Solution Manual for Legal Environment 4th Edition by Beatty

Solution Manual for Legal Environment 4th Edition

by Beatty

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Chapter 7

CRIME

Suggested Additional Assignments

Action Learning
Students should draft a statute that focuses on corporate crime. Students must select one area of law, such
as the environment, employee safety, equal employment opportunity, or some other. They must then iso-
late a type of conduct that they think deserves criminal liability; describe the acts with as much detail as
possible, and provide penalties.

Research
Students should research the insanity defense. How many states use the M’Naughton Rule? How many
use another test? Which test is most useful, given the purpose of the defense?

Suggested Film
The Star Chamber (1983), with Michael Douglas and Hal Holbrook, is about a group of superior court
judges who lose faith in the judicial process generally, and constitutional protections in particular, and
decide to take the law into their own hands. A lively look at some of the most often heard criticisms of
our criminal system.

Chapter Overview
Chapter Theme
Crime comes in many forms, and the culprits can surprise us.

Quotes of the Day

He threatens many that hath injured one.

—Ben Jonson (1573-1637), English dramatist,
Silius, in Fall of Sejanus, act II.

Most of the evils of life arise from man’s being unable to sit still in a room.
—Blaise Pascal (1623-1662), French scientist and religious essayist

Crime, Society, and Law

Key Issue: Rationale of Punishment
Question: The two primary rationales for punishment are deterrence and retribution. What is deter-
rence?
Answer: Deterrence is a utilitarian rationale–that is, a means to an end. The goal is to prevent future
crime. Utilitarians believe that punishment can (1) deter the criminal himself from repeating his unac-
ceptable conduct (specific deterrence) and/or (2) deter society generally from doing what the criminal
did (general deterrence).

85
86 Unit 1 The Legal Environment

Question: What is retribution?

Answer: Retribution means giving back to the criminal precisely what he deserves, based on what he
did. The punishment must be exactly equal to the crime. This is not a utilitarian theory; retributionists
do not care whether punishment has a deterrent effect or not. Deterrence is a pragmatic theory, but
retribution is purely a moral one: the prisoner gets what he deserves.

Example: Medicare Fraud

Benny Milligan and his wife Tammie, along with their friend James McElveen and others, went walking
through the rugged hills of Tennessee’s Natchez Trace National Parkway. Milligan and McElveen, both
in their early thirties, had been best friends since high school. Suddenly, McElveen tripped and plunged
down a 30-foot cliff. Milligan and the others hurried to the rescue. They found their unconscious friend
barely alive, his battered, bleeding body twisted and broken by the fall. Gently they carried him to their
car and raced to Lewis County Community Hospital.
As they reached the hospital, Milligan remembered that his friend had no health insurance. Compan-
ions in the car recalled incidents of uninsured friends going untreated. They were terrified that McElveen
would be denied admission—and die. As a doctor began examining McElveen in the back seat of the car,
a hospital attendant gave the Milligans forms to fill out. They agreed between themselves to make sure
that their friend was treated, and so they switched names, identifying their injured companion as Benny
Milligan. Milligan, a long-time employee of Martin Marietta Corporation, received health insurance
through NASA.
Doctors diagnosed McElveen with a burst vertebra and other serious injuries. The patient was trans-
ported to Vanderbilt University Medical Center. When he became conscious, Milligan whispered to him
the deception. Doctors later informed McElveen that with immediate surgery he should make a full re-
covery, having only a 30% chance of paralysis, but that if he delayed the operation the likelihood of pa-
ralysis increased to 90%. McElveen agreed to the surgery, relying on the fraudulently obtained insurance.
Six surgeons spent nine hours repairing his broken back
McElveen made a full recovery—just as NASA and its insurer learned of the trickery. Federal prose-
cutors charged both the Milligans and McElveen with defrauding the federal government, and a jury con-
victed. The judge sentenced Benny Milligan to nine months in prison and three years probation,
McElveen to seven months in prison and three years probation, and Tammie Milligan to four months
house confinement, permitting her to leave her home only for work, shopping, or child-care duties.
NASA fired Benny Milligan. Instead of a full-time job, earning $12 an hour with health benefits, he
must now get by on part-time work, generally earning about $8 per hour. He has no health insurance for
himself, his wife, or their three young children. Tammie Milligan, now a felon, also lost her $75 per day
waitress job, and earns about $100 per week in a diner. McElveen is out of work.
Federal law requires hospitals to furnish care to critically injured patients, regardless of their ability to
pay. The hospital must stabilize the patient and do whatever is required to save his life. However, a recent
study shows that frequently hospitals ignore this requirement. A report from the American Medical Asso-
ciation indicated that over 250,000 patients are turned away from hospitals in any given year because of
inability to pay.
Question: McElveen served seven months and Milligan nine months. Both were ordered to pay
$13,000 in restitution. Milligan lost his job on the space shuttle (and along with it, his health bene-
fits). What rationale(s) support punishment for the two?
Answer: There was probably no need for specific deterrence, since it is most unlikely that either de-
fendant would repeat the fraud. The possible rationales are general deterrence and retribution.
General Questions: If you had been the trial judge, would you have sentenced the defendants based
on a rationale of general deterrence? Based on a rationale of retribution?
Question: Milligan served nine months in federal prison and McElveen seven months. The court or-
dered restitution of the medical bills, and all three defendants suffered financially. How do you sup-
pose the friends feel about their crime today?
Chapter 7 Crime 87

