Analysis of Potential Prosecution This paper will

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

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5 (1992). In order for such a violation to trigger the criminal provisions of the Act, this violation must have been performed willfully. In United States v. Margala, 662 F.2d 622 (9th Cir. 1981), the Ninth Circuit held that defendants who supplied incomplete financial information to public shareholders as part of a "freeze-out" scheme to gain control of a publicly traded company violated the Act. The court said that a fact is material when there is a substantial likelihood that a reasonable investor would view its disclosure "as having significantly altered the total mix of information made available." Citing TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976). In the case of Murphy Corp., Patricia concealed facts concerning the operations of the company from the shareholders. Most certainly the disclosure of this information would have significantly altered the total mix of information available. Murphy concealed the fact that the company had suffered significant losses during its failed expansion effort. This alone would have caused a decline in the company's stock price. In addition, Murphy concealed the fact that the company was using domestic wool in its products. Had this fact been disclosed, the ma
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Approximate Word count = 1891
Approximate Pages = 8 (250 words per page)

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