Overcriminalization of Conduct, Overfederalization of Criminal Law, and the Exercise of Enforcement Discretion
History of the Problem
The overcriminalization of conduct that is not inherently wrong9 and the overfederalization of criminal law enforcement are two faces of the same problem: the attractive but ineffective use of criminal sanctions as a solution for whatever current crisis faces the American public, be it a surge in gang crime or a breakdown on Wall Street. The new criminal offenses that result are frequently drafted in a vague and overly broad manner, without adequate criminal intent requirements, and enacted into law without any consideration of whether such criminalization is necessary and appropriate.
Overcriminalization occurs when federal policymakers enact criminal statutes lacking meaningful mens rea (criminal intent) requirements; federalize crimes traditionally reserved for state jurisdiction; adopt duplicative and overlapping statutes; expand criminal law into economic activity and regulatory and civil enforcement areas; impose vicarious liability with insufficient evidence of personal awareness or neglect; and create mandatory minimum sentences unrelated to the wrongfulness or harm of the underlying crime. These inevitably increase the size of the already massive federal criminal code.
Given the sheer number of criminal prohibitions, it is not surprising that only a small fraction of these offenses require “criminal intent.” Indeed, federal statutes provide for more than 100 types of mens rea.10 As a prominent casebook notes, “[e]ven those terms most frequently used in federal legislation—‘knowing’ and ‘willful’—do not have one invariable meaning. . . . Another layer of difficulty is attributable to the fact that Congress may impose one mens rea requirement upon certain elements of the offense and a different level of mens rea, or no mens rea at all, with respect to other elements.”11 The erosion of mens rea is especially problematic in the white collar arena, where potential defendants often have little (or no) notice that the conduct in which they have engaged is unlawful, much less criminal.
Similarly, through the imposition of vicarious liability for the acts of others, defendants can be prosecuted, convicted and punished without any evidence of personal awareness or neglect. Under this theory, off-duty supervisors can be criminally punished for the accidental acts of their employees, even if they did not know of, approve of, or benefit from the conduct.12 Corporate criminal liability employs the doctrine of respondeat superior, which is identical to the standard used in civil tort law. This means that as long as an employee is acting within the scope of his or her employment (broadly defined), the corporation is deemed criminally liable for that employee’s actions, despite the corporation’s best efforts to deter such behavior. Regardless of compliance programs, employment manuals, or even strict instructions to the contrary, if an employee violates the law, then the corporation can be criminally punished.
Past attempts to reform these problems have been unsuccessful. In the 1970s and early 1980s, Congress produced several iterations of a comprehensive and cohesive federal criminal code.13 After hundreds of markups and passage through the Senate, the effort finally died due lack of support from major stakeholders.14 Throughout the 1990s, then Chief Justice William Rehnquist and the Judicial Conference advocated a five-point, limited basis for federal criminal jurisdiction in order to ease the burden on federal courts and return plenary police power to the states.15 The Judicial Conference advocated the exercise of federal criminal jurisdiction in the following cases: (i) offenses against the federal government or its inherent interests; (ii) criminal activity with substantial multi-state or international aspects; (iii) criminal activity involving complex commercial or institutional enterprises most effectively prosecuted using federal resources or expertise; (iv) serious high level or widespread state or local government corruption; and (v) criminal cases raising highly sensitive local issues.16 In 1998, the ABA issued nearly identical recommendations for curbing the excessive costs of overcriminalization and overfederalization, and preventing the further diminishment of criminal enforcement.17
Despite these efforts, the dismal state of federal criminal law remains and the trend proceeds unabated. A prime example of overcriminalization is the honest services fraud statute,18 which is responsible for victimizing countless law-abiding individuals. Criticized by legal experts as vague and overbroad, it fails to define or limit the phrase “intangible right of honest services.” According to Justice Scalia, if “taken seriously and carried to its logical conclusion,” the statute makes it criminal for an elected official to vote for a bill because it will help secure the support of a particular constituency group in his re-election campaign; a mayor to use the prestige of his office to get a table at a restaurant without a reservation; or a public employee to call in sick to work in order to go to a baseball game.19
The failure of Congress to define criminal conduct in a clear and specific manner encourages prosecutors to charge criminally all sorts of conduct—from errors in judgment to behavior that is the slightest bit unsavory. Congress frequently relies on prosecutorial discretion to shape the contours of criminal offenses.20 And, rather than limit the reach of prosecution to conduct truly belonging in the federal realm, these laws allow the federal government to directly encroach upon intra-state conduct and even criminalize behavior that state governments have deemed legal.
Another vague, poorly defined law that is subject to expansive application by prosecutors is the Foreign Corrupt Practices Act (FCPA).21 The law does not make clear what conduct is permissible and what is prohibited. To whom the law applies and the precise contours of the phrase “foreign official” are equally unclear.22 DOJ has had a free hand interpreting FCPA provisions, which have been virtually untested in the courts, since a criminal indictment would be a death sentence for corporations and going to trial is too risky and costly for most individual defendants. Thus, most FCPA investigations result in the settlement of allegations before there has been an opportunity to challenge a prosecutor’s interpretation of the statute’s application. Such risk and legal uncertainly is undoubtedly bad for business and decreases the competitiveness of American businesses abroad.
The most recent evidence of overcriminalization is found in the newly enacted 884-page Dodd-Frank Wall Street Reform & Consumer Protection Act.23 This law contains more than two dozen new criminal offenses, prohibiting conduct ranging from public disclosure of certain broadly defined information, to margin lending, to failure to reasonably foresee the bad acts of others.24 In addition to creating these new criminal offenses, virtually every provision of the Act includes regulatory criminalization wherein Congress hands over the power to define criminally punishable conduct to unelected agency bureaucrats.25 Like many new crimes created by Congress in recent years, these new criminal provisions were not reviewed by the Judiciary Committee of either the House or Senate, despite the fact that those committees are granted express jurisdiction over new criminal laws. And unsurprisingly, most of the criminal laws that are contained in the financial reform legislation lack an adequate criminal intent requirement.26 This financial services reform bill demonstrates that Congress continues to criminalize business and economic conduct without appropriate care and consideration.
