CRIJ 4365 White-Collar Crime

Commodities fraud:

"Fraudulent sale of commodities investments"

Mortgage fraud:

"intentional misrepresentation to a lender for the purpose of obtaining a loan that would otherwise not be authorized" Mortgage fraud has been steadily increasing. Not all mortgage fraud is classified as white-collar crime (i.e. consumers scamming banks for gain)

10 Top Cybercrimes:

(10.) Royal bank of Scotland WorldPay Heist. In 2008 hackers accessed RBS accounts & increased withdrawal amounts to steal over $9 million. Clone cards were used on 2,100 ATMS across the world in a 12 hour attack (09.) Vitek Boden. Boden hacked Australian sewer systems & dumped 250M tons of waste into rivers. Over two months he destroyed ecosystems in revenge for a rejected job application. (08.) LA Traffic Signal Attack. During a strike two engineers hacked LA's road signal network & adjusted traffic controls. Areas were paralyzed over the 4 days it took officials to regain control. (07.) South Carolina Data Theft. Hackers stole data from 75% of S. Carolina's population from State Dept. Computers. Leaks included 3.3m bank accounts & millions of kid's social security numbers. (06.) Iranian Nuclear Attack. In 2012 hackers targeting an Iranian nuclear plant caused computer networks to close down. It also caused computers to play AC/DC's 'Thunderstruck' at random intervals. (05.) MBA Application hack. In 2006 a hacker broke into college application systems & shared the hack online. Harvard identified & sent rejection letters to the 119 applicants who used the hack. (04.) Conficker. Microsoft offered $250K to identify the writer of this bot that infected 15m computers. The unknown hacker shut down 13,000 U.S. ATMs & grounded French fighter jets. (03.) Max Vision. Max Vision was sentenced to 13 years in prison after hacking 1.8m credit card numbers. He ran a forum selling data to ID thieves which led to $86.4m in fraudulent charges. (02.) The Slammer. 2003's Slammer virus blocked Seattle's 911 services & forced airlines to cancel flights. The virus multiplied in seconds & it took over $1bn to repair damages. (01.) Military Source Code Theft. A hacker accessed U.S. Navy source codes responsible for guiding missiles & satellites. Traced to Germany, their ID remains unknown. They stole 66% of the data.

Pump and Dumb scam

(Increase the price of stock by sharing false information before selling-dumping-the stocks) Manipulation of the market through aggressive buying/selling strategies

Retail crime

(Retail businesses are victims and perpetrators of WCC)

Crimes in the military-

(also known as "khaki-collar crime") instances where individuals enlisted in the military violate the rules governing their behavior.

Double-billing

(both taxpayers and corporations pay the bill)

Prearranged trading:

(collusion between brokers to fix the price)

Bait-and-Switch tactics

(e.g. Sales, Black Friday). Short weighting.

Crimes in the technological system and types of computer crime

(e.g. hacking, cracking, theft, etc.)

'Junketing'

(exotic trips at the expense of taxpayers)

Bucketing:

(take a position opposite of a customer's position)

Front running:

(take advantage of special knowledge to profit)

Overcharging

- employees charge customers more than they should

Power elite controls:

1. Decision-making & 2. Media. Financing of elections (Political action committees-PACs), Legalized bribery, Legislative lobbying

Securities and Commodities fraud:

A broad range of behavior designated to rip off investors. E.g. fraudulent activities related to stocks, bonds, and mutual funds

Slumlord as White-Collar Criminals

A slumlord is a landlord who profits from renting run down properties that they do not properly maintain

Hacking

A term used to describe those who have the skills to access various secure computer databases and programs but do so only out of a desire to experiment to see if they are able to access these programs

Theft

A type of computer crime refers to a variety of computer-related activities that result in the offender stealing something from the business. Items stolen include funds, information, and intellectual property.

Crackling

AKA crackers: individuals who crack into computer systems "with [the intent] to sabotage and cause chaos to [the] corporation" (Wiggins, 2002, p.20)

Rolling Stone magazine article 'The Dirtiest Cops in America' by Josh Eells.

About a Panama Unit that operated one of the most efficient drug-robbery rings in Texas, taking money from some dealers and traffickers while using their weapons and cars to rob others.

