Business, Legal & Accounting Glossary
a secret agreement between two or more people to perform an unlawful act
An agreement between two or more persons to engage jointly in an unlawful or criminal act, or an act that is innocent in itself but becomes unlawful when done by the combination of actors.
n. when people work together by agreement to commit an illegal act. A conspiracy may exist when the parties use legal means to accomplish an illegal result, or to use illegal means to achieve something that in itself is lawful. To prove a conspiracy those involved must have agreed to the plan before all the actions have been taken, or it is just a series of independent illegal acts. A conspiracy can be criminal for planning and carrying out illegal activities, or give rise to a civil lawsuit for damages by someone injured by the conspiracy. Thus, a scheme by a group of salesmen to sell used automobiles as new, could be prosecuted as a crime of fraud and conspiracy, and also allow a purchaser of an auto to sue for damages for the fraud and conspiracy.
Conspiracy has been informally defined as `an agreement to carry out an unlawful act, or a lawful act by unlawful means’. It is an indictable offence. `Unlawful’ has been construed quite widely, and historically is not limited to criminal acts. At present, there remain both statutory and common-law offences of conspiracy. In summary, it is a conspiracy to agree:
In summary, it is a conspiracy to agree to commit a crime. It is also a conspiracy to conspire to defraud, both in statute and common law, as fraud may be charged as a crime. There is also a conspiracy to outrage public decency, and to corrupt public morals. The statutory version applies when the act conspired to is itself a crime, whereas the common-law version may apply where the act would not be a crime if carried out by a single person. In practice, the common law conspiracy to corrupt public morals is unlikely to be charged, because most acts that would attract this charge would be crimes.
There are a number of problems with the Mens Rea of conspiracy. The Criminal Law Act 1977 says that the parties must `agree’ to commit the offence. However, does this mean that all the conspirators must actually intend that the offence be carried out? It appears that the Law Commission wanted a provision to that effect in the Statute, but it was left out because it was thought to be too complex. The result is a lack of clarity and conflicting decisions. In R v Anderson  AC 27 D agreed to supply diamond wire to facilitate a jailbreak. Did he agree that the jailbreak be committed? In his defence he said that he did not believe that it would and that the plan could not possibly have succeeded. The House of Lords held that the agreement itself was sufficient Mens Rea. However, in R v Edwards  Crim LR 45 D agreed to supply amphetamine will actually intending to supply ephedrine (which would not have been illegal). Or, at least, there was a possibility that he so intended. He was not convicted, despite that the Court of Appeal should have been bound by Anderson, because it had not been shown that he intended what had been agreed.
In the US, Conspiracy is governed by statute in federal courts and most state courts. Before its Codification in state and federal statutes, the crime of conspiracy was simply an agreement to engage in an unlawful act with the intent to carry out the act. Federal statutes, and many state statutes, now require not only agreement and intent but also the commission of an overt act in furtherance of the agreement.
Conspiracy is a crime separate from the criminal act for which it is developed. For example, one who conspires with another to commit burglary and in fact commits the burglary can be charged with both conspiracy to commit burglary and burglary.
Conspiracy is an inchoate, or preparatory, crime. It is similar to solicitation in that both crimes are committed by manifesting an intent to engage in a criminal act. It differs from solicitation in that conspiracy requires an agreement between two or more persons, whereas solicitation can be committed by one person alone.
Conspiracy also resembles attempt. However, attempt, like solicitation, can be committed by a single person. On another level, conspiracy requires less than attempt. A conspiracy may exist before a crime is actually attempted, whereas no attempt charge will succeed unless the requisite attempt is made.
The law seeks to punish conspiracy as a substantive crime separate from the intended crime because when two or more persons agree to commit a crime, the potential for criminal activity increases, and as a result, the danger to the public increases. Therefore, the very act of an agreement with criminal intent (along with an overt act, where required) is considered sufficiently dangerous to warrant charging conspiracy as an offense separate from the intended crime.
According to some criminal-law experts, the concept of conspiracy is too elastic, and the allegation of conspiracy is used by prosecutors as a superfluous criminal charge. Many criminal defense lawyers maintain that conspiracy is often expanded beyond reasonable interpretations. In any case, prosecutors and criminal defense attorneys alike agree that conspiracy cases are usually amorphous and complex.
