It's a Crime?: Flaws in Federal Statutes That Punish Standard Business Practice
Publication Date: December 2009
Author(s): Marie Gryphon
Funder(s): General Funding
Funder(s): General Funding
Series: Civil Justice Report 12
Keywords: federal statutes; fraud; blameworthiness principle; regulation
Coverage: United States
Since the dawn of Anglo-Saxon common law, conviction for committing a crime required evidence of malicious intent -- that is, a conscious willingness to violate society's norms by inflicting harm on people directly or by misappropriating or abusing their property. This stricture, which is often referred to as the blameworthiness principle, has tended to ensure that people who inadvertently and in good faith infringe laws and regulations will not suffer the stigmatization of a criminal conviction or face incarceration.
The economic and social policies of the 1930s and beyond came to undermine the blameworthiness principle. Standards of conduct promulgated to protect and advance the public's health, safety, and welfare carried with them deterrents imported from the criminal law. Today, the regulatory state so thoroughly encompasses the range of commercial activity that businesses and businesspeople trying to reduce their costs, better their products, best their rivals -- do all of the things, in short, on which survival in a market economy depends -- run an ever-present risk of becoming ensnared in the criminal law. In many instances, the laws in question are so voluminous and loosely drafted that even a student of the legislation would not have fair notice of what conduct was prohibited and what was not.
Ordinary Americans have been convicted of crimes under overbroad federal laws because their employer unsuspectingly forwarded drugs that had been mislabeled by another company; because their adult children failed to properly record the itinerary of a camping trip in a public park while doing volunteer work for the family touring business; and because their computer servers stored copies of clients' e-mails as an emergency precaution. Others have been judged criminals for such common failings as violating the terms of an employee handbook that prohibited otherwise legal behavior; lying about the details of a legal business transaction in response to media inquiries; and falsely claiming to be a talent scout in order to attract women.
Perhaps the most egregiously catch-all statutes are those governing mail and wire fraud. They assign criminal penalties to any "scheme or artifice to defraud" as long as the defendant could have foreseen that someone would use either the U.S. Postal Service or any form of electronic communication in (perhaps inadvertent) furtherance of the scheme as it unfolded. Yet these statutes lack any explicit language requiring a showing of harm, and the courts have not inferred or supplied such a requirement. Today criminal liability attaches to "any scheme or artifice to deprive another of the intangible right of honest services" via the above channels. Such vague and capacious language gives overzealous prosecutors a virtual carte blanche to indict.
Responsibility for this state of affairs lies with both Congress and the courts. The former should make clear what categories of actor laws like the fraud statutes contemplate. Congress should also insert into both existing and new laws, if they carry criminal penalties, the requirement of a showing of criminal intent. It should cease assigning criminal penalties to violations of agency-made regulations. And it should insert sunset provisions into all criminal laws.
The courts, as guardians of individual rights, have traditionally moved against due process abuses of the criminal law, but in modern times they have shown undue deference to the regulatory aims of Congress and federal agencies. The courts could begin by reading some standard of criminal intent into all laws carrying criminal penalties. And they should give criminal defendants the benefit of the doubt when the laws they have allegedly broken are ambiguous. The price for not doing so is not only the unjust punishment of many innocent people, but a chilling of the competitive spirit of those the law never touches.