CJ 408 Exam 3, CJ 408 Exam 2, CJ 408 Exam 1

Corporate violence against consumers

An enormous range of consumer products (toys, cars, food, drugs, medical devices, household products, cosmetics) are hazardous to varying degrees. All told, they are responsible for tens of thousands 0f "accidental" deaths and millions of injuries. Food- The sale of adulterated food. changing expiration dates, bleaching meat, mixing old with new, washing, coloring, or smoking/curing meat and reselling it. (Often sold in poor markets).

Antitrust Law

Antitrust law is broadly defined as law that regulates economic competition In the new American Republic, individual states attempted to prohibit monopolistic practices but increasingly national charters of the 19th century economy limited the effectiveness of such laws Congress passed the Sherman Act Sherman Act: Banned efforts to "prevent full and free competition" and also prohibited combinations that tended to raise the cost to the consumer and actions causing a "restraint in trade" that could lead to monopolies This gave private parties the right to sue for treble damages for violations of the act and gave the state in which such violations occurred the power to criminally prosecute and to see injunctions

Enforcement Options

Basic forms 1. Administrative enforcement- Non judicial 2. Civil Enforcement 3. Criminal Enforcement Not under the EPA's authority

The harm

By the time MER/29 was taken off the market, more than 400,000 people in the United States had used the drug. More than 5,000 users had suffered serious side-effects. - loss of hair - severe skin problems - cataracts

Political Reform

Campaign finance reform. As the aid to one presidential candidate put it when asked about his candidate's position on corporate crime: "No Democratic presidential candidate has ever made corporate crime an issue.... The money would dry up" Create federal and state financing for elections of campaigns. Give each candidate access to the same funds, air time, radio time, etc.

James William Coleman

Competition and Motivation to White Collar Crime- This theory of white collar crime is based on the hypothesis that criminal behavior results from a coincidence of appropriate motivation and opportunity. Motivation- A set of symbolic constructions defining certain kinds of goals and activities as appropriate and desirable. Opportunity- A potential course of action, made possible by a particular set of social conditions, which has been symbolically incorporated into an actor's repertoire of behavioral possibilities. - A potential course of action becomes an opportunity only when someone becomes aware of it Colemans' explanation of both the motivation and the opportunity are derived from the principles of symbolic interactionism.

Legal Crime

Corruption in Criminal Justice - Not uncommon Federal and state investigating committees revealed graft and corruption almost every time they have looked for them. - Edwin Sutherland We will find crime where we look for it! We have more than 100 years of studies on crime committed by CJ professionals.

Routine activities theory

Crimes will occur where three variables intersect 1. Motivated offender 2. Suitable target 3. Absence of a capable guardian - Points 2&3 address variables outside the realm of criminal motivation

The Criminal CASE

Criminal Charges were filed against a Richardson-Merrell vice president and two laboratory supervisors. - Potential penalties included five years in prison and a $10,000 fine. In the end, the judge ordered each to 6 months of probation. After pleading no contest to 8 of the 12 counts against it, the Richardson-Merrell Company was given a fine of $80,000 Cases like this are hard to detect!

OSHA's criminal and civil enforcement tools are weak

Criminal: - The law permits a maximum prison sentence of six months for willfully violating a safety standard or regulation which leads to the death of a worker - The max sentence for mail for is 30 years - The max sentence for improperly hunting migratory birds is 2 years Civil: - OSHA is empowered to impose 124,000 max penalty - By contrast, the department of commerce is authorized to impose a 325,000 penalty for a violation of the south pacific tuna act

Defining Environmental Crime

Definitional debate continues Environmental crime - An act committed with intent to harm or with a potential to cause harm to ecological and/or biological systems and for the purpose of securing business or personal gain - Any act that violates an environmental protection statue

Corporate Violence

Despite much reluctance for people to identify corporations as violent offenders, they are engaged in activities with violent consequences. Toxic Crimes (Environmental or Green Crimes) are often discussed under the category of corporate crime. However, with the growth of research and focus on this area, Green Crime has emerged as it's own area. - Often the offenders are corporations of one variety or another

Traditional theories

Differential Association (Edwin Sutherland) - Learning theory Rational Choice Theory - Are white collar offenders more rational?

MER/29 - RICHARDSON MERRELL

Early tests with the drug revealed serious problems. In one laboratory test, all of the female rats given a high dose of MER/29 died. In a subsequent test at a lower dosage, all of the rats had to be destroyed before the end of the test. Rather than scrap the drug, they decided to falsify the data and sought permission from the FDA to sell the drug in the United States. - Technicians eventually testified that they were ordered by company executives to falsify lab reports. The FDA inspector who first uncovered the MER/29 fraud stated: "I didn't think the MER/29 case was typical, but I was wrong... They were totally geared to the dollar sign. I am sure there are many other firms similar to them- even today. I suspect that Richardson-Merrell got away with the same thing many times before."

