Conspiracy

LAWS AGAINST CRIMINAL conspiracies were primarily enacted to combat organized crime. The crime of conspiracy is constituted by the agreement to act in concert with one or more persons to commit a crime. Agreement is the crime, and anyone consenting to participate can be criminally charged even if she did not carry out her part for the commission of the crime. Courts recognize people in a conspiratorial relationship have a much greater chance of successfully engaging in and covering-up more profitable and destructive offenses than a lone offender.

Many corporate crimes require a conspiratorial arrangement. Not only does the criminal conspiracy increase the odds of attaining an illegal goal, but it also brings the greater resources of a corporation to assist. Consequently white-collar crimes occurring in corporate or governmental organizations contain elements of criminal conspiracy. Classic examples are the Watergate scandal, the Heavy Electrical Equipment Price-Fixing Conspiracy, and savings and loans land-flip deals in the 1980s.

The need for collusion to commit many whitecollar offenses is easily demonstrated. For example, to carry out land-flip deals between savings and loans in the 1980s, each institution traded the same piece of low-value real estate back and forth. With each transaction the “value” of the land increased creating evidence on paper of a higher selling price, and, therefore of higher value. After a few transactions the “paper value” of the land went from nextto-worthless to extremely high. Each savings and[Page 197] loan official knew the property he authorized to purchase or sell was worthless. Once a high value was established by the inflated sale price, the property was used as collateral for a large loan executives had little concern about repaying. The scheme required officials in each institution to enter a prior agreement to engage in fraudulent sales.

An interesting aspect of criminal conspiracies is how well evidence of their existence is hidden. In that regard, the Heavy Electrical Equipment Price Fixing Conspiracy was a classic. Representatives from all companies that manufactured electrical equipment agreed before-hand which company would get a contract and what the price of various pieces of equipment would be. Following accepted practices, buyers submitted bids for expensive items such as generators and transformers to each company and the lowest bidder got the contract. Every company that bid was party to the conspiracy. The electrical-equipment companies designated which manufacturer among them would get a given contract by rigging bids in such a way as to leave little evidence of collusion. The arrangement allowed the conspirators to maintain an inflated price for all equipment for the benefit of every company.