No. There is no finding of fraudulent conduct until after the trial (if
any) or settlement. In the meantime a Minnesota corporation is under a
statutory duty to indemnify employees, directors and officers for their
legal costs up to that point. Fulfilling that duty becomes
"criminalized" when the prosecution threatens to prosecute corporations
(in addition to prosecuting the officers, directors, employees) for
fulfilling that duty.
Whether or not the employees, officers or directors were indeed guilty
or liable does not relieve the corporation of its statutory duty to
indemnify them in the meantime. In Minnesota, settlement or even an
adverse determination is NOT in itself conclusive that the person is
ineligible for indemnification.
I see the prosecutor's actions as exactly the same as prosecuting a
father for paying his child's criminal defense costs.
TZ
-----Original Message-----
From: Academy of Legal Studies in Business (ALSB) Talk
[mailto:[log in to unmask]] On Behalf Of Sleeper, Bradley
Sent: Tuesday, October 31, 2006 5:44 PM
To: [log in to unmask]
Subject: Re: NYTimes article 10/29
So Tom, are you saying fraudulent conduct is a fulfillment of the duties
of employees to employers for which corporations owe the duty of defense
and judgment reimbursement?
Brad
________________________________
From: Academy of Legal Studies in Business (ALSB) Talk on behalf of
Zupanc, Thomas
Sent: Mon 10/30/2006 9:39 AM
To: [log in to unmask]
Subject: Re: NYTimes article 10/29
I hear you. Although I am biased against many regulations as being
anti-competitive because they actually work in favor of the bug guys
(who have more resources to meet the costs of regulation), I am not sure
the problems cited by these critics are actually problems at all.
That being said, I think prosecutors over-reach when they threaten
corporations with criminal charges if they indemnify or pay the costs of
their employees' legal expenses. In Minnesota, and I suspect in other
states too, it is an employer's statutory duty to indemnify employees
for civil damages, penalties or fines claimed or levied for actions
performed fulfilling the duties of the employee for the employer.
Further, a Minnesota corporation shall indemnify directors, officers and
employees for any monetary exposure including judgments and attorneys'
fees. Therefore, prosecutors are in effect levying what my criminal
defense attorney colleagues call a "due process penalty". The
corporations are in a no win situation. They avoid prosecution by
ignoring their statutory duties, or they risk prosecution by complying
with their statutory duties.
Tom Z
________________________________
From: Academy of Legal Studies in Business (ALSB) Talk
[mailto:[log in to unmask]] On Behalf Of Marsha Hass
Sent: Sunday, October 29, 2006 5:50 PM
To: [log in to unmask]
Subject: NYTimes article 10/29
http://www.nytimes.com/2006/10/29/business/29corporate.html?hp&ex=116218
4400&en=9358599aad440557&ei=5094&partner=homepage
If I hadn't seen this I would not have believed anyone involved could
possibly be serious. Doesn't bode well for the national ethical
climate.
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