Why do people Embezzle?

Embezzlers include both males and females. Embezzlers are often found to be living a lifestyle that is well beyond their means. - Embezzling money becomes necessary to keep up with bills or to maintain the lavish lifestyle they desire.

Employee Crime

Employee theft - Includes the full range of low status to high status offenders. "Employees steal far more from most businesses, on the average, than do shoplifters, burglars, or robbers." - We all pay for it! (prices for goods and services increased by 10 -15%. - Responsible for between 50 - 75% of inventory shrinkage. Theft of confidential data and trade secrets is also employee theft. - Includes highly organized attempts to steal trade secrets. The Cola wars Utilizing the broadest definition possible, this type of crime is nearly universal The use of office supplies and machinery for personal use. Those who make personal phone calls on the a business phone. Those who use a company car for personal use. Even those who use company time for personal business or for unauthorized recreation. Those who "hook up" their friends with free/reduced cost products or services. Many employees view these things as benefits of their occupation and don't think twice about using them.

Enforcement Reforms

Enforcement reforms are necessary on several fronts. 1. Greater resources devoted to detection and prosecution. - Increase authority and support to current regulatory agencies. - OSHA is a prime example. They lack appropriate funding and authority. New legislation is necessary (Less ambiguous and easier to enforce) 3. Use the criminal law.

The EPA has tremendous responsibility

Enforcement: - Toxic Substances Control Act - Clean Water Act - Clean Air Act - National Environmental Policy Act

Occupational Crime (On the fringe)

Extravagant compensation: In 2003 the average CEO at a major corporation received more pay for working one day than the average worker got for working 52 weeks. Wal-Mart the epitome of inequality: The children of Sam Walton are among the richest people in the world (all 4 of them) after they inherited his wealth. In the early days of Wal-Mart, only 5% of the stores goods were made in another country. In 1985 Sam Walton launched his "Bring it Home Campaign" He offered to pay as much as 5% more for American made products. Sam Walton died in 1992. "Wal-Mart believes American workers make a difference." - Sam Walton By 2002, 60% of the merchandise sold in Wal-Mart stores was made in other countries. - Wal-Mart establishes American labor trends. the trend has been lower wages, fewer benefits, longer working hours, and the extermination of labor unions. In 2004 the Institute for Policy Studies found that CEOs of U.S. corporations who outsourced American jobs received pay increases during 2003 that averaged 46%. This was compared to only 9% increases for CEOs who did not export American jobs.

10-10-80 rules

Fraud and opportunity - 10 percent of the population will never commit fraud. This is the type of person that will go out of their way to return items to the correct party - 10 percent of the population are actively looking at systems and trying to find a way to commit fraud - 80 percent of the population might commit fraud given the right combination of opportunity, pressure, and rationalization

Willem Bonger

Heavily steeped in the writings of Karl Marx. Crime is form of egoism. Egoism is fostered through the capitalist modes of production. - Class conflict Competition "Economic conditions occupy a much more important place in the etiology of crime than most authors have given them." - Willem Bonger

Social/legal Control Continued

Historically, the law has not been structured to respond effectively to the exploitative and harmful practices of businesses as corporate entities Many harmful commercial and occupational practices were not addressed The U.S. Supreme Court has historically waxed and waned in its response to regulatory law, which addresses harmful business practices Lawmaking is a complex process that may reflect a variety of influences The role of history (Scandal Reform) An instrumentalist perspective on lawmaking advances the view that in a capitalist society, law reflects the elite class's control over the state and is intended to serve the purpose of that class

Policing white collar crime

Historically, white collar crime has not been a principle concern of law enforcement agencies

Service Business Fraud

How many of you have ever felt that you were overcharged or charged for work that was not completed by: - Automobile repair shop. - Home (furnace, hot water heater, air conditioner, appliance, etc). - Desktop/Laptop computer specialist. American spend about $90 billion dollars on automobile repairs yearly. - It is estimated that between 25-50% is wasted on fraudulent or incompetent work.

