offense,
fails to make proper effort so to do; or
iv. His conduct is expressly declared by law to establish his
complicity.
v. Not an accomplice:
1. Victim is not an accomplice
a. Statutory rape, deceitful bigamy, unlawful sale, etc.
2. When offense is so defined that his conduct is inevitably incident to its
commission;
3. When he terminates complicity prior to commission;
k. Difference between conspiracy and complicity
i. Conspiracy is an agreement to participate in wrongful activity
ii. Complicity (Aiding & Abetting) is knowingly giving substantial assistance to
someone who performs wrongful conduct – doesn’t necessarily agree to participate in
the wrongful conduct.
1. Substantive offense must be completed, and the accused must take some
action toward associating herself with the venture – knowing assistance.
iii. Substantive offense in a conspiracy need not be completed.
l. Kotteakos v. US (1946) – Wheel conspiracy – if ∆s are charged as co-conspirators when they
are really parts of separate conspiracies, should their convictions be overturned?
i. Insurance fraud
ii. Ct. held treating many conspiracies as one was too prejudicial. Guilt remains
individual and personal, not a matter of mass application.
iii. Trial court gave wrong charge to jury – confused the common purpose of a single
enterprise with the several, though similar, purposes of numerous separate ventures of
like character. It permitted the jury to find each defendant guilty of conspiring with
35 other potential co-conspirators, when none of the evidence would support such a
conviction.
iv. Dissent – in cases of such complexity, the jury is likely to be confused by the number
of defendants and complexities of the case and evidence relating to one may be used
to convict another. This wasn’t what happened here.
m. Pinkerton v. US (1946) – Is A’s entrance into conspiracy sufficient to make A liable for
substantive crimes in furtherance committed by B even if A didn’t know about those crimes
because he was in jail at the time?
i. Walter and Daniel Pinkerton – conspiracy to commit tax fraud; Walter continued to
commit tax fraud while Daniel was in jail; Daniel did not participate in or even know
about these later offenses.
ii. Daniel’s conviction affirmed; he was still liable for later substantive crimes
committed by his co-conspirator Walter.
iii. No evidence of affirmative action to establish withdrawal from conspiracy. Overt act
of one may be attributed to all co-conspirators all as long as the conspiracy continues.
iv. It would be different if the later crimes were not done in furtherance or not within
scope of the conspiracy.
v. Dissent – this is double jeopardy, because it punishes him twice for the same act, or it
punishes him for crimes he did not commit and could not (probably) have
substantively assisted.
 n. Krulewitch v. US (1949)
i. Krulewitch and alleged co-conspirator had induced complaining witness to go from
NY to FL for prostitution.
ii. Complaining witness testified to a conversation with the co-conspirator, about them
taking the blame instead of K.
iii. Whether the witness’s testimony was inadmissible hearsay? It was hearsay, not made
in furtherance of the objectives of conspiracy because it was after the objective
(transportation for purposes of prostitution) had either failed or had achieved.
o. US v. Svoboda (2003)
i. Conscious avoidance doctrine – deliberate or willful ignorance can qualify as
knowledge. Can be used to substitute knowledge for mens rea, but not sufficient for
intent.
ii. Robles denied knowledge of the unlawful source of Svoboda’s information.
iii. Conscious Avoidance doctrine can be used in the course of establishing a
conspiratorial agreement between two persons. Must (1) deny knowledge and (2) be
aware of a high probability of the fact in dispute and consciously avoided
confirming that fact.
p. 18 USC §371 – Conspiracy to commit offense or defraud
i. Two or more persons conspire to
1. Commit any offense against US or
2. Defraud the US or any agency thereof
ii. And one or more persons do any act to effect the object of the conspiracy.
q. US v. Arch Trading (1993)
i. Company trading in Iraq after President issued embargo orders.
ii. Convicted of conspiring to commit and offense against the US – argued that they
could only be charged with conspiring to defraud the US because violations of
executive orders is not an “offense.”
iii. When Congress provides criminal sanctions for violations of executive orders the
President is empowers the President to issue, which violations constitutes an offense
for the purpose of the statute.
iv. Defraud – to cheat gov’t out of property or money, but also to interfere with or
obstruct one of its lawful functions by deceit, craft, or trickery, or at least by means
that are dishonest.
v. Not necessary that gov’t suffers loss of property or money, just that its legitimate
actions be defeated by misrepresentation, etc....
r. US v. Jimenez Recio (2003)
i. Does a conspiracy end as a matter of law when the government frustrates its
objective, or when the object of the conspiracy becomes impossible to achieve? Feds
interdicted two drug trucks and set up a sting using them.
ii. Court says conspiracy doesn’t contain any automatic termination rule. The evil is the
agreement to commit an unlawful act, distinct from the substantive crimes
themselves.
iii. Dangers remain when the police have frustrated the specific objective, but the
conspirators have neither abandoned nor withdrawn from the conspiracy.
iv. More traditional automatic termination rule threatened endless liability.