The essence of conspiracy is the agreement between two or more persons. A single person acting alone cannot be guilty of conspiracy. However, if a coconspirator dies prior to the indictment or trial, the surviving coconspirator may still be charged with conspiracy. A husband and wife can be guilty of conspiracy. A corporation is considered a person for conspiracy purposes, so a corporation can be guilty of conspiracy, but it cannot conspire with itself. For example, if two or more employees within a corporation conspire to break the law and subsequently commit an act in furtherance of the conspiracy, the corporation itself is not criminally liable for conspiracy.
The agreement must be made voluntarily and with an intent to participate in furthering a common purpose. Mere knowledge or approval, in the absence of an actual agreement to cooperate, does not constitute conspiracy.
Once an agreement with criminal intent is made, the conspiracy is complete, unless the applicable statute requires the additional element of an overt act. The agreement need not be written or formal, and it may be proved by circumstantial evidence. A tacit understanding is sufficient to constitute agreement, even if no words are spoken that expressly communicate the conspiracy. Conspiracy exists if there is some form of mutual understanding between persons working together with a common unlawful end.
Criminal intent is also necessary to create a conspiracy. This means that the parties must intend both to agree on and to engage in the unlawful act. Ignorance of the law is not usually a defense to a crime, but an unwitting conspirator may defend against conspiracy charges on grounds of ignorance. Ignorance will not be a defense if the person continues to participate in the common plan after learning of its illegality.
Either the purpose of the agreement or the means by which it is accomplished must be illegal to support criminal prosecution on conspiracy charges. If the purpose is unlawful, the offense is committed even if the means used to achieve the purpose are lawful. One illustration is where a noncustodial parent conspires with another person to kidnap the parent’s child, and the child is abducted during a court-approved visit. Conspiracy also occurs if the purpose of the agreement is lawful but the means used to achieve it are illegal. For example, if a custodial parent chooses to retrieve a child who has been kidnapped by the noncustodial parent, an agreement to use unlawful force constitutes conspiracy.
An overt act can be any step that indicates that the execution of the conspiracy has begun. This can be an innocuous act and need not be illegal unto itself. For example, if two persons agree to rob a bank, then purchase a ski mask, the act of buying the mask may constitute the overt act required to charge the two with conspiracy.
The overt act must follow the agreement and must be executed with an intent to carry out the purpose of the conspiracy. For example, if one of the potential bank robbers buys a ski mask after the agreement is made, the purchase may not constitute the overt act if the ski mask will not be worn to carry out the robbery. An overt act need not be committed by each and every conspirator; an overt act by one conspirator solidifies the offense for all coconspirators. Thus, a conspirator who does not participate in the overt act can be charged with conspiracy.
If a conspirator completely and voluntarily renounces the criminal purpose to all conspirators, that person may withdraw from the conspiracy before the overt act is committed. Many jurisdictions require that the withdrawing conspirator also inform law enforcement officials or take measures to thwart the crime, in order to avoid criminal liability for the conspiracy.
A conspiracy exists as long as measures are taken to conceal evidence of the crime. A person who did not participate in the original agreement can become a coconspirator after the actual criminal act if the person joins in the concealment of the conspiracy. Whether a coconspirator received personal benefit or profit is of no importance.
Generally, conspirators are liable for all crimes committed within the course or scope of the conspiracy. The application of this general rule varies from state to state. Ordinarily, an act is within the course or scope of the conspiracy if it is a foreseeable result of the agreement. In some states, a conspirator is not liable where he or she has no knowledge of the specific act and argues successfully that the act was beyond the scope of the conspiracy. Also, if the purpose of the agreement is later changed by coconspirators, a conspirator who did not participate in the alteration may not be held liable for the new conspiracy. A person is liable for conspiracy only in regard to the meaning of the agreement as he or she understands it.
In some jurisdictions, a person may be guilty of conspiracy even if a coconspirator is immune from prosecution. For example, if two persons conspire to commit murder and one is found to have been insane at the time of the killing, the other conspirator may not be exempt from prosecution for conspiracy.