Because businesses are automatically held liable for the criminal acts of their employees—regardless of how high up the wrongdoing went and who knew of it—the executive branch has tremendous leverage when it threatens to indict an entire business. Coupled with the erosion of mens rea, this makes cases involving honest services fraud, environmental regulatory offenses, and any law that requires only a “knowing” violation, easy to win. And, until recently, DOJ exercised unprecedented leverage through policies that included threatening a business with indictment unless it turned over “culpable” employees and refused to indemnify those employees’ legal costs.27
Currently, there is a groundswell of unprecedented, bi-partisan support for stemming the tide of increasingly broad, vague, and unnecessary criminal laws. Both the business and legal communities share a concern about the vast amount of discretion that vague criminal laws give to the executive branch. For the past five years, a coalition of diverse groups that includes the ABA, the U.S. Chamber of Commerce, the American Civil Liberties Union (ACLU), the National Association of Criminal Defense Lawyers (NACDL), the Heritage Foundation, and the Association of Corporate Counsel (ACC), has pressured DOJ to limit its scope in investigating corporate crime.28 Successful lobbying by this large and diverse coalition, has led DOJ to retract some of these policies.29
In the last two years, the overcriminalization coalition has expanded both in membership and scope. Washington Legal Foundation, the Federalist Society, the Cato Institute, Families Against Mandatory Minimums (FAMM), and the Constitution Project (TCP), among others, have joined the existing coalition to express support for positive reform.30
Increased attention on the problem of overcriminalization helped spur two congressional hearings and a surge of attention to the topic by academics, legislators, and press. On July 22, 2009, under the bipartisan leadership of Reps. Bobby Scott (D-VA) and Louie Gohmert (R-TX), the House Judiciary Subcommittee on Crime, Terrorism, and Homeland Security held a hearing to learn about the trend of overcriminalizing conduct and overfederalizing crime. The hearing received attention from national media and further ignited the overcriminalization reform movement.31
Shortly thereafter, two coalition organizations, NACDL and The Heritage Foundation, published a groundbreaking, non-partisan, joint report entitled: Without Intent: How Congress Is Eroding the Criminal Intent Requirement in Federal Law.32 At the official release event, held on May 5, 2010 on Capitol Hill, Rep. Scott heralded the report as a “road map” for reform and Rep. Gohmert lamented the victimization of citizens by criminal laws lacking adequate intent requirements.33
On September 28, 2010, the crime subcommittee held a second hearing to examine the problems through the lens of the Without Intent report and explored the report’s recommendations.34 The coalition of organizations explicitly supporting this hearing included the ABA, ACLU, the Constitution Project, FAMM, The Heritage Foundation, Manhattan Institute, NACDL, and the National Federation of Independent Business (NFIB).
The explosive growth of federal criminal law in recent decades, the failure to guarantee adequate mens rea requirements, the proliferation of vague and overbroad criminal offenses, the expansion of vicarious criminal liability, and the increase in delegating Congress’s criminalization authority to unelected officials are all issues that Congress and the Obama administration need to address. Without reform, the federal criminal law is in danger of becoming a broad template for abuse of government power. The current fragile state of the economy, growing deficit, and calls for a smaller, more efficient, and less intrusive government demand that we revisit and reform our federal criminal code and lawmaking process.
Further, recent history has witnessed an erosion of important attorney-client privilege protections. In recent years, many federal government agencies have adopted policies that erode the attorney-client privilege, the work product doctrine, and employee legal protections in the corporate context. Each of these policies—including DOJ’s 2006 “McNulty Memorandum,” the SEC’s 2001 “Seaboard Report,” the Environmental Protection Agency’s “Audit Policy,” and similar policies by other agencies—pressure companies and other organizations to waive their attorney-client privilege and work product protections as a condition of receiving full cooperation credit during investigations. These policies also contain separate provisions that weaken employees’ Sixth Amendment right to counsel, Fifth Amendment right against self-incrimination, and other fundamental legal rights by pressuring companies not to pay their employees’ legal fees during investigations, to fire them for not waiving their rights, and to take other punitive actions against them long before any guilt has been established.
After considering the concerns raised by the ABA, NACDL, former DOJ officials, congressional leaders, and others during the course of congressional hearings, the U.S. Sentencing Commission (USSC) and the Commodity Futures Trading Commission voted to reverse their privilege waiver policies in April 2006 and March 2007, respectively.35 In addition, in August 2008, DOJ replaced the McNulty Memorandum with revised corporate charging guidelines that generally bar prosecutors from pressuring companies to waive their attorney-client privilege, work product, or employee legal rights in return for cooperation credit, with certain exceptions.36 The SEC also issued a revised Enforcement Manual on January 13, 2010 that provides additional guidance for agency staff but does not formally change the SEC’s waiver policy outlined in the Seaboard Report.37 Although the Manual generally directs agency staff not to request waiver of the privilege during most investigations, it also contains several significant exceptions and does not provide adequate protection for the privilege and employee legal rights. Comprehensive reform is needed to maintain attorney-client privilege in all federal agencies.
These problems transcend political affiliation or ideology; the need for reform is an increasingly commonly held view from those on both the right and the left. Congress and the administration should work toward stemming the growth of federal crimes, creating tighter mens rea requirements, and supporting more Congressional oversight of executive branch discretion. Otherwise, even more law-abiding individuals may find themselves facing unjust prosecution and punishment.