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CHAPTER 10
CRIMINAL LAW AND CYBER CRIME
ANSWER TO CRITICAL THINKING

QUESTION IN THE FEATURE
INSIGHT INTO THE GLOBAL ENVIRONMENT—LEGAL CRITICAL THINKING—INSIGHT INTO
THE TECHNOLOGICAL ENVIRONMENT (PAGE 83) What entities might pay “cyber
mercenaries” to create some of the malware described in this feature? Of course, first and
foremost would be governments that want to obtain diplomatic information or military secrets
from other countries. Additionally, and perhaps increasingly, large business enterprises might
wish to target other large business enterprises in other countries in order to steal intellectual
property, such as trade secrets.
ANSWERS TO QUESTIONS
AT THE ENDS OF THE CASES
CASE 10.1—LEGAL REASONING QUESTIONS (PAGE 201)

1A. What is the definition of the crime of obtaining goods by false pretenses? Do the
facts in this case satisfy that definition? Explain. Obtaining goods by means of false
pretenses is a form of theft that involves trickery or fraud. The text provides the example of
offering to sell someone an iPad knowing that you do not actually own the iPad. Statutes dealing
with such illegal activities vary widely from state to state and often apply to property, services,
and cash.
The facts in this case meet this definition. As the court summarized, Whitmer “authorized
the offline credit card sales and other violations of dealership policies, obtained the false
signatures from the fictitious buyers on the sales documents, and arranged for the delivery of
the vehicles.” And “the dealership incurred a charge back on each sale ranging from $9,100 to
$21,479.80, resulting in losses exceeding $250,000.”
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
2 UNIT TWO: TORTS AND CRIMES
2A. Besides the defendant, who may have committed a crime in this case? Mordichi Mor
was a direct participant in the scheme. According to Whitmer, Mor had “gotten the ball rolling”
on the thefts. He met with Whitmer before the twenty fraudulent sales of motorcycles, motorized
dirt bikes, all terrain vehicles, and recreational vehicles, and the stolen vehicles were delivered
to his home.
Van Hek and Barrera may also have been participants in the crime. Van Hek had shown
Whitmer how to do offline transactions. Barrera was the salesperson in all of the fraudulent
sales, each of which involved one of seven purported buyers, all of whom proved to be fictitious.
3A. How might the dealership have prevented the crimes in this case? The crimes in this
case might have been avoided if the dealership’s employees had followed the company’s
policies. These policies may have been imposed in part to avoid the misconduct that occurred
here. For example, to prevent charge backs, the dealership's policy was to require customers to
make purchases in person and to present two forms of identification. As a further preventive
measure, the dealership did not permit offline sales. The dealership retained the original
manufacturer certificate of origin (MSO) after a sale unless the vehicle was sold to an out-of-
state purchaser or transferred to another dealer. But the dealership was contractually obligated
not to sell vehicles for exportation outside the United States. Finally, Gilding advised Whitmer
specifically not to deal with Mor.
Carlos and Wilcox violated these policies by doing what Whitmer directed. Whitmer was
seen conferring with Mor. Paperwork was done for transactions in which the customers were not
introduced. Deals were processed as offline sales. MSOs related to the fraudulent sales were
removed from the dealership’s files despite any obvious need for their removal. And it was
learned that several of the vehicles had been shipped to Israel. If Carlos and Wilcox, and any
other employees who were not directly involved in the criminal scheme but who witnessed some
of the steps in its perpetration, had reported the violations of company policies to Gilding, the
crimes might have been stopped. But it also appears that the thefts might have been thwarted if
Gilding had more closely overseen sales at the dealership.
4A. Why do some states combine larceny, embezzlement, and obtaining goods by
false pretenses into a single crime called theft? Discuss. According to some observers, the
distinctions between these crimes only serve as obstacles in the administration of criminal
justice. For example, to prosecute a theft as one or another of the separate crimes, the various
elements must be considered, pleaded, and satisfied. A mistake in any step of the process can
delay or prevent a conviction. Simplifying the definitions of the crimes simplifies the
prosecutorial process. Under a state statute that combines larceny, embezzlement, and
obtaining goods by false pretenses into a single crime called theft, it is not necessary for an
indictment to specify which of these offenses is charged.
CASE 10.2—QUESTION (PAGE 208)

