White Collar Crime
drawn from Goode, 1994-2008
See the disclaimer)
Crimes committed by the affluent
in the course of normal business activities
- Conspiracies==>use position
- Expanded by some to include a
wider range of "middle-class" criminality and "high-tech"
- Legitimate business, deviant
- Internal versus external judgements
- Opportunity structures
- Institutional climate
- (see, the Legal Information
Versus Organized crime-- organization
directed towards deviance
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.
- Deliberate acts
motivated by profit
- Corporate Culture: Criminogenic:
- Element of Learning,
Peer support, Rationalization and Neutralization
- Lack of reporting and
- Civil vs. criminal violations
- Sociological category
- Sanctions: small fines,
limited resources, problem of technology
- Activity hidden
in normal business routines-secrecy (Medical Doctors vs Psychiatrists)
- Most investigation is pro-active
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.
Crime: Correlative Features
crime tends to be made up of complex, sophisticated, and relatively technical
- 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
- 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.
are motivated by two factors:
Individual deviance: Crimes against the corporation
- Embezzlement ($27 billion per
year- Thio 1998)
- Misappropriation of resources
- Neutralize: (Cressy,
1971 in Thio 1998)
- Unshareable financial
- Opportunity through
position of trust
- rationalize: temporary
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
- "Illegal-yeah, but criminal,
- Violaters had suffered enough
- 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
- Price-fixing: Baby
- 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:
- Collective embezzlement
Who is the corporate
- 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
- 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
- Internal Control
- Client Service
Crime Within Professional
What makes professional
crime different form corporate crime?
- 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
- 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
- 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.
- Quinney and Pharmacists--
- Social Structure
- Business vs. Profession
- Unnecessary surgery
- Medicaid fraud ($40 bil):
- "Make back what's
- "Above the law."
- "It's the system."
- Police Use of Excessive Force
- Sexual Abuse of Children by
Roman Catholic Priests (see pages 228-234, Goode 8th edition)
Socialization into and the Organization
of the Professions:
regulation, and normalcy
Political and Governmental Deviance
- Strict or
Narrow interpretation: such actions must be against the law in jurisdictions
in which they take place - Watergate.
- The broader
type: what a crime is as spelled out in one jurisdiction may not be a crime
- 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.
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
- Occasionally the
termination of political careers
- Once in a while embarrassing
- 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.
- Against Citizens
- Guinea pigs
- Subverting legal processes
- Corruption for personal gain
- Influence peddling
- Abusive management of public
- Abusing the Frank
- Abuse of Power
- CIA, IRS
- FBI and St. Louis ACTION
- Secrecy, Lying and Deception
- Bribery and Corruption: Kickbacks
- Election Improprieties
- Denial of voting rights
- Dirty tricks--rumors,
- Campaign finance
- Official Violence
- Police (see pages 223-228,
Goode, 8th edition)
- Attitudes changing
- Problems of physical harm
- Indirect impact.
- Not very effective
- Light sentences
- Small fines
- Limited resources available
- Regulatory--cease and desist
- Respectability of the offender
- Corporate structure and diffusion
- Yet, deterrence and Public
opinion, boycotts, and adverse publicity==> Hits the pocketbook.
Owner: Robert O. Keel email@example.com
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Wednesday, March 26, 2008 3:26 PM