Criminalization of Business Regulation Violations

In the past, when corporations committed regulatory violations the penalties were often not severe. It used to be the case that the company would pay a fine and then business could continue as usual. Over the last decade, however, criminal statutes and sanctions against businesses have begun to resurface from within the federal regulations. This allows these violations to be criminalized and corporations to be prosecuted in an environment that was formerly largely thought of as regulatory. White collar criminal defense attorney Barry N. Covert spoke to the Buffalo Law Journal about the way these regulations are now being applied and how they could affect businesses going forward. The full story is available on the Buffalo Law Journal website.

Complex white-collar defense

According to the Buffalo Law Journal, white-collar defense has become more complex because attorneys must now consider the criminal implications of their clients’ regulatory violations. Mr. Covert told the Law Journal that attorneys must look at any potential charges and prioritize minimizing criminal liability for both the president or manager of the company and the company as a whole. “When they were just going to enforce regulations on the civil side and potentially penalize with a civil penalty, that’s one matter that’s easier to negotiate,” he said. “But when they are indicating that there are potential criminal charges, now you have to concern yourself with whether your client can speak anymore with them, whether you need lawyers for other management and employees of the company, and what you do with document production,” Mr. Covert continued. He went on to say that “once there is a threat of criminal charges on any regulatory case, it changes the entire ballgame.”

Mr. Covert told the Law Journal that technological advancements have made white-collar criminal defense more complex. The constant electronic communication necessary for business operations has complicated the way discovery is handled in the digital era. “You have to have greater resources than you did 10 or 15 years ago,” Mr. Covert explained. He went on to say that preserving all communication is crucial to criminal litigation. Part of the challenge now lies in determining how all of this information should be downloaded, saved, and searched.

Affected industries

As criminal charges coming from regulatory violations have become more prevalent, some industries have felt the effects more than others. Mr. Covert explained to the Buffalo Law Journal that areas such as stock fraud and local zone ordinances are more heavily affected by the changes. He went on to say that the Environmental Protection Agency and the State Liquor Authority, among other agencies, have begun to enforce their regulations more aggressively. In response to this, Mr. Covert advises that companies institute affirmative compliance programs. These programs show that policies are being enforced so that, on the occasion a violation does occur, it is easy to show that the intent was not criminal. He also told the Law Journal that institutions should focus on properly training employees and forming a position, such as a compliance director, that can deal with the regulations specific to that institution’s field.

About Barry N. Covert

Mr. Covert is a senior partner in Lipsitz Green Scime Cambria’s Criminal Defense Trials and Appeals Practice Area. He is known for his aggressive representation of clients in the areas of New York State and federal criminal trials and appeals; driving while intoxicated; constitutional law, including First Amendment, civil rights actions, and federal False Claims Act; defending against allegations of scientific misconduct and fraud, research misconduct and fraud, plagiarism, and fabrication of evidence; and professional licensing defense. Mr. Covert frequently provides legal analysis for WGRZ and other media outlets.

This article does not purport to give legal advice and is for informational purposes only.