USA Law and Practice Contributed by: Daniel J. Fetterman and Brian S. Choi, Kasowitz LLP
1. Legal Framework and General Principles 1.1 Scope of Financial Crime and General Criminal Law Principles Financial crimes under the United States federal system are often defined as a “scheme to defraud”, which is a phrase used in many of the federal crimi - nal statutes relating to financial crimes, including the mail and wire fraud, bank fraud, securities fraud, and similar statutes. A scheme to defraud requires proof of a material misrepresentation, or the omission or concealment of a material fact calculated to deceive another out of money or property. Thus, in the context of bank fraud, a defendant engages in a scheme to defraud by engaging in a pattern or course of conduct designed to deceive a federally chartered or insured financial institution into releasing property, with the intent to victimise the institution by exposing it to actual or potential loss. For a financial crime to be charged federally in the United States, there must be a federal jurisdictional nexus, such as the use of US mails or wires that cross interstate lines, or the involvement of a federally char - tered institution. In addition to the broad “scheme to defraud” financial offences, the United States also criminalises specif - ic kinds of conduct, such as insider trading, money laundering, and public corruption. The constituent ele - ments of insider trading are (1) a material misrepresen - tation; (2) intent; (3) a connection with the purchase or sale of a security; (4) reliance; (5) economic loss; and (6) loss causation, or a causal connection between the misrepresentation and the loss. The constituent elements of money laundering are (1) conducting or attempting to conduct a financial trans - action, (2) knowledge that the transaction involved proceeds arising from unlawful activity, and (3) the requisite intent or knowledge. A defendant is liable for money laundering when, among other things, the conduct involves engaging in a financial transaction with the intent to promote the carrying on of specified unlawful activity, or knowing that the transaction is designed to conceal or disguise the nature, the loca -
tion, the source, the ownership, or the control of the proceeds of specified unlawful activity. Corruption is divided between bribing US officials and bribing foreign officials. Proving bribery of a US official requires that the official have a corrupt state of mind and accept (or agree to accept) the payment intending to be influenced in the official act. Payments to foreign officials are criminalised where they are intended to (1) influence a foreign official to act or make a deci - sion in his or her official capacity, or (2) induce such an official to perform or refrain from performing some act in violation of his or her duty, or (3) secure some wrongful advantage to the payor. 1.2 Burden and Standard of Proof The government always bears the burden of prov - ing all elements of an offence beyond a reasonable doubt. This standard is well-known but not always well-understood by practitioners outside of the United States. Proof beyond a reasonable doubt does not require the government to prove a criminal defendant guilty beyond all possible doubt. Proof beyond a rea - sonable doubt means that the evidence is of such a convincing character that a reasonable person would not hesitate to rely and act on it in the most important of his or her own affairs. This standard of proof is a much heavier burden than is required at the charging stage where the government must demonstrate prob - able cause. For the government to charge a person with a financial crime, it must demonstrate only that it is more likely than not that the defendant is the person named in the charging instrument and that he or she has committed the financial crime(s) alleged therein. 1.3 Aiding and Abetting Under US federal law, there is a general aiding and abetting statute – 18 U.S.C. 2 – that provides that any - one who “aids, abets, counsels, commands, induces or procures” the commission of an offence against the United States is “punishable as a principal”, and is subject to the same penalties as if he or she had committed the crime himself or herself. The United States also has a general conspiracy statute that criminalises (1) an agreement among two or more persons, the object of which is an offence against the United States; (2) the defendant’s knowing
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