A CEO can go to jail for what employees did only in specific situations: the CEO directed or approved the conduct, joined a conspiracy, deliberately avoided learning about it, signed false certifications, or held responsibility under a law that imposes liability on corporate officers. Holding the title alone is not a crime.

Federal criminal law punishes people for their own conduct and state of mind, not for their position on an organizational chart. The exceptions matter, though, and federal prosecutors in the Southern District of New York in Manhattan and the Eastern District of New York in Brooklyn use them regularly in corporate investigations. Varghese & Associates, P.C., led by principal Vinoo Varghese, a former Brooklyn prosecutor, represents executives, founders, and directors whose companies are under federal investigation. Our NYC white collar defense attorneys focus on the individual's exposure, which is often very different from the company's.

Call now for a confidential consultation with a NYC white collar defense lawyer. The earlier our white collar defense attorneys are involved, the more they can do.

When Can Federal Prosecutors Charge a CEO for Crimes Committed by Employees?

Federal prosecutors can charge a CEO for employees' crimes when evidence shows the CEO personally took part, for example by ordering the conduct, approving it, helping conceal it, agreeing with others to commit it, or deliberately ignoring obvious signs of it. The government must prove the CEO's own knowledge and intent beyond a reasonable doubt.

Several federal theories connect an executive to conduct carried out by others:

• Aiding and abetting, 18 U.S.C. § 2. A person who intentionally helps, directs, or causes a crime is punished as if they committed it.
• Conspiracy, 18 U.S.C. § 371 and offense-specific conspiracy statutes. An executive who agrees with employees to commit a crime is liable for the agreement and, often, for crimes committed by co-conspirators to carry it out.
• Willful blindness. Deliberately avoiding confirmation of a crime can substitute for actual knowledge, as explained below.
• Certification and signature liability. Signing a false certification, tax return, or regulatory filing can create personal liability even if staff prepared it.
• Responsible corporate officer statutes. A small number of federal laws impose liability on officers with authority to prevent violations.

What prosecutors rarely have is direct proof of what the CEO knew. They build that proof from emails, texts, meeting notes, board materials, compensation tied to the conduct, and the testimony of employees who are cooperating in exchange for leniency.

Can a Company Be Convicted for Employees' Crimes Even If the CEO Did Nothing Wrong?

Yes. Under federal law, a corporation can be convicted for crimes committed by any employee acting within the scope of employment and at least partly to benefit the company, even a low-level employee acting against company policy. That corporate liability does not automatically extend to the CEO or other executives personally.

This rule, rooted in New York Central & Hudson River Railroad Co. v. United States (1909), is broader than the rule for individuals. A company can be fined, placed on probation, or required to accept a deferred prosecution agreement because of what a single sales representative did. The CEO, by contrast, faces charges only if the evidence ties the CEO's own conduct and knowledge to the crime.

The gap between those two standards is why a company and its CEO frequently need separate lawyers. A company resolving its own case has every incentive to describe the misconduct as the work of identifiable individuals.

What Is Willful Blindness, and How Do Federal Prosecutors Use It Against Executives?

Willful blindness, also called conscious avoidance, allows a jury to find that a defendant knew a fact if the defendant believed there was a high probability it was true and took deliberate steps to avoid confirming it. The Supreme Court set this two-part test in Global-Tech Appliances, Inc. v. SEB S.A. (2011).

Federal prosecutors in New York use willful blindness when there is no email saying "I know." Typical examples include an executive who tells staff not to put certain information in writing, who refuses to read an internal audit report, or who stops asking questions after a compliance officer raises a concern. The Second Circuit permits a conscious avoidance jury instruction when the evidence supports it.

Willful blindness has limits. Carelessness, poor oversight, and a failure to supervise are not enough. The defense can show that an executive reasonably relied on lawyers, accountants, auditors, or compliance staff, and that red flags were never presented to them.

What Is the Responsible Corporate Officer Doctrine, and Which Federal Laws Use It?

The responsible corporate officer doctrine lets prosecutors charge an executive who had the authority and responsibility to prevent or correct a violation, without proving the executive knew of it. The Supreme Court applied it to food and drug law in United States v. Park (1975), and the Clean Water Act expressly includes responsible corporate officers.

• Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 333(a)(1). Misdemeanor violations, punishable by up to one year per count, can be charged against officers without proof of intent. This affects executives at food, pharmaceutical, supplement, and medical device companies.
• Clean Water Act, 33 U.S.C. § 1319(c)(6). The definition of "person" includes "any responsible corporate officer," although felony charges still require the statute's mental state. See our NYC environmental crimes attorney page.

Courts have generally confined the doctrine to public health and safety laws. It does not make a CEO automatically liable for fraud, bribery, or antitrust crimes committed by employees.

