205.1Prosecuting a Business or Organization

Overview and Procedure

Although it is much more common in federal court than in state practice, organizations such as corporations, partnerships, associations, or other groups can be prosecuted in North Carolina for committing criminal offenses. See G.S. 15A-773(c); State v. Sanford Video & News, Inc., 146 N.C. App. 554 (2001) (corporation convicted of disseminating obscenity and fined $50,000); State v. Cinema Blue of Charlotte, Inc., 98 N.C. App. 628 (1990) (corporation convicted of disseminating obscenity and conspiracy to disseminate obscenity and fined $150,000); State v. First Resort Properties, 81 N.C. App. 499 (1986) (corporation convicted of worthless check offense); see also G.S. 12-3(6) (for purposes of interpreting statutes, “person” includes “bodies politic and corporate” as well as individuals).

G.S. 15A-773 sets out the procedure for securing the attendance of corporations and other types of organizations that are charged with a criminal offense. In short, securing the organization’s attendance may be accomplished by: (1) issuance and service of a summons; (2) issuance of an information and waiver of indictment by an authorized officer, agent, or counsel for the organization; or (3) issuance and service of an indictment. See G.S. 15A-773(a).

At all stages of the criminal proceeding, an organization may appear in court through its counsel, or through an agent having authority to transact business for the organization. See G.S. 15A-773(b). Similarly, although ordinarily a judge may only receive a plea of guilty or not guilty from “the defendant himself,” in the case of a corporation the plea may be entered either by counsel or by a corporate officer. See G.S. 15A-1011(a).

Punishment of an Organization

G.S. 15A-1340.17(b) and 15A-1340.23(b) provide that when the defendant is “other than an individual,” the judgment may consist of a fine only. The Structured Sentencing Act does not impose a maximum fine for offense classifications other than a Class 2 misdemeanor ($1,000) and a Class 3 misdemeanor ($200). See G.S. 15A-1340.23(b). However, a specific statute may impose a minimum or maximum fine; for example, G.S. 14-39(c) sets a minimum fine of $5,000 and a maximum fine of $100,000 for a corporation or other organization convicted of kidnapping. 

In State v. Sanford Video & News, Inc., 146 N.C. App. 554 (2001), the court ruled that: (1) a $50,000 fine imposed on a corporation convicted of disseminating obscenity did not violate the Excessive Fines Clause of United States Constitution; and (2) the statute authorizing a fine as a punishment for a corporate defendant convicted of dissemination of obscenity provided explicit standards to a sentencing judge and thus was  not facially unconstitutional on vagueness grounds, even though the amount of a fine is left to the judge’s discretion.