Financial corruption in elections

Acts defined in the past as corrupt have become legally accepted somehow Citizens United v. FEC (Federal Election Commission). Allowing corporations/unions to donate unlimited money to political campaigns

Crimes committed by restaurants against consumers:

Adulterating food. Failing to adhere to cleanliness standards . Using false advertising to describe goods and prices. Short weighing (is the use of ice a method to give less in a beverage?)

Bernie Madoff's case study

Bernie Madoff organized the largest Ponzi scheme in U.S. history, $65 billion were invested in Madoff's accounts, Investors would send Madoff money to invest, but he would just deposit the money in a bank account, Madoff's scheme lasted for 17 years, The scheme was able to last for so long because investors received positive returns and Madoff rarely shared information about accounts, Maddoff's ponzi scandal: https://www.youtube.com/watch?v=4xYkQnCUl5E

Auto repair frauds:

Billing for services not provided. Unnecessary auto repairs. Airbag fraud. Auto insurance fraud. Automotive sales fraud

Home repair fraud

Building contractors fraud. Home improvement fraud. Maintenance fraud. Unnecessary repair or overcharging frauds

Ponzi scheme red flags

Complicated trading strategies, Irregular investment paymentsUnique customer statements, Delays in withdraws and transfers, Promises of high returns with little risk, Overly consistent returns, Unregistered investments , Unlicensed sellers, Secretive strategies, Issues with paperwork, Difficulties receiving payments

Common crimes using the Internet:

Consumer fraud, scams, credit card fraud, identity theft, etc. 10 Notorious cybercrime: https://www.youtube.com/watch?v=moiaRn2WwPw 2012 virus "stop net"? Iranian nuclear plant attack.

Police corruption types

Corruption of authority, Kickbacks, Opportunistic theft, Shakedowns, Protection of illegal activities, Fixing cases, Direct Criminal activity, Internal payoffs, Sexual misconduct

Physical

Critical infrastructure vulnerable to cybercrime. Banking, energy services, government, defense industry, IT, etc.

Issues with cyber security:

Data framework Data collected about students, employees, administrators, research projects, etc. All these information is available in databases and it is a target from hackers

Retail Crime As offenders

Deceptive and fraudulent adverting (E.g. Expiration date issues). Adulteration of products

Economic Internal:

Detection, investigation, containment, recovering, etc.

Behavioral framework

Digital and internet piracy by students.

Phishing

Distribution of a large number of e-mails in an effort to scam someone

Phishing:

Distribution of massive email to lure people to reveal personal information Advanced fee frauds, fake reimbursements, fake lottery winnings, fake security warnings, etc.

Ponzi scheme:

Do not have investors recruit other investors Usually high returns are promised on the original investment. Those that scam investors by paying them from future investor's payments into the offender's scheme.

Crimes committed by employees against the restaurant:

Eating food without paying. Giving food or beverages away. Selling goods at a lower price. Removing items from restaurant for personal use. Stealing from cash register

Types of correctional officer misconduct:

Embezzlement , Drug smuggling, Coercion, Sexual misconduct, Transporting contraband

Theft crimes against the consumer

Embezzlement, forgery, and falsifying account information

Retail crime As victims

Employee theft & check/credit card fraud. Shoplifters & burglars

Typical Fraud by officials or institutions

Employees trying to recruit students to their college Traditional offenders organizing fraud rings (e.g. For profit-colleges taking advantage of veterans-GI Bill), Consultants assisting students in college applications for a fee

The NPR podcast 'A closer look at how corporations influence congress'

Eric Lipton, an investigative reporter for The New York Times, has been writing about how corporations work in opaque ways to shape debates. He also explains the revolving door between Congress and lobby groups, and how non-profit think tanks aren't always what they seem.

Cyber gangs

Expertise on IT, Online reputation, Profit and information, no violence. Such as the cyber gang anonymous

Student loan fraud (main patterns)

Federal and state laws provide and regulate student aid such as grants or loans

Conflicts of interests

Finance and corporate industries spend millions lobbying members of Congress Tax breaks, bailouts, deregulation, lax, or no legislation Governor of New Jersey, Christ Christie

Employee theft in the retail system

Financially orientated offenses committed by individuals in the context of a legitimate occupation. Crime in and by small businesses

General prevention strategies

Firewalls and encryption, Employee-based strategies, Involve employees in the fight against computer crime, Reward system for reporting crimes and updating virus software.

