(these ideas drawn from Goode, 1994-2008 chapter 9. See the disclaimer)

Crimes committed by the affluent in the course of normal business activities

• Conspiracies==>use position for gain
• Expanded by some to include a wider range of "middle-class" criminality and "high-tech" crimes
• Legitimate business, deviant activity
• Internal versus external judgements
• Secrecy
• Opportunity structures
• Institutional climate
• (see, the Legal Information Institute overview)

Versus Organized crime-- organization directed towards deviance

• White-collar crime is not a classic, clear-cut case of deviance. It has one foot in conventionality and one foot in deviance.

•  Most of us hold the conception that "crime" is what street people, or at least poor people, do. Thus, there is, a certain incongruity in seeing an affluent, 60 year-old banker in handcuffs and a prison uniform.

Characteristics

 So: given the great rewards and low risks of detection, why do so many business people adopt the 'economically irrational' course of obeying the law?

•  When legitimate or conventional avenues make the attainment of a goal difficult or impossible, many of us, whether as individual or as corporate actors, will resort to illegitimate or deviant avenues.

White-Collar Crime/Corporate Crime: Correlative Features
 

• White-collar crime tends to be made up of complex, sophisticated, and relatively technical actions.
• White-collar crime tends to be intermingled with legitimate behavior
• Victimization tends to be diffuse. Harm is not always conceptualized or identifiable as such because it is usually spread out over a substantial number of victims.
• The monetary sums that are involved tend to be quite large. i.e. Michael Milken, Ken Lay
  • White-collar criminals steal by manipulating symbols rahter than objects
  • White collar crime occurs extends over time
• White-collar crime is rarely prosecuted and rarely convicted. Penalties are light.
• With respect to perception and prosecution, evidence indicating that they have taken place is not as clear-cut as with street crime.
• Limited media coverage
• Coroporate criminals are not heavily stigmatized: they don't acquire "criminal identities."
• Relative to their incidence, arrests are very rarely made

The Federal U.S. Sentencing Commission found that for white collar crimes prosecuted by federal courts between 1984- and 1987, sentences against convicted corporations tended to be extremely light; nearly half entailed a fine of $5,000 or less, 80% were fined $25,000 or less, and even probation against executives was imposed less than one-fifth of the time. Jail or prison time tends to be almost nonexistent.  

ARE ALL WHITE-COLLAR CRIMINALS RICH AND POWERFUL?  

• Most white-collar offenders are ordinary people who got into financial difficulty and who saw their way out of it through illegal and fraudulent measures. Business fraud is "as familiar in their business context as are street crimes in poor communities.
• It is the "small fry" who gets caught, while the  "big fish" get away because the "big fish" are more capable of insulating themselves from prosecutional scrutiny.
• When it comes to conviction, the higher the socioeconomic status of the offender, the stiffer the sentence juries vote for.
• Thus, the cards are not always stacked against the small fry. Goals must be achieved, but often this can be accomplished only by cutting corners.
• Top management does not have to "get their hands dirty" by directly ordering subordinates to break the law. "It is not difficult" to structure their affairs so that all of the pressure to break the law surface at a lower level of their organization or a subordinate organization.
• There are more people occupying small time white-collar positions. So, it would be remarkable if there were many "big fish" arrested, since they are so rare to begin with.

White-collar criminals are motivated by two factors:

• Economic difficulty
• Greed.

Types (more)

Individual deviance: Crimes against the corporation

• Embezzlement ($27 billion per year- Thio 1998)
• Misappropriation of resources
• Management
• Neutralize: (Cressy, 1971 in Thio 1998)
  • Unshareable financial problem
  • Opportunity through position of trust
  • rationalize: temporary loan

Collective embezzlement

• Crime by a corporation yet on behalf of a corporation.

  Savings and Loan Scandal

  • The largest monetary theft in history. The total amount of money stolen was six to seven hundred times that which is taken in all the robberies that occur in the United States each year.

  What happened?  