One who provides services to conspirators will not be guilty of conspiracy if that person has not participated in the agreement and does not know that a conspiracy exists. There must be willful participation in the conspiracy, as well as an intent to further the common purpose or design for conspiratorial liability. Therefore, aiding a conspiracy by selling material to further it does not make someone a conspirator if the person does not know of the conspiracy, even if that person knows the goods sold will be used for an unlawful purpose. However, if the circumstances indicate a conspiracy, one who cooperates and knowingly sells goods for illegal use may be guilty of conspiracy.
Generally, if a number of conspirators agree to carry out different functions in furtherance of the conspiracy, the agreement constitutes a single conspiracy. This is so even if the different functions amount to more than one unlawful purpose. In some states, however, the different functions may constitute multiple conspiracies if there is an agreement to commit more than one crime.
Punishment for the crime of conspiracy is ordinarily defined by statute and varies in accordance with the conspiracy’s objective. For example, a conspiracy to commit a misdemeanour will not be subject to the same punishment as a conspiracy to commit a felony. Conspiracy may be alleged in a civil case if the plaintiff has suffered an injury as a result of the conspiracy. Civil conspiracy is ordinarily not a cause of action, but the existence of a conspiracy may be used in determining the amount of damages in a civil action and the respective liabilities of civil codefendants for the payment of damages.
Federal conspiracy statutes were first passed in 1909. Under 18 U.S.C.A. § 371, it is a crime to commit an offense against or to defraud the United States or any agency of the United States. If the crime actually committed is a felony, the punishment is a fine of not more than $10,000 or five years’ imprisonment, or both. Under 18 U.S.C.A. § 372, it is a crime to conspire to impede or injure a federal law enforcement officer.
The U.S. Congress has made specific conspiracies illegal through a variety of statutes. For example, conspiracy to murder federal or foreign officials is prohibited by 18 U.S.C.A. § 1117, a freestanding statute. Conspiracy to kidnap is contained in subsection C of 18 U.S.C.A. § 1201, the federal kidnapping statute. Other federal statutes prohibit conspiracies to assassinate the president, the vice president, and their successors; assassinate the director or deputy director of the Central Intelligence Agency; assassinate or kidnap a Supreme Court justice; interfere with commerce and trade; violate computer laws; launder money; obstruct state or local regulation of gambling; injure property of the federal government; tamper with consumer products; gather, transmit, lose, remove, or destroy national defense information or materials; incite sailors to mutiny; engage in prohibited practices regarding radio broadcasts or game show contests; defraud the Tennessee Valley Authority; violate or interfere with voting rights; and sexually exploit children.
Conspiracy cases are often infamous for their ambition and breadth. The assassination of President Abraham Lincoln in 1865 by John Wilkes Booth was a product of a conspiracy between Booth and several supporters of the defunct Confederacy. In the early 1950s, the U.S. Congress conducted numerous hearings on Communist conspiracies against the United States. In the mid-1970s, several White House aides were indicted on charges of conspiracy in connection with the 1972 burglary of the offices of the Democratic National Committee in the Watergate Hotel, in Washington, D.C.
In November 1986, a Lebanese weekly, Al-Shiraa, reported that the U.S. government had secretly sold military weapons to so-called moderate factions in Iran. In exchange for the arms sales, according to Al-Shiraa, the moderate Iranians would work to secure the release of U.S. citizens held hostage in Lebanon. Thus began an investigation into a conspiracy that became popularly known as the Iran-Contra Affair.
Congressional investigations that followed the Al-Shiraa article revealed a covert “enterprise” connected with the arms sales. The operation, staffed by private citizens and funded by private monies, had diverted profits from the sale of the weapons to the Contras, a loosely knit military force in Honduras that sought to overthrow the socialist Sandinista government in Nicaragua.
Congressional investigations in the spring of 1987 revealed that the enterprise had been supervised by U.S. National Security Council (NSC) staff. The NSC, created by the National Security Act of 1947 (61 Stat. 496 [50 U.S.C.A. § 402]) and amended by the National Security Act Amendments of 1949 (63 Stat. 579 [50 U.S.C.A. § 401 et seq.]), existed to advise the president with respect to the integration of domestic, foreign, and military policies relating to national security.
