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(C) ruch visual or print medium depicts such conduct; 2 (2) a class D felony in any other case. 3 (cXI) It is a defense to a prosecution under this section that the material was 4 transferred, exhibited, or possessed with intent to master to a person5 (A) associated with an institution of higber learning eitber, u a member 6 of the faculty or us no enrolled student, teaching or pursuing a bona fide 7 course of study, or conducting or engaging in a bona bde research pro 8 fram, to which such material is pertinent; or 9

(B) whose receipt of such material rus authorized in writing by a li10 censed or certified poychiatrist, psychologist, or medical practitioner * 11 (2) It is a bar to a prosecution for an offense under this section that the 12 trasfer, exhibit, or prossession possession was not ilegal in the State or locality 18 where such transfer, exhibit, or possession cook place. 14 (d) As used in this section, the term 15 (1) "obscene material" means material that * 16

(A) takes us a whole, the average individual applying contempo17

nry community standards, would find appeals to the prurient interest 18

in sex, or to the sterage individual within a serually deviant class of 19

individuals, it weh material is intended by the disseminater for dis20

regination to that class; 21

* Bt upon the appliestion of contemporary community steadards, de22

picts or describes patently offensive, actual or simulated representa23

tions or descriptions of an act of sexual intercourse, including gepital24

genital, anal-genjual, or oral-genital intercourse, wberber between 25

buman beings or between a buman being and an animal; of masturba26

tion; of excretory functions; of nagellation, torture, or other violence 27

indicating a sado-masochistic serual relationship; or, lewd exhibition 28

of ebe genitals; and, 29

(C) taken as a whole, lacks serious literary, artistic, political or sci30

entific value; and 31 401 "minor" BONAs to the married individual who has not-ottained the 32 age of 16 year. 33 (e) There is Federal jurisdiction over no offense under this section if34 (1) ebe offense is committed within the special jurisdiction of the United 35 Sures; 86 (2) the mail or a facility of interstate or foreign commerce is used in the 37 commission of the offense; or 38 (8) the material is moved across a Suate or United States boundary in 39 che planning, execution, or concealment of the offense.

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I have just received your letter of September 17 as there was a delay in forwarding it to me from the University of Wisconsin from where I moved to Santa Fe about four months ago. Even with this unfortunate delay I hope my comments on the draft bill to recodify criminal laws will still be of some value.

My remarks shall be confined to violations of law by corporations and their executives, which has been the subject of my LELA supported research over the past three years.

A report on it (Marshall B. Clinard et al., Illegal Corporate Behavior) has just been published by the Government Printing Office and I assume you have a copy I am now working on a book, Corporate Crime, with Peter Yeager, which will be published next year.

You indicated that you would like my comments as soon as possible, and they are already late, and I have had difficulty in locating specific sections relating to corporations in the draft given me in March by Congressman Conyers. Consequently my specific comments will be brief and instead I am enclosing an additional list of proposals for controlling corporate crime in the federal criminal code. I assume your staff can then relate them to the specific sections of the code.

Chapter 23 should include a provision that provides a stiffer penalty when violations of federal health and safety or environmental regulations "recklessly endanger the public or a company's employees."

Section 2564 I am in favor of raising a corporate fine to $1,000,000 but I would much prefer that where corporate fines are fixed by statute, they would be increased to a minimum of $100,000 and a maximum of $1 million, but even these large sums can be absorbed by big corporations. Preferable would be a fine assessed in terms of the nature of the violation and in proportion to the assets or annual sales vi ine corporation. The latter is something like the "day fine" that has been proposed for individuals in ordinary crime or misdemeanors in which the fine would be set. according to their income. In Common Market nations such as West Germany, antitrust and other laws now impose fines on the basis of a percentage of the gross annual sales or profits of the firm, rather than in stated currency amounts which have progressively less sting the greater the size of a firm. Fines of $1,000,000 are rather trivial, for large corporations with sales of $50,000,000,000 or more.

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Section 2753 -- I support the large corporate fines provided for environmental pollution. These could be substantial cumulatively. I feel, however, that such heavy day fines should be available for other types of corporate violations but there is no indication that this is the case.

Section 3105 Corporate executives rarely have any criminal record. usually can show a distinguished career in public and comminity service. should not play a role in sentencing.

Instead they These factors

Chapter 25 -- Corporate executives may receive salaries and bonuses of $100,000 or even $500,000 or more as well as having large assets. Consequently I think their maximum fines should be set at $250,000.

I feel strongly that the criminal law should provide for a formal publicity sanction in the event of a corporate conviction. Corporations fear publicity for violations and this is one reason the government is often successful in a consent agreement or consent decree. Such a provision would strengthen federal prosecution and also serve as an effective deterrent.

If there is any way I can be of further assistance, please write or telephone.

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Marshall B. Clinard
October 12, 1979

ADDITIONAL COMMENTS ON!

RECODIFICATION OF PEDERAL CRIMINAL LAWS

(SUBCOMMITTEE ON CRIMINAL JUSTICE)

(1)

Where corporate fines are fixed by statute, they should be increased to a minimum of $100,000 and a maximum of $1 million, but even these large suns can be absorbed by big corporations. Preferable would be a fine assessed in terms of the nature of the violation and in proportion to the assets or annual sales of the corporation. The latter is something like the "day fine" that has been proposed for individuals in ordinary crime or misdemeanors in which the fine would be set according to their income.

(2)

Increased penalties for corporation recidivists. If there were a second or third offense in a period of three years there could, for example, be a larger fine based on a percentage of gross sales.

(3) By legislation nearly all corporate civil or criminal convictions would be

publicized at the expense of the firm. My research has found that corporations fear a fonal publicity sanction, and in fact most any publicity about violations, much more than a corporate fine, and second only to the imprisonment of corporate executives. Major adninistrative decisions, particularly in the area of false advertising, should also be publicized by the corporation.

(4) "ore extensive prison sentences for corporate executives. Research indicates

that while corporate executives fear a criminal conviction and a fine, they fear most a jail sentence. In fact, they will ço to any length to avoid going to jail; probation has far less effect. Frequently judges give a jail sentence of less than 30 days. If convicted a mandatory four months sentence or, possibly in particularly flagrant cases, a minimum sentence of eighteen months might be imposed. Marimur fines should be set at $250,000. Probation could not be given except for extrene circumstances; such factors as no prior conviction, public service and active participation in COT:unity organizations would not be considered extenuating circumstances. The use of community service instead of inorisonment, unless erually available to ordinary offenders, would be prohihited by law except in unusual circunstances.

(5)

Indemnification of convicted corporate officers by their corporations vould ne prevented by federal legislation which would preempt state laus permitting it.

(6)

Any managenent official who is convicted of criminally violating his corporate responsibilities would be deprived of - „suring similar managerrent positions within his corporation or exercising such duties in any other corporation for a period of three years.

(7)

Some sort of liability, short of criminal prosecution, would be instituted for the boards of directors for the illegal actions of the parent corporation and its subsidiaries.

(8) Congress should enact a new comercial bribery statute that would aid the

prosecution of corporate executives who receive kickbacks from customers or suppliers.

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