  • The Garn-St. Germain Act of 1982 failed to take into account the human factor of greed. It made the assumption that the entrepreneurs, who borrowed money from savings and loans, and the officers of the thrift institutions themselves, were honest and could be trusted to conduct business on the honor system.

    The savings and loan scandal is an excellent example of "heads I win, tails you lose" collective embezzlement. It entails the officers of a corporation looting that self-same corporation. The corporation might appear to be the financial institution itself, but in fact, as it turns out, the officers who run and profit from the corporation constitute the corporation. The institution's small investors and depositors are simply unwitting instrument dupes in the creation of a dummy of shell corporation that is set up only to be drained of its assets.    

  Enron: (1998-2001): False and misleading statements, concealed debt, earnings inflated: "Cooked the books"

  • 29 executives charged
  • Accounting firm (Authur Anderson) convicted of obsructing justice--$500,000 fine

Organizational deviance: Crimes in the name of the organization.

• Deviant goals (Profit vs. ethical/public/consumer responsibilities) and/or deviant means (collusion, price-fixing, false advertising)
• Link between profit and performance
• Market Structure ("criminogenic"): Used cars and the short sale
• Great Electrical Conspiracy (10-12 years/$1.7 bil.)

• Demands of corporate reality vs. individual awareness of criminality
• Deceptive Advertising
• Anti-Trust (1997: VISA and MAsterCard barred "their" banks from issuing AmExpress and Discover cards
  • Price-fixing: Baby formula
• Dangerous products
  • Foods: Jack-in-the-Box and E.Coli--400 ill in 1993 (Thio 1998)
  • Unsafe Products: Ford and the Pinto, now the Mustang, Drugs?
• Frauds: The savings and Loan scandal of the 1980's--cost to taxpayers: $1.4 trillion
  • "The best way to rob a bank is to own one."
  • Illicit banking practices: inappropriate loans
  • Collective embezzlement

• Crime committed by and on behalf of a corporation entails executives and executive officers engaging in illegal actions that are intended to further interests of that cooperation; they are actions taken on behalf of the corporation in so doing, they may also benefit the careers of the individual corporate actors..
• In corporate crime the victim or potential victim is the general public (illegal pollution), the consumer (price fixing or the sale of illegally unsafe products), the employee (illegally unsafe working conditions), the government (illegal tax avoidance) or a competitor (two firms forming a price-fixing conspiracy against the third).
• Framers, practitioners and observers of the criminal law regard mens rea or the possession of a "guilty mind," a necessary defining guilty of a crime. But: This not always or even usually true of corporate crime.
• In the majority of corporate crimes, the  intention to do harm to a victim is absent.
• Instead, corporate executives expose parties to a certain measure of risk. Whether this risk is acceptable or unacceptable, legal or illegal is a matter of interpretation.
• Some corporate actors knowingly expose other parties to risks that those parties, and the law would regard as unacceptable while other cooperate actors knowingly expose other parties to risks that those parties and the law, would regard as unacceptable, while other corporate actors do so in the absence of such awareness.
• There is a second risk that the corporate actor calculates, that is the likelihood of accountability in the case of the criminal law, the risk of arrest and prosecution, in the case of civil and administrative law, the risk of lawsuits and punitive fines.
• Corporate offenses very, very rarely result in criminal prosecution and administrative agencies rarely slap corporation with huge fines.
• But: they  do result in great many civil trials and occasionally extremely large settlements. Today, product liability is the largest field of civil law.
• To a cooperation, what counts is the "bottom line": executives make decisions based almost exclusively on cost benefit analysis: they weigh potential costs against earnings to determine possible or likely profit. To earn a profit, they make decisions to engage, or not to engage, in certain business ventures that may or may not pay off.
• Corporations do not avoid certain actions for the good or as a service to humanity; they do so because they would be unprofitable.

