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When do client dinners and personal gifts cross the line?

Marketers have long made good use of business lunches and gifts to prospective clients. As the pharmaceutical industry has shown, these strategies can bring powerful results. However, the recent conviction of a pharma boss reminds us there’s also a point at which these strategies can cross the line and become illegal.

Boston jurors recently declared the founder and CEO of Insys Therapeutics guilty of racketeering. According to NPR, Insys had been bribing doctors and lying to insurance companies to boost the sales of its painkillers.

Bribery and the law

It’s against federal law to offer money, gifts or other valuable items in exchange for the aid of government officials, witnesses and jurors, but it’s not always against the law to offer the same sort of deals in the corporate world. Federal law leaves most commercial bribery to the states, and state laws vary.

In California, a gift becomes a bribe when:

  • It exceeds $250: This may still be enough money to talk shop at a ball game or a good restaurant, and you can talk openly about how you hope the other person might help you out. But as soon as the gift goes over $250, it risks turning into a bribe.
  • It is given or received “corruptly”: The courts will look for behavior that someone could reasonably consider harmful to the company or its competitors. Even if you were to offer someone a gift worth more than $250, it may not be bribery if it wasn’t used to gain some unfair advantage.

Someone found guilty of commercial bribery under California law could also run afoul of federal law if that person traveled between states or used the mail to arrange bribes. This is because the Travel Act bans the use of mail or interstate travel to commit crime.

The line is blurry

In California, the line for bribery starts at $250, but it comes with some fuzzy exceptions. The safest ways to avoid bribery may be to keep your gifts below $250, make sure they’re wholly transparent and avoid using the mail or interstate travel to offer gifts in exchange for services. If you hope to use business lunches and personal gifts to expand your business in other states, you might want to look up their bribery laws.

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The Kaufman Law Group
1801 Century Park E. Suite 1430
Los Angeles, CA 90067

Phone: 310-286-2202
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