How Corporations Can Be Held Criminally Liable For Wrongful Acts- The Toyota Case

Earlier today it was reported that Toyota may pay $1 billion to settle a four-year federal criminal investigation. Clients have contacted us asking, why is a corporation allowed to pay its way out of a crime? Can corporations or their officers go to jail? Can people pay money to avoid going to jail like Toyota?

These are all good questions and here are our short answers.

First, a company such as Toyota is considered a legal person in the United States and generally speaking, is capable of being prosecuted for most criminal offences. If found guilty, you cannot send a corporation to jail. Having said that, here’s what can happened to a corporation and those who work for the corporation.

When a corporation is formally charged with one or more crimes, in addition to the corporation and depending on the facts, officers, directors and employees can all be prosecuted and held accountable. If found guilty of a crime, corporations can be held financially liable, lose government contacts and be exposed to shareholder lawsuits. Individuals working in corporations found guilty of state and federal crimes can be sentenced to prison. Remember Kenneth Lay and the Enron case?

Corporations found liable for a crime can also have their corporate charter revoked by state authorities and face civil penalties under the False Claims Act. Financial institutions found guilty of a crime can be hit with cease and desist orders coordinated with the temporary or permanent loss of deposit insurance, conservatorship and receivership. Security brokers may be hit with injunctions and cease and desist orders.

The Toyota Case

After a four-year investigation of safety complaints, it is reported that Toyota is close to negotiating and paying a fine to settle all pending and future criminal matters. The allegations revolve around whether Toyota properly reported automobile safety complaints to government regulators.

It is being reported by the Wall Street Journal that a deal with the U.S. attorney’s office in New York is near. According to Harvard Law School professor, John Goldberg, “Toyota is trying to put this entire episode behind it.” He further commented, “Given that the allegations of at least some injury victims were credible, and given the attention of government regulators, Toyota wasn’t going to be able to resolve things without negotiating substantial settlements.”

Many consumers share concerns about Toyota buying its way out of the criminal investigation. Others such as Clarence Ditlow, executive director of the Center for Auto Safety, pointed out, “Even today, no one knows what Toyota withheld from the National Highway Traffic Safety Administration that could have proven beyond a reasonable doubt that sudden acceleration is due to vehicle design, not driver error.” He added, “Only billion-dollar fines and criminal prosecutions can stop auto industry cover-ups of deadly vehicle defects.”

Civil Case

Toyota has previously agreed to pay $1.6 billion to settle a class-action case brought by thousands of Toyota owners who contended that sudden-acceleration problems damaged the value of their vehicles.

During the course of the investigation, Toyota recalled millions of vehicles and investigations by law firms and governmental agencies were initiated. Toyota denies that its vehicles have an electronic flaw that might cause them to accelerate unexpectedly. It blames incidents on three possible causes: drivers mistaking the gas pedal for the brake; gas pedals getting stuck under floor mats; or sticky gas pedals that don’t throttle back quickly as foot pressure eases.

Orange County lawyers and friends, Aitken, Aitken, and Cohn, served as National liaison counsel and co-counsel for civil suit.

So what are your thoughts? Do you think Toyota is responsible? If so, should Toyota be allowed to pay a fine to settle all criminal claims? Share your comments below.

If you have questions about the Toyota settlement or are interested in holding a corporation civilly or criminally accountable for its wrongful conduct, give us a call. We’ve been helping injured consumers since 1986 and the chances are good we can answer your questions and help you too.