The criminal prosecution of a corporation can have dire consequences. Not only can employees and officers be held criminally liable, but a corporation that is prosecuted for fraud or corruption may lose the ability to enter into contracts with the United States. The American Bar Association has identified additional potential consequences, including:
- Revocation of corporate charter
- Civil penalties under the False Claims Act
- Cease and desist orders for financial institutions and correlated loss of deposit insurance and appointment of receivership or conservatorship
When Can a Corporation Be Held Liable for an Employee's Criminal Acts?
Corporations may be liable for the criminal acts of employees if two prongs are met: the employee's actions were within the scope of her authority and the conduct benefits the corporation in some way. To be clear, if there is a reasonable relationship between the employee's action and her corporate responsibilities, then the corporation could be liable for the employee's conduct.
Additionally, under the legal principle of accomplice liability, a supervisor who turns a "blind eye" to criminal actions may be liable. Similarly, under the responsible corporate officer doctrine, an officer that fails to take remedial measures to curb an employee's illegal conduct may also be prosecuted, even if the officer did not encourage or participate in the illegal acts.
Whether in the energy or financial sector, Hilder & Associates, P.C., has consistently advised corporate clients facing prosecution for the actions of employees. It is critical for a corporation to understand the consequences of criminal prosecution so that the corporation can survive to continue conducting business.
To discuss your legal concerns, contact our Houston offices at 713-234-1416 or toll free at 888-659-8742.