White-Collar & Organized
Crime
MAN-3
Erlan Bakiev, Ph.D.
White-Collar & Organized Crime
Session Summary
 This session is an overview of white-collar, corporate,
and organized crimes.
 The session begins with the definitions and
prevalence of white-collar crime.
 This is followed with a discussion of corporate crime,
as well as the theories that address corporate crime.
 This section concludes with a discussion of law
enforcement’s response to corporate crime.
Session Summary
 The second half of the Session discusses organized
criminal groups both nationally and internationally.
 This is followed with a discussion of the theoretical
implications regarding organized crime.
 The Session concludes with a discussion of law
enforcement’s response to organized crime.
 After reading this chapter, students should be able to:
 Define white-collar crime
Session Summary
 Discuss the difference between occupational crime
and corporate crime
 Understand the theories regarding corporate crime
 Discuss law enforcement’s response to corporate
crime
 Define organized crime
 Discuss organized crime both nationally and
internationally
 Explain the theories of organized crime
 Discuss law enforcement’s response to organized
crime
Introduction
 People who wear white collars to work steal and
kill, but they use guilt and deceit.
 More money is stolen and more people die every
year as the result of scams and willful illegal
corporate activity than as a result of the activities of
street criminals.
The Concept of White-Collar Crime
 The U.S. Congress defined
white-collar crime as an
illegal act or series of illegal
acts committed by nonphysical means and by
concealment or guile, to
obtain money or property, or
to obtain business or
personal advantage.
The Concept of White-Collar Crime
 The term white-collar crime
was coined in the 1930’s
by Edwin Sutherland who
defined it as crime
committed by a person of
respectability and high
social status in the course
of his occupation.
How much White-Collar Crime is There?
White-collar crimes are absent from the
yearly crime tally of the UCR and NCVS.
Tallies of occupational and corporate
wrongdoings are collected and distributed
each year by state and federal regulatory
agencies such as the FTC and the FTC.
How much White-Collar Crime is There?
 Many of the more serious white-collar crimes are
incredibly complex and require thousands of person
hours and millions of dollars to unravel, thus making
them difficult to equate with street crime in terms of
being able to neatly discover, tabulate, and report
them.
Occupational Crime
 Occupational crime: Crime committed by
individuals in the course of their employment.
 Professional occupational crime: Crimes committed
by professionals such as physicians and lawyers in the
course of their practices.
 It seems that every occupational category generates a
considerable number of criminals and the higher the
prestige of the occupation, the more their criminal
activities cost the general public.
Causes of Occupational White-Collar Crime:
Are they Different?
 According to Hirschi and Gottfredson, occupational
crime differs crime common street crime in that it is
committed by people in a position to do so.
 The motives of occupational criminals are the same as
those of street criminals.
Causes of Occupational White-Collar Crime:
Are they Different?
 A study of federal white-collar criminals
showed that most of them were much less
involved in crime and deviance than street
offenders, that that chronic white-collar
offenders were similar to street criminals
in their patterns of prior deviance.
 High status white-collar criminals are
about 10 years older than the average
street criminal, and males are
overrepresented.
Corporate Crime
 Corporate crime: Criminal
activity on behalf of a
business organization.
 Crimes of fraud,
concealment, and
misrepresentation continue
to victimize all sorts of
groups and individuals in
society.
The S&L Scandal: The Best Way to Rob a
Bank is to Own One
 The savings and loan scandal of the 1980’s
amounted to one of the most costly crime sprees in
American history and is likely to cost the U.S.
taxpayer up to $473 billion.
The Enron Scandal: Crooks Cooking Books
 The Enron scandal did tremendous damage to
the economy, and created a crisis of investor
confidence the likes of which hasn’t been seen
since the Great Depression.
Theories about the Causes of Corporate Crime
 Those who hold classical assumptions about
human nature have no difficulty in appreciating the
motivation for individuals to engage in corporate
crime.