Answer: McElveen has no regrets. On July 12, 1990, four days after the accident, six surgeons spent
nine hours repairing his broken back at Vanderbilt University Medical Center. “It’s hard to get that
sort of treatment without insurance,” McElveen now says. Without Milligan’s fraud, “I don’t think I
would have gotten the surgery I needed. I’d probably be paralyzed.” Milligan agrees. “Nine months
of my life for the life of a friend is a fair trade,” he says. “There are probably millions of people who
would take that deal.”
Question: Make an argument that what McElveen and friends did indicates nothing immoral about
them but rather something wrong with society.
Answer: The underlying problem, one could argue, is that too many people in our nation live without
health insurance. It is unfair to punish a group of friends for doing their best to overcome this deficiency.
Question: In terms of money, which would be more costly to society: paying for McElveen’s opera-
tion, or denying him the operation?
Answer: It would probably cost society much more in the long run to deny McElveen the operation.
If he became paralyzed and spent the rest of his life in a wheelchair, it might well cost the country
more money in lost income and increased expenses to provide him with job and transportation access
and health services.
Question: Respond to the points above, arguing that it is essential to punish the defendants.
Answer: The defendants all have a sympathetic case, but we cannot permit everyone with economic
problems to break the law. The proper remedies for health care issues must come through legislation,
not fraud.

Example: Health Care and Crime

Here is another crime and punishment dilemma that began with health care problems. Wanda Bauer, age
69, had been a rancher for more than 50 years, but now she simply lay in bed, in her log cabin in Colora-
do, moaning and hoping to die. Her doctor had told her that she had terminal colon cancer. Wanda’s own
mother had died of cancer, and Wanda told her son, Dick, that she was not going to die in such agony.
But now she was unable to walk. She lay in her bed, crying and moaning, occasionally screaming, “Take
me, Lord, take me.” Dick telephoned for a prescription of pain killer, but the nearest pharmacy was 20
miles away, and Wanda cried that she couldn’t wait that long. “Give me the gun,” she demanded. Weeks
before, Dick had promised that he would help her end her life if the pain became too great. Weeping him-
self, Dick handed Wanda a pistol. Dick couldn’t bear for her to kill herself, so he took the gun back from
her. But then he returned it to her. He left the room and Wanda shot and killed herself.
Dick turned himself in at the nearest police station. The state charged him with manslaughter, for as-
sisting a suicide. But by then the ironic, tragic twist in the story had already surfaced: an autopsy had re-
vealed that Wanda did not have cancer. She suffered from a gallbladder infection and liver abscesses. Her
suffering could have been greatly eased, and her life prolonged, with proper medicine.
Question: The Colorado statute prohibits assisting suicide. Did Dick Bauer violate the statute?
Answer: Yes. Handing someone a gun, for the purpose of killing herself, would seem to be a clear
case of assisting suicide.
Question: If you were on the jury, would you vote to convict?
Answer: The jury voted to acquit.
Question: How could the jury acquit when the evidence was so clear?
Answer: It appears that the jurors practiced “jury nullification,” in which a jury understands that the
defendant has violated the law, but simply refuses to convict because it disapproves of the statute or
feels sympathetic for the defendant.
Question: Is jury nullification good?
Answer: Instances of it are unusual or even rare, yet it has been a part of Anglo-American law for
centuries. Those who favor it believe that it represents democracy in action, that the power of a jury
to acquit is protection against government tyranny, and a bulwark against laws that have become dis-
favored. Those who oppose jury nullification argue that it is nothing less than the collapse of law. If a
88 Unit 1 The Legal Environment

jury is free to ignore the judge’s instructions, and clear rules of law, it is acting as a superlegislature,
above the power of the people.
Question: Give an example of jury nullification that would be bad.
Answer: Suppose a defendant, who is popular in his community, attacks and seriously injures a recent
immigrant, based on race. The evidence is clear that he committed the crime without provocation. If the
jury practices “nullification,” simply ignoring the evidence because it likes this defendant, the streets
may become less safe and racial tensions greater. Respect for the judiciary could diminish and some cit-
izens might be tempted to take the law into their own hands, feeling that the courts had failed.

Key Issue: Insanity

You Be the Judge: Bieber v. People,1 p. 168
Facts: Donald Bieber shot and killed William Ellis, whom he did not know, without any motive. Bieber
had a long history of drug abuse. Colorado charged him with first degree murder. He pleaded not guilty
by reason of insanity. An expert witness testified that he suffered from “amphetamine delusional disor-
der” (ADD), a recognized psychiatric illness resulting from long-term use of amphetamines and charac-
terized by delusions—that is, false beliefs. At trial, Bieber’s attorney argued that he was not intoxicated at
the time of the crime but that he was insane due to ADD. The trial court refused to instruct that Bieber
could be legally insane due to ADD, and the jury found Bieber guilty of first degree murder. He appealed.
Issue: Should the trial court have instructed the jury that it could find Bieber legally insane due to ADD?
Holding: The court affirmed the conviction, stating that ADD was not a valid basis for an insanity plea.
The “argument” for the state, which appears in the text, comes nearly verbatim from the court’s decision.
Among other things, the majority stated:
We do not see any qualitative difference between a person who drinks or takes drugs knowing
that he or she will be momentarily “mentally defective” as an immediate result and one who
drinks or takes drugs knowing that he or she may be “mentally defective” as an eventual, long-
term result. In both cases, the person is aware of the possible consequences of his or her actions.
We do not believe that in the latter case, such knowledge should be excused simply because the
resulting affliction is more severe.
Question: Suppose a defendant goes to a bar, gets blind drunk, and then goes out and robs a store. Is
his intoxication a defense to the robbery?
Answer: No. In most states, voluntary intoxication is no defense to a crime. (Note that some states
may admit voluntary intoxication as evidence that the defendant could not form the specific intent
necessary for certain crimes. For example, a defendant charged with assault with intent to kill might
seek to demonstrate a degree of intoxication that prevented his forming the intent to murder. This is a
separate issue from the general point the court makes in Bieber: intoxication is generally no defense.)
Question: Since voluntary intoxication is not a defense to a crime, why does Bieber even bother to
raise his drug use?
Answer: Bieber acknowledges that voluntary intoxication is no defense. He is not arguing that he
was intoxicated, he is arguing that he was legally insane at the time he committed the crime.
Question: What does drug use have to do with insanity?
Answer: Bieber’s argument is that prolonged drug use left him afflicted with ADD, an established
psychiatric ailment.
Question: Morality clearly enters this case. In what way does Bieber argue that morality supports his
claim?
Answer: Bieber argues that the criminal law very properly makes a moral distinction for people who
commit an act without knowing what they are doing, without the ability to control their conduct. How-
ever such a person came to be sick, society must deal with him differently than it does with someone
who knowingly violates the law, injuring another person, knowing full well what he is doing.