IV. Chapter 4. Mail and Wire Fraud (pp. 83-138)

a. 18 USC §1341 – fraud by mail
i. Any one who devises any scheme or artifice to defraud, or
 1. for obtaining money or property by means of false or fraudulent pretenses,
representations, or promises,
2. counterfeit stuff,
ii. places in any post office or mail depository, any thing to be sent or delivered by the
Postal Service, or to be sent of delivered by any private or commercial interstate
carrier,
iii. or takes or receives therefrom any such matter or thing,
iv. or knowingly causes to be delivered by mail or such carrier any such matter or thing
b. 18 USC §1343 – fraud by wire, radio or tv
i. devised scheme or artifice to defraud, etc., etc.
ii. transmits or causes to be transmitted by means of wire, radio or television
communication in interstate or foreign commerce, any writings, signs, signals,
pictures, or sounds...
c. Elements
i. 1. ∆ engaged in scheme to defraud,
ii. 2. acted with specific intent to defraud,
iii. 3. Scheme resulted (or would have) in loss of money, property, or honest services.
iv. 4. US mail, private carrier, interstate/nat’l wires used in furtherance, and ∆ used or
caused the use of the mail/wires/courier.
v. Inchoate crimes – don’t need to be completed, just the mailing or wire transmission.
vi. Favorite tool of federal WCC prosecutors, because broad and flexible.
1. Grounded in Postal clause (Art 1, §8) and Commerce Clause (Art 1 §8)
vii. Courts split on whether mail fraud requires convergence (ie, that the party that ∆
intended to deceive is same party that is deprived of money or property).
d. US v. Regent Office Supply (1970)
i. Aggressive sales tactics by office supply co. (Queue “Boiler Room” clip)
ii. Can false representations which go not to quality of the product qualify as fraud?
iii. Reversed – There was intent to deceive, but no intent to defraud (fraud in the
inducement, no fraud in the factum; dolus bonus).
e. Lustiger v. US
i. Prospective Real estate customers told in mailing that there was a lake available only
5 miles from the property; which was true as the crow flies, but driving distance more
like 15-40 miles away on rough roads.
ii. Affirmed – statements in advertisements were not literally false, but taken as a
whole were fraudulently misleading and deceptive.
f. Neder v. US (1999) – scheme to defraud must include a material deception. Common law
holds must be a misrepresentation of material fact.
i. Objective – whether a reasonable person would attach importance to existence/non-
existence of the fact.
ii. Subjective – know/reason to know the recipient would think it important in making
his choice of action.
g. US v. Brown (1996) – Customer could easily determine relevant market prices.
i. Reasonable person would be fooled; not a material misrepresentation, since it was
about something which the customer should, and could easily confirm from readily
available external sources.
h. US v. Svete (2009) overruled Brown and held that mail/wire fraud could occur even if
misrepresentation would not fool a reasonable person and was missing the objective prong.
i. McNally v. US (1987)
 i. Does a public official’s or private individual’s participation in a self-dealing
patronage scheme defraud the citizens and government of certain “intangible rights”
such as honest services?
ii. Court said intangible rights not covered in statute, limited in scope to property rights.
If Congress wants to expand it should do so more clearly.
j. Carpenter v. US (1987)
i. Does a newspaper have a property interest in confidential business information prior
to publication even if no monetary loss results from leaks?
ii. The paper did have a property right in keeping confidential and making exclusive the
use, prior to publication, of the schedule and contents of the column.
iii. Intangible nature of the information does not make it any less property protected by
mail and wire fraud statutes.
iv. Circulation of the column was not only anticipated but an essential part of the
scheme, without which there would be no effect on stock prices and therefore no
possibility of profiting from the leaked information.
v. Arguments: Property right in the exclusive use of confidential information; McNally
not limited to tangible property, could include intangible; he had a fiduciary
obligation not to misuse/disclose WSJ’s confidential information.
k. Prof. Coffee criticizes Carpenter
i. Chill employee mobility
ii. Increase social control over employees.
iii. View of confidential information as property is historically unsound and inconsistent
with trade secret law, and trivializes McNally as precedent.
l. McNally vs. Carpenter – McNally is not clear that mail and wire fraud covers intangible
property rights, while Carpenter says that they cover at least one intangible: confidential
business information.
m. Right to Control Theory
i. US v. Catalfo (7th Cir. 1995)
1. Purchase of treasury bond puts and sale of treasury futures making money off
anticipations of market fluctuations. ∆ defrauded his clearing house of the
“right to control its risk of loss.”
ii. US v. Gray (4th Cir. 2005)
1. Lady kills husbands to collect their life insurance policies. Gov’t need not
prove monetary loss, enough to prove loss of “right to control the disposition
of its assets” as trustees of the policies.
n. US v. Evans (2d Cir. 1988)
i. Motions to dismiss granted, because court thought that convergence was required.
1. Convergence – the party that ∆ intended to defraud is the same party that is
deprived of money or property.
ii. Courts are split as to whether mail fraud requires convergence.
iii. The Supreme Court did not address this in McNally, but it seems logical that if a
scheme to defraud must involve the deceptive obtaining of property, the deceived
party must lose some money or property.
iv. Laws restricting/regulating the sale/resale of an item does not create a gov’t property
interest/right in the item.
o. Cleveland v. US (2000)
i. Is a video poker permit/license in the hands of the state property?
ii. No. Statute requires the object of the fraud to be property in the hands of the
victim.
 iii. State doesn’t own the license, nor does it sell them in the commercials sense – state is
not a franchisee in the gaming industry, and the right to regulate is not a property
interest.
p. Pasquantino v. US (US 2005)
i. Smuggling liquor into Canada without paying taxes. Canada is being defrauded. So
what? Using local wires to defraud, doesn’t matter who you’re defrauding. The
unpaid taxes is property in Canada’s hands.
q. Congress amended §1346 to include “intangible right of honest services” to legislatively
overrule McNally.
r. US v. Czubinski (1st Cir. 1997)
i. Dude accessing IRS taxpayer info, charges with defrauding IRS of property in
confidential info and honest services.
ii. Misconduct not serious enough, not on level of scheme to defraud.
iii. No proof that ∆ intended to deprive the IRS of their intangible property interest in
confidential information; under §1343, some articulable harm must befall the
information holder, or some gainful use must be intended by the person accessing the
information.
iv. Need foreseeable use of wire transmissions (but this is not quite right, mail/wires
must actually be used, not just foreseeably used).
v. Gov’t did not prove that Czubinski deprived, or intended to deprive, the public or his
employer of their right to his honest services.
vi. Don’t transform gov’t workplace violations into felonies.
s. Some circuits have a private gain requirement for honest services fraud – but the 10th Cir.
doesn’t hold with this. US v. Welch (10th Cir. 2003) – Intent to defraud does not depend on
intent to gain, but rather on the intent to deprive.
t. US v. Rybicki (2d Cir. 2003) – Court holds “honest svc” statute constitutional.
i. Use materiality test (misrepresentation must be material such that it is capable of
leading a reasonable employer to change its conduct) instead of reasonably
foreseeable test (reasonably foreseeable that the scheme could cause some non-de
minimis harm)
ii. Material misrepresentation is an element of the crime.
iii. Foreseeable economic harm is not necessary when determining whether he breached
a fiduciary duty.
iv. US v. Milanovic – 9th Cir joins 2, 5, 8, 10 in employing the materiality test.
v. Dissent – how can the public be expected to know what the law means if they have to
be judges and lawyers to construe it?
u. Schmuck v. US (1989)
i. Do mailings that occur after the fraud and do not further it satisfy the mailing element
of mail fraud?
ii. Court held that the mailings don’t have to be essential, just incident to an essential
part of the scheme. Scheme required the mailing to keep the fraud going.
iii. Dissent – it’s mail fraud, not mail and fraud.
v. Even if the use of mail/wire occurs after fraud is complete, it can still be in furtherance of the
fraud, if it was designed to lull the victim into a false sense of security. US v. Lane.
w. US v. Walters (7th Cir. 1993) – Sports agent signing college players to post-dated contracts.
Mailing was not essential to his scheme; distinguishable from Schmuck. He didn’t know the
Universities would mail the forms to the Conferences.