THE LEGAL ENVIRONMENT DIMENSION
How would police officers behave if they could always be held personally liable for
executing unconstitutional warrants? Would they be more or less inclined to apply for
CHAPTER 10: CRIMINAL LAW AND CYBER CRIME 3
and execute search warrants? Explain. Police officers would behave far more cautiously if
they could always be held personally liable for executing unconstitutional warrants. Cases like
Messerschmidt give police officers some leeway to do their jobs without fearing lawsuits.
Without such protection, they would be far less inclined to ask for and execute warrants. To
avoid personal liability, police officers might begin to seek only warrants that are clearly
constitutional. That would probably reduce the number of Fourth Amendment violations by
police departments, but it would probably also hamper criminal investigations.
CASE 10.3—QUESTION (PAGE 210)

THE GLOBAL DIMENSION
The right to remain silent has long been a legal hallmark in Great Britain as well as in the
United States. In 1994, however, the British Parliament passed an act that provides that a
criminal defendant's silence may be interpreted as evidence of his or her guilt. British
police officers are now required, when making an arrest, to inform the suspect, "You do
not have to say anything. But if you do not mention now something which you later use
in your defense, the court may decide that your failure to mention it now strengthens the
case against you. A record will be made of everything you say, and it may be given in
evidence if you are brought to trial." Should U.S. law also change to allow a defendant’s
silence during questioning to be considered as an indication of guilt? Why or why not?
Yes, because in combination with other circumstances—a smirk, arrogance, bravura, or
physical evidence—silence would seem to indicate guilt. No, because it seems contrary to the
U.S. principle that a suspect is innocent until proven guilty, because it seems to run counter to
basic constitutional rights under the First, Fourth, Fifth, and Sixth Amendments, and because
silence may seem to indicate guilt but it may also indicate reticence, fear, shock, ignorance,
misunderstanding, miscomprehension, or disability.
ANSWERS TO QUESTIONS IN THE REVIEWING FEATURE

AT THE END OF THE CHAPTER
1A. State of mind

Yes, because he was the corporate officer responsible for the project and had the power to
prevent the criminal violation. Corporate directors and officers are personally liable for the
crimes they commit, and can also be held liable for the crimes of employees under their
supervision. Because Hanousek was the corporate officer responsible for every detail of the “6-
mile” quarry, he had the power to prevent the criminal violation. Therefore, Hanousek can be
held criminally negligent for the backhoe operator puncturing the pipeline.
2A. Theory of liability

Under the responsible corporate officer doctrine, a corporate officer can be held liable for a
crime because he was in a responsible relationship to the corporation and could have prevented
the violation. The corporate officer does not have to intend the crime or even know about it, to
incur liability under this doctrine.
3A. Liability of employee

No, because he did not have the required mental state (mens rea) and was corporate officer in a
responsible position to prevent the criminal violation. Criminal liability requires a guilty act at the
same time as the defendant had a wrongful mental state. The backhoe operator pierced the
pipeline (the guilty act), but he did not have a wrongful mental state because he was simply
doing his job and may not even have been aware of the pipeline. A court would not apply the
same standard to an employee as it would to a responsible corporate officer who “knew or
should have known” of the existence of the pipeline. Because both elements of criminal liability
(guilty act and wrongful mental state) did not occur, the backhoe operator could not be charged
with a crime.
4A. Ignorance of the law

No, because Hanousek was the corporate officer responsible for the project and should have
known the requirements of the law. Because Hanousek was in a responsible position at the
corporation and in charge of the 6-mile quarry, a court would find that he “should have known”
the requirements of the law. Therefore, lack of knowledge of the requirements of the CWA
would not operate as a defense in his case.
ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE

Because of overcriminalization, particularly by the federal government, Americans

may be breaking the law regularly without knowing it. Should Congress rescind many of
the more than four thousand federal crimes now on the books? Difficult times require
drastic measures. This nation now has over 300 million residents who move
frequently. Moreover, the pervasiveness of the Internet means that business fraud is increasing
at a rapid rate. Consequently, the federal government must step in to make sure that criminal
actions do not go unpunished. That’s why so many new federal crimes have been added to the
body of criminal statutes.
The Constitution reserves for the states police powers for activities within state
boarders. Crimes have always been defined by state and local governments. Just because we
have a larger population that has access to the Internet does not mean that Congress should be
in the business of creating so many federal crimes. Moreover, many new federal criminal
statutes do not require intent—a cornerstone of the prosecution of most crimes for ages.
ANSWERS TO ISSUE SPOTTERS IN THE EXAMPREP FEATURE

