WHITE COLLAR CRIME IN CONTEMPORARY SOCIETY 4TH ED.

1
Trusted Criminals

• WHITE COLLAR CRIME IN CONTEMPORARY SOCIETY 4TH
  ED.
• CHAPTER 1
• THE DISCOVERY OF WHITE COLLAR CRIME

Designed by Jordan Land, M.S.
2
Introduction

• Public perceptions of white collar crimes tend to
  be more conflicted and confused than are
  perceptions of conventional forms of crime

3
Introduction

• Consider the following
• A pharmacist is convicted of diluting cancer
  drugs to enhance his profits
• A bookkeeper embezzles from her employer to pay
  her bills
• A priest is charged with stealing over a half
  million dollars in church funds
• The worlds largest retailer is accused of using
  illegal immigrant workers and cheating them on
  wages
• A major defense contractor, formerly headed by
  the VP of the U.S., is investigated for
  overcharging the government on Iraq contracts and
  cheating retirees on pensions

4
Introduction

• What do these situations have in common?
• 1. They do not include the forms of crime that
  typically come to mind when people think of crime
  (murder, theft, etc.)
• 2. The offenders or offending organizations enjoy
  a relatively high level of trust and
  respectability, at least when compared with
  organized crime and street criminals

5
Introduction

• What do these situations have in common? (Cont)
• 3. These situations have not been a traditional
  focus of the law and the justice system, which
  have responded to them in various ways
• 4. They have all been considered forms of white
  collar crime, according to at least someones
  conception of that complex term

6
Introduction

• The term white collar crime is familiar to many
  people
• It is also a source of confusion
• Deaths associated with an earthquake would appear
  to be a natural catastrophe and unrelated to
  white collar crime
• But the government report of the quake indicated
  that much of the loss of life could be attributed
  to shoddy building construction
• A consequence of greedy developers paying off
  corrupt governmental inspectors to evade proper
  building codes

7
Edwin H. Sutherland

• Given credit for introducing the term white
  collar crime in literature in 1939
• Was inspired by E.A. Rosss Sin and Society An
  Analysis of Latter Day Iniquity
• Sutherland alluded to crime in the upper or
  white-collar class, composed of respectable or at
  least respected business and professional men

8
E.A. Ross

• Was a prominent sociologist of his time
• Promoted the notion of the criminaloid
• The business man who commits illegal acts out of
  a desire to maximize profit, while hiding behind
  a façade of respectability and piety
• Ross regarded these criminaloids as guilty of
  moral insensibility
• He also held them directly responsible for
  unnecessary deaths of consumers and workers

9
The Discovery of White Collar Crime

• Sutherlands examples of white collar criminality
  in business included various forms of
• Misrepresentation
• Manipulation
• Embezzlement
• Bribery
• He also pointed out that the white collar classes
  have both the special influence on the formation
  of criminal laws and various means of minimizing
  the chances of criminal convictions

10
The Discovery of White Collar Crime

• In the 1940s, Sutherland undertook a major study
  
• In his book, he focused on the 70 largest U.S.
  manufacturing, mining, and mercantile
  corporations with the respect of the legal
  decision against them concerning allegations of
  wrongdoing which included
• Restraint-of-trade violations
• Infringement of patent and other rights
• Unfair labor practices
• Fraudulent advertising
• Illegal rebates

11
Defining White Collar Crime

• There are a variety of terms that have been used
  to characterize activities that could either be
  classified under the broad rubric of white collar
  crime or closely linked with it
• Elite deviance, economic crime, business crime,
  consumer crime, political crime, government
  crime, state or state-organized crime, corporate
  crime, occupational crime, workplace crime,
  technocrime, and computer crime are just a few
  terms used

12
Defining White Collar Crime

• Criminologists who study white collar crime have
  generally agreed that it
• Occurs in a legitimate occupational context
• Is motivated by the objective of economic gain or
  occupational success
• Is not characterized by direct, intentional
  violence

13
Defining White Collar Crime

• In 1996, the author of Trusted Criminals and 14
  other white collar crime scholars were invited to
  the National White Collar Crime Center
• They met for 3 days in Morgantown, West Virginia
• They were to discuss the definitional dilemma
  pertaining to white collar crime
• One day at lunch, one of the scholars wrote a
  definition on a napkin and passed it around for
  others to make amendments and revisions