Levels of opportunity

Individual = perceptions of availabiity and attractiveness of criminality Organizational = Internal constraints, role specialization/freedom Institutional = industry constraints (regulation)

Definitional Complications

Legal behaviors with proven and well known harmful environmental effects - Environmental crimes versus environmental harms - The confusion is perpetuated by media coverage

On the Fringe- Food additives

Many of the additives are poison. They appear in small amounts, but we don't exactly know what the long term effects will be. We don't know if these additives are stored in the body. Food additives Artificial sweeteners Artificial colors

Medicare/Medicaid fraud

Medicare/Medicaid fraud is believed to cost the public billions of dollars each year. (Some estimates in the hundreds of billions of dollars). Doctors- unnecessary procedures/tests, overbilling, double billing, unnecessary surgeries, Pharmacies- charging for meds never delivered, overcharging, billing for more medication than supplied to the patient. Medical labs- ordering extra tests, billing for extra tests not performed.

Meso-Organizational

Motivation = corporate culture, managerial, pressure, lack of funds, failure Opportunity = role specialization and task segregation, lack of constraints, deviant organizational culture Control = Culture of compliance, strong organizational constraints

Macro-Structural or Societal

Motivation = culture of competition, economic pressures (recession) Opportunity = availability of illegal means, goals/strain, weak regulations/enforcement Control = Strong enforcement agencies (EPA/OSHA), strong legal sanctions, political or public pressure, media scrutiny

Micro-Individual or interactional

Motivation = individual goals, competitiveness, greed, socialization Opportunity = definition of the situation, trust, specialized, knowledge Control = Personal ethics/morality, obedience to authority, lack of self control, rationalizations

Motivation

Motivation can be found in the political economy of industrial capitalism. The idea that wealth and success are central goals of human endeavor is part of a larger complex of beliefs that may be termed the "culture of competition." - The foundation of this world view can be traced back to at least the 17th century and is particularly powerful in the United States. Another source of motivation can be found in what numerous social thinkers have come to term the theory of possessive individualism. In this worldview, rational, free-willed people are viewed as largely responsible for his or her own condition. Due to the culture of capitalism, the pursuit of economic interest and the effort to surpass their fellows in the accumulation of wealth and status are of critical importance to these autonomous individuals. - The worth of a person is often measured by one's ability to outearn...... or to achieve in the area of accumulation. The competitive struggle is framed in a positive way. It is said to bring out the best in all people. - Over the years, these beliefs have served to legitimize the capitalist system and to legitimize the inequality that is evident in our society One powerful undercurrent of this culture of capitalism is the pervasive sense of insecurity. This fear of failure permeates every stratum of society; from the top to the bottom. Full-time hustlers never can relax... As is the case in any jungle, the hustler's every waking hour is lived with both the practical and subconscious knowledge that if he ever relaxes, if he ever slows down, the other hungry, restless foxes, ferrets, wolves, and vultures out there with him won't hesitate to make him their prey. According to Coleman, this account of a street hustler could easily be applied to any strata of society. Organizational subcultures can also serve as motivators to criminal action. Of particular relevance to the study of white collar crime are the work subcultures that expose their members to a particular worldview while providing some degree of insulation from the generally accepted definition of social reality. - Organizational - Industry - Occupational These work-related subcultures tend to insulate their members from the mainstream of social life and its constructions of reality. - In 2016, Wells Fargo fired more than 5,000 employees for creating ghost credit card accounts for the banks customers. - What type of organizational culture must have existed here? For many of these professionals, their everyday interactions are with others who share the same subculture. The isolation allows the subculture to maintain a definition of certain criminal activities as acceptable or even required behavior, when they are clearly condemned by society as a whole. Often, executives will show genuine surprise and even shock that other people consider their illicit acts as criminal

Ethical Reforms

Must be aimed at three levels 1. Individual 2. Organizational 3. Societal In fact, individual moral and ethical standards are societies first line of defense against all sorts of criminal behavior (including white collar crime).

Extreme Responses

Nationalize the criminal party. Make the state the primary share holder. Management could be replaced, restructuring could occur. Eventually the government could simply sell the stock and put the company back in private ownership. - Anyone see any problems here? Corporate Capital Punishment- A corporation is a person after all.

Techniques of Neutralization

Numerous examples exist in the white collar crime literature Research by Donald Cressy about white collar embezzlers. Most of the embezzlers studied would not have committed their offense if they had defined such activities as theft, instead of borrowing. Denial of harm- In particular when nobody is physically harmed, or any one individual experiences only a minor harm. Condemnation of the Condemners- Those involved in organizational crimes frequently justify their behavior by claiming that the laws they are violating are unnecessary or even unjust. Business leaders often use the ideology of laissez-faire capitalism to criticize laws and regulation that they consider inappropriate. The idea is that the regulations are more harmful than the business practices they prohibit. A related neutralization is the appeal to necessity. This rationalization holds that certain types of criminal behaviors are necessary to achieve an economic goal or simply to survive. A Westinghouse executive, busted in a price fixing conspiracy stated "I thought we were more or less working on a survival basis in order to try to make enough to keep our plant and employees." Appeals to higher loyalties- This appeal is common among workers who reported participating in criminal activities because "their employer expects it." In fact, some claim they would be fired if they failed to participate in the questionable behavior. - McWane employees used this rationalization on numerous accounts. Everybody else is doing it. It is common practice in the business. Rationalizations help individuals define their situation. Acting in a criminal way becomes defined as acceptable.

