The Science Fiction of Corporate Liability: Containing the Machine Through the Corporate Death Penalty

Corporate crime imposes costly externalities upon our economy and has harmed investor confidence leading to an unnecessarily high cost of capital. Management that tolerates and even fosters a criminal culture is largely beyond the reach of the law because of the difficulty of convicting individuals absent evidence beyond a reasonable doubt that they acted with mens rea. The Corporate Death Penalty Act would impose a three strikes standard on corporations to address recidivism. Although the Act would rarely apply, it would shield innocent shareholders and employees from costs associated with the sanction of dissolution, through the appointment of a trustee, focused on divorcing management that is demonstrably promiscuous regarding crime from the assets of the corporation.