Simple principles derived from economic theory can generate a realistic and effective Federal sentencing policy that will carry out the traditional purposes of criminal punishment and the goals of criminal law. Most organizational offenses in the Federal courts involve business corporations that have been charged with regulatory or property crimes. The corporations have been convicted under a standard of vicarious liability for the acts of their agents. When the theory of optimal penalties is applied to the formulation of sentencing policy for organizations, it is clear that monetary sanctions are the most effective form of sentence. Monetary penalties minimize societal losses resulting from the sanctioning process and provide incentives to influence organizational behavior. Limitations on the effectiveness of monetary penalties include sanctioning nonmonetary harms and punishing organizations that are insolvent. Appendix includes United States Sentencing Commission staff study. 275 footnotes.