Trapped: When Acting Ethically Is Against the Law

Since Enron’s collapse in 2002, the federal government has stepped up its campaign against white‐​collar crime. In doing so, contemporary federal criminal law has created a “Catch‐​22,” in which businesspeople are forced to act either unethically or illegally.

In Trapped: When Acting Ethically is Against the Law, Cato Institute senior fellow and Georgetown University business professor John Hasnas examines the ethical dilemmas raised by over‐​criminalization. “Because there is an increasing divergence between the demands of the law and the demands of ethics,” Hasnas explains, “current federal criminal law incentivizes and in some cases mandates unethical behavior by businesspeople.”

In creating white‐​collar criminal law, the federal government has eviscerated the liberal safeguards of the traditional criminal law to permit conviction for merely negligent or innocent actions and to circumvent the presumption of innocence, the 5th Amendment privilege against self‐​incrimination, and the attorney‐​client privilege.

Thus, federal criminal law creates serious problems for businesses that wish to respect their employees. According to Hasnas: “It gives corporations strong incentives to invade employees’ privacy, deny them the presumption of innocence, and breach promises of confidentiality.”

Hasnas concludes that the solution to the problem of white collar crime does not rest with more vigorous federal enforcement efforts: “With regard to the offenses that can adequately be handled by civil liability, the proper solution may be abstaining from any efforts at criminal enforcement at all.”

“John Hasnas is an associate professor of business at the McDonough School of Business at Georgetown University in Washington, D.C. and a senior fellow at the Cato Institute.

Read an article on business ethics by John Hasnas from the March 11, 2006 edition of the Wall Street Journal.”

“Deftly exploring the impracticalities and seemingly inane concepts which restrict our citizens and fill our penitentiaries, Trapped is very strongly recommended reading for anyone with an interest in business ethics, white collar crime, and their impact in a highly competitive marketplace.”

—Midwest Book Review

“Did you know that in many ways the terrorists detained at Guantanamo Bay have more rights than corporate CEOs and their employees? If you want to know more, get John Hasnas’s book!”

—Mark Levin, author, Men in Black: How the Supreme Court Is Destroying America

“Ethical behavior is critical in business. John Hasnas shows that new laws and regulations too often force CEOs to choose between acting legally and acting ethically. This is a book for business people, policymakers, and everyone who has a stake in successful and ethical business enterprises.”

—John Mackey, Co‐​founder and CEO, Whole Foods Market

“Most Americans think that they receive ample protections against unwise or excessive criminal prosecution. But they had better think again. John Hasnas’s quiet dissection of the manifold laws dealing with such arcane subjects as money laundering, mail fraud, racketeering, and obstruction of justice shows how people who are innocent of any primary offense are all too often caught in a complex web of federal law dealing with white‐​collar crime as they go about their ordinary business. Granted, argues Hasnas, white‐​collar crime is harder to prosecute than street crime. But he convincingly shows that an aggressive Congress and compliant courts have tilted the balance too much in favor of criminal prosecution. We should all be troubled by the prosecutorial histories of Arthur Andersen and Martha Stewart, among others.”

—Richard A. Epstein, James Parker Hall Distinguished Service Professor of Law, University of Chicago

“Mr. Hasnas does a good job of explaining the current state of criminal law for corporations, which have no Fifth Amendment right against self‐​incrimination, as well as Justice Department policies that offer leniency only to companies that cooperate by turning in employees.”

—Floyd Norris, the New York Times

“Hasnas demonstrates very effectively that lawmakers and judges have placed corporate executives in an untenable position. Trampling on the traditional elements of criminal law may make it easier to prosecute alleged deceptive corporate behavior, but it also makes business an endeavor that may result in personal financial loss and imprisonment, despite one’s best efforts at compliance with the law.
Trapped makes a persuasive case for the need to return to our former, more traditional principles of criminal law. On the present course, we face the prospect that only the foolhardy and unethical will be willing to enter the world of business, while competent and qualified individuals will justifiably steer clear.”

—Erica Little, Town​hall​.com