White-collar crime

White-collar crime (or corporate crime, more accurately) refers to financially motivated, nonviolent crime committed by businesses and government professionals.[1] It was first defined by the sociologist Edwin Sutherland in 1939 as "a crime committed by a person of respectability and high social status in the course of their occupation".[2] Typical white-collar crimes could include wage theft, fraud, bribery, Ponzi schemes, insider trading, labor racketeering, embezzlement, cybercrime, copyright infringement, money laundering, identity theft, and forgery.[3]

Criminology
and penology

Definitional issues

Modern criminology generally rejects a limitation of the term by reference, rather it 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 FBI 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). While the true extent and cost of white-collar crime are unknown, the FBI and the Association of Certified Fraud Examiners estimate the annual cost to the United States to fall between $300 and $660 billion.[4]
  • 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 MAFIA behavior, e.g., greed or fear of loss of face if economic difficulties become obvious.[5] Shover and Wright point to the essential neutrality of a crime as enacted in a statute.[6] 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.
  • By organizational culture rather than the offender or offense which overlaps with organized crime. Appelbaum and Chambliss offer a twofold definition:[7]
    • 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.


History

White-collar crime had been going on prior to Sutherland's definition and his research done in 1939. Sutherland wanted to find a general theory of the typical criminal and by reading other researchers work, getting the idea that all criminals were stereotyped as impoverished or of low social standing he found that hard to believe considering people of high social standing committed crime as well.[8]In his book Sutherland said "White collar crime may be defined as approximately as a crime committed by a person of respectability and high social status in the course of his occupation."[8]There were many factors going into the establishment of White-collar crime but the main issue was industrialization.[9]There is a White collar crime registry identifying those who've committed white-collar crime to the public trying to deter possible victims from being victimized.[10]The first White Collar Crime Offender Registrywas established in Utah in 2016.

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 have fewer opportunities to exploit than those who work in situations where large financial transactions occur.[11] Blue-collar crime tends to be more obvious and thus attracts more active police attention such as vandalism or shoplifting. [12] 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 benefits the investors or the individuals who are in high positions in the company or corporation. White-collar crime and corporate crime are similar because they take place within the business world. The difference is that white-collar crime benefits the individual(s) involved, and corporate crime benefits the company or the corporation, usually high-ranking individuals within the corporation.[13]

One well-known insider trading case in the United States is the ImClone stock trading case. In December 2001, top-level executives sold their shares in ImClone Systems, a pharmaceutical company that manufactured an anti-cancer drug. The U.S. Securities and Exchange Commission (SEC) investigated numerous top-level executives, as well as Martha Stewart, a friend of ImClone's former chief executive who had also sold her shares at the same time. The SEC reached a settlement in 2005.[14][15]

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. Although law enforcement claims to have prioritized white-collar crime,[16] evidence shows that it continues to be a low priority.[17]

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

Organized transnational crime

Organized transnational crime is organized criminal activity that takes place across national jurisdictions, and with advances in transportation and information technology, law enforcement officials and policymakers have needed to respond to this form of crime on a global scale. Some examples include human trafficking, money laundering, drug smuggling, illegal arms dealing, terrorism, and cybercrime. Although it is impossible to precisely gauge transnational crime, the Millennium Project, an international think tank, assembled statistics on several aspects of transnational crime in 2009:[14]

  • World illicit trade of almost $780 billion
  • Counterfeiting and piracy of $300 billion to $1 trillion
  • Global drug trade of $321 billion

Occupational crime

Individuals may commit crime during employment or unemployment. The two most common forms are theft and fraud. Theft can be of varying degrees, from a pencil to furnishings to a car. Insider trading, the trading of stock by someone with access to publicly unavailable information, is a type of fraud.[14]

The crimes related to the national interests consist mainly of treason. In the modern world, there are a lot of nations which divide the crimes into some laws. "Crimes Related to Inducement of Foreign Aggression" is the crime of communicating with aliens secretly to cause foreign aggression or menace. "Crimes Related to Foreign Aggression" is the treason of co-operating with foreign aggression positively regardless of the national inside and outside. "Crimes Related to Insurrection" is the internal treason. Depending on a country, criminal conspiracy is added to these. One example is Jho Low, a mega thief and traitor who stole billions in USA currency from a Malaysian government fund and is now on a run as a fugitive. [18]

Demographics

According to a 2016 study,[19]

A considerable percentage of white-collar offenders are gainfully employed middle-aged Caucasian men who usually commit their first whitecollar offense sometime between their late thirties through their mid-forties and appear to have middle-class backgrounds. Most have some higher education, are married, and have moderate to strong ties to community, family, and religious organizations. Whitecollar offenders usually have a criminal history, including infractions that span the spectrum of illegality, but many do not overindulge in vice. Recent research examining the five-factor personality trait model determined that white-collar offenders tend to be more neurotic and less agreeable and conscientious than their non-criminal counterparts.

