Introduction
When most people think of crime, they are likely
to conjure up images of such street crimes as
robbery, burglary or homicide. Crimes engaged
in by persons of privilege and standing in the
community are rarely considered. Yet, it should
be clear by now that there is a much greater economic
cost, which attaches to crimes `in the suites'
than ever results from crime in the streets. What
are known as white-collar crimes are, in short,
more costly in both dollar terms and in terms
of lives lost than the more routine criminal cases
that most of the public would see as `crime’?
It is important; therefore, that we attempt to
describe and understand these `upper world' crimes,
and to consider the particular vexing problems
these pose for the criminal justice system in
terms of control. (Mokhiber 2000)
The Federal Trade Commission received 162,000
reports of ID theft last year, almost twice as
many as the year before.
Thieves hack into corporate databases and download
credit card numbers and other personal information.
Once the personal information is stolen, they
can open a new credit card account using a victim's
name, birth date and Social Security number (SSN).
Or they may open bank accounts in someone else's
name and write bad checks. (Weinberg & Egan
2004)
As states try to provide some recourse for injured
parties, consumers are also asking for more protection
for their personal information. There is widespread
use of Social Security numbers in government and
business databases, which hackers access illegally.
New California laws not only restrict SSN use,
but also require credit bureaus to develop other
personal identification numbering systems.
Although most states have identity theft laws
in place, new statutes were enacted in at least
13 states last year to enhance existing legislation.
Arizona doesn't need proof of economic loss to
label a crime identity theft. California honed
its law to give counties jurisdiction for criminal
action. The Georgia code was amended to focus
on identity fraud and collection of personal financial
information. Hawaii added criminal penalties,
and New York set new penalties for misappropriation
of another's identity.
Maryland expanded the crime of fraud involving
personal information to include aiding another
in that crime. "Identity fraud" was
written into Ohio law and given stronger penalties.
Penalties for use of a financial scanning device
and re-encoder were added in Arizona, Colorado,
Idaho and Nebraska. Victim innocence was provided
in California and Colorado law, as well as restitution
in Idaho and New Jersey. A person convicted of
identity theft in Illinois and Pennsylvania is
liable in a civil action. (Ivancevich et al 2003)
What Is Meant By The Term ‘White
Collar Crime’?
White collar crimes involve, in fact, a wide
range of specific criminal acts which are defined
in the criminal codes. At the same time, there
is no specific crime in law, which has the name
'white collar crime'. Instead, this is a term,
invented over 60 years ago by the American criminologist
Edwin Sutherland, to provide a general focus on
those crimes which involve persons of respectability
and standing in the community who commit criminal
acts in the course of their work or profession.
This definition thereby has two elements. The
first, and weaker, refers to the status of the
offender (`person of respectability and standing'),
while the second (criminals acting `in the course
of their work or profession') moves us closer
to the critical elements of white-collar crime.
To give some illustrations, if a doctor (a `respectable
person') kills his wife in a jealous rage, this
will be treated as a traditional, not a white
collar, crime, because it does not involve an
act done in the course of the doctor's work. If
a doctor engages in a grossly negligent and unacceptable
procedure in the course of an operation and the
patient dies, that could be treated as a crime,
which occurs in the course of the doctor's occupation,
and then would be an illustration of white-collar
crime. (Casper 1995)
Individual And Small Scale Forms Of
White Collar Crime
There are, in fact, many different forms of
white-collar crime. Some white-collar crimes involve
relatively simple cases of one individual acting
mostly alone to defraud others of money or other
assets.
The situation can become more complex when the
level of the fraudulent activity becomes more
extensive. In the criminal cases involving the
likes of Bond or Connell, where sums in the hundreds
of millions of dollars are misappropriated, there
is no one, or simple set of, violations, but a
systematic pattern of criminal activity engaged
in over a long period of time, often with the
open collusion of teams of lawyers, accountants
and other professional personnel. Times have changed.
Intelligent criminals have discovered that without
question the best way to rob a bank is to own
it. But then, stealing becomes a much more complicated
matter. In by-gone times, a thief like Ned Kelly
would walk into a bank to hold it up, walking
away with the takings of the robbery. One cannot
'reach into the till' to steal one hundred million
dollars. It would be impossible to carry away
such vast sums in the form of cash. Instead, accounting
devices have to be created to transfer, electronically,
funds from one account to another.
