white collar crime

Defining white collar crime by what it is not

White collar crime refers to any illegal or harmful activity that is neither street crime nor conventional crime.

Possible Examples of White Collar Crime cont.

World's largest retailer uses illegal immigrant workers and cheats them on their wages Major defense contractor overcharges the U.S. Government on military contracts and cheats retirees on pensions

The blind or impersonal trust we place in people or business creates countless opportunities for corruption, misrepresentation and fraud.

Yet in modern society, placing our trust in people seems to be both necessary and unavoidable. Trust and the violation of trust are key elements of white collar crime.

Investigative Reporters-Journalists have traditionally been a thorn in the side of normal business and politics

because of their periodic exposures of wrongdoing and illegal conduct by the powerful and privileged business and politics. Investigative journalism reporting has been limited in the white collar crime area for several reasons Why? Lonely

Indirect Costs - Costs associated with a crime, but not a direct result. For instance, indirect costs may include higher taxes, increased costs of goods or services and higher insurance rates.In conventional crimes, these indirect costs may include

costs of locks for doors, gates, security systems.The criminal justice system spends less money to investigate white collar crime than conventional crime even though the costs to the victims and society are far greater in white collar crime

Many of white collar crime's victims do not even know they were victimized until years later when there is some incident

or fact that comes to attention of law enforcement or regulatory agencies

And some informers may just be manipulative con men...or women. Or even just be liars. The term "whistleblower" has been typically applied to those inside an organization who inform outside regulatory

or law enforcement agencies about the organization's illegal or unethical conduct.Similar to informers in that they may have crucial information of criminal activity from an insider's standpoint, BUT

Physical and Psychological Costs- Personal injury and loss of life. Physical costs can include

pollution, unsafe working conditions, unsafe products sold to the public. Psychological costs include trauma to the victim of a white collar crime. How about the trauma of losing your entire life savings! Psychological distrust and erosion of confidence in major organization

In white collar crime cases, the use of informers is almost indispensable.Informers may have specific and identifiable information of criminal activity

that only an insider could get. But some informers may commit further crimes with a sense of immunity. After all, I am working with the police. Why would they look at me? Why would they want to punish me when I am helping law enforcement solve a bigger crime.

Attorney General Report-"Illegal acts that use deceit and concealment - rather than the application or threat of physical force or violence

to obtain money, property or service; to avoid the payment or loss of money; or to secure a business or professional advantage. White collar criminals occupy positions of responsibility and trust in government, industry, business, professions and civic organizations."

White Collar Crimes are illegal or unethical acts that violate fiduciary responsibility of public trust committed by an individual or organization,

usually during the course of legitimate occupational activity, by persons of high respectable social status for personal or organizational gain."

U.S. Dept. of Justice Corporate Prosecution Guidelines

1999 - The 8 non-binding factors which guide Dept. of Justice prosecutors to decide if a Corporation should be criminally charged (p.7-8) 2003 - Principles of Federal Prosecution of Business Organizations (p.8-9)Corporate Cooperation ( p.8-9)

E.A. Ross

A criminologist who in 1907 came up with a new term and who was an influence upon Edwin Sutherland.You have heard of the term "humanoid?" A being who has physical features similar to a human and who has behavior and actions similar to a human......but is NOT human.

Possible Examples of White Collar Crime

A pharmacist diluting cancer drugs to enhance his profits.A bookkeeper embezzles from her employer to pay her personal bills.A priest steals over ½ million dollars from the church funds

What we see is that the reporting of white collar crime seems to have less of an impact on the general audience than does the reporting of violent crime. Murder, Rape, Robbery? Usually one victim per crime

Accounting Fraud, Tax Evasion, Embezzlement? Usually hundreds or thousands of victims per crime.There are a few explanations as to why media coverage of white collar crime is so limited. FIRST - There is more "indirect impersonal harm" experienced by indirect victims

Demographics of white collar crime- quid pro quo= that for that

Age. White collar criminals are more likely to be middle-aged or older. They tend to begin their offending and criminal ways at a later age than street criminals and offenders. Since many white collar criminals are in a profession or business, they tend to be older.

