Business Law and the Legal Environment Study Set 1

Business

Quiz 8 :

Crimes

Quiz 8 :

Crimes

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Carriage Homes, Inc. was a general contractor that built multifamily residential and land-development projects in Minnesota. John Arkell was Carriage Homes' chief executive officer, president, and sole shareholder. Carriage Homes built Southwinds, a condominium development of 38 residential units in Austin, Minnesota. The foundation elevations of some of the Southwinds units were lower than permitted under the State Building Code, causing storm water to pool in the units' driveways and garages. The city of Austin's development director sent Arkell a series of seven letters in 1999 and 2001 concerning the elevation problems, and Arkell gave the letters to the project managers, who failed to resolve the problems. Minnesota makes a violation of the State Building Code a misdemeanor. On May 30, 2001, the state charged Carriage Homes and Arkell with three misdemeanor counts each, alleging a violation of the Uniform Building Code (UBC). Carriage Homes pleaded guilty and was sentenced to a $1,000 fine. But Arkell pleaded not guilty, asserting that he could not be held criminally responsible for the violation. After a bench trial, the district court found Arkell guilty. He was sentenced to pay a fine, pay restitution to the condominium owners, and serve 90 days in jail, with 80 days stayed pending his compliance with sentencing conditions. Mr. Arkell appealed on the grounds that the employees and subcontractors had simply not followed his orders and he was not responsible for their failures. Is he correct? [State v Arkell, 657 NW2d 883 (Minn. App. 2003)]
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Refer to the case State v Arkell (657 NW2d 883)
Facts:
1) Arkell is the owner of Carriage Homes a company that made residential units in Minnesota.
2) Some houses built by Carriage did not comply with State Building Code and warned Arkell. Arkell failed to resolve the addressed problems. The state sued
3) Arkell was found guilty and appealed
The appeals court affirmed. Arkell contended that he had no control over the buildings compliances since it was the employees and contractors who failed to fix the problems. The court argued that under law Arkell is liable if he had the duty to prevent the issues but failed to do so. In this case Arkell was warned through a series of letters several times of the issue and Arkell and the responsibility to check building compliances throughout the project. Delegating the task to others does not relieve him of responsibility.

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James Durham runs an art gallery. He has several paintings from unknown artists that he has listed for sale. The paintings always sell at his weekly auction for $20,000 to $50,000 above what James believes them to be worth. James learns that the bidders at the auctions are employed by an olive distributor located near the shipping yards of the city. What concerns should Durham have about the art, the bidders and the large purchase prices?
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In this case as the owner of the gallery James have certain liabilities or should uphold extra responsibility in order to prevent his involvement in criminal activities. For example, James has no idea the origin of the paintings. James will have to find out the paintings origins in case these are stolen goods.
Additionally, James be wary of his customers. It is suspicious that most of the bidders of employed by a single olive company. The large purchase price is made by those employees should also arouse suspicion, these may be linked to criminal activities. James should report these suspicious activities to law enforcement to protect himself from implication from possible unlawful dealings.

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Kravitz owned 100 percent of the stock of American Health Programs, Inc. (AHP). To obtain the Philadelphia Fraternal Order of Police as a customer for AHP, Kravitz paid money bribes to persons who he thought were officers of that organization but who in fact were federal undercover agents. He was prosecuted for violating RICO. He was convicted, and the court ordered the forfeiture of all of Kravitz's shares of AHP stock. Can a forfeiture be ordered? [United States v Kravitz, 738 F 2d 102 (3d Cir)]
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Refer to the case US v Kravitz (738 F2d 102)
Facts of the case:
Mr. K (defendant) is the sole owner of AHP, Inc. Mr. K made bribes to undercover agents to secure a contract for his company. He was arrested and charged under RICO (Racketeer Influenced Corrupt Organization) Act, trial court ordered forfeiture of AHP stock and Mr. K appealed
Opinion:
The appeals court affirmed. Mr. K was in clear violation of RICO making more than one bribe to undercover agents. As to whether forfeiture of stock was necessary, court agreed with trial jury verdict that found AHP was used by Mr. K to maintain his RICO activities.

