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Bank Executive Sentenced on Bailout-Related Fraud Charges

The former chief credit officer for San Francisco-based United Commercial Bank has been sentenced to eight years in prison for corporate fraud-related charges. United Commercial Bank became the first American bank to fail despite having received nearly $300 million during the 2009 “bailout.” According to The Washington Post, the individual convicted and sentenced had made false statements on bank financial records and press releases in order to hide losses that the bank was sustaining on loans.

Liability for Corporate Crimes

While the Post article did not elaborate on many details of the officer’s conduct, presumably the officer engaged in the fraudulent conduct in his capacity as a corporate officer and on behalf of the bank. “But wait,” one may ask, “aren’t corporations their own separate legal entity? Isn’t a corporation its own legal ‘person’? How then can an officer who is acting on behalf of a company and performing his or her job duties be individually, criminally liable?” The argument goes, as one federal case from 1962 put it, “when an officer is acting solely for his corporation . . . he is no longer a ‘person’” subject to criminal liability. The U.S. Supreme Court, citing precedent from 1943, responded this argument thusly: “No intent to exculpate a corporate officer who violates the law is to be imputed to Congress without clear compulsion.”

What this means is that, in most cases, a corporate officer who commits a fraudulent or criminal act – even if he or she does so in his or her official capacity as a corporate officer and for the benefit of the corporation – can be held personally responsible for the criminal act. This is in addition to the corporation being held criminally responsible, subjecting the corporation to steep fines (although it is difficult to impose a prison sentence upon a corporation – how does one in fact incarcerate a company?).

Are There Any Protections Available for Corporate Officers or Employees?

Like in any other criminal case, the prosecution must prove that the corporate officer committed the criminal act with the requisite amount of knowledge or intention. Thus if a corporate employee commits a fraudulent act at the direction of a more senior officer, but the employee is not aware the act is fraudulent or criminal in nature, the employee may have a valid defense to the criminal charge.

As established, above, however, it is generally not a defense to a criminal charge for the defendant to claim he or she was acting on behalf of the corporation or that the corporation was the one to benefit from the acts.

Contact Jeffrey S. Weiner, P.A. for Help

Corporate officers who find themselves charged with criminal offenses based on actions they took on behalf of their employer/corporation and/or for the corporation’s benefit may have few defenses available to them. The assistance of an experienced white-collar crime attorney can mean the difference between a finding of guilty and an acquittal. Contact the South Florida office of Jeffrey S. Weiner, P.A. or call (305) 670-9919 to discuss your charges with our knowledgeable legal team.

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