 The prevalence of corporate crime can also be
appreciated given the weakness of formal and
informal controls over business activities and the
lenient penalties imposed.
Theories about the Causes of Corporate Crime
 General explanations that invoke assumptions
about human nature or about the economic system
do not explain differences between companies and
individuals who do and do not participate in illegal
activities.
 Strain can be evoked as a motive for corporate
crime but not for the choice to engage in it.
Corporate Characteristics
 There are criminogenic corporations with a
tradition of wrongdoing.
 Newcomers entering such corporate environments
are socialized into the prevailing way of doing
things.
Individual Characteristics
 It appears that people who choose business careers
tend to have lower ethical and moral standards
than people who choose other legitimate careers.
 Efforts to differentiate between offenders and
non-offenders in the white-collar world have
focused largely on locus of control, moral reasoning, and
Machiavellianism.
 The literature indicates that those who engage in
corporate crime tend to have an external locus of
control.
Individual Characteristics
 The lower the stage of moral development, the
more likely the person will engage in corporate
wrongdoings.
 Machiavellianism is the unprincipled and uncaring
manipulation of others for personal gain.
Law Enforcement Response to Corporate Crime
 Corporate crime is monitored and responded to by
a variety of criminal, administrative, and regulatory
bodies, but very few corporate crooks are ever the
recipients of truly meaningful sanctions.
 Great wealth does confer a certain degree of
immunity from prosecution and/or conviction.
Law Enforcement Response to Corporate Crime
 The Sarbanes-Oxley Act requires company
CEO’s and chief financial officers to personally
vouch for their companies’ financial disclosures,
ensuring that such people can no longer assume a
stance of plausible deniability.
 The White-Collar Crime Penalty Enhancement Act
creates new substantive offenses, significantly
enhances financial and incarceration penalties, and
relaxes some procedural evidentiary requirements
for prosecutors.
What is Organized Crime?
 The major difference between corporate and
organized crime is that corporate criminals are
created from the opportunities available to them in
companies organized around doing legitimate
business, whereas members of organized crime
members must be accomplished criminals before
they enter such groups, which are organized around
creating criminal opportunities.
What is Organized Crime?
 Organized crime: A
continuing criminal enterprise
that works rationally to profit
from illicit activities that are
often in great public demand.
Its continuing existence is
maintained through the use of
force, threats, and/or
corruption of public officials.
 La Cosa Nostra (LCN):
Commonly referred to as the
Mafia.
Structure
 LCN are structured in hierarchical fashion reflecting
various levels of power and specialization, with a
national ruling body known as the Commission.
 At the top of the family is the boss.
 Beneath the boss is a counselor and an under-boss.
 Beneath the under-boss are the lieutenants.
 Below the lieutenants.
Structure
 Membership in the family entitles the member to run
his own rackets using the family’s connections and
status.
 Corporate model: A formal hierarchy in which the dayto-day activities of the organization are planned and
coordinated at the top and carried out by subordinates.
 The feudal model of the LCN views it as a loose
connection of criminal groups held together by kinship
and patronage .
Figure 16.1 Hierarchical Structure of a Typical Organized Crime Family
Figure 15.1
Hierachical Structure of a Typical Organized Crime Family
BOSS
Counselor
Underboss
Lieutenant
Soldiers
lieutenant
lieutenant
Soldiers
Lieutenant
Soldiers
Soldiers
Associates
Adapted from President's Commission on Organized Crime, 1986, p. 469.
Continuity
 Organized crime is like a mature corporation in
that it continues to operate beyond the lifetime if
its individual members.
Membership
 LCN is restricted to males of Italian descent of
proven criminal expertise.
Criminality
 Most of organized crime’s income is derived from
supplying the public with goods and services not
available in the legitimate market, such as drugs,
gambling, and prostitution.
Organized Crime in the United States
 Most organized crime scholars believe that the
phenomenon is a normal product of the
competitive and free-wheeling nature of American
society.