Criminologist agreement on definition of white collar crime

Agreement by criminologists in general that "white collar crime":Occurs in a legitimate occupational context. Is motivated by the objective/goal of economic gain or occupational success. Generally, is not characterized by direct, intentional violence

They have a working and maybe an economic relationship with those organizations

And maybe, just maybe. They don't want anyone taking a close look at them and their organization!

Of good standing, Proper or decent, Of moderate excellence, Of considerable size or status

Appearances can be deceiving The successful con artist projects an appearance of respectability but lacks the required moral qualities or social status

A favorable or more lenient treatment of their own criminal conduct.

Both? What about just being a decent citizen? Because it's the right thing to do? Generally not. People are just not that good.

Auto mechanics who falsify what repairs need to be made

Car manufacturers who knowingly sell unsafe vehicles.

Researchers have used a variety of research methods to study white collar crime

Case Study - in depth study of a single case using a variety of sources such as court records, financial analysis, news reports and interviews. Interviews Observation and reviews of data. Surveys. Problem with Surveys? Everybody Lies! Especially about doing things that are unethical or illegal!

Limitation- corporate liability is limited to only those criminal acts that occur within the officer or supervisor's scope of employment, or scope of authority and acting on behalf of the corporation.

Commonwealth v. Beneficial Finance Co. (Mass. 1971) (p. 16 - 19) People v. Lessoff and Berger (NY 1994) (p. 23 - 24)

The Homestore Case 2002 (p. 9)

Corporate Compliance Programs ( p. 9 - 10) U.S. Attorney's Manual - Principles of Federal Prosecution of Business Organizations (2008) (p. 12 - 15)

FINALLY - White collar crime, as a rule, is less visible, than conventional crime

Crime in the SUITES, as opposed to crime in the STREETS. Most white collar crime does not occur in public places. It occurs inside corporate offices, in accounting procedures, in false documents, concealed and hidden from view

Criminal Intent

Criminal Intent - Willfulness. Specific intent- Willfulness- to voluntarily and intentionally, and with specific intent to disregard or disobey the law, with a bad purpose to violate the law. U.S. v. Bank of New England, N.A. (1st Cir. 1987) (p. 28 - 32)

Professionals, such as stockbrokers and other financial investment professionals, may expose their clients to excessive financial risks solely for the purpose of increasing their own income from commissions

Criminal charges in the financial frauds type of white collar crime are quite uncommon due to the extreme difficulty for prosecutors in proving criminal intent

The Costs of White Collar Crime First, there are different kinds of costs to be considered Direct Costs- Actual costs directly resulting from a white collar crime.

Difficult to judge. Conventional crime have more clearly defined direct costs. That is, what were the victim's losses? It is difficult to judge the losses from crimes such as tax evasion, environmental pollution, unsafe or defective products, antitrust violations, political corruption

The Discovery of White Collar Crime

Edwin H. Sutherland referred to as father of white collar crime. Credited with introducing the term "white collar crime" in his criminological study during a speech in Philadelphia to the American Criminological Society in 1939

Different names for white collar crime

Elite deviance,Economic crime,Business crime, Consumer crime,Political crime,Government crime, Corporate crime,Occupational crime,Cybercrime

and get a big financial outcome as a result. Laws to control societal risk, or harm to society generally, really came about in the late 1960s

Environmental Protection Agency(EPA) (1970) and the Occupational Safety and Health Administration (OSHA) were created by the government in response to society's request to impose legal controls on societal risk.

Tedious finding witnesses, reading through documents and financial statements

Expensive, Time consuming, Hazardous, Controversial, Emotionally draining, Of course, it can also be intensely satisfying and sometimes prestigious

In the 1990s, sex scandals involving the President of the United States Bill Clinton received more television coverage than the Whitewater political corruption case or any of the corporate cases which surfaced during that time

From 2001 on, corporate scandals were sometimes big news stories, but were ultimately overshadowed by the War in Iraq and other street crime stories. Enron, WorldCom, Countrywide Mortgage, Health South.