14
Defining White Collar Crime

• The resulting definition read as
• 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 or respectable social status for personal or
  organizational gain

15
A Multistage Approach to Defining White Collar
Crime

• A meaningful understanding of white collar crime
  must be approached in stages
• The 1st stage definitional stage is polemical
• The 2nd stage is typological
• The 3rd stage is operational
• This conception challenges a popular tendency to
  associate criminality with inner-city residents,
  minorities, young men, and conventional illegal
  activities such as homicide, robbery and burglary

16
A Multistage Approach to Defining White Collar
Crime

• In the 2nd stage, the purpose of criminological
  typology is to organize patterns of crime and
  criminal behavior into coherent categories to
  facilitate both explaining and responding to
  crime
• Occupational crime - defined by Clinard and
  Quinney
• Violation of the legal codes in the course of
  activity in a legitimate occupation
• They consider this to be a more useful definition
  than Sutherlands which is restricted to
  high-status offenders

17
A Multistage Approach to Defining White Collar
Crime

• Clinard and Quinney designated corporate crime as
  but one form of occupational crime
• Corporate crime
• Offenses committed by corporate officials for
  their corporation and the offenses of the
  corporation itself
• Typologies provide a necessary point of departure
  for any meaningful discussion of white collar
  crime

18
A Multistage Approach to Defining White Collar
Crime

• The principal criteria for differentiating
  between the types of white collar crime are as
  follows
• Context in which illegal activity occurs,
  including the setting and the level within the
  setting
• Status or position of offender
• Primary victims
• Principal form of harm
• Legal classification

19
A Multistage Approach to Defining White Collar
Crime

• The 3rd stage for defining white collar crime can
  be called operational
• On this level, the objective of the definition is
  to provide a point of departure for focused
  empirical research or comparative critical
  analysis

20
A Multistage Approach to Defining White Collar
Crime

• The concept of white collar crime is like a
  Chinese puzzle
• It is most easily defined in negative terms
• It refers to illegal or harmful activity that is
  neither street crime nor conventional crime

21
Trust and White Collar Crime

• The term trust refers to confidence in a
  relationship that the other party will act
  honorably and fulfill legitimate expectations
• This applies to corporations that employ us,
  banks where we deposit money, stockholders with
  whom we invest, retail businesses from which we
  purchase goods, physicians from whom we seek
  treatment, and so forth

22
Trust and White Collar Crime

• The diffusion of impersonal trust into a broad
  range of relationships and transactions creates
  countless opportunities for corruption,
  misrepresentation, and fraud
• The extension of trust thus appears to be both
  unavoidable and necessary in a modern society
• Trust and its violation are certainly key
  elements of white collar crime

23
Respectability and White Collar Crime

• Respectability is not easily defined
• Can be faked and not linked with specific norms
  for acceptable behavior
• Dictionary definitions include
• Worthy of esteem
• Of good standing
• Proper or decent
• Of moderate excellence
• Of considerable size

24
Respectability and White Collar Crime

• For the purpose of this class, we have 3
  different meanings
• A normative meaning or an assessment of moral
  integrity
• A status-related meaning, a legitimate position
  or occupation
• A symptomatic meaning or the outward appearance
  of acceptable or superior status

25
Respectability and White Collar Crime

• The successful con artist projects an appearance
  of respectability but lacks either the required
  moral qualities or sufficient status
• The more respectable people appear to be, the
  more likely they are to be trusted
• The more respectable people appear to be, the
  less likely they will be suspected of committing
  serious crimes

26
Respectability and White Collar Crime

• Societies have ceremonies or rituals wherein
  respectable status is publicly acknowledged
• Graduations
• Other ceremonies, called degradation ceremonies,
  strip people of their respectable status
• The criminal trial

27
Risk and White Collar Crime

• Risk - a wager or the probability of an event
  occurring great danger and alludes to negative
  outcomes exclusively
• Risk applies to white collar crime as a
  calculated gamble is taken
• The chances of being caught and punished are
  quite remote compared with the benefits that
  accrue from committing the crime

28
Risk and White Collar Crime

• In most cases, the risk strongly favors the
  offender because the probability of detections,
  prosecution and sanctioning is typically low
• One distinctive element of much white collar
  crime is the absence of the specific intent to
  cause harm
• The harm of much white collar crime is a function
  of making the pursuit or economic efficiency
  paramount over all other objectives

