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Trapped: When Acting Ethically is Against the Law
Since Enron's collapse in 2002, the federal government has stepped up its campaign against white-collar crime. In this timely book, John Hasnas reveals how the government's effort to enforce legal rules has created a Catch-22 legal environment in which businesspeople must either act unethically or illegally.
- GenresLaw
80 pages, Paperback
First published February 7, 2006
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Displaying 1 - 3 of 3 reviews
January 18, 2016
I was unaware of many of the aspects of white collar crime that Hasnas describes before reading "Trapped". He could have proved his point in half the time, it is a very repetitively written book.
September 3, 2022
The book's thesis is pretty much what you'd expect based on the title, which to me is a good thing.
It's very structured, starting off with a setup of the liberal safeguards of criminal law, why they were created and why they are necessary. During this, the following requirements for conviction are enumerated:
1. Mens rea (guilty mind), it must be proven that the criminal outcome was either intentionally caused by the defendant, or at least the result of unreasonable recklessness on the part of the defendant.
This means that as long as someone "does everything right", they cannot be charged with a crime, most relevantly if the incident occurred as a result of a lack of information the defendant wasn't supposed to have.
2. No vicarious criminal liability, only the individual's own actions are punishable. This one is pretty self-evident, as long as you didn't commit a crime yourself, directly and knowingly assisted in committing a crime or authorized someone to commit a crime on your behalf, you are not guilty of that crime, full stop.
Most relevantly this involves "collective guilt" or guilt for crimes committed as an indirect result of one's actions.
As a result of the above two relevant to the book, an individual cannot be expected to monitor and police everyone else's actions. For example, if a murderer takes the bus to reach their eventual victim, the bus driver cannot be charged with being an accessory to murder due to the above two requirements, and cannot be expected to monitor all their passengers.
3. Legality, a specific, clearly defined law must be broken for punishment, with clear advance warning. This means that an individual cannot be charged with breaking a law that is so vague as to make it impossible for the average person to determine if they're in violation of it or not.
4. Presumption of innocence, meaning the defendant cannot be treated as if they are guilty unless they are found to be so. Relevant to the book is that the defendant cannot be charged with additional crimes for using all legal means available to them to frustrate the prosecution's case against them, as would be perfectly acceptable for an innocent person to do.
5. Proof beyond a reasonable doubt - the evidence against the defendant must be virtually foolproof. Relevantly the defendant cannot be found guilty of a crime they "probably" committed, the case for the defendant's guilt must be as close to bulletproof as possible. This is based on the principle that it's better to let a criminal go free than for an innocent person be punished.
6. Attorney-client privilege, the defendant must be free to discuss defense strategy and disclose the necessary information for said strategy with a lawyer without fear of such disclosure being used against them. This is to give the defendant every opportunity to mount a defense against their accusers. Relevantly this means that talking to a lawyer in confidence should be guaranteed not to get you in trouble no matter what.
7. No self-incrimination, the 5th amendment. Relevantly this means that the defendant cannot be instructed to help the prosecution with assembling the case against them, and cannot be expected to hand over confidential information or evidence without a warrant, or to assist in producing said evidence.
The book then introduces us to the various ways in which the fight against white collar crime systematically erodes all of these protections.
Corporate Criminal Responsibility violates #1 and #2. RICO and the courts' encouragement to interpret it broadly violates #3. The creation of "Money laundering" and other so-called "secondary offenses" violates #2 and #4.
Most disturbingly, many judges approve of secondary offenses as a way to punish defendants who "probably" committed the crime but the State couldn't make the charges stick. Many of these make it illegal to use your own money (18 USC 1957) or to lie to federal agents even if not under oath (18 USC 1001).
18 USC 1512, 1519, 1520 violate #1, #2, #4 and #5. You can be indicted for obstruction of justice for sending an in-house memo (Arthur Andersen), or for publicly maintaining your innocence (Martha Stewart). Again disturbingly and disgustingly, these laws are blatantly and explicitly justified by judges on the basis of making conviction easier, with no regard for the sanctity of the enumerated liberal safeguards.
