BA 200 1st Edition Exam #2 Study Guide*This exam covers Chapter 8 Business Crime, Chapter 9 Business Torts & Chapter 19 EmployeeDiscrimination. There will be 70 multiple choice/true false questions. Chapter 8: Business Crime- What is Business Crime?o Corporate Crime, Also Called ‘White Collar Crime’, Occurs Because of Economic Pressure on Managers and Employees for Resultso The state vs. persono Intra-Business Crime (90%) Stealing from employers High cost of insurance and security Includes thefts and kickbackso Inter-Business Crime Stealing from competitors Acting illegally to gain a competitive advantage Electronic eavesdropping Federal violations—securities, campaign laws, antitrust- Liability for Crimeso Officers and Directors are Liableo If they authorized the conduct, oro If they knew about the conduct and did nothing- Federal Lawso Boesky and Milken: the Insider Trading and Securities Fraud Enforcement Act of 1988 (ITSFEA) o Savings and Loan Crisis: The “white-collar kingpin” lawo Enron et al.: Sarbanes-Oxleyo Subprime crisis: the Financial Services Reform Act, also known as the Dodd-Frank Wall Street Reform and Consumer Protection Acto White-Collar Kingpin Act Federal Law imposes minimum federal mandatory sentences on corporate officerso **Sarbanes-Oxley Act (2002) Criminal penalties increased Personal accountability enhanced Falsify financial records o Honest services fraud Action by an officer that deprives the shareholders of that officer’s honest services- Penalties o Reforming Criminal Penaltieso Concerned that they are directed at “natural” persons and not “corporate” personso Alternatives: Placing penalties as a percentage of company profits Monitors Prison sentences for officers and directors Use traditional criminal statutes Indictment for common law criminal offenses Shame Punishment- Business Crime Elements o Criminal Intent—Scienter or Mens Rea State of mind required to commit a crime No intent, no wrong doing  For corporations—prove intention on behalf of directors To prosecute, must show individual intent Can establish by showing their knowledge of actions and failure to objecto Examples of Crime Theft- Intent to take property- Actual taking of property for permanent use- No authorization to take the property Embezzlement- Intent to take property- Actual taking of property for use, temporary use is still crime- By person entrusted with property- Walmart employee stealing out of register  Criminal Fraud- Obtaining money, goods, services, or property through false on misleading statements- Requires intent to defraud- Racketeering (RICO)o Pattern of racketeering activityo Must have at least 2 consecutive violationso Offenses that qualify as predicate offenses include pornography, murder, kidnapping, bribery, extortion, fraud, etc.- USA Patriot Acto Business Crimes and the USA Patriot Acto $10,000 in cash limito Prior to 2001: Money Laundering Control Acto Post 2001: USA Patriot Act amended Money Laundering Control Act and Bank Secrecy Acto Cannot contract with terrorist groups or funnel cash to them for services (Chiquita Consider)-paying money to someone on the terrorist list - Procedural Rightso Fourth Amendment Rights: Privacy amendment Search warrant procedures- Must be based on probable cause- Must be issued by a disinterested magistrate- If searches are done improperly, evidence is inadmissible at trial- Exceptions to warrant requirement - Records are being destroyed- “Plain view” exceptiono Fifth Amendment Rights: Protection against self-incrimination Given to natural persons - not to corporations- Corporate officers can assert it to protect themselves but not corporate records Miranda warnings: - Given when individual is in “custody”- “Custody” means inability to leave—not necessarily jail - Right to attorney; right to silence—notice of evidentiary use of statementso Due Process Protections of Fifth Amendment:o Preliminary hearing or grand jury Hearing—information issued; defendant is present and can cross-examine witnesses Grand jury—indictment; secret proceedingso Arraignment:  Plea is entered Trial date is setChapter 9: Business Torts - Tort: a Civil Wrong That is an Interference With Someone’s Person or Property Such ThatInjury Resultso Latin Word Tortus: Means “Crooked, Dubious, Twisted”- Torts vs Crimeo Tort is a Private Wrong Injured party seeks remedy Recovers damages from the one who commits the torto Crime is a Public Wrong Wrongdoer is prosecuted Pays fine to government or is jailed to pay debt to society- Type of Torts:o Intentional Torts:  More than an accidental wrongo Tort of Negligence: Accidental harms that result from the failure to think through the consequences Still have liability but there are defenseso Strict Tort Liability: Absolute standard of liability Used in product liability cases- Defamationo Untrue Statement By One Party That is Published To a Third Partyo Slander is Oral or Spoken Defamationo Libel is Written, and in Some States Broadcast, Defamation  Elements:- Statement about a business’ or person’s reputation or honesty that is untrue- Statement is directed at business and made with malice and intent to injure- Publication - someone heard and understood the statement- Damages - economic losses such as damage to reputation Defenses:- Truth is a complete defense- Privileged speech: three typeso Absolute privilegeTestimony under oath and legislative debate (solong as related to the matter at hand)o Opinion Privilege : Analysis and op-ed articles; choice of words and thoughts on conduct or actions (calling someone a “deadbeat”who has, in fact, not paid his bills) are not defamation and enjoy First Amendment protectiono Qualified Privilege: Media (so long as item published without malice, which is knowing information is false or with reckless disregard for whether it is true or false)- Contract Interference o Elements:o Third party knew of existing contract between two primary partieso Third party intended to interfere with or cause a breach contracto Original party to the contract is injured by breach of contract induced by the third party Anna Nicole Smith case Creative theory of tortious interference with inheritance She did not