29
Risk and White Collar Crime

• The things we fear will harm us most often pose
  the least actual risk and vice versa
• Charles Perrow (1984) coined the term normal
  accident to refer to the accidents that complex
  modern technological systems inevitably produce
• Serious efforts to impose legal controls on many
  important sources of societal risk date only back
  to the mid 1960s

30
Risk and White Collar Crime

• Environmental Protection Agency and the
  Occupational Safety and Health Administration
  were created in response to impose legal controls
  on societal risk
• Corporations are more likely to take certain
  types of risks if they have reason to believe
  they can get away with it

31
Risk and White Collar Crime

• Corporations tend to accept higher levels of risk
  to employees than to the general public because
  accidents involving the public are more likely to
  get media attention
• Some suggest that the September 11, 2001 attacks
  might have been prevented if airlines had not
  been trying to save money on passenger screening
  procedures

32
Risk and White Collar Crime

• Other professionals, such as stockbrokers, may
  expose their clients to excessive financial risks
  to increase their own income from commissions
• Criminal charges are quite uncommon in such cases
  due to the often formidable difficulty of
  demonstrating criminal intent

33
Age

• White collar criminals are more likely to be
  middle-aged or older and to begin their offending
  at a later age
• The definition of white collar crimes includes
  actions of corporate executives, physicians and
  entrepreneurs
• They are typically middle-aged or older

34
Age

• Juveniles that are employed commit work-related
  offenses such as
• Shortchanging customers
• Giving away goods
• Stealing from their employer
• Such occupational delinquency tends to
  incorporate relatively minor forms of white
  collar crime

35
Class

• As originally conceived of by Sutherland, white
  collar crime is the crime of the upper or
  better-off class
• It is not the crime of the poor
• Occupational crime offenders are often middle
  class and in the broadest application, illegality
  is committed in the context of a legitimate
  occupation
• It may even be lower-class individuals employed
  in minimum wag jobs

36
Class

• Yale University project on white collar crime
  examined the membership of those formally charged
  with white collar offenses
• They declared white collar crime to be
  principally crimes of the middle class

37
Class

• Yales findings
• Social status and class are much less of a factor
  in determining the seriousness of white collar
  crime than is control over organizational
  structures and resources
• Managers are often more directly implicated in
  the most serious white collar crimes than are
  owners
• White collar crime offenders are significantly
  more likely to be middle and upper class than are
  conventional crime offenders

38
Race

• Over 25 of those arrested for index crimes in
  the U.S. are African Americans
• Although this group only constitutes about 12 of
  the American population
• African Americans and other minorities are highly
  unlikely to be charged with such white collar
  crimes as antitrust or corporate wrongdoing
• Although they are well represented among
  low-level white collar crime offenders guilty of
  embezzlement and fraud

39
Race

• The kinds of fraud for which African American
  arrest rates are significantly higher than those
  of whites are often not occupation related
• Including welfare fraud

40
Gender

• Males greatly outnumber females among
  conventional crime offenders
• Data indicates that the female arrest rate for
  white collar crimes has been one quarter or one
  fifth of the male arrest rate
• The male dominance of corporations and
  outside-the-home occupations, especially the more
  powerful positions, would seem to be clearly the
  single most important factor explaining the
  overall discrepancy or underrepresentation of
  female offenders

41
Other Demographic Variables and Differences

• White collar crime offenders are more likely to
  be employed
• As employment is virtually by definition a
  precondition for the commission of white collar
  crimes
• More likely to be better educated
• Older and more likely to be middle-class and
  employed
• More likely to be married and have a stable
  family situation
• More likely than conventional crime offenders to
  have community groups and church affiliations

42
Criminal Careers

• The large proportion of conventional crime
  offenders age out of such activity
• As they get older, they are less likely to engage
  in such activities as robbery or auto theft
• These offenders have commonly been regarded as
  committing only one form of white collar crime
• The offense is typically viewed as a relatively
  isolated incident in a legitimate occupational
  career
• With the crime not being repeated after the
  offender has been caught

43
The Social Movement Against White Collar Crime

• Emerging movements on behalf of minorities,
  consumers, and the environment highlighted social
  inequities and injustices and fed into increasing
  attention to white collar crime
• The Conflict Theory directed more attention to
  the crimes of the state and the economic elites
  and to the disproportionate role of the rich and
  the powerful in the lawmaking process