1
856 P.2d 811, 1993 Colo. LEXIS 630, Supreme Court of Colorado, 1993.
Chapter 7 Crime 89

Question: In what way does the state argue that morality supports its prosecution?
Answer: Bieber caused the problem himself. He knew the effect drugs had and made a decision to
continue causing those problems, until they became chronic. Morally, he must accept responsibility
for his behavior. This is not the case of someone tragically afflicted with a disease from birth.

Crimes That Harm Business

Key Issue: Fraud
Question: It is 7:00 in the morning and all seems right with the world. Mr. Browning leaves his house,
walking his children and their dog to the car, which is parked in the drive. What he does not know is
that a woman is sitting in the rusty Dodge parked across the street, watching him intently. When she
sees Browning’s easy gait and cheerful mood, she turns on her video camera. Browning drives to
school, and Video Woman follows. She tapes him walk the children into school, and she zooms in as he
takes the dog on a quick trot around the school. There is evidence of a crime here. What crime?
Answer: Insurance fraud. Mr. Browning has applied for insurance benefits based on an automobile
accident; he has claimed to be totally disabled and in great pain. The woman is an insurance investi-
gator. The insurance company will deny the claim, in whole or in part, based on the videotape, and if
necessary will use the tape in litigation defense.
Question: How serious is the problem of fraudulent insurance claims?
Answer: Very serious. Insurance losses for fraud may be from $20 to $40 billion annually. That is
more than all of the damage from the worst hurricane in history. According to the National Insurance
Crime Bureau the average American household spends $1,674 for insurance, and of that, about $167
goes toward paying fraudulent claims.
Question: Why is there so much fraud?
Answer: Greed is obviously part of the problem. Some people seem to regard accidents like the lot-
tery, a game to be played.
Question: Suppose you are walking down the street, round a comer, and see that a bus has just col-
lided with an automobile. Only one policeman has arrived so far, and the situation is chaotic. The bus
door is open, some passengers are exiting while a few seem to be getting on the bus. Why would any-
one be getting on the bus?
Answer: Other pedestrians, unaffected by the accident, may have realized that they could quickly en-
ter the bus, wait for investigators, and then claim serious, painful injuries.
Question: Is it fraud for them to do that?
Answer: Obviously.
General question: Suppose you realized that you could easily hop on the bus. By claiming a painful back
and neck injury, you might be able to get a quick settlement for $10,000 or more. Would you do it?
As described in the text, in “swoop and squat” collisions, two drivers conspire to cause a double rear-
end accident. One car pulls ahead of the target vehicle at a safe distance while the other conspiring driver
“swoops” directly in front of the target auto. The first vehicle makes a sudden stop, causing two rear-end
accidents. The goal is to place the target driver at fault, at least for one of the collisions. The driver of the
“swooping” car will make exorbitant injury claims, perhaps with the assistance of a cooperating doctor.
The driver of the first car may also claim injuries, or may conveniently speed away, making it less likely
that investigators will be able to prove a conspiracy.
Question: Is there anything people can do about fraudulent car accidents?
Answer: Yes. Witnesses to accidents should report everything they see to police. Write down the li-
cense plate numbers and any important details, such as the second car “swooping” in front of the tar-
get car. A witness may contradict a claimant’s story, and that, in turn, may alert insurance investiga-
90 Unit 1 The Legal Environment

tors to possible fraud. The investigators can then check with the National Insurance Crime Bureau, to
see if the claimants have been involved in other accidents.

Another Variation: Telephone Fraud

A college student allegedly made a quick profit by combining—fraudulently—two elements of the cyber
age. (We will omit the student’s name; initial articles described the allegations against him but as of a
year later there are no follow-up articles, indicating a likely plea bargain but conceivably a decision not to
prosecute.)
The student opened an account with Bell Atlantic for a “540” number. This is in fact a toll number, sim-
ilar to a “900” number, although few people recognize it as such. The student then obtained confidential lists
of beeper numbers for government employees, business people, and hospital workers. He entered the num-
bers in his computer and instructed the computer to page each of the people. Around the country, around the
clock, beepers sounded, notifying people that someone at a 540 number needed to speak to them immediate-
ly. Startled business executives responded at 3:00 in the morning; conscientious doctors, not recognizing the
area code but concerned that a patient might need emergency help, returned the calls promptly. Those re-
turning the calls heard only a “click” at the end, but were all billed 95 cents for each call.
The system worked smoothly for several weeks. Unfortunately for the clever but immoral student,
several of the people dialed by his computer happened to be investigators of the Nassau County, New
York, district attorney’s office. The student managed to earn an effortless $4,000 in just a few weeks–
until he was arrested.