Civil penalties

OSHA civil monetary structure is inadequate - The max penalty for a willful or repeat violation is 124,000. This figure has been adjusted twice (1990, 2016) since OSHA was created in 1970 - The inflation adjustment act of 1996 requires 80 federal agencies to increase civil monetary penalties to account for inflation every four years. OSHA penalties were specifically excluded from this requirement. Civil penalties are not tied to inflation - According to the government accountability office, in 2002 OSHA's civil penalties were 38% less than if they had kept pace with inflation since 1990. By 2008 the disparity had grown to 68% - The EPA is authorized to impose a 270,000 penalty for violation of the CAA - They can issue a 1,000,000 penalty for attempting to tamper with a public water system

OSHA fails to collect on fines imposed

OSHA data shows that the agency has not yet collected two thirds of penalties assessed after a fatality in 2007 and that almost half 47% of all penalties assessed after a fatality since 2004 have not been collected

Fine Reductions

OSHA rarely imposes the max penalty and routinely reduces fines when employers qualify for penalty reductions - OSHA internal rules require the inspector and area director to evaluate whether the employer is eligible for penalty reductions of "as much as 95 per cent depending upon the employer's good faith, size of business, and history of previous violations. The inspectors guidelines counsel that up to 60 percent reduction is permitted for size, up to 25 percent reduction for good faith, and 10 percent for history of previous violations

Occupational Crime

Occupational Crime was first clearly defined by Clinard and Quinney (1967) as: "a violation of the legal codes in the course of activity in a legitimate occupation" THESE ARE CRIMES COMMITTED PRIMARILY by middle and upper-class individuals within the context of a legal occupation 1. Not everyone is employed by a corporation. 2. Occupational crimes are virtually always committed by individuals. 3. They are for personal gain. (Not always true with corporate crime). Environmental crimes are but one example that might fall into both categories

MER/29

One of the best (among many) documented cases of fraud in the pharmaceutical industry. The case was referenced in your textbook, but not really elaborated upon. Richardson-Merrell Company- MER/29 - MER/29 was a cholesterol inhibitor intended for use by heart patients. Driven by potential profits, Richardson-Merrell falsified their application to the FDA. The application was full of major omissions and fraudulent statements.

Silent Spring

Rachel Carson's novel sparked a national awareness of the harm posed by the introduction of contaminates into the ecosystem and the resulted in a nationwide ban of DDT for agricultural purposes - Her work, although controversial at the time, was widely accepted in subsequent years - Carson inspired a grassroots environmental movement. She is often credited with sparking a movement that led to the creation of the EPA

Rational Choice Model of Corporate Crime

Raymond Paternoster and Sally Simpson summarize their findings offering a rational choice model of corporate crime. It includes several possible explanatory variables 1. Perceived certainty/severity of formal legal sanctions 2. Perceived certainty/severity of informal sanctions 3. Perceived certainty/severity of loss of self-respect. 4. Perceived cost of rule compliance (omissions) 5. Perceived benefits of non-compliance 6. Moral inhibitions 7. Perceived sense of legitimacy/fairness 8. Characteristics of the criminal event 9. Prior offending by the person. - (gets at punishment avoidance) *Addresses both formal and informal costs In studying corporate decision makers, the authors argue that corporate crime is best understood in terms of the cost-benefit assessments of individual corporate managers, tempered by concern with being shamed and moral sentiments.

Criticisms of regulatory agencies

Regulatory agencies have been criticized as: - Too responsive to political agendas - Run by appointed bureaucrats with too much power, too little competence, and too little accountability Regulatory agencies are greatly understaffed and underfunded Public pressure for agency action is small relative to that for conventional crime Business interests have lobbied for limitations on these agencies powers and budgets

The penalty........ revisited

Richardson-Merrell had profits that year in excess of $17 million! The estimated gross revenues from MER/29 in its first year of production was over $7 million. This was the penalty for a company who was caught red-handed falsifying data

Recent reform

Sarbanes-Oxley, Sarbox or SOX - Named for the bills sponsors. Largely a reaction to large corporate scandals (Enron, Tyco, Adelphia, and Worldcom) It is a Federal law. It applies to U.S. public companies and some provisions for privately held companies as well. The law contains eleven sections As a result of SOX, top management must individually certify the accuracy of financial information. In addition, penalties for fraudulent financial activity are much more severe. Also, SOX increased the oversight role of boards of directors and the independence of the outside auditors who review the accuracy of corporate financial statements

Crime and the American Dream

Steven Messner and Richard Rosenfeld- (extension of Robert Merton's Anomie tradition). In the United States, anomie has become institutionalized due the organization of society.