44
The Social Movement Against White Collar Crime

• Katz argued that a variety of moral
  entrepreneurs both responded to and measurably
  raised public consciousness about white collar
  crime
• Moral entrepreneurs are those who condemn a form
  of behavior and are in a position to mobilize
  people to demand legal action in response to it

45
The Role of the Media

• The media are 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 sensational, especially violent, crimes
• This serves the ideological function of
  deflecting attention from the structural and
  political sources of crime

46
The Role of the Media

• Reporting of corporate crime did not generally
  attribute criminal wrongdoing to the corporation
• In the recent era, newspaper coverage of
  corporate crime cases remains quite limited
• Television coverage of these crimes concentrated
  mainly on the stories early stages and the final
  stages
• In the 1990s, sex scandals involving President
  Clinton received more television coverage than
  the Whitewater political corruption case or any
  of the corporate cases surfacing during this
  period

47
The Role of the Media

• From 2001 on, corporate scandal cases were
  periodically big news stories, but ultimately
  were overshadowed by the war in Iraq and other
  stories
• More dramatic crime stories receive greater
  coverage even if they are less objectively
  consequential
• The reporting of white collar crime seems to have
  a smaller impact on the audience than does the
  reporting of conventional violence

48
The Role of the Media

• There are a few explanations on why there is
  little coverage of white collar crimes
• There is more indirect harm experienced by
  individual victims
• Public resistance to viewing corporations as
  criminal
• Large and wealthy media organizations may not be
  inclined to link other large and wealthy
  organizations with criminality

49
Exposing White Collar Crime

• White collar crime, as a rule, is less visible
  than conventional crime
• Most conventional crime does not occur in public
  places (the street)
• It comes to the attention of police because
  victims and witnesses report it and the police
  even observe some of it directly
• White collar crime is generally far less visible
• It takes place in suits, not streets
• Many of its victims are not clearly aware that a
  crime has been perpetrated against them

50
Informers Whistleblowers

• Informers - provide criminal justice system
  personnel with crucial information that can lead
  to the investigation, arrest, indictment and
  conviction of law violators
• They have provided information in exchange for
  payment, a favorable arrangement concerning
  criminal charges against themselves, or both
• In white collar crime cases, the use of informers
  is often indispensable

51
Informers Whistleblowers

• Inappropriate lenience may be extended to
  informers who themselves have committed serious
  crime
• Informers may use their status as informers to
  commit additional crimes with some sense of
  immunity

• Cases against major offenders often cannot be
  made without the assistance of informers
• Some informers turn out to be manipulative con men

52
Informers Whistleblowers

• Whistleblower - is a related crucial source of
  information needed for the detection, and
  ultimately the prosecution, of many white collar
  crimes
• Although whistleblowers have in common with
  informers an insiders perspective on the illegal
  activity
• Whistleblowers are not criminally implicated

53
Informers Whistleblowers

• White collar criminals may work with colleagues
  and associates who are not committed to the
  illegal activity or are directly opposed to it
• Most of these associates will not blow the
  whistle for many reasons
• Self-preservation ethos
• Fear of social ostracism
• Reverse whistleblowing

54
Informers Whistleblowers

• Women have been especially conspicuous among
  whistleblowers in the corporate scandals of the
  2000s
• The term whistleblower has been most typically
  applied to those who inform outside agencies or
  entities of illegal or unethical actions of their
  company

55
Informers Whistleblowers

• Workers tend to support whistleblowers when
  direct threats to their health and well-being
  have been exposed
• When the dangers are less direct or imminent and
  the whistleblower may jeopardize jobs or the
  local economy, workers are much less likely to be
  supportive

56
Informers Whistleblowers

• Whistleblowers pay a substantial price for their
  courageous actions
• Retaliation
• Traumatic personal consequences
• Suicide
• Divorce
• Loss of a home
• All which have been attributed to fallout from
  whistleblowing

57
Informers Whistleblowers

• In some cases, whistleblowers have been shot or
  even murdered
• Some have been dismissed from their jobs and sued
  for multimillion-dollar damages or reinstatement
• In rare cases they have even been formally
  vindicated by their company, complete with
  high-level apologies for their suffering
• More often they must move on to new jobs and
  careers

