Deck 14: Criminal Law

Question 1

An American Wrecking Corporation (AWC) employee was killed when bricks fell on him as he prepared a section of building for demolition. AWC was cited for willfully violating the Occupational Safety and Health Act (OSH Act) governing the removal of loose material during the demolition process. Willful violations of the Act can serve as the basis of criminal complaints. AWC filed a review petition. At hearing, the Occupational Safety and Health Administration Review Committee's experts testified that the bricks were unstable and should have been taken down, while company employees stated that they believed that the bricks had been supported by iron in the structure. The administrative law judge ruled that the company had willfully violated the statute by not removing the bricks because the hazardous condition should have been obvious to the demolition supervisor. On appeal, should this ruling be upheld? If so, what would be the appropriate sentence? [American Wrecking Corp. v. Secretary of Labor, 351 F.3d 1254 (D.C. Cir. 2003).]

Answer 1

An incident of demolition took place at AWC, and caused an employee to lose his life. AWC was charged for violation of OSH act. It was a willful violation of the act, and AWC was charged for criminal complaint under the OSH act. AWC raised a petition defending the organization, but was of no use. AWC was held liable, as the bricks used for construction was found to be hazardous.
Complying with the norms related to employee safety is important and mandatory to every organization. Irrespective of whether the employees are aware of the potential hazards in the working environment, or duly report the dangerous conditions, the company management is liable for worker's safety. The OSHA (Occupational Safety and Health Act) norms do not allow any negligence related to worker's safety, by the company.
As per the OSHA norms and the context of the accident, the company AWC may not be able to overcome the ruling, and is liable to pay the compensation as well as undergo the penal procedure.
If the company has violated the safety norms for the first time, the appropriate sentence would be $10,000 as penalty and serve six months imprisonment, or else the penalty is $20,000 with 12 months imprisonment.

Question 2

Bermel Enterprises, Inc. is a supplier of computer programming consulting services to the federal government. In completing their time reports, Alex and Margot Frankel, two Bermel systems analysts, have consistently overstated the time they spent working on the government projects. These time reports determine how much money the government pays the company. Additionally, Michelle Laff, a manager at Bermel, has falsified the results of systems tests conducted on the computer systems installed for the government. As a result, the systems appear to be bug-free when, in fact, they contain many errors.
What criminal charges may the government bring against the employees? Against Larry Bermel, owner of Bermel Enterprises, Inc.? Against Bermel Enterprises, Inc. itself?

Answer 2

The company BE Inc. supplies computer programming consulting services to the federal government. Employees AL and MG working as system analyst at BE Inc. overstated their time spent on the government projects. Here, time is related to the money, as the government pays the company based on time spent on their projects. Additionally, ML being a manager at BE Inc. manipulated the results of the project, stating that the installed software was bug-free.
The US Government can pursue legal procedures with the employees of BE Inc., for their frauds. The government must gather substantial proofs regarding misinformation presented by the employees AL and MG.
With respect to the over-rating of the time spent on the computer projects, the US government can follow the norms of the False Statements Act, and False Claims Act to recover the losses from the company, and prosecute the deviant employees.
The presentation of misleading information by the employee that the computer program has bugs may be dealt by applying the principles of the False Statement Act, and the Computer Fraud and Abuse act. The fraudulent employee, the owner and the company as a whole may be prosecuted by the US government depending on the severity of the fraud.

Question 3

Joseph Russo and Everett James Garner entered into an agreement to establish a building materials manufacturing business, Panel Building Systems, Inc. (PBS). To obtain capital to fund the development of the new company, Russo applied for a $630,000 loan from the U.S. Small Business Administration (SBA). On the loan application, Russo stated that he was the president and 100% owner of PBS. PBS subsequently defaulted on the loan, and the SBA suffered losses of about $474,000. During the SBA's investigation of the default, it was revealed that the actual president of PBS was Garner, not Russo, and that Garner had a poor financial record. Russo later admitted that he knew the information supplied on the loan application was false and that the false information was supplied in order to secure a loan from the SBA. Russo was sued for knowingly and willfully making a false statement to the federal government under 18 U.S.C. § 1001, which requires willful intent to deceive.
Russo claimed that although he knew the information supplied on the loan application was false, he lacked willful intent to deceive the federal government because he always intended to be president and CEO of PBS. Russo also argued that he thought Garner was a wealthy man and that he did not know Garner had a poor financial record. Did Russo have willful intent to deceive the federal government? [United States v. Russo, 202 F.3d 283 (10th Cir. 2000).]

Answer 3

JR and EJ wanted to start a business of building materials manufacturing named PBS Inc. Both JR and EJ entered a contract, and started obtaining funds from different sources. JR applied for a loan of $630,000 from SBA, and stated himself to be the owner. When JR defaulted to repay the loan, SBA suffered a loss of $474,000. During the investigation, it was revealed that EJ was president of the business, and not JR. Later on, JR admitted that the information submitted during the loan submission was false, as the intention of JR was to secure the loan from the SBA. JR was held liable for willfully making a false statement. JR defended the liability stating that, his intention was not to gain advantage, but was to become the president of the business. RJ also stated that, he did not know about the poor financial condition of EJ while entering a contract.
The partner of the PBS, who provided the false information that he is the owner of the company and owns 100% shares of the company, is liable to be charged for prosecution under the False Statement Act.
The defendant has agreed that he has presented the false information willfully, but claims that there was no harmful intent behind the act. Bringing out the real intent of the fraudulent action, rests with the prosecution agency. However, the partner of the PBS has demonstrated recklessness, and was deviant with respect to the verity of the information expected from the owners of a company.

