Can Private Corporate Conduct be Prosecuted?
Although it is surprising to many people, private individuals can be prosecuted for a wide range of seemingly innocuous business-related conduct, including failing to comply with the exact provisions of an employee manual, failing to provide information about expenditures to an employer, or disclosing certain business-related information to a third party. All of this conduct falls under the category of honest services fraud, which is prosecuted in federal court, and so comes with harsh penalties, including imprisonment for up to 20 years. Because the stakes are so high in these types of cases, it is critical for those who have been charged with corporate or honest services fraud to retain an experienced white collar crime attorney who may be able to get the charges reduced or even dismissed.
What is Honest Services Fraud?
Unfortunately, although honest services fraud is prohibited by federal law, there is no statutory definition of what types of conduct actually qualify as this type of fraud. As a result, many prosecutors are given wide discretion when it comes to charging private individuals with this offense. Some of the most common examples of cases that have been tried in court and resulted in conviction involve:
- Allegations against corporate officers and directors for entering into contracts on behalf of their employer with other businesses in which they held an interest;
- Claims made against private individuals who accepted gratuities from suppliers that also sold products to their employers; and
- Allegations against securities issuers for paying brokers additional compensation for selling their stock.
Fortunately, before private individuals can be convicted for this type of conduct, prosecutors must first prove that:
- The defendant entered into a scheme to defraud that included a material deception;
- The defendant undertook the scheme with the intent to defraud;
- The defendant used private commercial carriers, the mails, or interstate wires to further the scheme; and
- The defendant’s action resulted in the deprivation of a third party’s intangible right of honest services.
Aside from these elements, Congress and federal courts have remained divided on what type of conduct actually qualifies as honest services fraud. For instance, some federal courts have held that before a person can be convicted of honest services fraud there must be evidence that he or she also breached a fiduciary duty, while others maintain that no such duty is required. Similarly, courts differ on their interpretations of the level of intent required to obtain a conviction, with some judges requiring only evidence of fraudulent intent, and others requiring proof of an intent to achieve personal gain. This uncertainty makes it extremely important for those who have been charged with honest services fraud to be represented by an experienced attorney who can help defend them against frivolous charges filed by a federal prosecutor.
Call Today for Help with Your Case
For more information on private corporate conduct and honest services fraud, please contact dedicated Miami white collar crime attorney Jeffrey S. Weiner, P.A. at 305-670-9919 today. Initial consultations are conducted free of charge.