1A. Dana takes her roommate’s credit card without permission, intending to charge
expenses that she incurs on a vacation. Her first stop is a gas station, where she uses
the card to pay for gas. With respect to the gas station, has she committed a crime? If so,
what is it? Yes. With respect to the gas station, she has obtained goods by false pretenses.
She might also be charged with larceny and forgery, and most states have special statutes
covering illegal use of credit cards.
2A. Without permission Ben downloads consumer credit files from a computer
belonging to Consumer Credit Agency. He then sells the data to Dawn. Has Ben
committed a crime? If so, what is it? Yes. The Counterfeit Access Device and Computer
Fraud and Abuse Act of 1984 provides that a person who accesses a computer online, without
permission, to obtain classified data—such as consumer credit files in a credit agency’s
database—is subject to criminal prosecution. The crime has two elements: accessing the
computer without permission and taking data. It is a felony if done for private financial gain.
Penalties include fines and imprisonment for up to twenty years. The victim of the theft can also
bring a civil suit against the criminal to obtain damages and other relief.
ANSWERS TO BUSINESS SCENARIOS AND BUSINESS CASE PROBLEMS

10-1A. Types of cyber crimes

(Chapter 10—Page 213)
(a) This is vishing, a form of identity theft. The traditional crimes of theft (robbery,
burglary, larceny, and other) consist of wrongfully taking and carrying away another’s personal
property with the intent of depriving the owner permanently of it. Unique to crimes of identity
theft is that they involve taking another’s identity, and unique to cyber variations of the offense is
that the criminal acts are committed with computers, often online. A stolen identity is typically
used to commit more crimes.
(b) As in the previous problem, this is a form of identity theft. This problem describes a
factual situation referred to as phishing. In such a set of circumstances, once an unsuspecting
individual responds by entering the requested information, the phisher can use it to pose as that
person or to steal the funds in his or her bank or other account.
(c) Here is identity theft in the form of employment fraud. In this scenario, the goal is
to trick the recipient into revealing enough information for the perpetrator to steal his or her
identity and commit still other offenses—emptying the individual’s accounts, spending money in
his or her name, or otherwise taking advantage of his or her identity to obtain something
undeserved or accomplish a criminal end.
10-2A. Property crimes

The answer is (e). Receiving stolen property requires illegal activity on the part of more than
one person. Receiving stolen property (if the recipient knows it is stolen) is a crime that
necessarily involves both the recipient and the person who stole the property.
10-3A. Cyber scam

This is fraud committed in e-mail sent via the Internet. The elements of the tort of fraud are (1)
the misrepresentation of material facts or conditions made with knowledge that they are false or
with reckless disregard for the truth, (2) the intent to induce another to rely on the
misrepresentation, (3) justifiable reliance on the misrepresentation by the deceived party, (d)
damages suffered as a result of the reliance, and (4) a causal connection between the
misrepresentation and the injury. If any of this e-mailer’s recipients reply to her false plea with
money, it is likely that all of the requirements for fraud will have been met. The sort of fraud
described in this problem is similar to the “Nigerian letter fraud scam” noted in the text. In this
type of scam, an individual sends an e-mail promising its recipient a percentage of money held
in a bank account or payable from a government agency or other source if he or she will send
funds to help a fictitious official transfer the amount in the account to another bank. The details
of the scam are often adjusted to current events, with perpetrators referring to news-making
conflicts, tax refunds or payments, and other occurrences.
10–4A. Cyber crime

Klimecek committed copyright infringement (or “piracy”) and was not entitled to have his
sentence reduced on the ground that he was a “minor participant” in the scheme. He was an
essential participant in the operation: if he had not bought the hardware and software
components, set up the server, connected it to the Internet, and paid half of the monthly Internet
service fees, the unauthorized dissemination of others’ copyrighted works could not have
occurred. Even if other participants also set up servers and provided copyrighted materials, this
meant that Klimecek did no less than the “average” participant. His claim that he did not
understand the full scope of the operation was undercut by his admission that he knew users
around the world were accessing his group’s server. He further participated in the scheme by
making Czech movies and music available. The court found him to be “crucial” to the operation
and sentenced him to thirty months’ imprisonment (no reduction). The U.S. Court of Appeals for
the Seventh Circuit affirmed the sentence.
10–5A. Fourth Amendment