Can a CEO or CFO Go to Prison for Signing Financial Reports Prepared by Employees?

Yes. Section 906 of the Sarbanes-Oxley Act, 18 U.S.C. § 1350, requires the CEO and CFO of a public company to certify periodic SEC reports. Knowingly certifying a noncompliant report carries up to 10 years in prison and a $1 million fine, and willful false certification carries up to 20 years and $5 million.

The certification requirement exists precisely so that senior executives cannot claim the numbers were someone else's work. The government must still prove the executive knew the report did not comply, which is why these cases turn on what the executive was told, what sub-certifications and controls existed, and whether warning signs were raised. Securities charges often accompany certification counts, as discussed on our securities fraud defense page.

Can a Business Owner Be Prosecuted for Payroll Taxes Employees Failed to Pay Over?

Yes. Under 26 U.S.C. § 7202, a "responsible person" who willfully fails to collect or pay over withheld employment taxes faces up to five years in prison per count. The IRS treats owners, officers, and others with authority over which bills get paid as responsible persons, even when a bookkeeper handles the payments.

Business owners in New York City often discover this exposure after a payroll company or controller stops remitting withholding during a cash crunch. Civil liability under the trust fund recovery penalty, 26 U.S.C. § 6672, is common. Criminal charges generally require proof that the owner knew the taxes were unpaid and chose to pay other creditors.

How Does the Justice Department Decide Whether to Charge Executives in a Corporate Investigation?

Justice Department policy makes prosecuting culpable individuals a priority in corporate cases. Under Justice Manual § 9-28.000, a company seeking cooperation credit must identify the individuals involved and provide the facts about their conduct, which often puts executives directly in the path of the investigation.

The department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy, issued March 10, 2026, rewards companies that self-report, cooperate, and remediate with declinations or non-prosecution agreements. Those benefits come largely from the information a company provides about its own people. When a company is negotiating a resolution, its executives should assume their emails and interviews are part of what is being shared.

The factors that shape whether an individual is charged include the executive's role relative to others, the strength of the documentary record, whether employees are cooperating, the executive's reliance on professional advice, and any parallel SEC or civil matter.

Is a CEO's Criminal Exposure Different From SEC or Civil Liability for Employees' Conduct?

Yes. Civil and regulatory rules can hold executives responsible for employees' conduct far more easily than criminal law can. The SEC can pursue "control person" liability and seek clawbacks of executive compensation without proving criminal intent, but prison requires proof of the executive's own knowing or willful misconduct.

Because these proceedings often run at the same time, statements an executive makes to the SEC, in a civil deposition, or in a company interview can become evidence in a criminal case. Coordinating the defense across all of them is often as important as the criminal case itself.

Does New York State Law Hold Executives Criminally Liable for Corporate Conduct?

Under New York Penal Law § 20.25, a person who performs or causes criminal conduct on behalf of a corporation is liable as if the conduct were done in that person's own name. New York, like federal law, requires the executive's own participation, and District Attorneys in all five boroughs can bring such cases.

Corporate liability in New York is governed separately by Penal Law § 20.20. Readers facing a state investigation can learn more on our NYC criminal defense attorney page.

What Should a CEO Do When the Company Learns Employees May Have Committed a Federal Crime?

A CEO who learns of possible employee crimes should preserve all records, avoid informal fact-finding conversations with the employees involved, ask whether the company's lawyers represent the CEO personally, and consult independent criminal defense counsel before any interview with company lawyers, auditors, or federal agents.

• Do not delete or "clean up" anything. Destroying records after learning of a problem can be charged as obstruction under 18 U.S.C. § 1519, even if the underlying conduct was not criminal.
• Understand the Upjohn warning. When company counsel interviews an executive, counsel represents the company, which can waive privilege and share what the executive says with prosecutors.
• Check indemnification and insurance. Corporate bylaws, New York Business Corporation Law §§ 721 to 726, and directors and officers (D&O) insurance may cover defense costs.
• Be careful with the board and the press. Statements to directors, investors, or reporters can be inconsistent with later testimony.
• Retain counsel early. Independent counsel can present the executive's account before the company's version becomes the government's version.

Our NYC federal criminal defense lawyers represent executives from the first internal inquiry through any federal investigation. Learn more on our pre-indictment federal investigation page.

Contact Our NYC White Collar Defense Attorneys

If your company is under investigation, or you have been asked to sit for an interview with company counsel or federal agents, speak with our NYC white collar defense attorneys first.

Call Varghese & Associates, P.C. for a confidential consultation.

Sources

• U.S. Department of Justice, Justice Manual § 9-28.000, Principles of Federal Prosecution of Business Organizations
• 18 U.S.C. § 1350, Failure of Corporate Officers to Certify Financial Reports
• United States v. Park, 421 U.S. 658 (1975)