Structural Reforms

Structural criminologists will tell you that ethical standards will change only when the structural rewards for unethical behavior change. What is necessary is some way to make ethical behavior more rewarding than criminal behavior. As long as the deeply entrenched competitive individualism that pervades American culture and structures remains in tact, the fight against white collar crime will be difficult. Structural reform aims to attack the causes of crime where they exist. Prosecution is necessary, but it comes to late to prevent the crime. Many of these types of reforms, it is suggested, are not likely to be implemented. Ironically, they are some of the most promising. The problem is a lack of authority/and political will to propose such strategies.

The regulatory system response

Sutherland recognized that the dominant legal response to crime by businesses was regulatory rather than penal - Regulatory enforcement occurs in only a very small percentage of the cases in which it could be applied - It has far less of the moral disgrace and stigma associated with the criminal justice system - Regulation has roughly been defined as any attempt by the government to control the behavior of citizens, corporations, or sub-governments but there is no real consensus on its meaning

Differential Association

Sutherland was critical of mainstream criminology for what he called the class bias. Many theories in fact pointed to poverty or the conditions of poverty that were said to cause crime. For Sutherland, these theories could only be true if one ignored the vast amounts of crime referred to as white-collar crime. Traditional theories then, could not possibly explain white collar crime. After all, most white collar criminals are not poor, nor have they been subject to the conditions of poverty Eventually Sutherland would point out that his own theory of Differential Association (also referred to as learning theory) does not suffer from a class bias. He argued that it could just as easily account for the learning of criminal behavior in a board room, as it does in the street. - Central to this theory is the idea that individuals learn the techniques for committing crimes and more importantly they acquire (by learning from others) the belief that such behavior is acceptable.

The IRS Criminal Investigation division

The IRS investigates tax frauds or misrepresentations involving corporations, businesses, and individuals - Tax audits and investigations may precipitate investigations of other types of corporate and occupational crime when they uncover evidence of substantial income that cannot be ascribed to legitimate sources

Nothing New Here

The auto industry has a long and studied history of similar offenses and it is not restricted to VW - In the late 1990's Ford (who has spent millions lobbying against emission standards) pleaded no contest and paid a 7 million dollar fine for engaging in deceptive practices to avoid complying with emission standards and for 350 counts of criminal and civil charges for violations of the Clean Air Act - Chrysler violated the Clean Air Act by failing to disclose defective catalytic converters in over a million affected vehicles. Agreed with EPA to a one million dollar fine

Fraud...fraud.... And more fraud!

The crime of using dishonest methods to take something valuable from another person. - uses deceit or trickery. Service Business Fraud- The Holland Standard Gas Company- A fraud perpetrated for years. The president was eventually sentenced to six months in jail. Holland Furnace Company. With sales of about $30 million a year, Holland was far from one of corporate Americas giants, but it was no mom and pop organization either. Holland's standard sales technique was to send a representative of their company to the door of a private home and claim to be an inspector from the Gas Company. Once inside, they would dismantle the furnace and refuse to put it back together, claiming there is grave danger of an explosion. Just in the nick of time a salesman from Holland would arrive at the door tosave the day and make a quick sale. After 22 years of legal problems and consumer complaints, the company president and two vice presidents were found guilty of criminal contempt and the president was sentenced to six months in jail.

Class State and Crime

The crimes of accommodation and resistance to the conditions of capitalism are basic to the class struggle (robbery, burglary, drugs etc.). Committed by the proletariat. The crimes of domination most characteristic of capitalist domination are those crimes that occur in the course of securing the existing economic order. Committed by the bourgeoisie. Crimes of corporations (price fixing, pollution, manufacture and sale of unsafe products, harm to workers, etc.) Crimes of government (political corruption, assassination of foreign and domestic leaders) These are crimes committed by the elected and appointed officials of the capitalist state. Crimes of control (police brutality, spying, violations of citizens civil liberties) These are common actions of agents of the law, carried out in the name of the law against persons accused of other violations. Other actions (defined as social injuries) are harmful as well. Included here is sexism, racism, denial of basic human rights, and economic exploitation.

Unnecessary Surgeries

The dirty doctor Detroit Doctor Sentenced Unnecessary surgery

Even Academics commit crime!