V. Chapter 5. Securities Fraud

a. Modes of enforcement – SEC may bring admin investigation or civil suit; private parties may
bring civil suit; DOJ may bring criminal suit.
b. 15 USC §78
i. Crime to commit a willful violation of the statute or any rules/regulations adopted
under the statute.
c. 1933 Act
i. 15 USC 77(q)(a) – Fraudulent Interstate Transactions
1. Unlawful, in sale of securities,
a. to employ any device scheme or artifice, or
b. obtain money or property by means of
i. an untrue statement of material fact or
ii. an omission to state a material fact; or
c. to engage in any transaction or course of business which operates as a
fraud or deceit on the purchaser.
d. 1934 Act
i. Rule 10(b) – 15 USC 78(j) – Manipulative/deceptive devices
1. Unlawful by the use of any means of interstate commerce, to effect a short
sale, use or employ any stop-loss order in connection with purchase or sale of
any security in contravention of such rules and regulations as the Commission
may prescribe.
a. Short sale being a sale of futures not owned by the seller – seller hopes
to buy them back later at a lower price.
b. Security futures being a standardized contract to buy or sell at a set
future date at an agreed price.
2. To use or employ any manipulative or deceptive device or contrivance in
connection with the purchase or sale of any security...
ii. Rule 10b-5 – 17 CFR 240.10b-5
1. ∆ willfully
a. Engaged in fraudulent scheme, or
b. Made a material misstatement or
c. Omitted material information to one to whom ∆ owed a duty;
2. Scheme occurred in connection with sale/purchase of security
e. Insider Trading
i. Trading securities or stocks on the basis of nonpublic secret information.
ii. Traditional/Classical Theory
1. Corporate employee take information from the corporation and uses it to trade
in the corporation’s stock, in violation of duty to corp and shareholders.
iii. Misappropriation Theory
1. Anyone who steals confidential information in violation of a duty and uses the
information to buy or sell securities.
iv. 10b/10b-5 Elements of Insider Trading
1. ∆ bought or sold securities
a. insider/temporary insider of company whose securities were traded; or
b. misappropriator of information from a person to whom ∆ owed a
fiduciary duty
2. knowingly possessed material, nonpublic information
3. acted willfully
v. Chiarella v. US (1980) – Printing co. employee who trades on unannounced takeover
bids. Did he have a fiduciary duty to disclose? No.
 1. When an allegation of fraud is based on non-disclosure, there can be no fraud
absent a duty to speak.
2. Duty to disclose comes from relationship giving access to inside information
available only to corporate decision makers and the unfairness of allowing an
insider to take advantage of that information.
3. Majority goes for classic theory – must have a fiduciary relationship to target
company
4. Minority goes for misappropriation theory – anyone who gets the info has a
duty. He misappropriated the info...knew it was insider info when he got it,
inherently unfair and at the heart of what the statute was designed to stop.
vi. The threat of a random audit of executives’ trades and a standing offer of rewards for
whistleblowers are pretty much the only tools the SEC has had to keep traders honest.
vii. The use of computers to analyze trading activity in relation to major events like
earnings reports and mergers is called complex events processing.
viii. US v. O’Hagan (1997) – Partner at firm representing company negotiating a tender
offer for Pillsbury, traded on the information. Court held he could be charged under
the misappropriation theory.
1. Misapp. covers breach of duty by outsider to the source of information. Uses
deception, harms the source, is what the statute is designed to cover.
2. Classic covers breach of duty by insider to the shareholders.
ix. US v. Cassese (S.D.N.Y. 2003) – Is knowledge that information relates to a tender
offer necessary for liability under Rule14e-3(a)?
1. Knowledge is not a requirement for liability in criminal or civil cases, but ∆
must have a realization of wrongful conduct under the securities laws.
x. Tippee Liability
1. Dirks v. SEC (1983) – Does a tippee who received nonpublic information
have a duty to disclose?
a. Investment analyst investigates company and blabs about the findings,
the people he told sell their holdings.
b. Tippee can acquire a duty by knowing that he got the info improperly
(no general tippee liability).
c. SEC v. Switzer – tippees who traded on information overheard in
insider’s conversation were not liable.
2. What if the tipper is also the misappropriator? Tipper who misappropriates
and shares without motive to profit – no liability. But tippee could be liable
because of O’Hagan.
xi. “On the basis of” – purchase or sale “on the basis of” material nonpublic info means
that the person is aware of the material nonpublic info when he made the purchase or
sale.
1. Defense to show that before he became aware, he already had a binding
contract to buy or sell, already instructed a broker to buy/sell, or adopted a
written plan for the trade.
2. US v. Tarallo (9th Cir. 2004)
a. Does willfulness require knowledge of unlawfulness or only
knowledge of wrongfulness? All that’s necessary is knowledge of
wrongfulness of conduct.
b. Reckless disregard for truth or falsity, or must ∆ actually know?
Reckless disregard is sufficient.
 c. Sufficient for a fine, but for imprisonment, must also have knowledge
of illegality.
xii. Materiality
1. TSC v. Northway (1976) – Rule 14a: No proxy contest where
misrepresentation of material fact. Omitted fact is material if substantial
likelihood that a reasonable shareholder would consider it important. (ie,
would it alter the total mix?)
2. Basic v. Levinson (1988) –
a. Lower Ct said that denying the merger discussions made them material
because they make the statement/denial untrue.
b. Court said materiality depends on the probability of the transaction
being consummated. When unclear, case-by-case determination.
When clear, TSC controls.