Group of Criminologists

Group of white collar scholars and criminologists got together in Morgantown, WV to discuss the definitional dilemma of white collar crime One day at lunch, they passed around a napkin and wrote what their definition of white collar crime would include

The Respondeat Superior Rule (p.16)

Imposition of corporate liability for the criminal acts performed by a corporation's officers and agents in the course of their employment, without regard to their status in the corporate hierarchy.

The risk of being caught and punished for white collar crime is very low compared with the benefits that may result from committing the crime. low risk high reward

In most cases, the risk strongly favors the offender because the probability of detections, prosecution and sanctions are low. Corporations and business organizations are more likely to take certain risks if they have reason to believe they can get away with it

"Indirect harm" is seen as "impersonal harm." There is no one single victim that is identified that you may empathize with.

Indirect harm effects a large group of people, usually who are defrauded out of very large sums of money, sometimes their life savings! But the crime and the indirect harm is usually not discovered until long after the crime is committed.

In white collar crime, these gender differences are also present. Males comprise 75% of the number of white collar criminals arrested, while females constitute approximately 25%.

It is likely the male dominance in corporations and outside the home businesses, especially in more powerful positions, that seem to give males a significant greater likelihood of committing white collar crime than females.

It is the rare case when whistleblowers have been formally vindicated.

It is the rare case when a business organization apologizes to the whistleblower for their suffering in exposing the fraud or wrongdoing of the company. Most likely, whistleblowers will leave their jobs, pack up and move to a new location and start a new life with a new job or new career.

Weber's analysis for definition of white collar crime

Lying Cheating Stealing

Economic Costs of White Collar Crime

Measuring the costs of white collar crime is more difficult than for conventional crime. Why? Disputes about defining and identifying whether it was a white collar crime...or merely negligence

Reporting of corporate crime did not generally attribute wrongdoing to the corporation

Media directs our attention to the crime they want to report. Usually violent or sensational crime "if it bleeds it leads". The public sees only the crime that the media wants us to see unless we really look for it elsewhere

Sutherland's examples of white collar crime

Misrepresentation, Manipulation, Embezzlement, Bribery. Sutherland believed that the white collar class of society had a special influence on the formation of criminal laws and in addition, had various means of minimizing the chances of being criminally arrested and convicted

Is there a potential benefit of "payoff" for them?

No traditional crime Index ReportingUCR - Uniform Crime Reports for white collar crime Must rely on government agencies, financial reports, newspapers. Difficult to obtain accurate statistics of white collar crime because it is rarely reported immediately when it happens. It may be years later.

High percentage of white collar crime is either not reported or identified by law enforcement as something else such as a traditional crime

No uniform and consistent way to measure the costs even when a crime is reported Why so difficult to measure costs of white collar crime?

We minimize the harm by saying, "Maybe they did something wrong."

OK, but criminal? They didn't hurt anybody? DID THEY? THIRD - Many large and wealthy media organizations (television, newspapers, social media) do not want to link other large and wealthy organizations with crime. Why?They don't want any pushback from those organizations

They may not want to admit that they were defrauded because of embarrassment

Organizational victims who are defrauded may not want to report it because they fear negative publicity and a public loss of confidence in their organization. Problems in regulatory data because they have leeway in defining when an offense actually occurs

Trust is when we rely on others who have specialized knowledge or training that they will act in good faith

People place an "impersonal trust" into a broad range of relationships and transactions.Do we really know these people? Should we reasonably rely on them? Have we checked them out?Doctors, insurance people, auto repair, home repair, stock investors, restaurants?

Politicians-It was difficult for politicians or political institutions to focus on white collar crime since they were usually a target for prosecution of criminal activity

Politics also has close ties with big business and corporations which may be big financial partners or donors to the politician, and so politics may not want to expose the wrongdoing.