The Organizational Sentencing Guidelines make it so that the fine a corporation pays can be anything from 5% to 400% of the so-called "base fine", depending on a couple of factors. That is an 80-times difference.
The organization must preserve any documentation that could be used as evidence against them, and must refrain from advising anyone not to speak to investigators.
To receive a reduction in their score, it must have an effective compliance program and for cooperation to put up no defense and plead guilty to all charges.
Although putting up a defense is not technically illegal, imagine if your sentence for a crime could range from six months to 40 years in prison and your full co-operation including helping prosecutors build a case against you is what makes the difference. It is very clear that this makes it for all intents and purposes illegal for a company to mount any defense against an accusation, violating #4, #6 and #7.
In addition these sentencing guidelines make it so that the company must lie to all of its employees. If it openly states that it will tell anything the employee says to legal counsel to the government and aid in the employee's prosecution, it will erode the trust required for an effective compliance program since nobody will report any potential lawbreaking behavior.
On the other hand, if they keep their promise in not doing that, the company will not receive the reduction for co-operation.
Therefore the only legal action for a company is to make a promise of confidentiality to its employees and then later stabbing them in the back and betraying this trust.
This and other ethical dilemmas caused by these laws are then presented, with a conclusion that these "white collar" criminal laws be done away with, since they are effectively useless for their only possible purpose (increasing the amount of fines companies pay).
Even if you do not care about the "rights" of corporations, it should be noted that these blatant and disgusting violations of rights and disregard for the safeguards of criminal law do not stay isolated to corporations. 5th amendment rights of individuals can be circumvented via a subpoena to the corporation holding the evidence, and secondary offenses can be used to punish possibly innocent people who were found not guilty of a crime but the State wants to punish them anyway (Martha Stewart, the person convicted of money laundering for paying his rent while he was found not guilty of the drug trafficking charges used as a basis for that conviction, etc.).
My takeaway from the book is the illustration of the principle that politicians, Judges and the State in general do not care about the Constitution or any of the legal safeguards against the State. If they want to convict or otherwise hurt someone (and they often do), they will use any means at their disposal to circumvent and backdoor their tyranny into practice. The Constitution and other legal safeguards and principles are a joke to them and will not provide any protection from a motivated State actor.
It's very structured, starting off with a setup of the liberal safeguards of criminal law, why they were created and why they are necessary. During this, the following requirements for conviction are enumerated:
1. Mens rea (guilty mind), it must be proven that the criminal outcome was either intentionally caused by the defendant, or at least the result of unreasonable recklessness on the part of the defendant.
This means that as long as someone "does everything right", they cannot be charged with a crime, most relevantly if the incident occurred as a result of a lack of information the defendant wasn't supposed to have.
2. No vicarious criminal liability, only the individual's own actions are punishable. This one is pretty self-evident, as long as you didn't commit a crime yourself, directly and knowingly assisted in committing a crime or authorized someone to commit a crime on your behalf, you are not guilty of that crime, full stop.
Most relevantly this involves "collective guilt" or guilt for crimes committed as an indirect result of one's actions.
As a result of the above two relevant to the book, an individual cannot be expected to monitor and police everyone else's actions. For example, if a murderer takes the bus to reach their eventual victim, the bus driver cannot be charged with being an accessory to murder due to the above two requirements, and cannot be expected to monitor all their passengers.
3. Legality, a specific, clearly defined law must be broken for punishment, with clear advance warning. This means that an individual cannot be charged with breaking a law that is so vague as to make it impossible for the average person to determine if they're in violation of it or not.
4. Presumption of innocence, meaning the defendant cannot be treated as if they are guilty unless they are found to be so. Relevant to the book is that the defendant cannot be charged with additional crimes for using all legal means available to them to frustrate the prosecution's case against them, as would be perfectly acceptable for an innocent person to do.
5. Proof beyond a reasonable doubt - the evidence against the defendant must be virtually foolproof. Relevantly the defendant cannot be found guilty of a crime they "probably" committed, the case for the defendant's guilt must be as close to bulletproof as possible. This is based on the principle that it's better to let a criminal go free than for an innocent person be punished.