Key Issue: Identity Theft

Case: United States v. Dragon,2 p. 173
Facts: Shalon Dragon was convicted of identity theft, and sentenced to 44 months in prison. He appealed
claiming the sentence was too harsh.
Issue: Did Dragon’s identity theft warrant this sentence?
Holding: Yes, judgment affirmed. Dragon and Durham were stopped by officers after the officer received
a complaint about a black Lexus, and then observed a black Lexus driving erratically. After pulling the
car over, the officer questioned Durham about the Macy’s bags in the back seat. During the questioning,
Durham changed his story about the bags. Dragon and Durham were arrested after a check revealed that
they both had two outstanding warrants. A search of the car revealed the following: several fake New
York State nondriver identification cards with pictures of Durham and Dragon, but using different names;
records from Mount Sinai Medical Center listing names that matched those on the identification cards,
plus addresses, birth dates, and social security numbers; receipts from Macy’s in New Jersey, New York,
and Pennsylvania; nineteen boxes of Timberland boots; five Macy’s shopping bags containing new mer-
chandise; two cellular phones, and twenty-eight small glassine bags.
Dragon confessed to a scheme whereby Durham obtained personal information from patients at
Mount Sinai Medical Center, and they both obtained false identification cards using the patient infor-
mation. The pair then used the identification cards to charge merchandise and gift cards to the real ac-
count-holders at Macy’s stores in New Jersey, New York, and Pennsylvania.
The District Court imposed a 44-month sentence, noting the complexity of the scheme and the harm
caused to victims of identity theft. Although the court acknowledged Dragon’s request for more lenient
sentence, in imposing the higher sentence the court emphasized Dragon’s “long history of fraudulent
criminal conduct and the fact that Dragon had been given ‘a second chance’ by various courts ‘over and
over again’”. Because of his failure to take advantage of this leniency, the District Court thought it was
necessary to sentence Dragon to “a serious term of imprisonment.”
The Court also noted that based on the record, it was clear that the District Court gave careful consid-
eration to the higher sentence, and the Appellate Court must afford that decision great deference because
the trial court is in the best position to determine the appropriate sentence.
2
471 F.3d 501, Third Circuit Court of Appeals, 2006.
Chapter 7 Crime 91

Question: What is identity theft?

Answer: Identity theft involves taking without permission someone’s personally identifiable infor-
mation (“PII”) such as credit card numbers, social security number, or driver’s license number, and
using that information to obtain credit, make purchases, and engage in other financial transactions.
Question: How does identify theft occur?
Answer: One example is transactions conducted over the Internet. These transactions are susceptible
to identity theft because they are not conducted face-to-face, it takes only a modicum of technological
sophistication to steal the PII of others, and Internet users often fail adequately to safeguard their in-
formation.
Question: Is that what occurred in this case?
Answer: No. Dragon and Durham engaged in old-fashioned identity theft. He used stolen medical
records containing PII to obtain credit information of the victims and use it for his own gain.
Question: Will the court order Dragon to repay the victims of his crime?
Answer: The court has the power to order restitution. We don’t know whether it did in this case, and,
in any event, restitution is only effective if the criminal defendant has the money to pay it.
Question: Why did the court make a point of saying that the trial court was in the best position to im-
pose a sentence in his case?
Answer: Because Appellate courts, like the court in this case, do not hear testimony. They base their
decisions on the record of the trial, the briefs of the lawyers, and their oral argument. The trial court
heard first hand all of the witness testimony and other evidence. Based on this, the trial court is in a
better position to make decisions about the facts of the case

Crimes Committed by Business

Case: Case: Commonwealth v. Angelo Todesca Corp.,3 p. 175
Facts: Brian Gauthier, an experienced truck driver, worked for Todesca, a paving company. Gauthier no-
ticed that the back-up alarm on the truck he was driving was broken. He reported it to the company, and
the mechanic realized that the alarm needed to be replaced, but there were none in stock. The company
told Gauthier to continue driving the truck without the alarm.
About a month later, Gauthier and other Todesca drivers were delivering asphalt to a worksite at an
entrance to a mall. A police officer directed mall traffic and the construction vehicles. The trucks had to
back through the intersection. All of the other truckers had back-up alarms. When it was Gauthier’s turn
to back up, he struck and killed the officer.
The state charged the company with motor vehicle homicide. The jury found the company guilty and
the judge imposed a fine of $2,500.
Issue: Could the company be guilty of motor vehicle homicide?
Holding: Yes, conviction affirmed. According to the court, in order to find a corporation guilty, the
Commonwealth must prove that Gauthier was in a position to act on behalf of the corporation, and that he
was acting on behalf of Todesca at the time he committed the criminal act.
Todesca argues that a corporation can never be found guilty of motor vehicle homicide because a
“corporation” cannot “operate” a motor vehicle. However, by that logic, according to the court, a corpora-
tion would never be guilty of any crime. Only human agents, acting on behalf of the corporation, are ca-
pable of operating a motor vehicle. Nevertheless, the court has consistently held that a corporation may be
criminally liable for the acts of its agents, if the agents are acting within the scope of their employment
and on behalf of the corporation.
Here, it clear that the back-up alarm on Gauthier’s truck was not working properly at the time of the
collision. Although an alarm is not required by law, Todesca’s safety policy requires alarms on all of its
trucks. Gauthier’s violation of this safety policy is negligent, for which Todesca could be held liable.