VI. Chapter 7. Bribery and Gratuities

a. 18 USC §201(b) – Bribery of public officials and witnesses
i. whoever directly or indirectly, corruptly gives, offers or promises to give
ii. anything of value to any public official
iii. with intent
1. to influence any official act
2. to influence a public official to commit or collude in or allow fraud
3. to induce a public official to do or omit any act in violation of the lawful duty;
iv. being a public official who corruptly demands, seeks, receives, accepts or agrees to
accept anything of value in return for
1. being influenced in the performance of any official act
2. being influenced to commit or aid in committing any fraud
3. being induced to do or omit to do any act in violation of official duty
b. 18 USC 201(c) – Gratuities
i. whoever gives offers to give, promises anything of value
1. for or because of any official act performed or to be performed
ii. or public official demands, seeks, etc anything of value
1. for or because of any official act performed or to be performed
c. US v. Sun-Diamond Growers of Cal. (1999) – distinguishing feature is intent element.
i. Bribery requires intent “to influence” an official act
1. i.e., quid pro quo
ii. Gratuity requires only that it be given or accepted “for or because of” an official act.
1. i.e., reward for some act
d. US v. Williams – can include things believed to be valuable but later turn out worthless.
e. US v. Parker – normally means act within the scope of the official’s duties or authority, but
could include something “in connection with” official acts.
f. US v. Arroyo (7th Cir. 1978) – What if the bribe is given but the act to be influenced has
already been performed? Still bribery.
i. Bribes are paid and solicited in exchange for what the payer believes he is paying for.
Thus, will always create the impression that the action sought is yet to come and
contingent on the bribe.
ii. Influenced “in the performance,” NOT being influenced “to perform.”
g. Bribery is to get the official to put someone above their status quo.
h. Extortion is to keep the official from putting them below their status quo.
i. Harm
 i. Bribery impairs integrity of official performance of duties.
ii. Gratuities – deprives public of honest services?
j. Dixon v. US (1984) – kickbacks from contractors doing work with federal HUD funds.
i. Argued they weren’t public officials, as employees of a subgrantee of organization
that dispensed the federal block grants.
ii. They were essentially federal agents, and possessed some degree of official
responsibility for carrying out a federal program or policy.
iii. Proper inquiry is whether the person occupies a position of public trust with official
federal responsibilities.
k. US v. Sun-Diamond (1999) – Does conviction for gratuities require showing it was given
because of recipient’s official position, or because of specific official acts?
i. Trade Assn had been giving illegal gratuities to SecAg. Indictment didn’t allege
specific connection btw gifts and policy action of the Sec.
ii. Held: there must be a link btw the gift and the specific official act. Absurd to
criminalize token gifts and normal free stuff.
l. 18 USC §666 – theft/bribery concerning programs receiving federal funds
i. Bribed Party (Bribee)
1. Solicited or received a thing of value;
2. Agent of private organization/state gov’t/state agency that got at least $10,000
per year of federal funds;
3. Solicited in connection with business of the entity valued at $5,000 or more;
4. Acted corruptly.
ii. Bribing Party (Bribor)
1. Offered or gave a thing of value;
2. Agent of private org/state gov’t receiving at least $10,000 of federal funds;
3. Offered in connection with business valued at $5,000 or more;
4. Acted corruptly.
m. Programs getting at least $10,000 per year.
i. Fischer v. US – medicare payments qualify
ii. Salinas v. US – gov’t not req. to prove that bribes led to misapp/misuse of federal
funds; fed funds don’t necessarily have to be affected to violate.
n. Sabri v. US (2004) – Sabri bribing councilman Herron and offering him kickbacks on comm.
devel. grant moneys.
i. §666 reaches beyond punishment of state and local gov’ts who receive those funds to
proscribe the conduct of third persons who aren’t parties to the funding contract.
ii. Not every bribe is traceably skimmed from federal funds.
iii. N&P clause allows congress to not let federal funds be frittered away on graft.

