Understanding Texas Penal Code Section 7.24
Criminal Defense North Texas
As we discussed in the previous article, Texas Penal Code Section 7.22 allows for the criminal prosecution of corporations and business entities. This can feel like an overwhelming threat to business owners—after all, how can you control every action of every employee at all times?
Fortunately, Texas law provides a “safe harbor” known as the Due Diligence Defense. Under Section 7.24, a business entity has an affirmative defense against certain criminal charges if it can prove it took active, sincere steps to prevent the illegal conduct.
What is the Due Diligence Defense?
Section 7.24 states that it is a defense to prosecution if the high managerial agent who has supervisory responsibility over the subject matter of the offense employed due diligence to prevent its commission.
In plain English: If the leadership of a company did everything reasonably possible to ensure their employees followed the law, the company itself may not be held criminally responsible for a “rogue” employee’s actions.
Note: This defense specifically applies to offenses under Section 7.22(a)(1) and (a)(2). It is a vital tool for defending against complex regulatory or corporate crimes.
Proving “Due Diligence” in Court
Because this is an affirmative defense, the burden is on the business to prove it. Simply saying “we told them not to do it” is rarely enough. To win this defense, a company typically needs to demonstrate a robust Corporate Compliance Program.
Criminal Defense North Texas
The court will look for evidence of the following:
- Written Policies: Clear, accessible codes of conduct that specifically forbid the illegal activity in question.
- Regular Training: Documentation showing that employees were trained on these policies and understood the legal consequences of violations.
- Monitoring and Auditing: Proof that the company had systems in place (like internal audits or “whistleblower” hotlines) to catch misconduct.
- Consistent Enforcement: Evidence that the company actually punishes employees who break rules, rather than looking the other way.
The Role of the “High Managerial Agent”
For this defense to work, the effort must come from the top. The law focuses on the High Managerial Agent (an officer, director, or partner). If the leadership was “recklessly tolerant” or ignored “red flags,” the due diligence defense will likely fail.
However, if a supervisor can show they implemented rigorous oversight, vetted their team, and provided the necessary resources to stay compliant, they can effectively insulate the business from the criminal acts of a subordinate.
Why Documentation is Your Best Defense
Criminal Defense Lawyer
In a criminal investigation, a business is only as good as its paper trail. At Beltz Law Group, we advise our corporate clients that “due diligence” is a verb—it requires ongoing action.
- Did you keep sign-in sheets for compliance meetings?
- Did you save the logs of your internal safety audits?
- Did you document the termination of an employee who violated a minor policy?
- These records are the bricks and mortar of a Section 7.24 defense.
How Beltz Law Group Can Help
If your company is under investigation, the window to prove due diligence is narrow. We work with business entities to conduct internal investigations, gather evidence of compliance, and present a compelling case to prosecutors that the entity should not be blamed for the unauthorized acts of an individual.
Is your company prepared for a legal audit? Building a defense starts before an investigation begins. We can help you review your current policies to ensure they meet the “due diligence” standard.