58
Muckrakers Investigative Reporters

• Journalists historically have been a thorn in the
  side of the establishment because of their
  periodic exposures of wrongdoing by the powerful
  and privileged
• Muckrakers - firmly established the revelation of
  high-level wrongdoing as a legitimate
  journalistic enterprise

59
Muckrakers Investigative Reporters

• 1902-1912 has been referred to as the golden
  age of muckraking
• In the 1970s, muckraking experienced a formidable
  revival
• It became more commonly known as investigative
  reporting
• Investigative journalism is lonely, frustrating,
  tedious, expensive, time-consuming, hazardous,
  controversial and emotionally draining work
• It can also be intensely satisfying and sometimes
  prestigious

60
Muckrakers Investigative Reporters

• Investigative journalism remains a fairly limited
  enterprise today
• The traditional focus of muckraking and
  investigative journalism have been political
  corruption
• Due to considerable resources often needed to
  support investigative journalism, it has been
  undertaken mainly by major newspapers
• The Washington Post and The New York Times

61
Muckrakers Investigative Reporters

• Newspapers in small cities and towns are limited
  mainly to exposing local political corruption,
  consumer fraud, and sometimes illegal or
  unethical practices
• Campus newspapers occasionally address some forms
  of corporate wrongdoing
• Sweatshop labor

62
Muckrakers Investigative Reporters

• Some regular network magazine shows (60 minutes)
  have also exposed white collar crime practices
• Whenever 60 minutes has gone after federal
  agencies, it has typically encountered formidable
  resistance
• Television networks have not made investigative
  reporting on a range of white collar crimes a
  staple for several reasons

63
Muckrakers Investigative Reporters

• This investigative reporting of white collar
  crime is unappealing to television network
  executives
• Most white collar crimes do not provide vivid
  visual images
• Investigating these crimes are time consuming
• Many of the stories cannot be covered in the
  brief TV segments typically available
• In competitive local TV markets, there is a
  strong temptation to go with sensationalistic
  exposes rather than in-depth investigations of
  complex white collar crimes

64
Muckrakers Investigative Reporters

• Michael Moore has been one of the most famous
  investigative reporting filmmakers and perhaps
  the most controversial
• Roger and Me and Fahrenheit 9/11
• Exposing white collar crime through journalism
  wouldnt be complete without a discussion of the
  historical role of political cartoonists
• It attempts to produce a picture of reality that
  captures the essence of truth in a particular
  situation
• Cartoons are among the most widely read and
  easily understood parts of newspapers

65
The Consumer Movement, Public Interest Groups
Labor Unions

• Some exposure of white collar crime has resulted
  from efforts of both individuals claiming to act
  on behalf of the public and public interest
  groups making parallel claims
• The emergence during the late 60s and 70s of a
  public interest movement and of civil activism
  has been attributed to
• The relative prosperity of the period, which
  helped generate a perception that corporations
  could afford to behave more responsibly in
  producing safe products, improving workers
  conditions and limiting harm to the environment
• An escalating rate of inflation promoted consumer
  anxiety and mistrust of business

66
The Consumer Movement, Public Interest Groups
Labor Unions

• Labor unions have also played a role in exposing
  corporate practices that put workers in jeopardy
• In managerial decisions that exploit workers
  financially or deprive them of jobs
• Labor unions have played a role in exposing white
  collar crime

67
The Role of Politicians and Political Institutions

• Political institutions are both the locus of
  major forms of corruption and illegal activity
  and a principal instrument for the exposure and
  prosecution of such activity
• Politicians often have a complex net of close
  ties with corporations and businesspeople whose
  improper and illegal activities they are
  sometimes compelled to expose

68
The Role of Politicians and Political Institutions

• Politicians have generally found it more
  attractive to attack street crime and call for
  law and order than to attack the crimes of
  powerful corporations
• Which may be among their biggest financial
  supporters
• The legislative branch has played a role in
  exposing white collar crime primarily through
  congressional investigative committees

69
The Role of Politicians and Political Institutions

• In the 20th century, Congressional Committees
  that received the most public attention were
  those that exposed alleged wrongdoing in the
  White House
• Watergate and the Iran-Contra arms hearings
• In the late 1990s the Congressional Committees
  held hearings on matters relating to the collapse
  of Enron and allegations of various forms of
  fraud.