The fact that professors engage in less occupationally related crime than do doctors and lawyers is probably more a function of fewer opportunities for such activity than a matter of greater personal integrity among professors. - David Friedrichs Falsifying research (can cause physical harm to people and env.) - Corporate sponsored research (grants, etc.) Embezzlement of school money

Embezzlement

The fraudulent appropriation of funds or property entrusted to your care but actually owned by someone else. - Trust is the embezzlers best friend. - Committed by both low and high level employees (accountants and bookkeepers). Costs can range from hundreds to millions of dollars and can occur over a anywhere from weeks to years. The savings and loan scandal is often considered a cases of collective embezzlement.

The Influence of Business on the Lawmaking Process

The politicians who make the laws often depend on business leaders and corporations for financial support for their campaigns, for personal gifts and favors, and for post-political career employment or contracts Because the evolution of white collar crime is complex, laws governing economic crimes are likely to be products of various competing constituencies. Business has generally had disproportionate influence over the lawmaking process. But they don't always come out on top.

US Postal Inspection Service

The postal inspectors are identified as the oldest federal law enforcement agency - in 1872, congress enacted a mail fraud statue in response to an epidemic of mail swindles that were beyond the jurisdictional reach of local prosecutors

State and Federal Enforcement Agences

The principle federal investigative agencies are: - FBI - Inspectors General - US Postal inspection service - US secret service - US customs service - Internal revenue service criminal investigation division

Sub Prime Mortgage Crisis - Reform

The recent sub-prime mortgage crisis has produced reforms to financial regulations. Credit Rating Agency Reform Act (2006). A bill to improve ratings quality for the protection of investors and in the public interest by fostering accountability, transparency, and competition in the credit rating agency industry The intent of the U.S. Congress was to increase the choice for consumers by opening the market to a greater number of ratings agencies. Prior to its passage, "the big three" rating agencies - Standard & Poor's, Moody's Investors Service and Fitch Rating rated 98% of the trillions of dollars of home mortgage oriented "structured investment" products. ***Hundreds of billions of dollars' worth of securities given the agencies highest—(triple A) rating were later downgraded to "junk" status.... But not before they were sold to Federally insured banks. This means that you continue to pay for it. However, in the 12 months that ended in June 2011, the SEC found the big three still issued 97% of the same products

Crime of Omission?

This has historically been framed as a crime of omission. It is a crime that results from the failure to act

Corporate Criminals?

To complicate matters, if we believe that corporations can commit crimes, then our explanations will NOT focus on individuals, but rather on corporations. *This point is debated by criminologists. Corporate cultures can take on a life of their own. On the other hand, it should be noted that, in a strictly literal sense, a corporation cannot take action. It is the decisions and actions of specific human beings that set into motion the activities of ALL organizations

Explanatory Levels

Traditional explanations of crime have tended to focus on two specific levels. 1. Micro- Focus is on offenders and their individual propensities and choices. 2. Macro- Focus on the conditions within society that promote white collar crime. * Meso - (Organizational level developed later).

Corporate dumping

Unethical/Illegal dumping of unsafe products. This includes consumer products as well as medicine and medical devices. Prior to 1986 it was not legal to export drugs that did not have FDA approval. - In 1986, it became legal to export drugs to 21 different countries that were deemed to have sufficient drug regulatory systems in place. Drug manufactures are constantly looking for ways to skirt the laws and export the drugs anyway. Another variation includes dumping drugs whose shelf life has expired. How is this behavior likely to be detected? In third world countries, the doctors often lack access to the latest medical journals and often rely on the information provided by the drug companies and sales people.

Diane Vaughan

Vaughan cast a spotlight on organizational decision making. Traditional theories have tended to Emphasize either micro or macro level forces within Their theories. It was not merely the decision to launch the space shuttle that was problematic. Vaughan argues that through a series of decisions dating back some nine or so years that deviance and the acceptance of deviant decisions had become normalized. The result of these decisions is an environment in which deviance becomes normalized and risk taking becomes acceptable. - It creates a culture of risk taking. Vaughan argues that this faulty decision-making is often found in white collar crimes committed within organizations.

Utilizing logic to solve the problem.

What are the major causes of white collar crime? 1. Motivation 2. Opportunity 3. Lack of controls

False Advertising

When does false advertising become a fraud? The legal definition of false advertising is very generous to advertisers. - Falsity is not the standard. Advertisers frequently use broad/general lies. - Deception is the standard. More difficult to prove.