3
446 Mass. 128, 842 N.E.2d 930, Supreme Court of Massachusetts, 2006.
92 Unit 1 The Legal Environment

Also, Todesca’s policy was to install back-up alarms on all of its trucks. The other Todesca trucks at
the site had working alarms. The jury could have inferred that the victim, a veteran police officer, knew
that Todesca’s policy was to have back-up alarms on their trucks, and that the victim expected to hear the
alarm when the truck backed-up.
The jury could also have inferred that an alarm on Gauthier’s truck would have alerted the victim that
the truck was moving in reverse in time for the victim to have gotten out of the way, and that the victim
did not realize Gauthier’s truck was backing up because he did not hear the alarm.
Question: The court answers two entirely separate questions in this case. What are they?
Answer: First, the court has to decide whether corporations could be criminally liable for the acts of
its agents. If the answer to that question is yes, the court then must decide whether there was suffi-
cient evidence to find this corporation liable.
Question: Todesca wants to court to read the law strictly. What does this mean?
Answer: Todesca is asking the court to look at the exact language of the statute. The law says “oper-
ating” a motor vehicle. A corporation cannot actually “operate” a motor vehicle; therefore it cannot
be guilty of motor vehicle homicide.
Question: What did the court think about that argument?
Answer: Not much. Taken to its logical conclusion that line of thinking would make it impossible for
a corporation to ever be guilty of any crime. A corporation cannot falsify documents, or serve alcohol
to minors. Only human beings working on behalf of a corporation can engage in that type of conduct.
Question: If the employee commits the criminal act, why is it fair to hold the corporation liable for
the employee’s conduct?
Answer: Because if the employee is acting within the scope of his or her employment, they are en-
gaging in the conduct for the benefit of the corporation. In this case, Gauthier was at the work site be-
cause it was part of his job with Todesca. To hold otherwise would not deter companies from engag-
ing is shoddy or unsafe work practices.
Question: A corporation cannot go to jail. What criminal penalties do courts impose on corporations?
Answer: A corporation convicted of a crime typically will face a fine—money paid to the state.
Question: If individuals have been harmed by a corporation’s crime would they receive payment of a
fine imposed on the corporation?
Answer: No. A court might order a corporation to pay restitution to victims of a crime. The victims
could also bring civil lawsuits against the corporation and seek money damages.

Key Issue: Money Laundering

Ethics: Prosecutorial Ethics in Money Laundering Cases
Federal prosecutors have sharply increased the number of people they charge with money laundering. Be-
cause more people are funneling drug money out of the country? Not necessarily, argue defense lawyers.
They say that prosecutors are now routinely adding on money laundering charges to cases that used to be
routine fraud cases. For example, a medical supply company bills the federal government for prosthetic
devices that it never delivered. Formerly, that would have been a simple Medicare fraud case. Today,
though, it is likely to be a Medicare fraud and money laundering case. Prosecutors in such a case argue
that the money obtained illegally from the federal government is used to invest in and maintain a legiti-
mate business, and that is money laundering. If the medical supply company uses money obtained from
fraudulent bills to pay the rent on its company headquarters, it has laundered the money.
What is the big deal? Time in prison. A simple fraud conviction typically results in a sentence of five
years or less; a money laundering conviction can increase the penalty to 20 years in prison. In addition, a
prosecutor who tacks on a money laundering charge puts extra pressure on the defendant to plea bargain,
because the penalty for a conviction could be so high.
Defense lawyers claim that this practice is unethical, in that Congress intended stiff money laundering
penalties for big-time drug dealers who gravely damage our country by importing harmful substances. A
small business dealer who cheats once or twice should not be treated like a drug kingpin. Prosecutors re-
Chapter 7 Crime 93

spond that they are ethically required to charge the most serious provable crime, and that Congress wrote
the money laundering statute broadly in order to discourage all fraud, not just drug-related offenses.

Case: Case: United States v. Kennard,4, p. 179

Facts: The reverend Abraham Kennard bilked hundreds of churches out of millions of dollars through a
phony grant scheme. Abraham created the Network International Investment Corporation and then ap-
proached churches and other nonprofits with an offer: for every $3,000 in membership fees that an organ-
ization paid to the Network, the Network would award $500,000 in grants. Abraham told investors that
the grants were possible because he had secured wealthy investors who would provide financing, and that
the Network expected to earn a profit from its Christian resorts. More than 1,600 churches and other non-
profits paid Abraham over $8.7 million.
Abraham deposited the money into an escrow account in the name of his lawyer, and then transferred
the money into another account in the name of Promotional Times International, Ltd., which was con-
trolled by Abraham’s brother Laboyce Kennard.
The investors never received their money and Abraham was found guilty of various crimes. Laboyce
was found guilty of money laundering. He appealed, arguing there was insufficient proof that he know-
ingly laundered money.
Issue: Was there sufficient evidence that Laboyce knowingly laundered money?
Holding: Yes, conviction affirmed. Laboyce claims that there was not enough evidence for a jury to find
beyond a reasonable doubt either the existence of a criminal agreement or his knowing participation in it.
To convict Laboyce on the money laundering conspiracy charge, the prosecution had to prove that
some agreement existed to launder the proceeds of Abraham’s fraud scheme, and that Laboyce knowingly
participated in that agreement. The extent of Laboyce’s knowledge of the details in the conspiracy does
not matter if the prosecution can show that he knew the essential objectives of the conspiracy.
There was sufficient evidence to prove that Laboyce knowingly participated in the agreement to laun-
der the proceeds from Abraham’s fraud. Laboyce set up the Promotional account and made large deposits
to that account of cashier’s checks from Abraham and checks drawn on the escrow account. Laboyce
made most of the withdrawals from the Promotional account including cashier’s checks made payable to
Abraham.
Laboyce was also involved in Network events. For example: Laboyce went with Abraham to a Net-
work meeting in Charlotte, North Caroline at which Abraham gave Network members fake checks instead
of the promised grant money; Laboyce videotaped Abraham at a fake groundbreaking ceremony for a
Network resort which was used to hold off member complaints; Laboyce “worked security” at a Network
meeting where Abraham told the members their grants would be delayed again; and Laboyce was present
at a meeting where Abraham told him that an FBI investigation of the Network led to a seizure of the es-
crow account.
This evidence, according to the court, was enough for a jury to find beyond a reasonable doubt that
Laboyce knowingly participated in the conspiracy to launder the proceeds of the fraud.
Question: What is money laundering?
Answer: Money laundering is taking the profits of certain crimes and either (1) using the money to
promote crime or (2) attempting to conceal the source of the money.
Question: How did the money laundering occur here?
Answer: Payments received from members based on a fraudulent investment scheme were passed
through two accounts to hide their source and relationship to Abraham.
Question: If Laboyce did not commit the fraud, what crime did he commit?
Answer: Laboyce was charged with conspiring to commit money laundering.
Question: How is that different than money laundering?
Answer: Conspiracy to launder money involves an agreement to launder money, and Laboyce’s
knowing and voluntary participation in that agreement.