Question 4

Shurgard Storage Centers, the industry leader in full- and self-service storage facilities in both the United States and Europe, sued its competitor Safeguard Self Storage for allegedly embarking on a "systematic" scheme to hire away key employees for the purpose of obtaining trade secrets. Shurgard claimed that Eric Leland, a Shurgard employee subsequently hired by Safeguard, used Shurgard's computers to access various trade secrets and proprietary information belonging to Shurgard and to send e-mails containing the information to Safeguard. Leland was still employed by Shurgard at the time he sent the e-mails.
Shurgard alleged violations of the Computer Fraud and Abuse Act as well as misappropriation of trade secrets, conversion, unfair competition, and tortious interference with a business expectancy. Safeguard moved to dismiss the CFAA claims. [Shurgard Storage Centers, Inc. v. Safeguard Self Storage, Inc., 119 F. Supp. 2d 1121 (W.D. Wash. 2000).]

Question 5

To what extent, if any, could the prosecutors in this case have encouraged the adoption of the principles of the Thompson Memorandum without crossing constitutional boundaries?

Question 6

Is a computer or its information "damaged" within the meaning of the CFAA if intruders alter existing log-on programs to copy user passwords to a file that the hackers can retrieve later if, after retrieving the newly created password file, the intruders restore the altered log-in file to its original condition?

Question 7

Could a private company's legal fee policy, based in reliance on the Thompson Memorandum, be a constitutionally sound policy absent any outside government coercion?

Question 8

Would an employee be criminally liable for computer fraud if she used her work computer to check the latest football scores in violation of a no-personal-use policy?

Question 9

Antoine Jones and several others were the subjects of an FBI-Metropolitan Police Department task force investigation of narcotics violations. As part of the investigation, authorities conducted telephone wiretaps and installed a Global Positioning System (GPS) in Jones's Jeep without a valid warrant. Police used the GPS to track Jones's movements twenty-four hours a day for four weeks. The district court admitted all evidence obtained during the police investigation, and the jury found Jones guilty of conspiracy to distribute and to possess with intent to distribute cocaine.
On appeal, Jones argued that his conviction should be overturned because the police violated his constitutional rights by tracking his movements with the warrantless use of a GPS device. Is GPS tracking a "search" requiring a warrant? Is obtaining GPS data from cell towers? [United States v. Jones, 132 S. Ct. 945 (2012).]

Question 10

Acting on a tip, two inspectors from the Environmental Protection Agency took samples of the wastewater discharged from a paper mill by accessing sewer pipes through a manhole located on the edge of company property 300 feet from where the water dumped into the public sewer system. The mill and its owner were indicted on criminal environmental law charges based, in part, on the test results from those samples. Are the test results admissible at trial? [Riverdale Mills Corp. v. Pimpare, 392 F.3d 55 (1st Cir. 2004).]

Question 11

Bert's Sporting Goods, Inc., with stores located throughout the state of Lys, sells a wide variety of sporting goods, including guns. Section 123.45 of the Lys Penal Code requires sellers of guns to verify that the purchaser has not committed a felony within the last five years. If the purchaser has committed a felony within the last five years, the seller is not allowed to make the sale. Selling a gun to a recent felon is considered a misdemeanor and is punishable by up to one year in jail and/or a maximum $10,000 fine.
Jim Dandy, who was convicted of a felony under Lys's penal code four years ago, went to purchase a gun at one of the Bert's Sporting Goods stores. Joe Mountain, a salesman at Bert's, sold Dandy the gun without asking for identification or checking to see whether Dandy was a convicted felon.
As a matter of fact, Mountain never checked whether any of the customers to whom he sold guns were felons. Mountain did not know of the Lys law requiring him to check on the customer's prior criminal history. However, Jay Lake, Mountain's supervisor, knew of the law and also knew that Mountain never checked whether a customer was a felon. Bert, the sole shareholder and director of Bert's Sporting Goods, Inc., knew about the law but did not know that Mountain did not check on his customers' prior criminal history.
Dandy used the gun in a robbery and shot two police officers during his getaway. He was never captured. Can Mountain be punished under section 123.45 of the Lys Penal Code? What about Lake? Bert? Bert's Sporting Goods, Inc.? What penalties should be assessed? [See, e.g., Staples v. United States, 511 U.S. 600 (1994).]

Question 12

Barry Engel was president of Gel Spice Company, which imported, processed, and packaged spices. As president, he was responsible for the purchasing and storing of spices in the company's warehouse in Brooklyn, New York. In June 1972, the Food and Drug Administration (FDA) inspected the Gel Spice warehouse and found widespread rodent infestation. On reinspection in August 1972, the FDA found evidence of continuing infestation. Following the two 1972 inspections, the FDA considered a criminal prosecution against Gel Spice. Before referring the case to the Department of Justice, however, the FDA conducted an additional inspection. At that July 1973 inspection, no evidence of rodent infestation was found, and the criminal prosecution was dropped. Three years later, in July 1976, the FDA inspected Gel Spice and again found active rodent infestation. Four additional inspections were performed from 1977 to 1979, each of which revealed continuing infestation. Thereafter, the government instituted criminal proceedings against Gel Spice and its president, Barry Engel. Under what theory of criminal liability could Engel be held liable for violating the Food, Drug and Cosmetic Act? Can Engel successfully assert any defense? [United States v. Gel Spice Co., 773 F.2d 427 (2d Cir. 1985).]