How to categorize corporate crime

Who are the victims- public, consumers, employees, competitors, the environment Types of Injury- death or physical injury, monetary loss, theft of power Size and scope of the corporate entity and harm- Transnational, domestic national, or local Type of product(s) involved- Banking, automotive, pharmaceutical, healthcare, construction, consumer products

Conflict Perspective

Willem Bonger- Criminality and Economic Conditions Richard Quinney - Class State and Crime

Defining Corporate Crime

"Offenses committed by corporate officials for their corporation and the offenses of the corporation itself"

Criminal Charges?

- 4 BP executives would eventually face criminal charges for their roles in the environmental disaster (crime) - One engineer was acquitted of hindering an investigation - One was convicted for his involvement in the cover up and destruction of evidence. Subsequently a new trial has been ordered - Two executives faced the charge of manslaugther for the deaths of 11 employees. In late 2015 the charges were dropped - This brought an end to the governments attempt to hold anyone criminally responsible for the disaster - The result no criminal convictions and no jail/prison

Criminal charges for VW

- Both VW and six former executives were criminally charged - One was arrested in Florida in January of 2017 - The others are believed to be living in Germany - It is too early to say what will happen in any of these criminal cases

Opportunity

- Both the distribution of opportunities and their relative attractiveness vary significantly from one industry to another - Variations in the regulatory environment play a major role in the opportunity structures in different industries

Environmental Protection Agency

- EPA created by President Nixon by executive order 1970 - Congress subsequently approved the creation of the agency - It was charged with the enforcement of all environmental laws in the United States - The EPA is an independent agency within the executive branch of the federal government - The agency is headed by a presidential appointment (confirmed by congress)

The FBI

- Emerged as one of the biggest agencies to investigate white collar crime - On September 2001, the FBI was shifted to counterterrorism squads leaving fewer to investigate white collar crimes - By 2008 they had shifted some resources back. Their main focus is on investigating financial crimes

Trust and opportunity

- High levels of trust create opportunities for crime - Specialized knowledge also creates opportunity for crimes - Opportunity is nearly universal - All occupations offer some illicit opportunities, but opportunities are unevenly distributed, and some occupations clearly hold far greater opportunities for illicit gain than others

Common examples of environmental crimes

- Midnight dumping - Illegal disposal of waste tires - Illegal disposal of construction debris - Illegal wildlife trade/illegal logging/fishing/hunting

Criminal motivation

- Most traditional theories of crime focus almost exclusively on criminal motivation - Motivation alone is not considered sufficient in explaining white collar crime

Criminal prosecutions

- OSHA cannot prosecute a criminal case. They can only refer cases to the DOJ - Only cases involving a worker fatality and a willful safety violation are eligible for criminal prosecution - The offense is classified as a Class B misdemeanor - OSHA fails to use its limited criminal referral authority - Only 21% of eligible cases were referred for prosecution between 2003-2007 - The DOJ pursued only 4.2% of these cases

Underrating/Deleting Violations

- OSHA routinely undermines its own front line inspectors - in 2006, OSHA supervisors downgraded willful citations to a lesser classification 21 times in 17 separate fatality cases, representing 22% of all initially assessed willful citations in fatality cases. In other words, more than one fifth of all willful penalties initially cited by OSHA inspectors in fatality cases were downgraded by OSHA supervisors. Supervisors similarly downgraded almost 13% of all repeat citations initially issued by inspectors in fatality cases

Funding and staff issues

- Overall the past three decades, OSHA's budget, staffing, and inspection activity have all dropped - At the same time, the american workforce has grown. We now have more facilities needing inspection - OSHA's budget when adjusted for inflation has been cut every year since 2001. In 2008 the OSHA budget was virtually the same as it was in 1980

Update 2016

- President Obama signed a bipartisan bill to reform TSCA in June 2016. The first major reform to TSCA in more than 20 years - The Frank R. Lautenberg Chemical Safety for the 21st Century Act - Forty years after TSCA was enacted, there are still tens of thousands of chemicals on the market that have never been evaluated for safety, because TSCA didn't require it - The new law requires EPA to evaluate existing chemicals, with clear and enforceable deadlines. Under the new law, EPA will evaluate chemicals purely on the basis of the health risks they pose. The new law provides a consistent source of funding for EPA to carry out its new responsibilities

The creation and operation of federal regulatory agencies

- Regulatory agencies can be found at the state and federal levels - Federal regulatory agencies are created by congressional action - The heads of most federal regulatory agencies are appointed by the president - Subject to congressional confirmation

The regulatory agency's philosophy

- Regulatory agencies confront a basic choice between emphasizing compliance or deterrence - Traditionally, most regulatory personnel have probably thought of themselves less as a police force and more as governmental agents who seek to gain voluntary compliance with regulatory standards - Regulatory agencies typically adopt some mixture of cooperative and punitive approaches