One of the many problems presented by the enterprise was its apparent violation of the Boland amendments to appropriations bills— which were enacted as part of Pub. L. No. 97-377, § 793, 96 Stat. 1833, 1865 (1982); Pub. L. No. 98-215, § 108, 97 Stat. 1473, 1475 (1983); Pub. L. No. 98-441, § 106(c), 98 Stat. 1699, 1700-01 (1984); Pub. L. No. 98-473, § 8066, 98 Stat. 1837, 1935-36 (1984); Pub. L. No. 99-83, § 722 (g), 99 Stat. 190, 254-55 (1985); Pub. L. No. 99-169, § 105, 99 Stat. 1002, 1003 (1985); and Pub. L. No. 99-500, §§ 206-09, 100 Stat. 1783-299 to 1783-301 (1986). These bills were established in the early 1980s to prevent any “agency or entity of the United States involved in intelligence activities” from spending funds available to it “to support military or paramilitary operations in Nicaragua” (133 Cong. Rec. H4982-87 [daily ed. June 15, 1987]). The covert arms sales also violated procedural and substantive requirements of the Arms Export Control Act of 1976 (Pub. L. No. 90-629, 82 Stat. 1320 [22 U.S.C.A. §§ 2751-2796c (1989 Supp.)]). Moreover, the executive branch’s failure to notify Congress of the covert arms sales flouted the reporting provisions of the 1980 Intelligence Oversight Act (Pub. L. No. 96-450, tit. IV, § 407(b)(1), 94 Stat. 1981 [50 U.S.C.A. § 413 (1982)]).
In 1987, Lawrence Walsh, a former American Bar Association president and former federal judge, was assigned by the U.S. Court of Appeals for the District of Columbia Circuit, Independent Counsel Division, to investigate the Contra-funding scheme. In March 1988, Walsh charged Richard Secord, Albert Hakim, Oliver North, and John Poindexter with conspiracy to obstruct the U.S. government. North and Poindexter had worked for the NSC.
As in all conspiracy cases, an important goal of the prosecution was to determine who was involved in the agreement. A major issue in the Iran-Contra investigation was to determine precisely who in the executive branch authorized or was aware of the arms diversions and, specifically, whether the president had knowledge of the unlawful activities.
In the legal battles that ensued over access to information in connection with the prosecutions, Walsh faced challenges by the Reagan and Bush administrations, the Justice Department, intelligence agencies, and lawyers for the accused. Ultimately, the White House refused to relinquish classified information crucial to the prosecutions, and Walsh was forced to drop all conspiracy charges. The Iran-Contra Affair resulted in criminal convictions of several persons directly connected with the Reagan administration, but Walsh was never able to link the president to a conspiracy to obstruct the U.S. government. See also Bush, George: Reagan, Ronald.
In another conspiracy case, Patricia Caldwell, a bookkeeper with the Northwest Community Exchange (NCE), was charged with conspiracy to defraud the United States because she refused to provide to the IRS certain account information it requested regarding NCE customers. The NCE was one of a number of warehouse banks, which promised their customers that they would not reveal account information to third parties, including the Internal Revenue Service (IRS). As a result, the IRS shut down the warehouse banks, and it charged several customers and employees with conspiracy to defraud the United States. A jury convicted Caldwell of conspiring to defraud the United States, in violation of 18 U.S.C.A. § 371.
The Ninth Circuit Court of Appeals reversed Caldwell’s conspiracy conviction (United States v. Caldwell, 989 F.2d 1056 ). The government had argued that people have a duty to conduct their business affairs so as to not impair or impede the collection of revenue by the IRS. The majority opinion, written by Judge Alex Kozinski, rejected this interpretation of 18 U.S.C.A. § 371 and held that to defraud the government, a person had to act deceitfully or dishonestly. To allow otherwise would create an oppressive theory of criminal conspiracy. The court observed that under the government’s theory, “a husband who asks his wife to buy him a radar detector would be a felon … because their actions would obstruct the government function of catching speeders.” According to the court, Congress did not intend to make a federal crime out of actions that merely make “the government’s job more difficult.”