Yale University did a study on white collar criminals and determined that the majority of white collar offenders are from the middle class or upper class.

Race. White Collar criminals tend to be Caucasian (white) more than any other race. Gender Males significantly outnumber females among traditional street crime

E.A. Ross - Criminaloids

Regarded criminaloids as being guilty of "moral insensibility."Also held them responsible for unnecessary deaths of consumers and workers

Who Are the Victims of White Collar Crime

Remember this...... All of US are victims of white collar crime, often without being aware of it!

Research of White Collar Crime

Research of white collar crime has been difficult Why? Difficult field of study involves economics, management, law, sociology, psychology and organizational theory, Obtaining cooperation from an organization. Why should they cooperate?

The more respectable people appear to be, the more likely they will be trusted.

Respectability leads to trust. The more respectable people appear to be, the less likely they will be suspected of committing serious crimes

Respectability

Respectability, like white collar crime, is not easily defined. It can be a false representation of respectability.Appearances can be deceiving. Some definitions of respectability are:Worthy of esteem

The Price of Whistleblowing-Whistleblowers may pay a substantial price for their courageous actions.

Retaliation, Traumatic personal consequences, Physical harm, In some cases whistleblowers have been shot or murdered, Divorce, Loss of a home, Arson, Financial loss, Loss of their jobs and face multi-million dollar lawsuits claiming damages from the business organization, Suicide

Risk and white collar crime

Risk - a wager or the odds or probability of an event occurring, may involve danger, but not always, usually involves a negative outcome Risk applies to white collar crime when there is a calculated chance of a certain behavior or conduct that will likely be successful

E.A. Ross

Ross developed the term "criminaloid." A person who had features of a "criminal" by the way they acted, unethical, immoral with a possibility of illegal, but society did not want to call them a "criminal" because of the appearance of respectability, which common criminals do not have.

E.A. Ross

Ross spoke of "the businessman who committed exploitative, if not necessarily illegal, acts out of an inhibited desire to maximize profit, all the while hiding behind a façade of respectability and piety."

Traditional/Conventional crime is a "direct personal harm." You know who the single identified victim is. They were shot, murdered, raped or robbed. The harm is "immediate" and occurs at the time of and right after the crime.

SECOND - There is some resistance from the public to view corporations as criminal! That is, the appearance of respectability and power.How can an accounting firm be criminal Arthur Anderson? How can an energy company be criminal Enron? How can a healthcare company be criminal Health South?

Workers and other corporate employees will tend to support whistleblowers when the information relates to a direct threat to the workers' health or well-being has been exposed

Safety issues. Health issues. When the information does not expose any direct or imminent danger to the employees there is significantly less support for the whistleblower from employees. WHY?Whistleblower may jeopardize their jobs. Whistleblower may jeopardize the local economy.

Younger white collar criminals tend to be employees of a business who can commit occupational (work related) offenses such as: shortchanging customers, giving away free goods or services and stealing from their employers.

Social Class or Status. Sutherland originally conceived white collar crime as the crime of upper class (white collar) or the better-off class of society. The haves vs the have nots. It is generally not the type of crime committed by the poor or economically disadvantaged? Why?

Corporations tend to accept higher levels of risk when it comes to their employees than to the general public because accidents and harm to the general public are more likely to get media attention

Some say the September 11, 2001 terrorist attacks might have been prevented or minimized if the airlines had not been trying to save money on passenger screening procedures, bulletproof cockpit doors, and better secured locking cockpit doors that cannot be entered in an emergency.

Measuring the Amount of White Collar Crime

Statistics on white collar crime will be generally inaccurate. Focus is on amount of conventional crime, not white collar. Victims of consumer fraud are unlikely to report the crime to police. Why? They may not know they were a victim of a crime at least for a long time after the actual crime

The Discovery of White Collar Crime

Sutherland attacked criminologists who believed that crime could only be the result of poverty, psychopathic or sociopaths conditions. Because Sutherland believed in general that criminologists failed to consider another important aspect of crime...White Collar criminals.

