White-collar crime

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See also: Wikibooks:Social Deviance

White-collar crime is a financially motivated, economic, non-violent crime committed for illegal monetary gain. Within the field of criminology, white-collar crime initially was defined by Edwin Sutherland in 1939 as "a crime committed by a person of respectability and high social status in the course of his occupation" (1939). Sutherland was a proponent of Symbolic Interactionism, and believed that criminal behavior was learned from interpersonal interaction with others. White-collar crime, therefore, overlaps with corporate crime because the opportunity for fraud, bribery, elaborate ponzi schemes, insider trading, embezzlement, computer crime, copyright infringement, money laundering, identity theft, and forgery are more available to white-collar employees.

Historical background

The term white-collar crime only dates back to 1939. Professor Edwin Hardin Sutherland was the first to coin the term, and hypothesize white-collar criminals attributed different characteristics and motives than typical street criminals. Mr. Sutherland originally presented his theory in an address to the American Sociological Society in attempt to study two fields, crime and high society, which had no previous empirical correlation. He defined his idea as "crime committed by a person of respectability and high social status in the course of his occupation" (Sutherland, 1949). Many denote the invention of Sutherland's idiom to the explosion of U.S business in the years following the Great Depression. Sutherland noted that in his time, "less than two percent of the persons committed to prisons in a year belong to the upper-class." His goal was to prove a relation between money, social status, and likelihood of going to jail for a white-collar crime, compared to more visible, typical crimes. Although the percentage is a bit higher today, numbers still show a large majority of those in jail are poor, "blue-collar" criminals, despite efforts to crack down on white-collar, and corporate crime. The introduction of white-collar crime was a relatively new issue to criminology at that time. He was urging other criminologists to stop focusing on the socially and economically disadvantaged. The types of individuals who committed these crimes lived successfully and were respected by society in general-also criminologists; because these criminals were held to such a high regard, these individuals were given a blind eye to the crimes they committed.

Other fiscal laws were passed in the years prior to Sutherland's studies including antitrust laws in the 1920s, and social welfare laws in the 1930s. After the Depression, people went to great lengths to rebuild their financial security, and it is theorized this led many hard workers, who felt they were underpaid, to take advantage of their positions.

Much of Sutherland's work was to separate and define the differences in blue collar street crimes, such as arson, burglary, theft, assault, rape and vandalism, which are often blamed on psychological, associational, and structural factors. Instead, white-collar criminals are opportunists, who over time learn they can take advantage of their circumstances to accumulate financial gain. They are educated, intelligent, affluent, confident individuals, who were qualified enough to get a job which allows them the unmonitored access to often large sums of money. Many also use their intelligence to con their victims into believing and trusting in their credentials. Many do not start out as criminals, and in many cases never see themselves as such.

Definitional issues

Modern criminology generally rejects a limitation of the term by reference, rather classifies the type of crime and the topic:

• By the type of offense, e.g. property crime, economic crime, and other corporate crimes like environmental and health and safety law violations. Some crime is only possible because of the identity of the offender, e.g. transnational money laundering requires the participation of senior officers employed in banks. But the Federal Bureau of Investigation has adopted the narrow approach, defining white-collar crime as "those illegal acts which are characterized by deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force or violence" (1989, 3). This approach is relatively pervasive in the United States, the record-keeping does not adequately collect data on the socioeconomic status of offenders which, in turn, makes research and policy evaluation problematic. While the true extent and cost of white-collar crime are unknown, it is estimated to cost the United States somewhere between $300–$660 billion annually, according to the FBI (Lane and Wall 2006, cited; in Friedrichs, 2007, p46).
• By the type of offender, e.g. by social class or high socioeconomic status, the occupation of positions of trust or profession, or academic qualification, researching the motivations for criminal behavior, e.g. greed or fear of loss of face if economic difficulties become obvious. Shover and Wright (2000) point to the essential neutrality of a crime as enacted in a statute. It almost inevitably describes conduct in the abstract, not by reference to the character of the persons performing it. Thus, the only way that one crime differs from another is in the backgrounds and characteristics of its perpetrators. Most if not all white-collar offenders are distinguished by lives of privilege, much of it with origins in class inequality.
• By organizational culture rather than the offender or offense which overlaps with organized crime. Appelbaum and Chambliss (1997, 117) offer a twofold definition:
  • Occupational crime which occurs when crimes are committed to promote personal interests, say, by altering records and overcharging, or by the cheating of clients by professionals.
  • Organizational or corporate crime which occurs when corporate executives commit criminal acts to benefit their company by overcharging or price fixing, false advertising, etc.