The jury in Caldwell’s case had not been instructed that it had to find that Caldwell agreed to obstruct the IRS’s tax-collecting functions by deceitful or dishonest means. This failure to inform the jury about an essential element of conspiracy constituted reversible error, and Caldwell’s conviction was overturned.
The sheer size of a conspiracy can create distinct problems for prosecutors and defense attorneys alike. In 1993, U.S. attorneys in New Hampshire began to investigate employees of the American Honda Motor Company. By 1994, prosecutors had cobbled together an immense conspiracy-based commercial bribery case.
The conspiracy prosecutions of American Honda executives and dealers began to develop in 1989, when Richard Nault, an automobile dealer in Nashua, New Hampshire, brought a civil suit against American Honda, claiming unfair treatment. In 1993, after testimony raised concerns of bribery, the judge in Nault’s case recommended that federal authorities investigate the financial affairs at American Honda.
Investigations by the Federal Bureau of Investigation (FBI) revealed a widespread pattern of illegal payoffs in which American Honda executives were given cash, jewellery, cars, and store ownership interests in return for the award of new Honda dealerships and favourable car allocations. According to the prosecutors, assistant U.S. attorneys Michael Connolly and Donald Feith, the alleged conspiracy involved twenty-two American Honda executives and dealers, encompassed thirty states, and was responsible for the misappropriation of approximately $50 million. In 1993 and 1994, prosecutors dangled various substantive and conspiracy charges before the executives and dealers.
By the end of 1994, only three of the alleged conspirators had refused to plead guilty: John Billmyer, an eighteen-year American Honda veteran and longtime vice president of auto field sales; Stanley Cardiges, another vice president of auto field sales and Billmyer’s protégé; and Dennis Josleyn, whose last position was West Coast sales manager for Acura, American Honda’s flagship automobile. In March 1994, Billmyer, Cardiges, and Josleyn were arrested at their homes, booked at local jails, and then released pending trial.
A federal grand jury charged Billmyer with one count of conspiring with Cardiges and Josleyn to defraud American Honda, the United States, the U.S. Department of the Treasury, and the IRS, in violation of 18 U.S.C.A. § 1341. Specifically, the indictment alleged that Billmyer, Josleyn, and Cardiges had conspired to receive money and gifts by secretly selling the valuable contract rights conferred on prospective dealers by American Honda.
Cardiges and Josleyn were charged with participating in the broad conspiracy with Billmyer and also conspiring to receive kickbacks in connection with an American Honda advertising campaign. Cardiges and Josleyn were further charged with violating the Racketeer Influenced and Corrupt Organizations Act (18 U.S.C.A. § 1961 et seq.). In November 1993, Cardiges allegedly asked former American Honda zone manager Edward Temple to tell the FBI that payments the two had received from a hidden interest in a Conway, Arkansas, car dealership were actually loan payments.
American Honda was portrayed by prosecutors as a victim of the conspiracies. As the trial approached, lawyers for Cardiges and Josleyn prepared a defense that would further victimize the company. According to Cardiges’s lawyer Philip Israels, any conspiracy case should have included the Japanese executives of Honda Motor Company International, the owner of American Honda. Israels maintained that the Japanese executives knew of, condoned, and even participated in the kickback schemes. Israels further charged that the federal government had information that suggested that Japanese executives knew of the kickbacks, and that the decision not to prosecute the Japanese executives was being used as a bargaining chip in trade negotiations between the United States and Japan.
Josleyn adopted a defense similar to that of Cardiges. Josleyn’s attorneys, Paul Twomey and Mark Sisti, noted that the alleged conspiracy was so widespread that Japanese executives must have known of it. Josleyn would deny no specific facts. Rather, he would invert the meaning of the mountain of evidence uncovered by the prosecutors and the FBI, to show that the Japanese executives must have known about and approved of the kickback schemes. Such a showing would allow Josleyn’s attorneys to argue that the alleged conspiracy was actually a lawful, routine business practice promoted by American Honda’s parent company.