Punishment

In the United States, sentences for white-collar crimes may include a combination of imprisonment, fines, restitution, community service, disgorgement, probation, or other alternative punishment.[20][21] These punishments grew harsher after the Jeffrey 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. Sometimes punishment for these crimes could be hard to determine due to the fact that convincing the courts that what the offender has done is challenging within itself.[22] In other countries, such as China, white-collar criminals can be given the death penalty,[23] yet some countries have a maximum of 10–25 years imprisonment. Certain countries like Canada consider the relationship between the parties to be a significant feature on sentence when there is a breach of trust component involved.[24] Questions about sentencing disparity in white-collar crime continue to be debated.[25] The FBI, concerned with identifying this type of offense, collects annual statistical information on only three categories: fraud, counterfeiting/forgery, and embezzlement. All other types of white-collar crime are listed in an, "miscellaneous" category.[26]

In the United States, the longest sentences for white-collar crimes have been for the following: Sholam Weiss (845 years for racketeering, wire fraud and money laundering in connection with the collapse of National Heritage Life Insurance Company); Norman Schmidt and Charles Lewis (330 years and 30 years, respectively, for "high-yield investment" scheme); Bernard Madoff (150 years for $65 billion fraud scheme); Frederick Brandau (55 years for $117 million Ponzi scheme); Eduardo Masferrer (30 years for accounting fraud); Chalana McFarland (30 years for mortgage fraud scheme); Lance Poulsen (30 years for $2.9 billion fraud).[27]


Longest white collar sentences (USA)
Name Company Occupation Crime Counts Losses caused by the defendant Company Loss Year Co-defendants Sentence (Yr)
Sholam Weiss National Heritage Life Insurance Investor, Consultant Racketeering, Wire fraud, Money Laundering[21] 77 $0 $0 (company realized a profit after all assets were sold off) 2000 13 845
Keith Pound National Heritage Life Insurance Mortgage Specialist Racketeering, Wire fraud, Money Laundering 74 $0 $0 (company realized a profit after all assets were sold off) 2000 13 740
Norman Schmidt[23] Capital Holdings Investment adviser, Financier Ponzi scheme, Money Laundering, Mail Fraud, Wire Fraud, securities fraud 36 $38,414,988 $38,414,988 2008 5 330
Bernard Madoff Madoff Securities International Ltd Stock broker, Investment adviser, Financier Ponzi scheme, Money Laundering, Mail Fraud, Wire Fraud, securities fraud, Theft or embezzlement, 11 $2,000,000,000 $13,000,000,000 2009 5 150
Robert Allen Stanford, Stanford Financial Group Businessman in the financial services sector Ponzi scheme, Money Laundering, Mail Fraud, Wire Fraud, securities fraud. 21 $5,900,000,000 $5,900,000,000 2009 110
Frederick Brandau[26] Frederick Brandau's South Florida life insurance company Businessman in the financial services sector Conspiracy to commit mail fraud; conspiracy to commit wire fraud, conspiracy to commit money laundering. 117,000,000 55
Bernard Ebbers WorldCom Businessman in the financial services sector and telecommunication Accounting Fraud 15 $11,000,000,000 ($0 after $5.6 billion settlement with victims) $11,000,000,000[27] 2005 25
Marc Dreier Dreier LLP Attorney Money Laundering, Mail Fraud, Wire Fraud, securities fraud, Theft or embezzlement, 8 $700,000,000 $700,000,000 2009 20
Walter Forbes CUC International. Accounting Fraud 12 $3,275,000,000 $14,000,000,000[28] 2007 1 12
Jeffrey Skilling Enron Former CEO of Enron False statement, Insider trading, securities fraud, conspiracy 51 $41,950,874 $7,200,000,000 2006 10
Richard Marin Scrushy HealthSouth Corporation, Businessman

Founder and former chairmanand chief executive officer of HealthSouth Corporation,

former chairman and chief executive officer of MedPartners, Inc.

