Lecture 1: The Discovery of White Collar Crime
WHITE COLLAR CRIME
White Collar Crime Versus
“Conventional” Crime
White Collar Crime
•
Usually involves deceit and concealment
(rather than direct violence).
“Conventional” Crime
•
Usually involves force or violence.
•
Varying reasons for the commission of
offenses.
•
Typically for the purpose of financial gain.
•
Occurs in a business setting.
•
Usually occurs in non-business settings.
•
Less chance of being caught and punished.
•
More focused justice system response.
•
Can be characterized as involving a violation
of trust.
•
Some crimes can involve violations of trust,
but most lack a relationship between the
victim and perpetrator.
•
More leniency from the justice system (“status
shield” protects from harsh penalties of
“common” criminal offenders.
•
Generally receive less leniency (victims
engender more sympathy than those harmed
by white collar criminal activity).
•
Generally not able to secure expensive legal
counsel.
•
Able to secure the best legal counsel.
Identify The White Collar Criminals
Kenneth
Lay
Richard
Nixon
Martha
Stewart
Scott
Peterson
Michael
Jackson
Lindsay
Lohan
Answer
Name
Crime
Result
Kenneth Lay
Enron
WCC
Martha Stewart
Lying about stock sale
WCC
Michael Jackson
Child Molestation
Not WCC
Richard Nixon
Abuse of Political
power
WCC
Scott Peterson
Murder
Not WCC
Lindsay Lohan
DWI
Not WCC
Defining White Collar Crime
Early Definition:
• Term first coined by criminologist Edwin
Sutherland
• “Crimes committed by a person of
respectability and high social status in the
course of his occupation”
Alternative Approaches To Definng
White Collar Crime
• Definition by type of offender (i.e., high
socioeconomic status and/or position of
trust)
• Definition by type of offense
• Definition in terms of organizational
structure
Reasons For Lack Of Consensus
Regarding Definition
• Dispute regarding whether “white collar
crime” should only refer to acts defined by
criminal law and adjudicated in criminal
proceedings.
• Dispute regarding whether “white collar
crime” should only refer to acts committed
by higher-status individuals or institutions.
• Dispute regarding whether “white collar
crime” should refer to acts committed in
association with legitimate employment,
regardless of socioeconomic status.
Difficulties Associated With Identiy
Of White Collar Crime
• Victims of white collar crime typically do not
know that a crime has even occurred
• WCC is less visible than the other crimes and
witnesses often do not believe that a crime has
occurred
• City police forces are not organized to respond to
white collar crimes
• Victims that are aware that a white collar crime
has been committed may not report it due to
embarrassment/shame
• Many alleged white collar crime cases fail to reach
the proper authorities*
*Statistics obtained from the National Fraud Center approximate that 1 in 3
households is the victim of white collar crime. Of these, only 41% report the
incident. Of the number of reported incidents, only 21% are handled by a law
enforcement or consumer protection agency. This means that less than 8% of
white-collar crimes reach the proper authorities.
Informers
• Typically involved in the illegal activity to
some degree.
• Usually receive “consideration” in return
for revealing knowledge about white collar
criminal activity.
Whistleblowers
• Have an inside perspective on the illegal
activity, but not criminally implicated.
• Can be current employees, former employees,
competitors, subcontractors, and just about
anyone else with whom a company does
business.
• Rarely receive a positive response.
• Laws prohibit employer retaliation, but
many still punished by termination,
suspension, demotion, wage garnishment,
and/or mistreatment by other employees.
Other Sources Of Exposure
• Investigative journalists
• Public interest groups
• Congressional investigative committees
• Social scientists
• Academic scholars
• Prosecutors
Direct Costs
• Economic
• Actual loss suffered by victim
Indirect Costs
• Higher taxes
• Increased cost of goods and services
• Higher insurance rates
• Cost of maintaining justice and regulatory
systems to address WCC
Physical Costs
• Death
• Illness from pollution
• Unsafe working conditions
• Unsafe Products
Justice Served?
“CONVENTIONAL” CRIMINAL
OFFENSES
(average in months)
WHITE COLLAR CRIMINAL OFFENSES
(average in months)
Robbery: 110.6
Fraud: 18.0
Drug Trafficking: 75.3
Embezzlement: 9.9
Drug Possession: 18.5
Bribery: 16.2
Manslaughter: 26.1
Tax Offenses: 16.6
Larceny: 15.6
Money Laundering: 46.3
Environmental: 14.5
Antitrust: 12.7
Food & Drug: 23.1
*Obtained from Paul Rosenzweig’s March 26, 2003 testimony before the Commission on
Sentencing of Corporate Fraud and White Collar Crime