4 472 F.3d 851, 11th Circuit Court of Appeals, 2006.

94 Unit 1 The Legal Environment

Constitutional Protections
Key Issue: Exclusionary Rule
Under the exclusionary rule, evidence obtained illegally may not be used at trial against the victim of the
search.
Question: How can it possibly make sense to exclude legitimate evidence, because a police officer
made some technical mistake? Aren’t we letting the criminal go free because the constable blun-
dered?
Answer: The Supreme Court has created the exclusionary rule as a judicial remedy to protect all citi-
zens from potential police abuse. The theory is that if the police know in advance that illegally seized
evidence cannot be used at trial, they will have no motive to obtain such evidence, and will go about
their investigations lawfully. Remember also that some “technical” mistakes might be quite invasive,
such as the police breaking down a door at night, entering an apartment, strip searching all residents,
tearing up the premises, and then realizing that no crimes had been committed and that they had acted
on a worthless tip.
Question: Does the Supreme Court think that all cops want to abuse the average citizen?
Answer: No. What the court has said, by crafting the rule, is that one of the most valuable things
there is about living in a democratic society is the ability to live without fearing the police. We should
be able to sleep at night without worrying that our doors will be smashed in.
Question: The difference between a lawful search (or arrest) and an unlawful one is often a warrant.
What is so special about a warrant?
Answer. The warrant requirement means that the police must obtain the permission of a neutral per-
son before conducting most searches or making most arrests. Because the police are charged with re-
sponsibility to investigate crimes, they may have a vested interest in conducting investigations as ag-
gressively as possible. The warrant requirement means that someone who has no personal interest in
the investigation must first be convinced that there is probable cause to search some premises or make
an arrest.
Question: What might happen if there was no requirement for probable cause?
Answer: For example, police might reason that a certain percentage of students at a large university
use illegal drugs, and that therefore it would be profitable to stake out the campus and search every-
one who enters it. Even if only a tiny percentage of students are carrying drugs, it might prove a good
way to catch criminals. The problem is that all of the innocent people would be forced to endure peri-
odic searches.
Question: What is wrong with being searched if you don’t have anything to hide?
Answer: It is not pleasant to be searched. Some people might not mind it, but there are many who do
not want to feel that they live in a police state. Also, to allow police to search without a warrant is to
give them tremendous power, which some officers might abuse. For example, a particular policeman
might choose to search only minorities, or women, or students, or those living in a particular neigh-
borhood. Ours is supposed to be a society regulated by law, not by personal, police power.
Question: How many people go free because of the exclusionary rule?
Answer: Not many. As the text reports, most studies have shown that less than 1% of those prosecut-
ed go free because evidence is excluded. Courts deny the great majority of motions to suppress, and
in those few cases where they are allowed, the prosecution generally has additional evidence suffi-
cient to convict.

Key Issue: Patriot Act

The Patriot Act was quickly passed following the September 11 attacks. Since its passage, a number of
politicians and civil libertarians have criticized its scope. Ask students to find recent newspaper articles
regarding the use or criticism of the Patriot Act.
Chapter 7 Crime 95

Key Issue: Double Jeopardy

Question: What does double jeopardy mean?
Answer: A criminal defendant may be prosecuted only once for a criminal offense. (Note that this
means prosecuted by the same sovereign. There is no prohibition against a different sovereign prose-
cuting the same defendant, based on the same incident. In the Rodney King trials in Los Angeles, the
police officers were first charged by the state of California. Their acquittal led to the Los Angeles ri-
ots. The United States then prosecuted them for civil rights violations, and obtained convictions
against two. Because the United States is a different sovereign from California, there was no double
jeopardy problem.)
Question: O. J. Simpson was acquitted after the most highly publicized trial in history, yet he was
then sued by the families of the victims. Didn’t that violate double jeopardy?
Answer: No. The families filed a civil lawsuit. That is not a criminal prosecution and there is no dou-
ble jeopardy issue.

International Perspective: Double Jeopardy

Prosecutors in Catanzaro, Italy charged Francesco Mesiano and Michele Iannello with murdering a seven-
year-old boy. The government sought life sentences. The jury heard all the evidence, retired to consider it,
and later emerged with a verdict of not guilty. The jurors were not convinced that there was sufficient ev-
idence to convict the men. A year later, the same two men were back on trial for the same crime. Prosecu-
tors again tried to prove that they brutally killed the young boy. Does this second prosecution violate
double jeopardy? No. In Italy an acquitted defendant may be retried.
Question: What are the advantages and disadvantages of the American and Italian approaches to the
double jeopardy issue?
Answer: The American rule ensures that a powerful government will not be able to destroy someone
simply by prosecuting relentlessly and repetitively. The disadvantage is that, if the prosecution made
its case ineptly, or new evidence surfaces, or the original jury ignored the evidence, the rest of society
must live with a defendant who perhaps should be in jail. The Italian approach avoids this latter prob-
lem, but fails to offer the same protection against an overbearing government.
General Question: Which system do you prefer?

