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86 Tul. L. Rev. 1017 (2011-2012)

handle is hein.journals/tulr86 and id is 1027 raw text is: TULANE LAW REVIEW VOL. 86 MAY 2012 No. 5 Bailouts and the Potential for Distortion of Federal Criminal Law: Industrial Espionage and Beyond Robert E. Wagner* This Article eveals previously neglected and disconcerting consequences that government participation in corporate ownership can have on Ameican criminal law, and it illustrates these problems by establishing how the recent bailout could influence cnrminal enforcement. TheArticle shows how the model ofcost allocation developed by Guido Calabrsi and based on Ronald Coasek work can apply in the context of the crimnal law and specifically economic cimes. The argument in this Article then demonstates how the govemmenth purchase of corporate shares through the implementation of the TroubledAsset ReliefProgram (TARP) causes inefficiencies and inequalities in the ciminal la, mcludhing by shifing prosecutorial and other enforcement resources toward 'orefered companies and allowing for the imposition ofhigher statutorypenalties against economic criminals that offend against those entities. As a consequence, some corporations may underinvest in pnvate precautionary measures while others will be forced to overnvest and pass on the costs to their customers through artificially idlated pnces. The potential end result is a misuse ofgovernment power to reward unsuccessful companies like General Motors at the expense ofsuccessful ones like Ford Havig establsheda general framework for using a cost allocation analysis to addess economic crimes optimaly and having shown that TARP leads to inefficient outcomes under that type of analysis, this Article concludes with recommendations to avoid these problems in the future * 0 2012 Robert E. Wagner. Visiting Assistant Professor, Rutgers School of Law- Newark. J.D., Cornell Law School; M.B.A., University of Chicago Booth School of Business. I would like to thank Jonathan Adler, Richard Albert, Irina Manta, Tony Robinson, Arden Rowell, Michael Scharf, and my research assistant Katherine North, as well as the staffs of the Rutgers School of Law-Newark and of the Case Western Reserve University School of Law, especially Andy Dorchak. 1017

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