VII. Chapter 8. Extortion

a. 18 USC §872 – extortion by officers or employees of the US
i. Officer or employee of United States or representing himself as such
ii. Under color or pretense of office
iii. Commits or attempts an act of extortion
b. 18 USC §1951 – Hobbs Act
i. whoever obstructs delays or affects commerce by robbery or extortion
ii. attempts or conspires to do so,
iii. or commits or threatens physical violence to any person or property in furtherance of
such a plan.
iv. Robbery – unlawful obtaining of personal property against his will by means of
 1. Actual or threatened force
2. Violence or
3. Fear of injury immediate or future to person or property
v. Extortion means obtaining property from another with his consent, induced by
1. Wrongful use of actual or threatened force, violence or fear, or
2. Under color of official right
vi. [key difference between robbery and extortion. Robbery – “against his will;”
Extortion – “with his consent.”]
c. Scheidler v. NOW (2003) – anti abortion protestors sued for extortion, because they were
disrupting and interfering with functioning of the clinics, argued that controlling the
exclusive control of use and disposition of clinic’s assets was obtaining their property.
i. Stat – requires obtaining property from another – here there was not obtaining of
property.
ii. Beyond outer limits of statute; lenity.
iii. Dissent – Gotti case: it was extortion for a company to try to force someone out of
their job to get their guy in. Controlling right = obtaining.
d. Quid Pro Quo
i. McCormick v. US (1991) – WV rep gets cash payment from doctors during his
campaign, before their bill presented and again after their bill is passed didn’t list $ as
campaign contributions or as income.
1. Court says no showing that the donations were in return for en explicit
promise/undertaking, the quid pro quo has to be there.
2. Dissent – quid-pro-quo must be there but it doesn’t have to be explicit.
ii. Evans v. US (1992)
1. Is an affirmative act of inducement by public official an element of extortion
under color of official right?
2. No, the gov’t need only show that he obtained a pyt to which he was not
entitled, knowing the pyt was made in return for official acts. Affirmative
Act/demand/request was not an element at common law.
3. Public office can supply the coercive element/inducement (“under color of
official right”)
4. [Does this blurs the line btw bribery and extortion? Remember the distinction
is about the baseline; it can still be extortion when instead of a threat, the
coercive element is the public office itself.]
iii. McCormick – quid pro quo req for all campaign contribution cases, must be explicit.
iv. Evans – quid pro quo need not be explicit; may be required for all color of official
right cases...
e. US v. Garcia (2d Cir. 1990) – they said they paid Garcia’s wife out of fear...
i. No evidence that Garcia’s created any feeling of fear; they paid them to ensure they
would receive special, preferential treatment; purchasing an advocate, not buying off
a thug.
ii. Gov’t must prove the victim reasonably believed the ∆ had the power to harm them,
and would exploit that power to the victim’s detriment.
iii. Wedtech not risking the loss of anything it was legally entitled to.
iv. [They were paying not keep from being harmed, but to get themselves above the
baseline...how is this not bribery? Garcia was acquitted of bribery, so the appeal was
that the remaining claim had to be based on extortion by wrongful use of fear and not
under color of official right.]
VIII. Chapter 9. False Statements
a. 18 USC §1001 – Statements
i. Knowingly and willfully
ii. In any matter within the jurisdiction of the exec, jud, leg branch of gov’t of US
1. Falsifies, conceals, covers up by trick, scheme, or device
a. A material fact
2. Makes any materially false fictitious or fraudulent statement or representation
3. Make or uses any false writing or document knowing it contains falsity
b. §1001 Elements
i. Defendant made a statement
ii. Statement was false or fraudulent
iii. Statement was material
iv. Defendant acted knowingly and willfully
v. Statement was made in a matter within the jurisdiction of any branch of the US gov’t.
c. Two kinds of false statements
i. Lying to cover up illegal activities (incl. omission/nondisclosure)
ii. Attempt to defraud or disrupt gov’t functions
d. Judicial Exception – Does not apply to party or counsel in judicial proceeding.
i. Don’t want to criminalize conduct that falls within the bounds of responsible
advocacy (i.e., pleading not guilty, etc.)
ii. But lies in an administrative matters, bar admissions, probation, etc. may fall within
statute. US v. Manning.
e. Overlapping Crimes – overlaps with a lot of other crimes...where we talked about lesser-
included offenses (i.e., proof of crime B will always necessarily prove crime A; all core
elements of A are included in B).
f. Double Jeopardy
i. Blockburger test – defendant may not be punished for multiple crimes arising out of
one act if (1) one of the crimes is a lesser-included offense of the other, or (2)
Congress did not intend that both crimes be punishable.
ii. US v. Woodward (1985) – is making a false statement a lesser-included offense of
failure to report carrying over $5,000 into the US?
1. Answering “no” to question of whether he was carrying more than $5k into
the country formed the basis of each charge.
2. No Double Jeopardy  false stmt is not a lesser-included offense, because it’s
possible to violate the currency reporting statute without violating the false
statement statute.
g. US v. Rodgers (1984) – Do false claims filed with FBI and SS fall within “jurisdiction” as
per §1001?
i. Friedman – jurisdiction must be confined to include only the positive powers of an
agency, otherwise false stmts to FBI worse than perjury (absurd result).
ii. Court held that ordinary meaning of jurisdiction (power to exercise authority in a
given situation) is broad enough to include the FBI’s investigation of possible crimes.
h. False statement need not actually be submitted to the federal gov’t, just that they have a
natural tendency to influence a federal agency (includes indirect statements).
i. Exculpatory No Doctrine – falsely denying wrongdoing does not fall within §1001 (circuits
had been applying...)
i. Brogan v. US (1998) – Court says no; 5th amendment doesn’t confer a privilege to
lie, just a privilege to remain silent.
 1. Ginsburg concurs because of text of statute, but worries that an answer which
misled no one led to a felony, and because feds could escalate completely
innocent conduct into felonies.
j. Inference of guilt from silence – Pre-arrest silence may be used against a defendant, if he did
not explicitly invoke his 5th Am privilege against self-incrimination.
k. False Promise = false statement? Yes because promise is expression of present intent.
l. Implied false statement = false statement?
i. US v. Williams – no; false check is not false stmt.
ii. US v. Blankenship – no; contract is not a stmt, cannot be either true or false.
m. Concealment
i. US v. Safavian (DC Cir. 2008) – does a gov’t employees failure to volunteer relevant
information constitute concealment of a material fact?
1. He inquired with ethics as to whether he could accept airfare to Scotland
gratis, told them that Abramoff had no business with GSA, omitted the
communications about the two properties because there was no contract that
resulted from them.
2. Court held that he had no legal duty to disclose. Voluntary ethics advisory
opinion doesn’t impose a duty to disclose under §1001.
ii. Court hold that a literally true statement, even if misleading, cannot be basis for
conviction under §1001.
n. Mens Rea – Specific intent to deceive, plus knowing and willfully.
i. Knowing – knowledge that conduct is unlawful; knowledge that statement is false.
ii. Willfully – means intentionally; knowledge that this kind of conduct is generally
unlawful.
iii. Specific Intent – required for §1001; proof of knowledge that stmt was false is strong
circumstantial evidence of specific intent.
1. Concealment requires proof of (a) knowledge of duty to disclose, and (b)
intentional failure to do so.
iv. Knowingly – prove that stmt was false; actual knowledge or intentional/reckless
avoidance.
v. Constructive Knowledge – willful ignorance of high probability that statement was
false.
o. US v. Yermian (1984) – §1001 does not require knowledge that statement is being made or
relayed to federal gov’t (strict liability).
i. Oakar – Yermian suggests that §1001 might reach situations of fortuitous federal
involvement.
p. Materiality – gov’t not required to prove stmt actually influenced or deceived the gov’t body
or agent. Gaudin. Only that it has the capacity to deceive.

