Fraud, Elizabeth Holmes, Immanuel Kant
Constitutional Law | Law and Philosophy | Securities Law
The criminal trial of Elizabeth Holmes has reanimated public interest in fraud. Holmes, once a Silicon Valley prodigy, was charged with two counts of conspiracy to commit wire fraud and eleven counts of wire fraud. A jury found Holmes guilty on four counts, potentially subjecting her to 80 years in prison. This Note uses the example of Elizabeth Holmes's case to examine more broadly the role of morality in fraud and argues for a new framework by which to articulate and prosecute fraud.
Criminal jurisprudence has struggled to construct a satisfactory definition of "white-collar crime" since sociologist Edwin H. Sutherland first coined the term in 1939. White-collar crime, which is dominated by fraud, has a significant moral dimension. And beneath fraud's statutory language lies a simple notion of morality: it is wrong to deceive another out of their property. Because of this moral dimension, the adjudication of white-collar crimes would benefit from the application of Immanuel Kant's universalizability principle.
The purpose of this Note is to show that the traditional degrees of culpability, either at common law or according to the Model Penal Code, are insufficient and should be supplanted with a standard based on Kant's philosophy. Although the traditional degrees of mental states are adequate for the adjudication of most crimes, the same cannot be said of white-collar crimes. Resolving white-collar cases has proven to be a difficult task. Courts have shifted to using morality to adjudicate white-collar crimes. Mixing of morality and black-letter law has convoluted the adjudication of fraud. Jurors, for instance, are often required to speculate not only about a defendant's mental state in the traditional legal sense but also to only convict if they find the defendant was aware that what she was doing was wrong—a principle called "consciousness of wrongdoing." A simplified solution—one that aligns with the flexibility required of fraud statutes and coheres with the congressional intent behind those statutes—involves universalizing fraud by relying on Kantian principles.
Part I surveys two aspects of fraud's legal landscape: the statutory language and courts' interpretations of it, proving that consciousness of wrongdoing as the requisite mens rea is a judicial misstep. Then Part II will explain Kant's philosophy, in particular his discussion of the Categorical Imperative. Part III will apply Kant's philosophy and design a new framework in an attempt to remedy some shortcomings of fraud jurisprudence.
Parmida Enkeshafi, Universalizing Fraud, 18 Duke Journal of Constitutional Law & Public Policy Sidebar 47-71 (2022)