South-Western Legal Studies in Business

Company May Be Convicted for Illegal Acts of Its Officers
Description

Appeals court affirmed the conviction of corporate officers and the liability of their employing corporation in an effort to bribe the leader of a state legislature to secure passage of legislation favorable to company interests.

Topic Criminal Law
Key Words

Fraud, Conspiracy, Bribery, Public Officials, Corporate Liability

C A S E   S U M M A R Y
Facts

LPRI operated a gambling facility and dog track in Rhode Island. It was owned by Wembley, a British company. Bucci was the general manager of LPRI; Potter was CEO of Wembley. They were convicted of hiring the McKinnon law firm to pay John Harwood large sums of money to influence state legislation beneficial to LPRI. Harwood was speaker of the Rhode Island House of Representatives and a member of the McKinnon firm. Bucci was sentenced to 41 months in prison, Potter to 36 months, and LPRI was fined $1.5 million. They challenged the sufficiency of the evidence and the ability to convict the firm for misdeeds of its manager.

Decision

Affirmed. Defendants were found guilty of violating the federal statute that makes it illegal to devise any scheme, in interstate or foreign commerce, that involves fraud that deprives citizens of their officials' honest services. Evidence was sufficient to show that Bucci got an agreement from Potter to pay a $1 million bonus to McKinnon if Harwood got legislation passed that would help LPRI's gambling interests. The payments were called "retainers" to the law firm but payment was based on passage of beneficial legislation. Even if the scheme is not successful, it is illegal to attempt to secure favorable legislation based on promised payments to legislators. A corporation may be held liable for the criminal acts of its agents so long as those agents are acting within the scope of employment.

Citation

U.S. v. Potter, 463 F.3d 9 (1st Cir., 2006)

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