• Structural entities play larger role in acting for corporate crime than, perhaps for any other type of crime.
• By their very nature, corporate crimes are enacted by a collectivity, rather than individual persons. It is the corporation that acts, as a whole, not scattered, isolated actors, one at a time.
• BUT: a corporate entity cannot serve a prison sentence.
• If the corporation is considered as the actor, then clearly, most corporations are guilty of committing corporate crimes at least once since at least some executives made decisions that turned out to be illegal. So, their rate of corporate crime would be enormous.
• However, if all the executives are included in the total number of actors it is possible that rates of white-collar crime would be quite low.
• Most observers who argue that white-collar crime is rampant have not devoted much thought to determine its rate relative to the number of persons who are in a position to commit it.

Occupational/Professional Deviance: Sociology of the Professions

• Autonomy
• Self-regulation
• Internal Control
• Expertise
• Accountability
• Client Service

Crime Within Professional Occupations  

• All occupations that are classified, as professions require advanced usually graduate training and all practitioner possess a specialized skill that is not accessible to the general public.
• All are governed by an ethical code that places service above self-interest
• All have a system of licensing that permits only qualified and presumably ethical to practice
• All deal with clients - paying customers who look to the professional for help.
• The professions stand at the top of the occupational prestige hierarchy, their practitioners are respected members of their community
• The most common form of professional crime is fraud. Prescription violations, unnecessary Surgery and Medicaid fraud. Medicaid Fraud cost $40 billion annually (1993)

It is undertaken on behalf of the individual professional for person gain, not for a larger entity such as corporation and almost always the victim is the client.

Why do doctors do this?

• the behavior that enables a physician to engage in fraud is partially learned from authors in the profession in that professional values may effectively neutralize the doctor's conflict of conscience. The deviance neutralization process.
• Occupational norms may support an attitude on the part of some professionals that they are "above the law."
• Sutherland 1949 believed that professional behaviors are learned as a result of association with fellow professionals within each profession there is a strong demand for autonomy the result is a "circle the wagons" mentality in reaction to outside regulation and to the external policing of deviant behavior.

Self-protection, secrecy, regulation, and normalcy

2 Types

1. Strict or Narrow interpretation: such actions must be against the law in jurisdictions in which they take place - Watergate.
2. The broader type: what a crime is as spelled out in one jurisdiction may not be a crime in another.
   • Assumes special importance when two nations engage in conflict to ensure that the definition is institutionalized; when on nation defeats another in a war, acts that were previously legal can be redefined as a crime. i.e. Nuremberg Trails.

Acts that are contemplated by political authorities that have a certain likelihood of prosecution are the product of an entirely different set of dynamics from those that have little or no such likelihood, for them, their actions literal illegal status is crucial.  i.e. when Saddam Hussein considers whether and how to crush the kurdis rebellion he does not have to consider the issue of legal prosecution. The fact that human rights groups or political leaders from around the world condemn the killing of Kurds is irrelevant.

What qualifies as political or governmental crimes?  

• Very rarely result in criminal prosecution
• Result in some measure of citizen outrage and public condemnation, media attention and criticism
• Occasionally official investigation
• Occasionally the termination of political careers
• Once in a while embarrassing international repercussions
• Personal corruption and bribery of and by political officials represent another major type of government white-collar crime. i.e. ABSCAN

Concrete harm caused by government and political wrongdoing is independent of these reactions.  

Examples:

• Against Citizens
  1. Guinea pigs
  2. Subverting legal processes
• Corruption for personal gain
  • Influence peddling
  • Abusive management of public funds
  • Abusing the Frank

• Official Violence
  • Police (see pages 223-228, Goode, 8th edition)
  • Military

Seriousness:

• Attitudes changing
• Problems of physical harm
• Indirect impact.

Enforcement:

• Not very effective
• Light sentences
• Small fines
• Limited resources available (street demands)
• Regulatory--cease and desist
• Respectability of the offender
• Corporate structure and diffusion of responsibility
• Yet, deterrence and Public opinion, boycotts, and adverse publicity==> Hits the pocketbook.

Violence

Subcultural Theories

URL: http://www.umsl.edu/~keelr/200/wcolcrim.html
Owner: Robert O. Keel rok@umsl.edu
References and Credits for this Page of Notes
Last Updated: Wednesday, March 26, 2008 3:26 PM