6. Attorney-client privilege, the defendant must be free to discuss defense strategy and disclose the necessary information for said strategy with a lawyer without fear of such disclosure being used against them. This is to give the defendant every opportunity to mount a defense against their accusers. Relevantly this means that talking to a lawyer in confidence should be guaranteed not to get you in trouble no matter what.
7. No self-incrimination, the 5th amendment. Relevantly this means that the defendant cannot be instructed to help the prosecution with assembling the case against them, and cannot be expected to hand over confidential information or evidence without a warrant, or to assist in producing said evidence.
The book then introduces us to the various ways in which the fight against white collar crime systematically erodes all of these protections.
Corporate Criminal Responsibility violates #1 and #2. RICO and the courts' encouragement to interpret it broadly violates #3. The creation of "Money laundering" and other so-called "secondary offenses" violates #2 and #4.
Most disturbingly, many judges approve of secondary offenses as a way to punish defendants who "probably" committed the crime but the State couldn't make the charges stick. Many of these make it illegal to use your own money (18 USC 1957) or to lie to federal agents even if not under oath (18 USC 1001).
18 USC 1512, 1519, 1520 violate #1, #2, #4 and #5. You can be indicted for obstruction of justice for sending an in-house memo (Arthur Andersen), or for publicly maintaining your innocence (Martha Stewart). Again disturbingly and disgustingly, these laws are blatantly and explicitly justified by judges on the basis of making conviction easier, with no regard for the sanctity of the enumerated liberal safeguards.
The Organizational Sentencing Guidelines make it so that the fine a corporation pays can be anything from 5% to 400% of the so-called "base fine", depending on a couple of factors. That is an 80-times difference.
The organization must preserve any documentation that could be used as evidence against them, and must refrain from advising anyone not to speak to investigators.
To receive a reduction in their score, it must have an effective compliance program and for cooperation to put up no defense and plead guilty to all charges.
Although putting up a defense is not technically illegal, imagine if your sentence for a crime could range from six months to 40 years in prison and your full co-operation including helping prosecutors build a case against you is what makes the difference. It is very clear that this makes it for all intents and purposes illegal for a company to mount any defense against an accusation, violating #4, #6 and #7.
In addition these sentencing guidelines make it so that the company must lie to all of its employees. If it openly states that it will tell anything the employee says to legal counsel to the government and aid in the employee's prosecution, it will erode the trust required for an effective compliance program since nobody will report any potential lawbreaking behavior.
On the other hand, if they keep their promise in not doing that, the company will not receive the reduction for co-operation.
Therefore the only legal action for a company is to make a promise of confidentiality to its employees and then later stabbing them in the back and betraying this trust.
This and other ethical dilemmas caused by these laws are then presented, with a conclusion that these "white collar" criminal laws be done away with, since they are effectively useless for their only possible purpose (increasing the amount of fines companies pay).
Even if you do not care about the "rights" of corporations, it should be noted that these blatant and disgusting violations of rights and disregard for the safeguards of criminal law do not stay isolated to corporations. 5th amendment rights of individuals can be circumvented via a subpoena to the corporation holding the evidence, and secondary offenses can be used to punish possibly innocent people who were found not guilty of a crime but the State wants to punish them anyway (Martha Stewart, the person convicted of money laundering for paying his rent while he was found not guilty of the drug trafficking charges used as a basis for that conviction, etc.).
My takeaway from the book is the illustration of the principle that politicians, Judges and the State in general do not care about the Constitution or any of the legal safeguards against the State. If they want to convict or otherwise hurt someone (and they often do), they will use any means at their disposal to circumvent and backdoor their tyranny into practice. The Constitution and other legal safeguards and principles are a joke to them and will not provide any protection from a motivated State actor.
May 8, 2019
Intelligent view
Very good analysis of practical problems faced by in house lawyers and business executives. It also presents a straight forward wording that captures readers 'attention.
Very good analysis of practical problems faced by in house lawyers and business executives. It also presents a straight forward wording that captures readers 'attention.
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