Relationship to other types of crime

Blue-collar crime

The types of crime committed are a function of what is available to the potential offender. Thus, those employed in relatively unskilled environments and living in inner-city areas have fewer "situations" to exploit (see Clarke: 1997) than those who work in "situations" where large financial transactions occur and live in areas where there is relative prosperity. Blue-collar crime tends to be more obvious and thus attracts more active police attention (e.g. for crimes such as vandalism or shoplifting, where physical property is involved). In contrast, white-collar employees can incorporate legitimate and criminal behavior, thus making themselves less obvious when committing the crime. Therefore, blue-collar crime will more often use physical force, whereas in the corporate world, the identification of a victim is less obvious and the issue of reporting is complicated by a culture of commercial confidentiality to protect shareholder value. It is estimated that a great deal of white-collar crime is undetected or, if detected, it is not reported.

Corporate crime

Corporate crime deals with the company as a whole. The crime benefitting the investors or the individuals who are in high positions in the company or corporation. The relationship white-collar crime has with corporate crime is that they are similar because they both are involved within the business world. Their difference is that white-collar crime benefits the individual involved, and corporate crime benefits the company or the corporation.

State-corporate crime

The negotiation of agreements between a state and a corporation will be at a relatively senior level on both sides, this is almost exclusively a white-collar "situation" which offers the opportunity for crime. White-collar crime has become a priority of law enforcement, however evidence shows that it continues to be a low priority.

When senior levels of a corporation engage in criminal activity using the company this is sometimes called control fraud.

Public a victim of white collar crime

A common misconception about corporate crime and white collar time is that its effects are mainly financial. However, they can cause harm to the general public, workers and consumers. For example false claims made by pharmaceutical companies about their products or the dumping of toxic wastes. An example is the Hooker Chemical Company (later acquired by Occidental Petroleum Corporation) dumping toxic waste into the abandoned Love Canal in Niagara Falls and later selling the land after knowing of the problem but choosing not to warn health officials. It was later sold to a private housing developer in the 1950s and in the 1970s the families starting experiencing major health problems such as miscarriages and birth defects (O'Grady, 2011).

How workers/employees of a company can be victims of white collar crime

Some ways that employees of a company can become victims of white-collar crime can be that workers are being exposed to the harms and risks of being involved in a crime. Even if the workers are unaware of the crimes his or her corporation is committing, this poses a threat to their job security. Essentially, if a company is charged with a white-collar crime, such a fraud or embezzlement, and loses copious amounts of money forcing the company to declare bankruptcy, the employees are at risk of losing their jobs. Another harm making employees victims of white-collar crime can be when employers are aware of a physical harm that can affect their employees. An example of this danger can be depicted with miners in Newfoundland who were exposed to Radon gas, which the company (and the Canadian government) were aware was a danger to people’s health, yet there was nothing done to protect the employees (O'Grady, 2011).

Occupational crime

Individuals may commit crime during the course of their employment. The two most common forms are theft and fraud. Examples of occupational thefts are removal by employees of job-related items from the workplace. Theft can be of varying degrees, from a pencil to furnishings to a car. Most employees do steal and the expense is high. An example of fraud is insider trading. This occurs when an employee uses information not available to the public to gain personal advantage over others in the buying and selling of stock (O'Grady, 2011).