IX. Chapter 10. Perjury and False Declarations

a. 18 USC §1621 – perjury
i. Whoever takes an oath before a competent tribunal to testify truthfully and
1. willfully and contrary to oath states any matter which he doesn’t believe true;
or
ii. in any declaration under penalty of perjury and
1. willfully subscribes as true any matter he doesn’t believe to be true;
b. 18 USC §1623 – False declaration before grand jury or court
i. Under oath
1. In any proceeding before or ancillary to
 2. Any court or grand jury
3. Knowingly makes any false material declaration
4. Makes or uses any other information, knowing it to contain false material
declaration
c. §1621 Elements
i. Defendant took an oath
ii. Before a competent tribunal, officer, or person
iii. Oath was administered in a case in which federal law allowed oaths
iv. Defendant made a false statement
v. Statement was material to the proceedings
vi. Defendant acted willfully and with knowledge of falsity.
d. §1623 Elements
i. Defendant took and oath
ii. Oath was administered before or ancillary to a court or grand jury proceeding
iii. Defendant made a false statement (or used false information)
iv. The statement was material to the proceeding
v. Defendant knew the statement was false.
e. It is a defense to an indictment that the ∆ believed the declaration was true at the time.
f. Both subject to the defense of recantation – if it hasn’t
i. substantially affected the proceedings, or
ii. become manifest that the falsity has been or will be exposed.
g. Dunn v. US (1979) – what is scope of “ancillary proceeding?”
i. Interview and sworn statement in a private atty’s office? NO.
ii. Proceeding means something more formal than merely a sworn statement
h. Bronston v. US (1973) – falsity
i. Literally true but unresponsive and arguably misleading answer does not qualify as a
falsity.
i. US v. Chestman (2d Cir. 1990)– two-witness rule
i. Two-Witness rule requires two independent witnesses or one witness and
corroborating evidence that is inconsistent with innocence.
ii. Corroborative evidence (1) if true, substantiates the testimony of a single witness who
has sworn to the falsity and (2) the trustworthiness of the evidence.
j. US v. Smith (8th Cir. 1994) – Is “or” disjunctive (“or”) or conjunctive (“and”)?
i. For recantation, must you prove both substantial affect or falsity exposed, or just
either.
ii. Court held that under the statute, “or” has its ordinary disjunctive meaning and sets
for two alternative conditions.
k. ABA Model Rules of Professional Conduct
i. Rule 1.6 – Confidentiality
1. Lawyer shall not reveal information relating to representation unless
a. Client gives informed consent
b. Disclosure is impliedly authorized
c. Permitted by paragraph (b).
2. Except as reasonably believed by lawyer necessary
a. To prevent death or substantial bodily harm
b. Prevent client from committing a crime or fraud
c. To prevent mitigate or substantially rectify injury to property or
financial interests of another
d. To secure legal advice re: lawyer’s compliance with these Rules
 e. To establish a claim or defense on behalf of the lawyer...
f. To comply with other law or court order.
ii. Rule 3.3 – Candor toward the Tribunal
1. Shall not knowingly
a. Make a false statement of fact or law to a tribunal
b. Fail to correct a false statement of material fact or law previously
made to the tribunal by the lawyer
2. Shall not knowingly
a. Fail to disclose to the tribunal legal authority in the controlling
jurisdiction known to the lawyer directly adverse to the client’s
position and not disclosed by opposing counsel.
b. Offer evidence that the lawyer knows to be false; must take reasonable
remedial measures; may refuse to offer evidence other that testimony
of a defendant in a criminal matter, that the lawyer reasonably believes
to be false.
3. Seek to persuade the client not offer false evidence.
4. Only applies to evidence the lawyer knows to be false, reasonable belief
doesn’t cut it.