Criminals such as Bond or Connell early on were
given advice (by trusted law, accounting and computer
associates) on how to create personal companies,
which would then feature in a large number of
illegal transactions so that money from corporate
funds would find its way, illegally, into personal
accounts where the individuals could spend it.
While at one level these activities can be viewed
simply as fraud, in fact over the many months
and years of the operations of such criminals
countless violations of a wide range of criminal
statutes would be involved, including not only
the laws relating to fraud, but as well regulations
concerning corporate management and banking. (Casper
1995)
Corporate Forms Of Crime
While the financial frauds of the likes engaged
in by Bond and Connell were aimed primarily to
benefit the individuals involved, there are some
even more complex forms of criminal activity where
the ultimate beneficiary is the corporation itself.
In the famous case involving the Ford Motor Company
in the United States, a particular model of motorcar,
the Pinto, was produced which was found late in
the production process to possess a fault in its
fuel tank. Now, there is hardly anything startling
in the discovery of such a fault in a new model
car. What was unusual in this case was the way
that the company decided to deal with the problem.
Confidential documents available later established
that early on a decision was made, on the basis
of a cost-benefit analysis that there were likely
to be lower costs if the fault remained uncorrected,
even if there might be law suits later from individuals
who suffered as a consequence.
The difficulty was that in this case, because
of the defect, the fuel tank tended to explode
when there was even a minor rear-end collision
involving the vehicle, and that as a result many
people suffered death or lingering injuries from
horrific burns. As a consequence of these injuries,
and the particular pattern of demonstrable negligence
on the part of the company, which produced these
injuries, a number of successful civil (not criminal)
suits were brought against the Ford Motor Company.
Further, even after the defect became public knowledge,
it was alleged that the company was slow to carry
out the proper recall process to correct the problem.
As a result, in a very unusual step, Ford, as
a company, was put on trial in the state of Indiana
in the United States for criminal homicide for
deaths caused by the uncorrected defect (although
the company was ultimately found not guilty in
the trial). (Ettore 1994)
There are a number of things about such corporate
wrongdoing that make it different from more simple
examples of crimes such as financial fraud. For
one thing, while there is some guiding notion
of the ultimate financial gain of the company,
which is part of what leads to such crimes, the
individuals involved in the process may themselves
see little direct personal benefit from the particular
decision. For another, at least some of the wrongdoings
of large corporations are truly international
in character, which may make it difficult to bring
the company into account in any one particular
legal jurisdiction.
When the conduct of the company produces harms
that are redressed through civil rather than criminal
procedure, the victims in one country may find
it difficult to obtain the compensation that results
from civil suits in another country. (Bucklin
1997)
White Collar Crime In The Public Sector
Some forms of white-collar crime are found within
the public as well as the private sectors. Like
other forms of privileged crime, there are different
levels of complexity in public sector crime. Some
involve simply individuals who are willing to
use their position of trust for personal gain.
There are numerous examples of individual policemen,
judges or other governmental officials who have
been found guilty of such offences as bribery
or related crimes. That such individual level
violations can reach to the highest levels was
demonstrated in the impeachment of former President
Clinton in the United States, although, of course,
the US Senate found in Clinton's favor in that
case. (Collaring the White-Collar Criminal 2001)
Unfortunately, misconduct in the public sector
can also take a similar form to corporate crime.
It is one thing when a rogue policeman takes a
bribe to protect a local brothel owner; it is
another altogether when corruption runs through
a whole police establishment. At that time several
top police were charged with corruption, and the
Chief Commissioner of Police was convicted of
corruption charges and sentenced to a lengthy
prison term. In order to combat this problem of
high level and organizationally based corruption,
states have created an independent body against
corruption. (Polk 1999)
When misconduct in the public sector exists
at the highest levels of government, and is found
throughout the governmental process, the problems
posed are exceptionally difficult to resolve.
How should the international community respond,
for example, when a government implements a persistent
policy of ethnic cleansing that includes massive
killings of out of favor ethnic groups? Spurred
on by the long shadow cast by the Holocaust policies
of the Nazi government during World War II, currently
in Europe there is considerable unrest as the
North Atlantic Treaty Organization nations engage
in various forms of military action against the
Serbian Government of Belgrade for its 'crimes
against humanity' aimed at 'cleansing' the Kosovo
region of ethnic Albanians.
