In an effort to protect the public and maintain ethical business practices, the federal and state court systems have enacted various laws and regulations. There are many laws covering a variety of topics, including the collection of debts. For instance, consider the Racketeer Influenced and Corrupt Organizations Act (RICO). This regulation is a federal law that allows criminal and civil penalties for those who are convicted. Using the provided scenario, the RICO law is analyzed from different perspectives.
Possible Criminal and Civil Liability
The RICO laws can only be used when an individual or business under investigation has been convicted of at least two laws in a list of 27 federal laws and 8 state laws (Carlson & Finn, 1993). These laws include items such as gambling, extortion, counterfeiting, embezzlement, fraud, and money laundering (Carlson & Finn, 1993). In other words, for an individual or organization to be charged with RICO, he or she must be charged and convicted of two other crimes. The provided scenario does not specify whether the corporation or its chief financial officer (CEO) has been convicted of these two other and separate charges. If the defendants can mount a sufficient defense to have at least one of the charges dismissed or acquitted, then the firm and the CEO could avoid the RICO charge altogether. Given the circumstances, however, this discussion will continue forward assuming that the firm and/or CEO will be charged and convicted of two separate charges that then allow RICO to be charged.
The RICO law has specific punishment maximums. Individuals or corporations found guilty of RICO can be fined up to $25,000 and individuals can face up to 20 years in prison (Carlson & Finn, 1993). In addition, the Sarbanes-Oxley Act of 2002, a different federal law, requires CEO's to physically sign financial statements of corporations (Securities and Exchange Commission, 2007). The Sarbanes-Oxley Act also allows investors and the public to hold the CEO directly responsible for financial wrongdoing (Securities and Exchange Commission, 2007). In the scenario, the fraudulent business practices involve the collection of debts; assuming that the fraudulent collection affected the required financial reports of the presumably publically held company, the CEO can be found liable. Furthermore, the RICO law allows individuals to file civil lawsuits against the offending company and obtain treble damages, which is triple the amount of damages that would ordinarily be rewarded (Legal Dictionary, n.d.). Lastly, the RICO act requires any funds collected from the convicted offenses be forfeited (Carlson & Finn, 1993). Clearly, the corporation and CEO face a significant amount of liability. The damages alone would likely be enough to bankrupt the corporation.
Subsequent Criminal and Civil Cases
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The evidence presented in the initial charges and RICO charge most likely can be used in other charges, criminal and civil. This is especially true if the case is being tried in different states, as supported by the US Constitution's Fifth Amendment (Justia, 1986). With respect to a criminal case within the same state, however, the evidence can be used for subsequent charges and trials as long as the defendant was not acquitted or found guilty, as evidenced by double jeopardy (Justia, 1986). That being said, there are usable legal maneuvers based upon the circumstances surrounding the acquittal that will allow the evidence to be used within the same state.
In terms of a civil lawsuit, the court proceedings would be very different than a criminal court proceeding. A criminal court attempts to prove wrongdoing whereas a civil lawsuit attempts to show harm to an individual or business. Therefore, the criminal evidence could be a basis to launch a civil case but the civil attorneys should do their due diligence in obtaining pertinent evidence to the civil case at hand. In other words, yes, the outcome of the criminal case can be used in a civil proceeding.
Pleas Admitting Responsibility
The threat of using an individual or company's plea in a criminal proceeding against the same individual or company in a civil proceeding is a worrisome matter. Fortunately, the Fifth Amendment to the US Constitution also protects the right to not self-incriminate. Therefore, a plea issued in a criminal proceeding cannot be used in a civil proceeding (Legal Service, 2010).
The provided scenario is clear about the fraudulent actions committed by the corporation in question. Assuming the company and/or the CEO are convicted of the charges and that the charges are appropriate for a RICO charge, the CEO and/or the company could face a significant amount of liability including jail time. In addition, the civil liability will likely be immense. Without more details, it is not possible to determine the exact outcome of liability but it is relatively certain that damages will be high enough to bankrupt the company.
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