Fraud during closing/settlement:

Fraudulent activities that occur at the conclusion of a real estate business deal. Fraudulent activities: Kickbacks, failure to reveal settlement costs, overstating settlement costs and pocketing the difference . Increasing fees above promised amount

Hedge fund fraud:

Fraudulent acts occurring within hedge fund systems "Private investment partnership with high net worth clients" Hedge funds are not regulated by the SEC Money can be invested in any kind of securities Hedge funds managers receive a percentage of the returns instead of a fee Example: Hedge fund managers overstate the assets in a fund to trick their investors

These schemes rip-off investors by paying them from future investors' payments into the offender's scheme

Fraudulent investment strategy

Tax breaks, bailouts, deregulation, lax, or no legislation

Governor of New Jersey, Christ Christie. Squeezing off the judge from the orange.

Consequences of slumlord behavior include:

Health consequences, Financial consequences, Dehumanization, Emotional consequences, Decreased property values, social disorganization, Crime, Legislative consequences and grassroots effects.

Theft as computer crime:

Includes a number of computer-related activities where the offender steals something from a business Offenders can steal funds, information, and intellectual property

Economic External

Information loss, business disruption, damaged equipment, revenue loss

There are more rules to break in the military than in any other occupation

Insubordination, Desertion, Mutiny, Malingering, Foreign Enlistment, Treason

Police strategies

Law enforcement agencies become more involved in the response to computer crime. The creation of specialized units within agencies

There is a need for interdisciplinary collaboration in responding to cybercrime.

Law enforcement working with each other to succeed.

Role in the offense of cybercriminals

Lone wolf, Associations, Cyber mercenaries

Crimes by agents against the company

Lying about a client's income/assets in order to obtain coverage

Typical frauds by students:

Lying about intent to take classes, Obtaining loans with no intent to pay them back, Schemes or false strategies to enroll students in colleges, Providing false information to enhance qualifications, Dishonest strategies to charge students with fee for financial aid seminar.

Prevention Strategies for Mortgage Fraud

Mandatory reporting requirements, Better communication between the mortgage industry and law enforcement, A database of censored or debarred mortgage officials , Increased funding for preventing offenses , Assigning law enforcement responsibility to one specific Department of Justice office, Enhancing intergovernmental collaborations

Documentary: The Untouchables

Martin Smith investigates why the U.S. Department of Justice (DOJ) has failed to act on credible evidence that Wall Street knowingly packaged and sold toxic mortgage loans to investors, loans that brought the U.S. and world economies to the brink of collapse.

Fraud:

Misleading behavior in order to illegally obtain money from federal or state student loan programs

Legislative strategies

New laws to criminalize cyber criminals. The computer Fraud and Abuse Act of 1984. Prevention through education and information (e.g. detention, response, recovering)

Prevention strategies for Crimes in the insurance system:

Obtaining references. Using local businesses. Verifying multiple estimates. Using written contracts

Conspiracy appraisal

Occur when appraisers work with other offenders as part of broader mortgage schemes. Collaboration with other offenders as part of a larger scheme

Windshield appraisal

Occurs when appraisers fail to even go into the home to determine its value; the home's value is determined by appraisers looking through the windshield of their automobile.

Foreign Exchange fraud:

Occurs when brokers or other officials induce "victims to invest in the foreign currency exchange market" by using fraudulent methods

Builder initiated fraud:

Occurs when builders engage in behaviors that are intended to defraud the lender or buyer

Unauthorized access:

Occurs when individuals break into various computer databases that they do not have legitimate access to (Hacking by Hackers)

Problems responding to computer crimes

Offenses happen quickly (hit and run offenses), Computer crimes are often international in scope, which makes it hard to determine where the crime originated, Victims often do not know they have been victimized right away, Signs of crime are constantly changing, Offenders go to great lengths to cover crimes, Many criminal justice officials are not trained to respond to this type of offense, It is hard to identify potential victims.