Sutherland's Definition of White Collar Crime

Sutherland believed that these improper business practices by people in respected positions were not merely civil wrongs but criminal offenses. Sutherland focused on the social status of the person, as opposed to the offense itself.

Sutherland's Definition of White Collar Crime

Sutherland was first to consider."crime in the upper or white collar class, composed of respectable or at least respected business and professional men." That is, "crime committed by a person of respectability and high social status in the course of his occupation."

Due to considerable resources necessary to support investigative reporting, particularly business and political fraud and corruption, it has been mainly undertaken by the major newspapers and television stations

The Washington Post Woodward and Bernstein, The New York Times, The Wall Street Journal, CBS 60 MinutesNewspapers in small cities or towns are usually limited by financial and personnel resources to exposing small town or local political corruption

So politicians may not want to attack white collar crime but rather focus on traditional street crime for a tough on crime, law and order approach. This, as opposed to attacking the very business/financial supporters they need.

The legislative branch of government Congress is the most likely political institution to investigate white collar crime through Congressional investigative committees Watergate, Iran Contra, Enron

The Role of the Media in White Collar Crime- emphasis on sensationalism.. rape and murder

The media is a crucial source of our understanding of crime because few people experience a wide variety of crime firsthand. Crime is portrayed in the media with an emphasis on sensationalism, especially violent crime. The motto "If it bleeds, it leads."

consumer fraud and sometimes illegal or unethical activity by a business or politician

The reporting of white collar crime is generally not appealing to television stations since most white collar crime does not involve sensational vivid visual images of the crime

What do these acts have in common

These crimes, in the past, have not been a traditional focus of the law, law enforcement and the criminal justice system.And generally, they have all been considered a type of White Collar Crime? WHY?????

Occupational crime offenders are those who have the opportunity to commit crime by virtue of their legitimate employment. Occupational crime offenders are generally middle class persons.

They commit white collar crime in the context of their legitimate jobs because they see an opportunity, low risk, high reward.Sometimes the minimum wage earners employed at a job will also see the opportunity to commit white collar crime, most often, theft.

What do these acts have in common

They do not include the forms of crime that are typical when people think about crime (Murder, Robbery, Drugs, Assaults, Theft, Burglary). The offenders or offending business organizations enjoy a relatively high level of TRUST and RESPECTABILITY....at least when compared with common street criminals.

Violation of Trust-Trust refers to confidence in a relationship that the other party will act honestly and fulfill expectations

Trust is acting in good faith.Trust applies to corporations that employ us, banks where we deposit money, stock brokers and investment firms where we invest, retail stores where we shop, doctors from whom we seek treatment and diagnosis.

Elements of White Collar Crime

Trust, Respectability, Risk, Demographics

Whistleblowers-Many of these associates who will not participate in the criminal activity will not become whistleblowers.

WHY? Self-preservation. Fear of social repercussions and being ostracized.Reverse whistleblowing. In the corporate scandals of the 2000s, it has been women, in general, who have been whistleblowers in the corporate scandals WHY?

Informers and Whistleblowers

What is an "informer?"Person who provides criminal justice system agencies or regulatory agencies with crucial information that may lead to an investigation, arrest, indictment and conviction of a criminal or criminals. Why do informers provide information?In exchange for payment. Money.

Doctors who overbill Medicare and insurance companies

When politicians are corrupt, when companies pollute the air or water, when business inflates their financial statements, when people are overcharged, when mortgage companies engage in predatory lending to people who cannot afford the mortgage and lose their homes, they are all victims.

Generally whistleblowers have no criminal liability or implication. That is, they have not committed a crime themselves.

Whistleblowers may be colleagues and associates of white collar criminals but they do not want to participate in the illegal activity or they are directly opposed to it.