X. Chapter 11. Obstruction of Justice

a. Criminalization of efforts to interfere with federal judicial, administrative, and legislative
proceedings. Ex: destroying or altering evidence, procuring false testimony, threatening
witnesses, jurors, etc.
b. 18 USC §1503 – Influencing or injuring officers or jurors
i. Whoever
1. Corruptly, or by threats or force, or by any threatening letter or
communication, endeavors to influence, intimidate, or impede
2. Any grand or petit juror, officer in any court of the US, or magistrate judge in
the discharge of his duty
3. Or injures any such grand or petit juror in his person or property on account of
any verdict or indictment assented to by him,
4. Or injures any such officer, magistrate judge or other committing magistrate
in his person or property on account of the performance of his official duties,
5. Or corruptly...influences, obstructs, or impedes, or endeavors to such, the due
administration of justice.
c. 18 USC §1505 – Obstruction of proceedings before depts., agencies, committees
i. Whoever, with intent to avoid, evade, prevent, or obstruct compliance with any civil
investigative demand under Antitrust Civil Process Act,
ii. Willfully withholds, misrepresents, removes from any place, conceals, covers up,
destroys mutilates alters or by other means falsifies any documentary material,
answers to written interrogatories, or oral testimony, which is the subject of such
demand;
iii. Or attempts to do so or solicits another to do so; or
iv. (Omnibus Clause) whoever corruptly influences, obstructs or impedes or endeavors to
such the due and proper administration of the law under which any pending
proceeding is being had before any dept. or agency of the United States.
d. Elements of Omnibus Clauses
i. ∆ acted with corrupt intent
ii. endeavored to interfere with a judicial/administrative/congressional proceeding
 iii. Nexus between endeavor and proceeding
iv. Proceeding was actually pending at time of endeavor
v. ∆ knew that proceeding was pending.
e. NB: Sarbanes-Oxley Act eliminated #4 – pending at time of endeavor.
f. 18 USC §1512 – Tampering with a witness/victim/informant
i. Whoever kills or attempts to kill another, with intent to
1. Prevent their attendance/testimony at an official proceeding
2. Prevent production of record/document/other object in an official proceeding
3. Prevent their communication with a law enforcement officer or judge relating
to the (possible) commission of a federal offense/probation or parole
violation/release pending judicial proceedings
ii. Whoever uses physical force to threat thereof (or attempts to) against any person with
intent to
1. Influence/delay/prevent their testimony in official proceeding
2. Cause/induce anyone to
a. Withhold testimony/record/document/other object
b. Alter/destroy/mutilate/conceal an object with intent to impair the
integrity/availability of the object
c. Evade legal process summoning him to appear as witness/produce
record/document/other object
d. Be absent from an official proceeding to which he has been summoned
by legal process
3. Hinder/delay/prevent his communication to LEO or judge information relating
to (possible) commission of offense/violation of probation or parole
conditions/release pending judicial proceedings.
iii. Also covers knowingly using intimidation, threats, corrupt persuasion, with intent for
above, or corruptly doing any of those things, or intentionally harassing another and
thereby accomplishing the above,
g. It is an affirmative defense that the conduct was solely lawful and defendant’s sole intention
was to encourage, induce or cause the other to testify truthfully.
h. Proceeding need not be pending.
i. Testimony/Object need not be admissible evidence or free from privilege.
j. Don’t have to prove state of mind of ∆ as to what kind of judge/court the proceeding is
before (i.e., district, bankruptcy, magistrate judge, gov’t agency, etc.)
k. Extraterritorial federal jurisdiction over an offense under this section – can be brought where
the proceeding was intended to be affected or where the conduct occurred.
l. Corrupt intent requires ∆ to have contemplated an official proceeding.
m. US v. Aguilar (1995) – §1503 does not punish false statements made to potential grand jury
witnesses.
i. Must have nexus between agents and grand jury – intent to influence grand jury
proceedings.
ii. ∆ must know that actions likely to affect the judicial proceeding.
iii. Endeavor suffices – need not be successful.
n. Perjury and Obstruction?
i. Convictions for both perjury and obstruction do not violate double jeopardy, under
the Blockburger test.
ii. Perjury can satisfy the actus reus of obstruction.
iii. Obstruction can = perjury + intent to obstruct.
 o. US v. Fulbright (9th Cir. 1997) – conviction under 1503 requires the gov’t to prove the
existence of a judicial proceeding.
i. Dicta – although he had recused himself from this particular case, he had other
pending cases and was therefore engaged in the discharge of his duties. Also, judge’s
duties do not end immediately after sentencing because there are still post-sentence
appeals and motions.
p. Court proceedings begin with filing, and end when time for appeal has lapsed or been
exhausted.
q. Grand Juries – do they begin (a) with gathering of evidence, or (b) when the grand jury
initiates the investigation? Ancillary proceedings independent of the court’s/grand jury’s
authority does not qualify.
r. Jury presented with a legally impermissible alternative – reversal
s. Jury presented with a factually deficient alternative – no reversal
t. Mens Rea
i. Arthur Anderson v. US (2005) – reversed AA’s conviction for flawed jury
instructions.
1. Knowingly is normally associated with awareness, understanding or
consciousness.
2. Corruptly is normally associated with wrongful, immoral, depraved, or evil.
3. Only persons conscious of wrongdoing can be said to knowingly corruptly
persuade.
4. Must have nexus – knowledge that action will likely affect judicial
proceedings  intent to obstruct.
u. Statute doesn’t prohibit lawful, bona fide, legal representation services in
connection/anticipation with official proceedings.
v. US v. Cintolo (1st Cir. 1987) – lawyer joined the ongoing criminal enterprise and adopted it
as his own, advised witnesses to refrain from testifying against his client to a grand jury. He
was convicted of obstruction.