Under the Fourth Amendment, a police officer must obtain a search warrant to search private
property. In the case of a traffic stop, it seems unreasonable to require an officer to obtain a
warrant to search one of the vehicle’s occupants. But it seems reasonable to apply some
standard to prevent police misconduct. An officer might be held to a standard of probable cause,
which consists of reasonable grounds to believe that a person should be searched. In some
situations, however, an officer may have a reasonable suspicion short of probable cause to
believe that a person poses a risk of violence. In a traffic-stop setting, for example, this risk
would not stem from the normal reaction of a person stopped for a driving infraction, but from
the possibility that evidence of a more serious crime might be discovered. A criminal’s
motivation to use violence to prevent the discovery could be great. And because the vehicle is
already stopped, the additional intrusion is minimal. Under these circumstances, a limited
search of the person for weapons would protect the officer, the individual, and the public. Thus,
an officer who conducts a routine traffic stop could perform a patdown search of a passenger on
a reasonable suspicion that the person may be armed and dangerous. In this case, a jury con-
victed Johnson of the charge, but a state appellate court reversed the conviction. The United
States Supreme Court reversed the appellate court’s judgment and remanded the case.
10–6A. Searches
Yes, a cross-gender strip search is unreasonable if there is no emergency—such as a riot or
natural disaster—to justify it. Whether a search is reasonable under the Fourth Amendment
requires balancing the need for the search against the invasion of personal rights that the
search entails.
Here, there was no emergency situation, and there was no apparent justification for
conducting a cross-gender strip search. In addition, the manner in which the search was
conducted seems unreasonable. A female officer performed the search while several male
officers watched, and one videotaped the search. There was no reason for the female officer to
conduct the search immediately rather than another officer whose gender was the same as
Byrd’s.
In the actual case on which this problem is based, the court held that the search
performed on Byrd was unreasonable and violated Byrd's rights under the Fourth Amendment to
be free from unreasonable searches.
10–7A . Credit-card theft

Yes, there was sufficient evidence of credit- and debit-card theft for a court to uphold Turner’s
conviction. Although there were no eyewitnesses to say they saw Turner take Barden’s purse,
there was sufficient circumstantial evidence because Turner attempted to use Barden’s credit
card immediately after the purse was taken. Turner also had Barden’s credit and debit cards on
her at the time of her arrest. The appellate court refused to consider the credibility of Turner’s
testimony that a friend had given her the credit and debit cards, because assessing credibility is
the role of the trial court (and the jury, in jury trials). Turner had a long history of theft-related
offenses and clearly knew that the credit and debit cards she had were stolen. Appellate courts
focus on the law and evaluate whether the evidence was sufficient for conviction. In this
situation, the appellate court found that the evidence was sufficient to uphold Turner’s
convictions for theft. The court also upheld Turner’s sentence as a habitual offender because
she had twelve prior felony convictions. She received a sentence of ten years in prison for theft
of credit and debit cards—and a total of thirty years in prison when combined with additional
charges.
10–8A. BUSINESS CASE PROBLEM WITH SAMPLE ANSWER—Criminal liability

Yes, Green exhibited the required mental state to establish criminal liability. A wrongful mental
state (mens rea) is one of the elements typically required to establish criminal liability. The
required mental state, or intent, is indicated in an applicable statute or law. For example, for
murder, the required mental state is the intent to take another's life. A court can also find that
the required mental state is present when a defendant’s acts are reckless or criminally
negligent. A defendant is criminally reckless if he or she consciously disregards a substantial
and unjustifiable risk.
In this problem, Green was clearly aware of the danger to which he was exposing people
on the street below, but he did not indicate that he specifically intended to harm anyone. The
risk of death created by his conduct, however, was obvious. He must have known what was
likely to happen if a bottle or plate thrown from the height of twenty-six stories hit a pedestrian or
the windshield of an occupied motor vehicle on the street below. Despite his claim that he was
intoxicated, he was sufficiently aware to stop throwing things from the balcony when he saw
police in the area, and he later recalled what he had done and what had happened.
In the actual case on which this problem is based, after a jury trial, Green was convicted
of reckless endangerment. On appeal, a state intermediate appellate court affirmed the
conviction, based in part on the reasoning stated above.
10–9A. A QUESTION OF ETHICS—Identity theft

