2005 Federal Sentencing Guidelines
Chapter 8 - PART C - FINES
§8C3.4. Fines Paid by Owners
of Closely Held Organizations
The court may offset the fine imposed upon a closely held organization when
one or more individuals, each of whom owns at least a 5 percent interest in
the organization, has been fined in a federal criminal proceeding for the same
offense conduct for which the organization is being sentenced. The amount of
such offset shall not exceed the amount resulting from multiplying the total
fines imposed on those individuals by those individuals’
total percentage interest in the organization.
1. For purposes of this section, an organization is closely held, regardless
of its size, when relatively few individuals own it. In order for an organization
to be closely held, ownership and management need not completely overlap.
2. This section does not apply to a fine imposed upon an individual that
arises out of offense conduct different from that for which the organization
is being sentenced.
Background: For practical
purposes, most closely held organizations are the alter egos of their owner-managers.
In the case of criminal conduct by a closely held corporation, the organization
and the culpable individual(s) both may be convicted. As a general rule in
such cases, appropriate punishment may be achieved by offsetting the fine imposed
upon the organization by an amount that reflects the percentage ownership interest
of the sentenced individuals and the magnitude of the fines imposed upon those
individuals. For example, an organization is owned by five individuals, each
of whom has a twenty percent interest; three of the individuals are convicted;
and the combined fines imposed on those three equals $100,000. In this example,
the fine imposed upon the organization may be offset by up to 60 percent of
their combined fine amounts, i.e.,
Historical Note: Effective
November 1, 1991 (see Appendix
C, amendment 422).