Patterns of mortgage fraud

Offenses involve huge dollar losses, Mortgage Fraud cases often occur over long periods of time. Mortgage fraud is distributed differently across the country. Top states for concern are Florida, New York, California, Arizona, and Michigan as well as major urban setting such as Miami, LA, NYC. Very few criminological studies have focused on mortgage fraud

Factors that contribute to judicial misconduct:

Office authority, Heavy caseloads, Interactions with others in judicial process

Inflated appraisal

Overestimate the value of a home in order to allow it to be sold at an inflated price.

Networks used to commit the cybercrime

Perps work together with other cybercriminals, Familiarly with networks, Interconnection with multiple networks

Stacking

Persuading persons to buy more insurance polices than are needed

Rolling over

Persuading the customer to cancel an old insurance police and replace it with a more expensive "better" policy

Government officials engaging in illegal or improper activities for personal benefits

Political extortion, Bribery, Illegal gratuities, Illinois case (Rod Blagojevich)

Patterns surrounding investment fraud

Press attention, Greed, Increasing punitiveness, "White Collar gangs", Multiple offenses, Regulatory changes, Negative consequences

Judicial misconduct trends

Pressuring jury for verdict, Private communication with jurors, Improper influence, Comment on pending case, Failure to ensure rights, Receiving gifts, Improper courtroom decorum, Illegal activities on/off bench, Abuse of sanctions, Bias/appearance of bias, Misuse of court resources, Abuse of authority, Allegations of judicial misconduct rose during the early 1990's

Organized crime

Prostitution, gambling, money laundering, etc.

Is Herbalife an American dream or a pyramid scheme

Pyramid Scheme. See definition for Pyramid Scheme.

Factors involving these crimes in sales-related crimes:

Rationalization to explain illegal behavior. E.g. 'I've been exploited by the company, it's to compensated low wages'. Young employees more likely to commit these crimes. Dissatisfaction with employment conditions or about to leave the job soon

Futures trading fraud:

Refers to fraud occurring in the trading of futures contracts and options on the futures trading market

The Guardian article; 'Ferguson judge accused of misconduct due to aggressive fine'

Ronald J Brockmeyer, who is accused of fixing traffic tickets for himself and associates, was a driving force behind using fines and fees to generate revenue

Chunking:

Situations where investors buy multiple properties without informing the bank about the other properties

Market manipulation:

Situations where officials do things to artificially raise trading volume.

Broker Fraud:

Situations where stockbrokers do not meet their legal obligations to investors Omitting key information to investors Broker embezzlement

High yield investment schemes:

Strategies that promise investors low risk or even no risk, when the funds are not invested or backed.

Video: Crimes against the elderly

Talked about contractors taking advantage of the elderly by overcharging them or making them believe they need repairs when they don't.

The role of computers in crime:

Target of the offense, Tool for the crime, Incidental to the crime

Social

Taxpayer's money wasted; disruption of everyday life, fear of victimization, damage to city infrastructure (water system, airports, traffic system, hospitals, and crucial database).

Addressing employee crime through the use of

Technology (e.g. cameras, surveillance, policing between competing companies)

Documentary: Inside Job

The global financial meltdown that took place in Fall 2008 caused millions of job and home losses and plunged the United States into a deep economic recession. Matt Damon narrates a documentary that provides a detailed examination of the elements that led to the collapse and identifies keys financial and political players. Director Charles Ferguson conducts a wide range of interviews and traces the story from the United States to China to Iceland to several other global financial hot spots.

Understand and explain the line/differences between a 'bribe' and a campaign contribution

The line between bribery and illegal gratuities has to do with intent. In bribery cases, authorities must prove that the official intended to provide political favors in exchange for some item, good, or service. In illegal gratuity cases, the official simply received something that they were not supposed to receive.

Crime in the hotel industry:

Theft of food. Theft of hotel items. Theft of guest's items

Investment focus crimes

To get consumers to buy/invest in insurance products. E.g. Promissory note fraud

Awareness strategies:

To increase employee awareness about issues surrounding employee theft. Anonymous tip lines, new hire orientations, and loss prevention programs

Organizational culture strategies:

To promote a sense of attachment and commitment to the workplace (build loyalty and encourage honesty)

Deflated appraisal

Underestimate the value of the home in order to force the seller to lower the home price.