Investigations are a challenge

- Requires different knowledge - (hazardous materials training & education) - Also need to know the rules of the investigation - Requires different equipment (costly) - Uses tools like coliwasa (composite liquid waste sampler) - Safety officers should be protected (PPE)

Criminal Prosecution

- The EPA does not have the power to initiate a criminal action - They can however refer cases to the DOJ - The DOJ can issue an information or seek an indictment from a grand jury - The DOJ could also move the case to a civil court. The burden of proof is significantly less

Other regulatory agencies

- The FDA is part of the department of health and human services and was created from the food and drug act of 1906 - mandated public protection from hazardous foods, drugs, cosmetics, and medical devices - The FTC was created as an independent agency in 1914 as the federal government principle weapon against trusts - The SEC was established in 1934 as a government response to the massive stock manipulation and frauds that contributed to the 1929 stock market crash - Consumer Product Safety Commission (CPSC) the CPSC was established in 1972 during the heigh of the consumer movement

Trouble with Toxic Substances (Chemicals)

- The Toxic Substances Control Act (TSCA) was enacted in 1976 to allow the U.S. EPA to protect us from the dangers of toxic chemicals in consumer products Two major problems 1. It does not require companies to prove that chemicals are safe before they are used in products 2. A related issues. They can't keep up with new chemicals being created

BP and Deep Water Horizon

- The criminal and civil lawsuits from both the government and private entities against numerous entities are too many on the list - In the end, BP and partners (including Halliburton and Transocean) were ordered to pay fines for violating the Clean Water Act and the Natural Resources Damage Assessment - To date, BP has paid more than 54 billion dollars for damages, clean up, and penalities

The fraud triangle

- opportunity - rationalization - pressure/motivation

A few Structural Reform Ideas

1. Place a member of the public on the board of directors at all major corporations. This member would be charged with representing the public interest. They would have to be independently appointed and paid. 2. Create a Federal chartering process, rather than letting corporations play states against one another for their business. 3. Adding workers to the board of directors. 4. Create more transparency for records on such things as product safety, plant emissions, plans for factory closings, etc.

History

20 years ago environmental crime was only an emerging field of study in criminal justice - This subfield has grown immensely - Media usage began to increase Not to be confused with environmental criminology - A separate subfield of criminology altogether

Operation Goldpill

82 Pharmacists and 1 physician arrested in FBI sting. - Medicaid Fraud on a large scale. Other medical crimes: Kickbacks from pharmaceutical companies Price fixing Doctor gets 30 years for diluting cancer drugs. double billing, billing for drugs never prescribed, secretly giving patients generic drugs and charging for the more expensive.

VW scandal

A peer reviewed study published in Environmental Research Letters estimated that approximately 59 premature deaths will be caused by the excess pollution produced between 2008 and 2015 by vehicles equipped with the defeat device in the United States, the majority due to particulate pollution (87%) with the remainder due to ozone (13%). The study also found that making these vehicle emissions compliant by the end of 2016 would avert an additional 130 early deaths - This does not account for the numerous non fatal health impacts that will affect thousands of people

Aspects of American Society

A. Emphasis placed on the American Dream. Its not how you play the game, but whether you win or lose. B. Individualism- The emphasis on individual success. C. Universalism (There is no escape from the pressure to achieve). D. The fetishism of money. "... the distinctive feature of American culture is the preeminent role of money as the 'metric' of success." - Robert Merton E. Monetary success is inherently open-ended It is always possible to have MORE! All of this can be traced back to Robert Merton who noted that strong emphasis on the ends, rather than the means will cause high crime rates. For Messner and Rosenfeld, this can be true for the rich as well. It is the structure of American society...... the culture that produces institutionalized anomie.

Opportunity

According to Coleman, white collar criminals often "adjust" the symbolic construction of their behavior to conform to generalized social expectations. In doing so, criminal opportunities are created as offenders both justify their behaviors and neutralize guilty feelings, which allow one to define their criminal activities as acceptable. - In this way, opportunities that did not previously exist, now become defined as acceptable.

Pharmaceuticals and Medical Devices

According to Criminologist James William Coleman, the pharmaceutical industry has a track record that is at least as bad, if not worse than the automobile industry. "Time and again, respected pharmaceutical firms have shown a cavalier disregard for the lives and safety of the people who use their products." - James William Coleman Sales persons downplay or ignore harmful side effects. They are encouraged by the industry to make deceptive statements about their products.

Basic Goals of White-Collar Crime Prevention

Accountability Transparency Oversight Reducing the rewards of crime and rewarding compliance Consider how these goals are met as