Billmyer had retired from American Honda in 1988. His lawyers, David Long and Kevin Sharkey, centered his defense on a variety of grounds. Their arguments included that the prosecution of Billmyer was barred by the five-year statute of limitations on conspiracy charges because the indictment actually alleged multiple conspiracies, and any criminal liability for a conspiracy involving Billmyer expired in 1993; Billmyer had withdrawn from any alleged conspiracies by retiring in 1988; and New Hampshire was an improper venue because none of the acts Billmyer was alleged to have committed had any relation to New Hampshire.
In the months before trial, several motions to dismiss the case were denied by Judge Joseph DiClerico of the U.S. District Court for the District of New Hampshire. On January 22, 1994, after two years of maintaining his innocence and just one day before jury selection was scheduled to begin, Cardiges pleaded guilty to all charges. In exchange for lenient sentencing recommendations by the prosecutors, Cardiges agreed to testify against Billmyer and Josleyn. All the conspirators except Billmyer and Josleyn were prepared to testify to conspiracies to defraud.
The case proceeded to jury trial in February 1995 and was presided over by Judge DiClerico. In opening statements, assistant U.S. attorney Connolly submitted to the jury that the conspiracy was limited to a few rogue U.S. executives and dealers, and that the United States and American Honda had been conspired against and defrauded by them. Twomey declared that “the government is going to take you everywhere—north, south, east and west” to prove a conspiracy that was supposedly limited to U.S. executives and was completely unknown to Japanese executives. Long and Sharkey covered the litany of apparent infirmities in the government’s conspiracy case against Billmyer.
A seemingly endless stream of witnesses then proceeded to testify against Billmyer and Josleyn. American Honda executives and dealers regaled the jury with descriptive accounts of opulence and excess. The kickback schemes resembled homage to the executives, a practice that Honda and Acura dealers called kissing the ring. Dealers and executives told of expensive offerings, including cash payments, free automobiles, Rolex watches, shopping sprees, swimming pools, and tuition payments for children. In several days on the witness stand, Cardiges alone testified to the receipt of approximately $5 million in kickbacks.
At the close of the government’s case in chief, Long made a motion to dismiss, arguing that the suit was one of multiple conspiracies, that any conspiracy involving Billmyer supported by the evidence was barred by the statute of limitations, and that any payments or gifts received by Billmyer were unconnected to any conspiracy with Josleyn. The motion was denied, Billmyer called no witnesses, and Josleyn began his defence.
Throughout the presentation of the government’s case, Josleyn’s lawyers had been fighting a battle with American Honda. They sought to obtain, and eventually received, a copy of handwritten notes kept by Sherry Cameron, American Honda’s vice president of human resources. Cameron’s notes had been made in connection with American Honda’s 1992 internal investigations into rumours of kickbacks. American Honda had appealed Judge DiClerico’s decision to order American Honda’s release of the notes to the defence, but the First Circuit Court of Appeals refused to reverse the order.
Cameron had testified for the government in March 1995, and Sisti’s cross-examination of her had been suspended while the production of her notes was contested. On May 15, 1995, Cameron resumed the witness stand and was faced with poster-sized copies of her notes, one of which revealed that her “point of view” in the investigation was to “try to protect [American Honda].” Cameron further testified that she had limited her investigation to facts, not rumours.
Twomey then called to the stand J. D. Powers, a prominent market research specialist for the automobile industry. Powers testified that in 1983, he sent a letter to Yoshihida Munekujni, then president of American Honda, informing him of widespread rumours of corruption in American Honda. According to Powers, several unindicted top-ranking American Honda executives knew of the kickback schemes in the early 1980s.
This and other evidence allowed Twomey to argue in his closing statement that the conspiracy was so implicit as to constitute one company’s policy. Twomey asked the jury whether it could be satisfied that it knew the entire truth in the case. Long contended, in part, that the government had been selective and heavy-handed in its prosecution. The case was submitted to the jury. After five days of deliberations, Billmyer and Josleyn were convicted of all charges. Both vowed to appeal.
Although no Japanese executives were charged in the case, twenty American Honda executives and dealers pleaded guilty, making this the largest conspiracy-based commercial bribery prosecution in the history of the United States.
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This glossary post was last updated: 27th April, 2020 | 0 Views.