Key Issue: The Eighth Amendment

Case: Ewing v. California,5 p. 189
Facts: California passed a “three strikes” law pursuant to which a defendant with two or more serious
convictions, who was convicted of a third felony, had to receive an indeterminate sentence of life impris-
onment, which required the defendant to actually serve a minimum of 25 years, and in some cases much
more.
Gary Ewing, on parole from a nine-year prison term, stole three golf clubs worth $399 each, and was
prosecuted. Because he had prior convictions, the crime, normally a misdemeanor, was treated as a felo-
ny. Ewing was convicted and sentenced to 25 years to life. He appealed claiming that the sentence violat-
ed the Eighth amendment.
Issue: Did Ewing’s sentence violate the Eighth Amendment?
Holding: No. When the California Legislature enacted the three strikes law, it made a judgment that pro-
tecting the public safety requires incapacitating criminals who have already been convicted of at least one
serious or violent crime. Nothing in the Eighth Amendment prohibits California from making that choice;
states have a valid interest in deterring and segregating habitual criminals.
Recidivism is a serious public safety concern in California and throughout the nation. Approximately
67% of former inmates released from state prison were charged with at least one “serious” new crime

5
538 U.S. 11, 123 S.Ct. 1179, 155 L. Ed.2d 108, United States Supreme Court, 2003.
96 Unit 1 The Legal Environment

within three years of their release. Released property offender, like Ewing, had higher rates of recidivism
than those released after committing violent or drug offenses.
California’s three strikes law is controversial. Critics doubt that the law is effective and cost-efficient
in reaching its goals. This criticism is best directed at the Legislature, we do not sit as a “superlegislature”
to second guess these policy choices. The state’s interest is not merely in punishing for the triggering
event. It is also in dealing in a harsher manner with repeat offenders that are incapable of conforming to
the norms of society as established by criminal law.
Ewing’s sentence is justified by the State’s interest in public safety, and amply support by his long
criminal record. Ewing has been convicted of numerous misdemeanor and felony offenses, served nine
separate terms of incarceration, and moist of his crimes were committed while he was out on parole. His
prior strikes were serious felonies including robbery and three residential burglaries. Although his sen-
tence is long, it reflects a rational legislative judgment entitled to deference.
We hold that Ewing’s sentence is not grossly disproportionate and therefore does not violate the
Eighth Amendment.
Question: What is the “three strikes law”?
Answer: A California law that dramatically increases the sentences for repeat offenders. A defendant
with two or more serious convictions, who is convicted of a third felony, receives an indeterminate life
sentence, and is required to serve at least 25 years of that sentence.
Question: Was Ewing’s third offense a felony?
Answer: It normally would have been a misdemeanor, but because of his prior convictions it was treated
as a felony.
Question: Why did the state pass the law?
Answer: To combat not just crime, but repeat offenders. Recidivism is a serious public safety issue. Cali-
fornia’s interest is not just in punishing the third strike crime, but also in dealing in a harsh manner those
repeat criminals who cannot conform to societal norms.
Question: Doesn’t 25 years for stealing three golf clubs sound excessive?
Answer: To some, yes. The Court said it was long, although justified, and critics of the three strikes law
have questioned the law’s effectiveness and fairness.
Question: If the Court thinks it is long, why don’t they overturn what the trial court held?
Answer: The court pointed out that if critics do not agree with the law, they need to take that up with the
Legislature, the body charged with making laws. The court is not going to second-guess the Legislature,
which has primary responsibility for making difficult policy choices. Moreover, the Court agreed that the
law was in response to dangerous levels of recidivism, and the need to incapacitate criminals who have
already been convicted of at least one serious or violent crime.

Additional Questions
1. YOU BE THE JUDGE WRITING PROBLEM An undercover drug informant learned from a mu-
tual friend that Philip Friedman “knew where to get marijuana.” The informant asked Friedman three
times to get him some marijuana, and Friedman agreed after the third request. Shortly thereafter
Friedman sold the informant a small amount of the drug. The informant later offered to sell Friedman
three pounds of marijuana. They negotiated the price and then made the sale. Friedman was tried for
trafficking in drugs. He argued entrapment. Was Friedman entrapped? Argument for Friedman: The
undercover agent had to ask three times before Friedman sold him a small amount of drugs. A real
drug dealer, predisposed to commit the crime, leaps at an opportunity to sell. If the government
spends time and money luring innocent people into the commission of crimes, all of us are the losers.
Argument for the Government: Government officials suspected Friedman of being a sophisticated
drug dealer, and they were right. When he had a chance to buy three pounds, a quantity only a dealer
would purchase, he not only did so, but bargained with skill, showing a working knowledge of the
business. Friedman was not entrapped—he was caught.
Chapter 7 Crime 97