Tax Evasion:

Underreporting income. Keeping two sets of books. Claiming false deductions. Overstating deductions & wage theft (e.g. Restaurants)

Students and computer crimes (major patterns) *not too sure about this one*

Universities are not excluded from cybercrime

Pyramid:

Unsustainable business scheme

Judicial misconduct

When a judge violates the rules of impartiality or engages in unethical behavior

Sliding

When agents include insurance coverage that was not requested by the customer

Sales-directed crimes

When brokers or agents steal through fraudulent sales tactics (p.58)

Investment fraud:

When consumer investments are managed or handled fraudulently by stock brokers or other officials in the economic system

Insider trading:

When individuals share or steal information that "is material in nature" for future investments. Information must be significant enough to affect the company's stock price

Flipping:

When offenders buy and resell properties at inflated prices

Apolitical white-collar crime-

When politicians get into trouble for actions outside the scope of politics (i.e. sex scandals)

Qualifications fraud:

When professionals lie about a buyers qualifications in order to obtain a loan to buy a home. Income, collateral, property value. Assets, employment status, length of employment . Professionals often misrepresent a client's income, employment, and/or occupancy intentions.

Factors that contribute to theft in restaurants:

Workers tend to be younger. Workers are paid low wages. Workers are mainly part-time employees. Irregular hours provide more opportunities for deviance/crime

Extortion

a criminal act that occurs when a person obtains money, goods, or a desired behavior from another person through violence or threats.

Computer crime refers to

a variety computer-related behaviors that are illegal or otherwise harmful Hacking, cracking, phishing, extortion, Child pornography, fraud, identity theft, cyber bulling, etc.

Extortion can be considered

a white-collar crime if performed non-violently through a business or professional setting.

Builder bailout schemes:

builders offer excessive incentives to buyers, but conceal these offers from the lender to create the appearance that the property is worth more than it actually is

Structural changes:

businesses and society have dramatically increased their reliance on computers, which provides more opportunities for computer crime

Foreign friendly civilian crimes:

committed against civilians of another country (i.e. property or personal crimes)

Enemy Civilian social system crime:

committed against residents of countries the military is currently at war with (i.e. looting)

Extra-occupational crimes:

committed against the American civilian social system (i.e. property of personal crimes)

Inter-occupational crimes:

committed against the enemy military system (i.e. torture)

Entertainment/services system is the setting where

consumers purchase various services designed to entertainment. Major industries: The restaurant and hotel industry

Virus introduction:

crackers typically introduce viruses for recreational reasons, pride, profit, protection, or cyber-terrorism reasons

Intra-occupational crimes:

crimes committed against the American military system (i.e. theft of military property)

Peer associations:

crimes occur because the offender is associated with peers who may be more likely to commit computer offenses

Consequences of Police Corruption:

diminished effectiveness, demoralization in department, and barriers between officers and communities.

It is estimated that approximately 90% of allegations of judicial misconduct are

dismissed

Soft money

donations (to promote issues, not candidates). The line between a 'bribe' and a contribution has become blurred in many cases

Estimations suggest that 90% of crime in hotels is a result of

employee theft

Shortchanging-

employees do not give the customer all of the change they are due and keep the difference

Sweetheart deals-

employees provide friends and family members unauthorized discounts

Coupon stuffing-

employees steal coupons and use them later on

Theft of goods:

employees steal items from the retail system

Theft of production supplies and raw materials-

employees steal materials used to produce the goods for sale in the retail store

Embezzlement-

employees steal money from an account they have access to

Theft of money from the cash register-

employees steal money out of the cash register

Churning:

excessive selling of the same property in an effort to gain from the fees and commissions associated with the repeated sale of the property.

Individual victims:

financial ruin and emotional stress

Businesses as victims:

financial ruin, business failure, morale problems, and loss of jobs

Opportunity explanations:

focus on how easy computer crimes are committed Offenses are easy to commit for those who are familiar with technology and an offense can target many victims simultaneously

Officials must decide whether or not to

force tenants out of homes and possibly become homeless or do nothing and allow slumlord activities to continue.

