This paper will analyze various aspects of a potential federal prosecution of Patricia Murphy and Murphy Corp. for violations of federal criminal statutes. The first part of the paper will discuss the possible criminal liability of the Murphy Corporation. The second part of the paper will examine the liability of the company and Patricia Murphy under the RICO statute. The third part of the paper will look at liability under the Securities and Exchange Act. The fourth part of the paper will discuss possible conspiracy liability. The fifth part of the paper will discuss liability under the mail fraud statutes. The last part of the paper will discuss how the U.S. Attorney should exercise his prosecutorial discretion in this case.
Criminal Liability of Murphy Corp. In General
It has been accepted that a corporation can be found liable for criminal actions under both state and federal law. It had previously been argued that holding a corporation criminally liable for its actions would be unfair to shareholders who took no part in the daily operations of the corporation. The only sanction which could be imposed upon the corporation is a monetary fine. Shareholders would be unfairly hurt by these fines, which would affect the profitability of the corporation, and by the resulting decline in the stock price.
In order to prove criminal liability under the RICO statute, the U.S. Attorney must show (1) the existence of an enterprise; (2) an interstate commerce connection; (3) a person who committed the RICO violation; (4) a pattern of racketeering activity; and (5) a relationship between the racketeering activity and the enterprise. This relationship must be designated in ยง1962(a), (b), or (c) of the statute or the prosecutor must show a conspiracy to commit a violation of the RICO statute.
Of these elements, the most critical in this case is the fourth element. The prosecutor must be able to show a pattern of racketee...