XI. Tax Crimes (Prof. Hackney Guest Speaker)

a. Mens Rea: sometimes ignorance of the law can be a defense
b. Proof is much easier – signed tax returns from taxpayers
c. Can be used to get perps for other crimes where there is not enough evidence.
d. Penalties
i. more taxes
ii. criminal sentences
e. Why punish?
i. Deterrence, and to encourage other people to file their taxes.
ii. IRS goes after big names (Leona Helsmley, CEO of Beanie Babies, etc.)
f. Statutes
i. 26 USC §7201 – Tax Evasion
1. any person (corp, entity, etc.)
2. willfully
3. evade or defeat
4. felony
ii. 26 USC §7206 – Filing False Tax Return
1. willfully makes and subscribes document or return
2. signed under penalty of perjury
3. falsity was material (some courts hold it must be substantial underpayment)
 4. or aids/assists, procures counsel, advises in the filing of false return
iii. 26 USC §7203 – Failure to File a Tax Return
1. any person (w/ obligation to file)
2. failed to file a required return, pay a required tax, keep required records, or
supply required information
3. failed to act at the time the law specified
4. misdemeanor
g. US v. Shortt Acctcy. Corp. (9th Cir. 1986) – tax return preparer helped client purchase a
straddle position and backdate the purchase agreements.
i. Court holds that accounting firm liable for “making” a return under §7206(1) because
it’s a perjury statute.
h. Spies v. US (1943)
i. §7201 tax evasion. Petitioner admitted income and failed to file. He argued insanity,
so no willfulness.
ii. Court says willfulness includes some sort of evil motive, and want of justification to
make a tax evasion conviction.
i. Tax Gap – $400,000,000 estimated unreported taxes, out of estimated $1 trillion in US
Income Taxes paid every year.

XII. Sentencing (Prof. Bennardo Guest Speaker)

a. Legislature defines criminal conduct and gives range of punishment. Delegating courts
discretion to choose the sentence in that range.
b. 1800’s – originally there were mandatory sentences with no discretion to judge. Jury would
nullify if they didn’t agree.
i. Prosecutors decided whether and what charges to bring, and whether to plea bargain.
c. Early 20th C – legislature gave wide discretion to judges to prescribe penalties (i.e., 2-100
years). Parole board would make the sentence not reflect actual jail time.
i. Similarly situated ∆s were receiving very different sentences, based on identity of
sentencing judge, arbitrary or discriminatory factors.
ii. Rising crime and recidivism
iii. Legislature narrowed the sentencing ranges, with mandatory minimums, and issued
sentencing guidelines. In order to channel the discretion of sentencing judges,
legislature instituted appellate review of sentences. In some states they abolished
parole.
d. 1984 – US Sentencing Commission – created to promulgate sentencing guidelines.
i. Take the characteristics impt in determining sentencing and quantify them.
1. Offense level – how serious
2. Criminal history – recent pas criminal convictions
ii. These two elements on the chart gives you the sentence range.
iii. Judge cannot increase past the high end (i.e., beyond 25% of the low end).
e. Base level
i. At bare commission of each offense
ii. Specific characteristics of offense will add to or deduct from that base level.
iii. Adjustments for certain characteristics applicable to all crimes (bias-crime
motivation, role in offense, vulnerable victim).
f. Economic Offenses
i. Relatively low base level (< 10)
ii. Dollar amount of loss/gain drives up level (up to +30)
iii. Other enhances
 1. # of victims (+6)
2. jeopardize financial institution
3. violate securities law
g. Guidelines are advisory. Originally Congress made them mandatory, but then
i. US v. Booker (2005) – application of binding guidelines violates ∆s 6th Am trial by
jury right. Court made the guidelines advisory.
h. Courts must make an accurate guideline punishment on record; judge can impose based on
statutory purposes of punishment, and must explain reasons for specific sentence imposed.
i. Appellate review – reviewed for reasonableness, procedural and substantive.
i. Court may apply a rebuttable presumption of reasonableness to a within-guidelines
sentence.