Punishment

In the USA, sentences for white-collar crimes may include a combination of imprisonment, fines, restitution, community service, disgorgement, probation, or other alternative types of punishment. These punishments became harsher after the Jeffery Skilling and Enron Scandal, when the Sarbanes–Oxley Act of 2002 was passed by the United States Congress and signed into law by President George W. Bush, defining new crimes and increasing the penalties for crimes such as mail and wire fraud. In other countries, such as China, white-collar criminals can be given the death penalty. The question remains whether the current sentencing policies are effective, or if a sentencing disparity exists in white-collar sentencing.

See also

• Accounting scandals
• Con man
• FBI
• Franchise fraud
• Fraud
• Industrial espionage
• INTERPOL
• IRS Criminal Investigation Division (IRS-CID)
• Money laundering
• Office of Criminal Investigations (OCI)
• Organized crime
• Sarbanes-Oxley Act
• Securities and Exchange Commission (SEC)
• Securities fraud
• Terrorist financing
• United States Postal Inspection Service
• United States Secret Service

Further reading and references

• Appelbaum, Richard P. & Chambliss, William J. (1997). Sociology: A Brief Introduction. New York: Longman. ISBN 0-673-98279-3
• Barnett, Cynthia. (Undated). The Measurement of White-Collar Crime Using Uniform Crime Reporting (UCR) Data.
• Clarke, Ronald (ed). (1997). Situational Crime Prevention: Successful Case Studies (2nd edition). New York: Criminal Justice Press. ISBN 0-911577-38-6
• Dillon, Eamon Dilloninvestigates.com, The Fraudsters – How Con Artists Steal Your Money Chapter 5, Pillars of Society, published September 2008 by Merlin Publishing, Ireland ISBN 978-1-903582-82-4
• Friedrichs, David O. (2003) Trusted Criminals: White Collar Crime in Contemporary Society, Wadsworth. ISBN 0-495-00604-1
• Geis, G., Meier, R. & Salinger, L. (eds.) (1995). White-collar Crime: Classic & Contemporary Views. NY: Free Press.
• Green, Stuart P. (2006). Lying, Cheating, and Stealing: A Moral Theory of White Collar Crime. Oxford: Oxford University Press.
• Lea, John. (2001). Crime as Governance: Reorienting Criminology.
• Leap, Terry L. (2007) Dishonest Dollars: The Dynamics of White-Collar Crime. Ithaca: Cornell University Press. ISBN 978-0-8014-4520-0
• Newman, Graeme R. & Clarke, Ronald V. (2003). Superhighway Robbery: Preventing E-commerce Crime. Portland, Or: Willan Publishing. ISBN 1-84392-018-2
• Reiman, J. (1998). The Rich get Richer and the Poor get Prison. Boston: Allyn & Bacon.
• Pontell, H. & Tillman, R. (1998). Profit Without Honor: White-collar Crime and the Looting of America. Upper Saddle River, NJ: Prentice Hall.
• Shapiro, Susan P. (1990). "Collaring the Crime, not the Criminal: Reconsidering the Concept of White-collar Crime", American Sociological Review 55: 346–65.
• Simon, D. & Eitzen, D. (1993). Elite Deviance. Boston: Allyn & Bacon.
• Simon, D. & Hagan, F. (1999). White-collar Deviance. Boston: Allyn & Bacon
• Shover, Neal & Wright, John Paul (eds.) (2000). Crimes of Privilege: Readings in White-Collar Crime. Oxford: Oxford University Press. ISBN 0-19-513621-7
• Sutherland, Edwin Hardin (1949). White Collar Crime. New York: Dryden Press.
• Thiollet, J.P. (2002). Beau linge et argent sale — Fraude fiscale internationale et blanchiment des capitaux, Paris, Anagramme ed. ISBN 2 914571178
• U.S. Department of Justice, Federal Bureau of Investigation (1989). White Collar Crime: A Report to the Public. Washington, D.C.: Government Printing Office.