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J & J Subsidiary Pleads Guilty of Tylenol Contamination

The Justice Department recently announced that McNeil Consumer Healthcare, a subsidiary of Johnson & Johnson, entered a guilty plea in federal court to a crime growing out of the investigation into the tainted production of Tylenol. The guilty plea resulted in a fine of $25 million.

It is interesting to note that while a $25 million fine is significant, the company pleading guilty was the subsidiary of Johnson & Johnson.

Anytime a major corporation is the subject of a criminal investigation, there is the possibility that individual officers, directors or employees of the corporation may be personally charged with crimes in addition to the corporation. For any corporation, a felony conviction can have devastating ramifications beyond a large fine. One of the greatest potential catastrophes for a corporation is to be prevented from engaging in business with federal or state governments. For example, a business would not be able to contract with the governments for construction projects or to provide products for defense or healthcare.

Often, criminal investigations that involve major businesses have resulted in deferred prosecution programs which include payment of significant fines, instituting strong corporate compliance programs with monitors that report to the government. Such conditions may be onus but avoid a conviction and the loss of government business.

The opportunity to avoid criminal prosecution given to major companies is usually not extended to the officers, directors and employees.