Pump-and-pay schemes:

fraudulently increasing a property's value and then collecting money from the equity.

These crimes, sales related, go beyond the low ranks to include

high-level executives in companies. Reluctance to report crime due to bad publicity, long term trials, and potential lawsuits.

Herbalife, American Dream for sale?:

http://abcnews.go.com/Nightline/video/herbalife-investigation-part-american-dream-sale-23449013

The Herbalife case study

http://abcnews.go.com/Nightline/video/herbalife-investigation-part-american-dream-sale-23449013

Mortgage fraud exposed:

https://www.youtube.com/watch?v=RJjmnAlkl6g

Not all the "computer wrongdoing" is

illegal (e.g. Face-booking while working). Legal changes are being made to better respond to computer crimes.

Foreclosure rescue scams:

illegal activities designed to use future foreclosures as a component of offense. Illegal activities include: arson, unknown bankruptcy fillings, advanced fee frauds, and stimulus fraud.

Internet crimes:

include a variety of crimes that are committed by offenders through the internet

Real estate market as a victim:

increased rates/fees and difficulties determining home values

Crackers:

individuals that "crack" into computer systems in order to sabotage and create chaos within a particular corporation or business

Fine line between mistake and

misconduct

Consumer fraud victimizes the

most vulnerable sector in society: Poor, illiterate, needy people, students, women, immigrants, undocumented workers, elderly.

The insurance system encompasses the

numerous agencies and institutions responsible for providing insurance coverage.

Reverse mortgage fraud:

occurs when homeowners over the age of 62 sell their home back to the bank, but are allowed to continue to live in it until they pass away. Fraudulent activities include: Charging for free information, misrepresenting re-loan counseling. Forgery, posing as government officials, and bundling unnecessary services

Fraud-for-profit:

occurs when offenders commit fraud for financial gains. Industry insider fraud. Multiple participants who commit a series of fraud over time. E.g. Appraisers, real estate professionals, financial advisors, closing attorneys, etc.

Fraudulent loan origination:

occurs when professionals help buyers falsely qualify for a loan

Luxuries trips

paid by wealthy donors disguised as fund-raising events

Commodities are

raw materials such as gas, oil, and other tangible products

Pyramid schemes:

recruit investors by promising them profits in exchange for recruiting other individuals into the scheme

Software crime:

refers to situations when computer software is a key component of the offense Types include: theft of software, counterfeiting software, copyright violations, and piracy

Fraud in the sales system include cheating customers through

repair service businesses

Insurance fraud is

seldom studied because it is difficult to understand and identify. People frequently do not realize they have been a victim of insurance crime

Advanced fee fraud:

situations where investors are promised certain actions/services in exchange for an upfront fee and those actions/services are not provided.

States have passed criminal laws to

target home repair fraud. These laws provide clear guidance for how cases should be processed

The Uniform Residential Landlord and Tenant Act requires

that homes must be inhabitable, up to code, safe, and capable of providing necessary utilities.

Two types of crackers exist:

those inside the company and those outside the company.

Some members of congress engage in behavior that could be defined as

unethical or nearly criminal. Use their official status for personal privileges

Communities as victims:

vandalism of abandoned properties, increased disorganization in community, increase in conventional crime rates, and raised property taxes

Appraisal fraud:

when appraisers lie about a home's value

Faulty credit enhancements:

when builders make it appear that the buyer has better credit than they actually do.

Straw buyer fraud:

when individuals purchase a home they do not plan on living in and then deed the home over to another person.

Equity skimming/equity fraud:

when investors convince homeowners to use the equity in their home to hire the investor to buy the home. Fraud has occurred when the investor defaults on the mortgage

Liar Loans:

when investors lie about loans they currently have or are attempting to obtain

Fraud-for-housing:

when offenders commit fraud in order to secure a loan to buy a house

Police corruption-

when officers violate social trust and abuse their authority

Short sale fraud:

when parties involved in a short sale manipulate the process in order to convince the bank to allow the short sale to occur.

Retail system is

where consumers purchase an assortment of products. it relies on employees to perform successfully. Retail workers guide the direction of the retail system

Home Improvement scams:

where real estate agents or investors hide issues with a home