Can Corporations Be Charged With Crimes? Liability and Penalties

Yes, corporations can be charged with crimes under federal law, and they have been since the Supreme Court’s 1909 decision in New York Central & Hudson River Railroad Co. v. United States held that Congress can impose criminal liability on a company for offenses its agents commit within the scope of their authority.¹ The framework has since grown to cover financial fraud, foreign bribery, antitrust violations, money laundering, environmental crimes, and tax offenses. In practice, though, few of these cases go to trial. Most end in negotiated resolutions shaped by a detailed set of Department of Justice policies.

How the Law Makes a Company Criminally Liable

The main theory is respondeat superior, roughly “let the master answer.” To hold a corporation liable, prosecutors need to establish three things: an employee or agent committed a crime, the person was acting within the general scope of their job, and the person intended at least partly to benefit the company. One detail catches people off guard. The corporation is liable even if it expressly told the employee not to do the thing that led to charges.² A written policy saying “don’t bribe anyone” does not shield the company if an employee bribes someone anyway while doing company business.

The “benefit” requirement is read broadly. It does not require actual financial gain. An employee who bribes a foreign official to win a contract benefits the company even if the contract never materializes. Courts look at the employee’s intent, not the outcome.

The second major theory is the collective knowledge doctrine, established in United States v. Bank of New England in 1987. A corporation’s knowledge is the combined knowledge of all its employees. No single person needs to know every element of the crime. If one department knows a transaction is suspicious and another department processes the paperwork, the corporation “knows” both things at once. The court specifically said corporations cannot “plead innocence by asserting that the information obtained by several employees was not acquired by any one individual.”³ The doctrine prevents companies from siloing information as a defense.

The Crimes Corporations Actually Get Charged With

Corporate criminal charges cluster around a handful of offense types, and the DOJ’s own structure reflects them:⁴

Financial fraud and securities violations, handled by the DOJ’s Fraud Section, with parallel SEC enforcement.
Foreign bribery under the Foreign Corrupt Practices Act, which regularly produces penalties in the hundreds of millions of dollars.
Antitrust violations such as bid rigging, price fixing, and market allocation under the Sherman Act.
Money laundering and sanctions evasion, including Bank Secrecy Act violations.
Environmental crimes, from illegal dumping to Clean Air Act violations.
Tax fraud, pursued by the Tax Division and IRS Criminal Investigation.

Many cases involve overlapping charges. A company that bribes foreign officials and then routes the money through shell accounts can face both FCPA and money laundering counts.

Why “Can Be Charged” Doesn’t Mean “Will Be Charged”

Even when the evidence supports a charge, the decision is not automatic. The Justice Manual lists eleven factors prosecutors must weigh, and they give the DOJ significant discretion:⁵

The seriousness of the offense and the public harm caused.
How pervasive the wrongdoing was, and whether management participated or looked the other way.
The company’s history of prior criminal, civil, and regulatory action, including from foreign regulators.
How well the company cooperated, including identifying responsible individuals.
Whether a real compliance program was in place at the time and whether it has been improved since.
Whether the company voluntarily disclosed the misconduct before being caught.
Remedial actions such as firing wrongdoers, fixing the underlying problem, and paying restitution.
Collateral consequences to innocent employees, shareholders, and pension holders.
Whether civil or regulatory enforcement would be enough.
Whether the responsible individuals are being prosecuted.
What the company has done to identify and compensate victims.

The collateral consequences factor is where corporate cases often diverge sharply from individual ones. Convicting a major defense contractor could disrupt national security work. Convicting a hospital chain could cut off patient care. Prosecutors do not ignore those realities, and the concern often pushes cases toward a negotiated resolution.

The Arthur Andersen case is the reason this concern carries so much weight. The firm’s 2002 obstruction conviction effectively destroyed it, even though the Supreme Court later reversed the conviction. That outcome still shapes decisions on both sides of these cases.

How Corporate Cases Usually End

Full trials of corporations are rare. The reputational damage, stock price impact, and collateral consequences of an indictment alone create heavy pressure to settle. The Justice Manual describes negotiated agreements as occupying “an important middle ground between declining prosecution and obtaining the conviction of a corporation.”⁵ Three main forms exist:

A Deferred Prosecution Agreement, where charges are filed but prosecution is deferred for a set period. If the corporation meets all conditions, the charges are dismissed. Conditions typically include large financial penalties, ongoing cooperation, compliance improvements, and sometimes an independent monitor.
A Non-Prosecution Agreement, where no charges are filed at all as long as the corporation meets specified conditions. These are usually reserved for companies that self-disclosed, cooperated fully, and remediated.
A Plea Agreement, where the corporation pleads guilty to specific charges in exchange for agreed penalties. This produces an actual criminal conviction, which carries heavier collateral consequences than a DPA or NPA.

All three should include an agreed statement of facts and an explanation of why the DOJ chose that resolution. DPAs and NPAs typically run two to three years. Violating the agreement lets the government reinstate prosecution using the company’s own admissions.