Answer: Friedman argued entrapment, claiming that there was no evidence of his predisposition to
traffic in drugs. The Alabama Supreme Court ruled against him. The court noted that Friedman admit-
ted to occasional use of marijuana, that he had been able quickly to locate marijuana to resell to the
agent, and that he showed a sophisticated knowledge of the drug when bargaining over the price of
three pounds. The court held that there was no evidence of entrapment. Friedman v. State, 654 So.2d
50, 1994 Ala. Crim. App. LEXIS 179 (1994).
2. ETHICS Nineteen-year-old David Lee Nagel viciously murdered his grandparents, stabbing them
repeatedly and slitting their throats, all because they denied him use of the family car. He was tried
for murder and found not guilty by reason of insanity. He has lived ever since in mental hospitals. In
1994 he applied for release. The two psychiatrists who examined him stated that he was no longer
mentally ill and was a danger neither to society nor to himself. Yet the Georgia Supreme Court re-
fused to release him, seemingly because of the brutality of the killings. Comment on the court’s rul-
ing. What is the rationale for treating an insane defendant differently from others? Do you find the
theory persuasive? If you do, what result must logically follow when psychiatrists testify that the de-
fendant is no longer a danger? Should the brutality of the crime be a factor in deciding whether to
prolong the detention? If you do not accept the rationale for treating such defendants differently, ex-
plain why not.
Answer: The ruling appears to contradict the purpose of the insanity defense, which is to distinguish
those who are not morally responsible for their actions from criminals deserving punishment. If the
psychiatrists are correct that he is now sane and no danger, he should be released. The atrociousness
of the killings is legally irrelevant because the original verdict was that he was not legally (or moral-
ly) responsible for them.
3. Federal law requires that all banks file reports with the IRS any time a customer engages in a cash
transaction in an amount over $10,000. It is a crime for a bank to “structure” a cash transaction, that
is, to break up a single transaction of more than $10,000 into two or more smaller transactions (and
thus avoid the filing requirement). In Ratzlaf v. United States, the Supreme Court held that in order to
find a defendant guilty of structuring, the government must prove that he specifically intended to
break the law, that is, that he knew what he was doing was a crime and meant to commit it. Congress
promptly passed a law “undoing” Ratzlaf. A bank official can now be convicted on evidence that he
structured a payment, even with no evidence that he knew it was a crime. The penalties are harsh. (1)
Why is structuring so serious? (2) Why did Congress change the law about the defendant’s intent?
4. Conley owned video poker machines. They are outlawed in Pennsylvania, but he placed them in bars
and clubs. He used profits from the machines to buy more machines. Is he guilty of money launder-
ing?
Answer: Yes. It is money laundering to take the proceeds of illegal acts and conceal or use them for
other activities (be those activities legal or illegal).
5. Northwest Telco Corp. (Telco) provides long-distance telephone service. Customers dial a general
access number, then enter a six-digit access code and then the phone number they want to call. A
computer places the call and charges the account. On January 10, 1990, Cal Edwards, a Telco engi-
neer, noticed that Telco’s general access number was being dialed exactly every 40 seconds. After
each dialing, a different six-digit number was entered, followed by a particular long-distance number.
This continued from 10 P.M. to 6 A.M. Why was Edwards concerned?
Answer: He suspected that a computer hacker was trying to steal the six-digit access code. A com-
puter can be programmed to dial the general access number and randomly try a six-digit code, and
continue doing it until it succeeds. Edwards was right. Telco traced the calls to the home of Joseph
Riley. Riley was in fact using a computer to steal the number, a violation of Washington’s computer
crime statute. State v. Riley, 121 Wash. 2d 22, 846 P.2d 1365 (1993).
Solution Manual for Legal Environment 4th Edition by Beatty

98 Unit 1 The Legal Environment

6. Under a new British law, a police officer must now say the following to a suspect placed under arrest:
“You do not have to say anything. But if you do not mention now something which you later use in
your defense, the court may decide that your failure to mention it now strengthens the case against
you. A record will be made of anything you say and it may be given in evidence if you are brought to
trial.” What does a police officer in the United States have to say, and what difference does it make at
the time of an arrest?
Answer: In the United States, a police officer must give the four essential parts of the Miranda warn-
ings: the right to remain silent; that anything said can be used in court; that the suspect is entitled to a
lawyer; and that if he cannot afford one, the court will appoint one. Moreover, it is a constitutional vio-
lation if a prosecutor/ district attorney uses a defendant’s silence to prove his guilt. The British warning
puts additional pressure on a suspect. If the suspect remains silent at the time of arrest but then at trial
states an alibi, the prosecution will be allowed to attack the alibi because it was not mentioned earlier.
American reaction to the new British rule has been critical. Commentators claim that putting greater
pressure on a suspect to speak increases the possibility of confused, forced explanations that will lead to
wrongful convictions. The British government created the new practice because it claimed that innocent
suspects speak up freely whereas sophisticated criminals wait until later to concoct false defenses. (This,
of course, ignores the larger category of unsophisticated or intellectually challenged criminals).
7. After graduating from college, you work hard for 15 years, saving money to buy your dream property.
Finally, you spend all your savings to buy a 300-acre farm with a splendid house and pool. Happy, an
old college friend, stops by. She is saving her money to make a down payment on a coffee shop in
town. You let her have a nice room in your big house for a few months, until she has the funds to
make her down payment. But odd acquaintances stop by almost daily for short visits, and you realize
that Happy is saving money from marijuana sales. You are unhappy with this, but out of loyalty you
permit it to go on for a month. Why is that a big mistake?
Answer: Happy could be convicted, under state and/or federal law, of drug felonies. Under RICO,
each sale is a racketeering act. If she uses the money to invest in a business, she is guilty under RICO,
and could be fined or jailed. Moreover, the property used in the sales could be forfeited–your proper-
ty. See, for example, United States v. A Parcel of Land With A Building, 884 F.2d 41 (1st Cir. 1989).
8. ROLE REVERSAL Write a short-answer questions that focuses on the elements of a RICO viola-
tion.

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