USA Law and Practice Contributed by: Daniel J. Fetterman and Brian S. Choi, Kasowitz LLP
3.5 Tax Evasion and Financial Reporting There is a federal law that criminalises any attempt to evade or defeat a tax or its payment in any manner. There are closely related criminal offences, including wilfully filing a materially false return, and aiding or abetting the preparation of a materially false return. While there is no specific statute criminalising false accounting, such conduct generally falls within the purview of criminal laws and regulations like falsify - ing books and records, making false statements, and wilfully failing to keep required records. Finally, while there is no standalone corporate offence for failure to prevent tax evasion, companies can be and often are held criminally liable under a respondeat superior theory – for the illegal acts of their directors, officers, employees, or agents associated with tax evasion. Stated differently, under US law, corpora - tions generally are criminally liable for the illegal acts of their employees, management and directors that benefit the company – even if those acts violate a company’s policies. 3.6 Cartels and Anti-Competitive Offences There are three primary antitrust, cartel, and competi - tion laws. • First, the Sherman Act prohibits agreements that unreasonably restrain trade, including price-fixing, bid-rigging, and customer allocation. It also makes it illegal to monopolise trade. • Second, the Clayton Act prohibits mergers or acquisitions that may substantially lessen competi - tion or tend to create a monopoly. The Clayton Act provides only civil penalties. • Third, the Federal Trade Commission Act prohibits unfair methods of competition and unfair or decep - tive acts and practices. This act is a civil statute that the government may use to initiate civil and administrative proceedings against the defendant. 3.7 Counterfeiting Generally, the US mail and wire fraud statutes can be used to prosecute conduct involving the counterfeit of intellectual property. More specifically, 18 U.S.C. 2320 is the primary criminal statute used to prosecute the sale, manufacture, or distribution of goods or ser -
vices using a counterfeit mark. This statute covers the general trafficking of counterfeit goods and services, military goods, and pharmaceutical products. The US Economic Espionage Act (EEA) also criminal - ises the theft of intellectual property that constitutes trade secrets. It is codified at 18 U.S.C. 1831 – 1839. Section 1832 criminalises the commercial theft of trade secrets and other statutes criminalise economic espionage intended to benefit a foreign government. In criminal cases, an individual who violates the EEA faces up to ten years’ imprisonment and corporations face the greater of USD5 million or three times the value of the stolen trade secret. The EEA also pro - vides for criminal forfeiture, destruction of the stolen trade secrets and restitution. On the civil side, DOJ or the trade secret owner can seek injunctive relief, and trade secret owners can sue for actual losses, unjust enrichment or a reasonable royalty as well as ex parte seizure in extraordinary circumstances, among other remedies. 3.8 Greenwashing and Environmental Pollution Violations In the United States, the Clean Air Act and the Clean Water Act are well-known environmental statutes that criminalise the negligent or knowing discharge of haz - ardous pollutants into the air or water. One of the most prominent criminal cases involving the Clean Air Act is the prosecution of car manufacturer Volkswagen, which pled guilty to three felony counts and a USD2.8 billion penalty for running a scheme to sell diesel vehi - cles that were installed with a defeat device to cheat on emission tests mandated by the Environmental Protection Agency (EPA). 4. Prosecution and Trial Process 4.1 Initiating a Prosecution A financial crime prosecution can be initiated in one of three ways: (1) a criminal complaint, (2) an indictment returned by a grand jury, or (3) the government’s filing of an information. A criminal complaint is a document that states the essential facts constituting the offenc - es charged and must be sworn by a law enforcement officer in front of a magistrate judge or other suitable judicial officer. It must establish probable cause to
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