Top-Level Executives Can No Longer Hide Behind Their Company's Shield To Avoid Prosecution
At one time, many business executives calculated the occasional lawsuit and fines for fraud, knowingly leaving defective and dangerous products on the market, or other illegal act into the ordinary cost of doing business—if and when they were caught. These days, an executive who relies on his or her business to take the hit for a consciously illegal action could face criminal charges instead. Here are some things to keep in mind.
Owners and executives are being held more accountable.
It's hard to say exactly when the shift started, but public disgust over executives who walked away from business scandals with nothing more than a fine—which the company usually had to pay, not the private individual—has caused a change in the way the federal government has gone after cases that fall under its jurisdiction.
For example, the New England Compounding Center case, led not just to the closure of the compounding pharmacy but to indictments for the owners and other key players—including the pharmacists—on charges ranging from fraud to murder.
Just recently, three former employees of Takata Corp. have been indicted on conspiracy and wire fraud for intentionally hiding information about the company's defective airbags for decades. These charges are in addition to fines and charges levied against the company itself.
Executives can no longer hide behind their business entity's shield.
The Department of Justice (DOJ) is letting business executives know that they are now taking aim at individual wrongdoers that participate in corporate misconduct. Their new policy is to require companies to identify all individuals involved in the misdeeds, regardless of their rank, in order for the company to receive any credit for cooperating in the investigation.
This is a big change because companies used to be able to voluntarily disclose improper practices while shielding employees (particularly those at the top) and still avoid criminal charges. Now, if the company wants to come out of an investigation without being in danger of losing important licenses to operate, they have to give up the names of the people involved in the wrongdoing.
In practical terms for business executives and owners, this means making sure that you are always clear with an attorney like Souders Law Group about what you are doing and that you follow his or her advice. Make certain that you discuss any potential ethical or legal issues in advance of taking an action that could be considered questionable—your future, not just your company's, resides on staying on the right side of any legal lines because you can now face personal prosecution if you don't.