 30 $2,800,000,000 $2,800,000,000 2006 1 7

See also
  • Public Criminology

References
  1. "FBI — White-Collar Crime". FBI.
  2. Sutherland, Edwin Hardin (1949). White Collar Crime. New York: Dryden Press, p. 9.
  3. "White Collar Criminal Defense Guide". Law Offices of Randy Collins. Retrieved 23 December 2016.
  4. Friedrichs, David O. (2009). Trusted Criminals: White Collar Crime In Contemporary Society (4 ed.). Wadsworth Publishing. p. 50. ISBN 978-0495600824. citing Kane and Wall, 2006, p. 5
  5. Benson, Michael L. (1985). "Denying the Guilty Mind: Accounting for Involvement in a White-Collar Crime*". Criminology. 23 (4): 583–607. doi:10.1111/j.1745-9125.1985.tb00365.x. ISSN 1745-9125.
  6. Shover, Neal & Wright, John Paul (eds.) (2000). Crimes of Privilege: Readings in White-Collar Crime. Oxford: Oxford University Press. ISBN 0-19-513621-7
  7. Appelbaum, Richard & Chambliss, William J. (1997). Sociology: A Brief Introduction. New York: Longman Pub Group. p. 117. ISBN 9780673982797.CS1 maint: uses authors parameter (link)
  8. "White-Collar Crime: History of an Idea - The Evolution Of White-collar Crime". law.jrank.org. Retrieved 10 March 2020.
  9.   Berghoff, H., & Spiekermann, U. (2018). Shady business: On the history of white-collar crime. Business History, 60(3), 289–304. https://doi.org/10.1080/00076791.2018.1414735
  10. Lam, Bourree (29 March 2016). "Why Is Utah the First State to Have a White-Collar Crime Registry?". The Atlantic. Retrieved 10 March 2020.
  11. Clarke, R. V. G. (1997). Situational Crime Prevention: Successful Case Studies (2 ed.). Harrow and Heston. ISBN 9780911577389.
  12. Shover, Neal; Hunter, Ben W. (2013-01-11). "Blue-collar, white-collar: crimes and mistakes". Offenders on Offending. doi:10.4324/9781843927785-24. Retrieved 2020-02-20.
  13. Monday, On behalf of Darryl A. Goldberg posted in Federal Crimes on; December 11; 2017. "White collar vs. corporate crime". Darryl A. Goldberg. Retrieved 2020-02-25.
  14. O'Grady, William (2011). Crime in Canadian Context: Debates and Controversies (2 ed.). Oxford University Press. ISBN 9780195433784. Retrieved 1 June 2012.
  15. Anderson, Jenny (20 January 2005). "S.E.C. Settles ImClone Insider Trading Case". New York Times. Retrieved 1 June 2012.
  16. Anzalone, Charles (28 April 1991). "White-Collar Crime Has Become Priority of Law Enforcement". Buffalo News.
  17. "State's white collar convicts get lighter sentences". California Watch.
  18. Sukumaran, Tashny (16 February 2019). "What's the deal with Jho Low, Malaysia's most wanted man?". South China Morning Post Publishers. South China Morning Post. Retrieved 25 February 2019.
  19. Dodson, Kimberly D.; Klenowski, Paul M. (1 May 2016). Van Slyke, Shanna R; Benson, Michael L; Cullen, Francis T (eds.). "Who Commits White-Collar Crime, and What Do We Know About Them?". The Oxford Handbook of White-Collar Crime. doi:10.1093/oxfordhb/9780199925513.013.6.
  20. Rubino, Esq. PA, Frank. "White Collar Crime - An Overview". Retrieved 30 January 2012.
  21. "Penalties for White Collar Crime". Blumberg & Associates.
  22. Hagan, John; Parker, Patricia (1985). "White-Collar Crime and Punishment: The Class Structure and Legal Sanctioning of Securities Violations". American Sociological Review. 50 (3): 302–316. doi:10.2307/2095541. ISSN 0003-1224. JSTOR 2095541.
  23. "Is China's White-Collar Death Penalty Fair?". The American Lawyer. Retrieved 30 January 2012.
  24. "What is Breach of Trust in Canada?". Alexander Ejsmont. Retrieved 30 November 2013.
  25. Podger, Prof. Ellen S. (21 February 2007). "Throwing Away the Key". Yale Law Journal. Retrieved 30 January 2012.
  26. "White-Collar Crime - Further Readings". law.jrank.org. Retrieved 24 March 2017.
  27. Liz Moyer, In Pictures: The Longest White-Collar Prison Sentences, Forbes (June 24, 2009).

Further reading
  • Barnett, Cynthia. (2000). The Measurement of White-Collar Crime Using Uniform Crime Reporting (UCR) Data.
  • Cox, Steven P. (2017) "White-Collar Crime in Museums", Curator:The Museums Journal 60(2):235-248.
  • 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
  • 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.
  • Koller, Cynthia A. (2012). "White Collar Crime in Housing: Mortgage Fraud in the United States." El Paso, TX: LFB Scholarly. ISBN 1593325347. ISBN 978-1593325343
  • Koller, Cynthia A., Laura A. Patterson & Elizabeth B. Scalf (2014). When Moral Reasoning and Ethics Training Fail: Reducing White Collar Crime through the Control of Opportunities for Deviance, 28 Notre Dame J.L. Ethics & Pub. Pol'y 549 (2014). Available at: http://scholarship.law.nd.edu/ndjlepp/vol28/iss2/5
  • 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
  • Rolón, Darío N. Control, vigilancia, y respuesta penal en el ciberespacio, Latinamerica's new security Thinking, Clacso 2014.
  • 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
  • Thiollet, J.P. (2002). Beau linge et argent sale — Fraude fiscale internationale et blanchiment des capitaux, Paris, Anagramme ed. ISBN 2-914571-17-8
  • U.S. Department of Justice, Federal Bureau of Investigation (1989). White Collar Crime: A Report to the Public. Washington, D.C.: Government Printing Office.
  • Notre Dame College Online "White-Collar vs. Blue-Collar Crime" 2019. South Euclid, Ohio.


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