Dealerships that have established compliance and ethics programs could reduce the penalties for violations of federal laws by as much as 95 percent. This is due to amendments to sentencing guidelines that went into effect Nov. 1.

The new guidelines place greater responsibility upon the management of an organization. The board of directors must be knowledgeable about the content, provide reasonable oversight and ensure that the program is effective.

The sentencing commission has outlined an effective compliance and ethics program and stated that it should include the following elements:

• Standards and procedures to prevent and detect criminal conduct.

  
  

• Personnel screening related to program goals.

  
  

• Training at all levels.

  
  

• Auditing, monitoring, and evaluating program effectiveness.

  
  

• Non-retaliatory internal reporting systems.

  
  

• Incentives and discipline to promote compliance.

  
  

• Reasonable steps to prevent further offenses upon detection of a violation.

  
  

  According to Daniel J. Laudicina, an attorney at Hudson Cook, LLP in Linthicum, Md., in 2002, more than half of the criminal sentences for fraud entered against organizations under the federal sentencing guidelines included fines and/or orders to make restitution.

  
  

  Not one of the 143 organizations sentenced under the federal guidelines for crimes had an established compliance program. Laudicina suggested that the existence of compliance and ethics programs is often an effective deterrent to criminal activity. In addition, judges will probably give more weight to these programs under the new sentencing guidelines and make their existence a consideration during the sentencing process.