(a) Omole’s conduct can be perceived as arrogant—a display of a feeling of
superiority—and lacking empathy for others, particularly those victims to whom he sent the e-
mail. There is no indication that he had any sense of what it takes to live in society without
cheating, stealing from, and victimizing others. To behave ethically requires at least a
willingness to refrain from illegal conduct and a degree of empathy for others. Omole’s conduct
showed that his character lacked these qualities. In other words, he seems to have had no
ethical principles. It might be countered that he was twenty years old and that his behavior
reflected only the self-centeredness of youth.
It might be pointed out that if Omole had put the ingenuity and energy he expended on
his illegal scheme to legal, practical use, he might have engineered a successful business.
Instead, his lack of ethics robbed himself and others of money and property, as well as the
opportunity to trust and be trusted and to do business in good faith.
(b) Omole’s sentence was too lenient. He perpetrated a sophisticated scheme that
involved planning, execution, and avoidance of detection. He defrauded more than 100
individuals out of $90,000—which could be described as their “hard-earned money”—and would
likely have cheated them and others out of more if he had not been stopped. He may have been
only twenty years old, but this age is not a unique characteristic. He had a previous conviction
for Internet fraud. He expressed contempt towards his victims and the trial court. These facts
argue against a reduced sentence. Omole appears to be the sort of offender who deserves the
punishment that the law prescribes. This suggests that the sentence was unreasonable. On the
government’s appeal, the U.S. Court of Appeals for the Seventh Circuit vacated the sentence
and remanded the case for resentencing.
10–10A. LEGAL REASONING GROUP ACTIVITY—Cyber crime

(a) It goes without saying that the higher the anticipated cost of engaging in cyber
crime activity, the lower will be the amount demanded. In other words, heavy fines and long jail
sentences would have some deterrent effect. The real question is by how much. Many hackers
who bring down corporate and government computer systems are teenagers. They cost
businesses billions of dollars, yet gain no monetary reward for their hacking—they do it to prove
that they are as good or better than other hackers. If caught, they could not engage in much
meaningful restitution to their corporate victims. In contrast, adult cyber criminals who engage
in identity theft, credit-card fraud, and online auction fraud often make larges sums of money
from this criminal activity. They could be forced to engage in meaningful restitution to their
victims. They could be sentenced to long jail terms, just as we routinely do for traditional
thieves. Restitution and long jail terms might serve as a deterrent to such cyber criminal
activities. U.S. authorities, though, cannot easily arrest, try, convict, and sentence cyber
criminals living and operating in, say, Russia.
(b) Protection against cyber crime starts with the awareness at management and staff
levels of the potential harm that could result. Even the temporary loss of a system’s functions
while its software is replaced due to a virus’s infection or other destructive event could prove
costly. Thus, management should make appropriate funds available to pay for security, impose
procedures to identify the system’s vulnerability, require the use of security hardware and
software, and conduct security audits on an ongoing basis. The use of passwords among those
with access to the system is also an important step when used correctly. Backed-up data can be
key, and storing the backed-up data off-site can be even more effective.
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Business Law Text and Cases The First

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CRIMINAL LAW AND CYBER CRIME

ANSWER TO CRITICAL THINKING

CASE 10.1—LEGAL REASONING QUESTIONS (PAGE 201)

CASE 10.2—QUESTION (PAGE 208)

CASE 10.3—QUESTION (PAGE 210)

ANSWERS TO QUESTIONS IN THE REVIEWING FEATURE

1A. State of mind

2A. Theory of liability

3A. Liability of employee

4A. Ignorance of the law

ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE

Because of overcriminalization, particularly by the federal government, Americans

ANSWERS TO ISSUE SPOTTERS IN THE EXAMPREP FEATURE

ANSWERS TO BUSINESS SCENARIOS AND BUSINESS CASE PROBLEMS

10-1A. Types of cyber crimes

10-2A. Property crimes

10-3A. Cyber scam

10–4A. Cyber crime

10–5A. Fourth Amendment

10–7A . Credit-card theft

10–8A. BUSINESS CASE PROBLEM WITH SAMPLE ANSWER—Criminal liability

10–9A. A QUESTION OF ETHICS—Identity theft

10–10A. LEGAL REASONING GROUP ACTIVITY—Cyber crime

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