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Jennings operated a courier service to collect and deliver money. The contract with his customers allowed him a day or so to deliver the money that had been collected. Instead of holding collections until delivered, Jennings made short-term investments with the money. He always made deliveries to the customers on time, but because he kept the profit from the investments for himself, Jennings was prosecuted for embezzlement. Was he guilty? [New York v Jennings, 504 NE2d 1079 (NY)]
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In April 2006, a DC-9 aircraft landed in the port city of Ciudad del Carmen, located 500 miles east of Mexico City. When the plane's crew began directing security personnel away from the plane, the suspicious activity piqued the curiosity of local law enforcement officials. They decided to search the plane and found 128 suitcases packed with over 56 tons of cocaine. The cocaine was to have been delivered to Toluca, near Mexico City. In investigating the plane and individual involved, law enforcement agents discovered that the plane had been purchased with money that had been laundered through two U.S. banks, Wachovia Corp. and Bank of America Corp. Neither bank was actually aware that the money was being used to purchase a plane that would then be used for drug trafficking. Are the banks still criminally liable for breaking the rules? Explain why or why not. What if the banks were aware of large sums of money being run through particular customers' accounts? Would that knowledge make a difference?
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Baker and others entered a Wal-Mart store shortly after 3:00 A.M. by cutting through the metal door with an acetylene torch. They had moved some of the merchandise in the store to the rear door, but the police arrived before the merchandise could be taken from the store. Baker was prosecuted for larceny. He raised the defense that he was not guilty of larceny because no merchandise had ever left the store. Is there enough intent and action for a crime? [Tennessee v Baker, 751 SW2d 154 (Tenn App)]
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Gail drove her automobile after having had dinner and several drinks. She fell asleep at the wheel and ran over and killed a pedestrian. Prosecuted for manslaughter, she raised the defense that she did not intend to hurt anyone and because of the drinks did not know what she was doing. Was this a valid defense?
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Bernard Flinn operated a business known as Harvey Investment Co., Inc./High Risk Loans. Flinn worked as a loan broker, matching those who came to him with lenders willing to loan them money given their credit history and the amount involved. From 1982 through 1985, Flinn found loans for five people. Indiana requires that persons engaged in the business of brokering loans obtain a license from the state. Flinn was prosecuted for brokering loans without having a license. He raised the defense that he did not know that a license was required and that, accordingly, he lacked the criminal intent to broker loans without having a license. Does Flinn have a good defense? [Flinn v Indiana, 563 NE2d 536 (Ind)]
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Grabert ran Beck's, an amusement center in Louisiana. He held a license for video gambling machines. Louisiana makes it illegal to allow a minor to play a video gambling machine. A mother came into Grabert's center carrying her 23-month-old baby in her arms. She sat at the video poker machine with her child on her lap and proceeded to play. State troopers witnessed the baby pushing the buttons on the machine at least three times. The Department of Public Safety and Corrections revoked Grabert's video gaming license because a minor had been allowed to play the machines, and Grabert sought judicial review. The trial court reversed, and the department appealed. Has Grabert committed the crime of allowing a minor to engage in gaming? Is this the crime of allowing a minor to gamble? [Grabert v Department of Public Safety Corrections, 680 So2d 764 (La App) cert. denied; Grabert v State through Dept. of Public Safety and Corrections, 685 So2d 126 (La.)]
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The Banco Central administered a humanitarian plan for the government of Ecuador. Fernando Banderas and his wife presented false claims that the bank paid. After the fraud was discovered, the bank sued Banderas and his wife for damages for fraud and treble damages under the Florida version of RICO. Banderas and his wife asserted that they were not liable for RICO damages because there was no proof that they were related to organized crime and because the wrong they had committed was merely ordinary fraud. They had not used any racketeering methods. Is involvement with organized crime a requirement for liability under RICO? [Banderas v Banco Central del Ecuador, 461 So2d 265 (Fla App)]
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Howell made long-distance telephone calls through the telephone company's computercontrolled switching system to solicit funding for a nonexistent business enterprise. What crimes did Howell commit? [New Mexico v Howell, 895 P 2d 232 (NM App)]
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H. J., Inc., and other customers of Northwestern Bell Corp. alleged that Northwestern Bell had furnished cash and tickets for air travel, plays, and sporting events and had offered employment to members of the Minnesota Public Utilities Commission in exchange for favorable treatment in rate cases before the commission. A Minnesota statute makes it a felony to bribe public officials. H. J. and other customers brought suit against Northwestern for violating the criminal bribery statute. Can the customers bring a criminal action? [H. J., Inc. v Northwestern Bell Corp., 420 NW2d 673 (Minn App)]
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In the late 1980s, Life Energy Resources, Ltd. (LER), a New York corporation, was a multilevel marketing network. LER's marketing plan provided that members of the general public could purchase its products only through an official LER distributor or by becoming LER distributors themselves. Each potential distributor had to be sponsored by an existing distributor and was required to sign a distributorship agreement with LER stating that he or she would not make medical claims or use unofficial literature or marketing aids to promote LER products. Ballistrea and his partner Michael Ricotta were at the top of the LER distribution network. Two products sold by LER were the REM SuperPro Frequency Generator (REM) and the Lifemax Miracle Cream (Miracle Cream). The REM, which sold for $1,350 to distributors, was a small box powered by electricity that ran currents through the feet and body of the user. Ballistrea and Ricotta distributed literature and audiotapes to many potential downstream distributors and customers-some of whom were undercover government agents-touting the REM and the Miracle Cream. Other literature claimed that the Miracle Cream could alleviate the discomforts of premenstrual syndrome and reverse the effects of osteoporosis. The Food and Drug Administration charged Ballistrea and Ricotta with violating federal law for making medical claims concerning LER products. Their defense is that they never sold any of the products. They simply earned commissions as part of the marketing scheme and could not be held criminally liable on the charges. Are they correct? [United States v Ballistrea, 101 F 3d 827 (2d Cir)]
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Dr. Doyle E. Campbell, an ophthalmologist, established his practice in southern Ohio in 1971. Many of Dr. Campbell's patients are elderly people who qualify for federal Medicare benefits and state Medicaid benefits. Under the existing financing system, a doctor who treats a Medicare patient is required to submit a "Medicare Health Insurance Claim Form" (HCFA Form 1500). The doctor is required to certify that "the services shown on this form were medically indicated and necessary for the health of the patient and were personally rendered by me or were rendered incident to my professional service by my employees." Claims Dr. Campbell submitted for his elderly patients ranged from $900 to $950, of which $530 to $680 were covered by the Medicare program. The government alleged that Dr. Campbell billed Medicare for several treatments that were either not performed or not necessary. Dr. Campbell was charged with fraud for the paperwork he submitted. Has he committed a crime? [United States v Campbell, 845 F 2d 1374 (6th Cir)]
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