When cases do result in formal charges, prosecutors use one of two mechanisms. A grand jury indictment is the more common route for serious cases, requiring at least twelve grand jurors to find probable cause.⁶ The other option is an information, a formal accusation filed directly by the prosecutor without a grand jury. Informations are common in corporate cases resolving through plea agreements, since the outcome has already been negotiated.

Voluntary Self-Disclosure Changes the Math

In March 2026, the DOJ released its first department-wide Corporate Enforcement Policy, applying to all criminal cases except antitrust matters. Companies that voluntarily disclose misconduct, cooperate fully, and remediate will generally receive a declination, meaning no prosecution at all.⁷

The policy replaced a patchwork of component-specific rules that had accumulated across DOJ divisions. The logic is straightforward. The government has limited resources, and encouraging companies to come forward helps prosecutors identify and pursue the individual wrongdoers more quickly. From a corporation’s side, voluntary disclosure is now one of the most consequential decisions available after internal misconduct comes to light. Waiting for regulators to find the problem first makes the eventual outcome much worse.

What Penalties Look Like After Conviction

When a corporation is convicted or pleads, the financial penalties alone can be very large. Federal law sets baseline maximum fines of up to $500,000 for a felony, with lower caps for misdemeanors. But the statute also allows an alternative fine of up to twice the gross gain the corporation derived from the crime, or twice the gross loss suffered by victims, whichever is greater.⁸ A fraud scheme that generated $2 billion in illegal profits can therefore expose the company to a $4 billion fine.

How Fines Are Calculated

Chapter Eight of the federal Sentencing Guidelines provides a structured formula. The process starts with a base fine, which is the greatest of three numbers: a dollar amount tied to the offense level (ranging from $8,500 at the lowest levels to $150 million or more at the highest), the corporation’s actual gain, or the victims’ actual loss.⁹

The base fine is then adjusted by a culpability score. It starts at five points. It goes up if senior management participated, if the company has prior misconduct, if it violated a court order, or if it obstructed the investigation. It goes down if the company had an effective compliance program, self-disclosed, cooperated, and accepted responsibility. That score maps to a pair of multipliers that set the floor and ceiling of the fine range. A corporation that did everything wrong can face multipliers of 2.0 to 4.0, quadrupling the base fine. A corporation that did everything right can see multipliers as low as 0.05 to 0.20. If the organization operated primarily as a criminal enterprise, the guidelines call for a fine large enough to strip it of all its net assets.

An effective compliance program is one of the biggest levers here, worth up to a three-point reduction in the culpability score. The program has to be genuine. If senior leadership took part in the crime, the credit is generally lost. If the company found the misconduct through its own compliance function but delayed reporting it, the credit disappears. Prosecutors evaluate the program both at the time of the offense and at the time of the charging decision, so meaningful improvements after the fact still count.

Restitution, Probation, and Debarment

Fines are rarely the only penalty. Courts can put a convicted corporation on probation for one to five years for a felony, and probation is mandatory when the sentence doesn’t include a fine. During probation the company must avoid new criminal conduct and may be required to pay restitution, implement compliance reforms, or accept other court-imposed conditions.

Restitution is mandatory for certain offenses, including crimes involving fraud or property damage where identifiable victims suffered financial loss.¹⁰ Courts order the corporation to return stolen property or pay the value of what was lost.

Outside the courtroom, a conviction can trigger debarment from federal government contracts, sometimes for years. Certain environmental convictions carry mandatory debarment for the facilities involved. For companies that depend on federal business, debarment can hurt more than any fine. Even an indictment or a DPA can prompt discretionary debarment proceedings.

Charging the Company Doesn’t Shield the People

Charging a corporation does not let individual wrongdoers off the hook. The 2026 Corporate Enforcement Policy explicitly aims to “hold accountable the individual wrongdoers” alongside the corporate entity, and the Justice Manual lists the adequacy of individual prosecutions as one of the eleven factors weighed in resolving corporate cases.⁷

That dual-track approach shapes cooperation in practice. To get full cooperation credit, a corporation generally needs to identify the individuals responsible and provide evidence against them. The result is real tension between the company’s interest in resolving its own exposure and the personal legal interests of its executives and employees, and it is often where these cases get most complicated.

1
Justia Law. New York Central and Hudson River Railroad Co. v. United States
2
Congressional Research Service. Corporate Criminal Liability – An Overview of Federal Law
3
Justia Law. United States v. Bank of New England
4
Department of Justice. Corporate Crime
5
Department of Justice. Principles of Federal Prosecution of Business Organizations
6
Department of Justice. Charging
7
Department of Justice. Department of Justice Releases First-Ever Corporate Enforcement Policy for All Criminal Cases
8
Office of the Law Revision Counsel. 18 USC 3571 – Sentence of Fine
9
United States Sentencing Commission. Annotated 2025 Chapter 8
10
Office of the Law Revision Counsel. 18 USC 3663A – Mandatory Restitution to Victims of Certain Crimes