 The Tammany Society began as a fraternal and
patriotic society, bust soon evolved into a corrupt
political machine consisting mostly of ethnic
Irishmen.
Organized Crime in the United States
 The Volstead Act, or Prohibition, ushered in a
vicious 10-year period of crime, violence, and
political corruption as gangsters fought over the
right to provide the drinking public with illicit
alcohol.
 The Capone era provided America with its
stereotypical image of organized gangsters.
 The Americanization of LCN saw the emergence
of the five New York LCN families active today.
Reaffirming the Existence of Organized Crime
 In 1950, the Kefauver Committee was formed to
investigate organized crime’s involvement in
interstate commerce.
 The Apalachin meeting in 1957 provided further
evidence for the existence of a national and
coordinated crime syndicate, and once again
riveted national attention.
Reaffirming the Existence of Organized Crime
 The McClellan Commission was formed in 1956 to
look into financial irregularities in the Teamster’s
Union, but the star witness was a drug trafficker
and made man in the Genovese Family named Joe
Valachi.
 Valachi decided to testify as to what he know
about the mafia in front of the McClellan
Commission.
The Russian “Mafiya”
 The Russian “Mafiya” is a catch-all phrase for a
group of organized gangs that many experts
consider to be the most serious organized crime
threat in the world today.
The Russian “Mafiya”
 ROC has existed since at least the 17th century and
that it became firmly entrenched in Russian society
in the 1920’s.
 ROC is the biggest factor threatening Russia’s
democratization, economic development, and
security.
 Russian organized crime metastasized to the United
States with the influx of Russian immigrants in the
1970s and 1980s.
The Japanese Yakuza
 Japanese organized crime (JOC) groups are
probably oldest and largest in the world.
 The official Japanese term for organized
criminals is Boryokudan, but they are more
commonly referred to as yakuza.
 Members of the JOC groups are recruited from
the two outcast groups in Japanese society.
The Japanese Yakuza
 The burakumin (部落民)
 Japanese born Koreans
 The Yakuza are not shadowy underworld figures,
their affiliations are proudly displayed on insignia
worn on their clothes and on their offices and
buildings, and they publish their own newsletter.
Theories about the Causes of Organized Crime
 Some argue that we create our own organized
crime problem by creating laws that prevent
members of the public from acquiring goods and
services they desire and demand.
 Early theories of organized crime relied on the
anomie/strain tradition .
Theories about the Causes of Organized Crime
 Ethnic succession theory: Upon arrival in the
United States, each ethnic group was faced with
prejudicial and discriminatory attitudes that denied
them legitimate means to success.
 Organized crime affords those who commit it he
rewards for relatively little risk..
 Almost all mob members live in neighborhoods
where they were constantly surrounded by
criminals and criminal values.
Theories about the Causes of Organized Crime
 It would not be too much of a stress to posit that
many men attracted to the outlaw lifestyle are
predatory psychopaths and sociopaths.
 There is no reason to assume that the rank and file
gangster in any different in background and
personal characteristics than the ordinary
unaffiliated street criminal, or the street criminal
affiliated with ad hoc criminal gangs.
Law Enforcement’s Response to Organized
Crime
 The Organized Crime Control Act (OCCA) and the
Bank Secrecy Act (BSA) both passed in 1970.
 The witness immunity provision allows federal
prosecutors to grant lower level members of
organized crime groups immunity from prosecution
for their own crimes in exchange for testimony
incriminating higher-level members.
Law Enforcement’s Response to Organized
Crime
 Witness protection program: Provides for
around-the-clock protection while witnesses are
awaiting court appearances. After testifying,
witnesses in the program are provided with new
identification documents, employment, housing,
and other assistance until they become established.
Law Enforcement’s Response to Organized
Crime
 The RICO statutes address ordinary crimes, but
they differ from traditional statutes relevant to the
same crimes in that they specifically target the
continuing racketeering activities of organized
criminals.
 The primary function of the BSA is the prevention
and detection of money laundering.