Whether that particular action is either proper
or effective, what the situation points to is
the difficulty that occurs when criminal activities,
in that case what have been defined internationally
as 'crimes against humanity', are undertaken by
an independent nation. What many hope for in the
future is that the development of a more effective
system of international co-operation through an
organization such as the United Nations can lead
to better mechanisms for controlling the behavior
of potentially rogue nations. (Beatty 1993)
White Collar Crime And The Criminal
Justice System
What can be done when white-collar crimes are
detected? In fact, one of the problems posed by
white-collar crime is how they can be dealt with
by the criminal justice system. Looking at the
investigation and policing stage of the process,
the simple forms of individual fraud are relatively
straightforward.
The statutes are clear, the crimes frequently
easy to define, and the investigation and arrest
procedures follow clearly defined jurisprudential
pathways. Thus, when a financial adviser has defrauded
elderly investors, it is generally fairly easy
to gather the evidence of the fraud, including
the documents regarding the various financial
dealings and the various witness statements that
will be required to support a successful court
prosecution. (Johnston 2002)
These problems continue into the trial phase
as well, since it is not uncommon for complex
fraud prosecutions to last for many months. The
United States Government, for example, is currently
pursuing a case against Bill Gates and his Microsoft
Corporation for illegal restraint of trade, in
a trial that has been going for months, with no
end in sight as yet. These cases involve complex
points of law, complex sets of charges, and document
files that run into the hundreds of thousands
of pages.
They may cost governments millions of dollars
of unrecoverable expenses to prosecute. Inevitably,
governments may find themselves in a position
where, while they disapprove of the criminal actions
involved in a complex financial fraud, they may
not have the resources to mount a successful prosecution
against the criminals involved. Furthermore, the
huge resources available to such organizations
assure that a highly competent and complex defense
will be mounted, and it will be difficult to obtain
a conviction. (Mokhiber 2000)
In cases where a prosecution has been initiated,
and that prosecution leads to a conviction for
one or another form of white-collar crime, another
set of problems are found at the sentencing stage
of the criminal justice process. For individuals
convicted of white-collar crimes, the problem
most commonly is that as offenders these criminals
are quite distinctive when compared with other
individuals found guilty of violations of criminal
law. Judges sentencing street criminals are accustomed
to dealing with cases where there are likely to
be particular mixes of serious criminal offences,
and offenders who have lengthy histories of involvement
in other forms of crime.
That is, the traditional sentencing exercise
is likely to involve consideration of two general
characteristics, the first being the nature of
the particular crime (how serious was it, what
are the particular kinds of harms involved, how
were the victims affected, etc.) and the second
being the criminal and social history of the offender
(how many prior offences, has the offender been
sent to prison for before, what are the prospects
for rehabilitation, what evidence exists of a
positive change in the life of the individual
in recent months, does the defendant have a family
and children to support, does the offender have
a current job). (Weinberg 2004) White collar criminals
coming into court are distinctive in that while
the crimes may appear to be quite serious (especially
in terms of the financial costs of the crime),
the offenders tend to appear, relative to other
offenders in the courts, 'respectable' when it
comes to the absence of prior criminal charges,
and the fact that they are likely to be currently
employed and to have families with children to
support.
In the past, it was not uncommon for the defense
attorney to enter a plea that the criminal trial
itself has seriously stained the name of the offender,
and that further criminal punishments would be
unnecessary. It is now the situation, however,
that white collar criminals, especially those
convicted of large scale financial fraud, are
likely, if convicted, to face reasonably lengthy
prison terms. This is partly because there have
been more of these notable cases which have moved
through the courts, and in part because the public
has become outraged with the more extreme excesses
in the crimes committed by some of the more notable
fallen entrepreneurs.
Sentencing of corporations convicted of criminal
acts is even more vexing. For many years, of course,
it had been argued that companies, as companies,
could not be charged with criminal offences. That
issue has been resolved, and corporations now
can be charged and even convicted of a range of
criminal offences. While it may be possible to
convict a company if it engages in criminal activity,
there still remains the difficult problem of determining
a proper sentence.
A company as such obviously cannot be placed
in prison. Even the other ready option, a fine,
may have little impact on a criminal corporation.
This is true for many reasons, including the fact
that the officers of the company may simply pass
the cost of the fine on to consumers (in the form
of higher prices) or to stock-holders (in the
form of lowered returns on investment). Further,
often the fines available will be minuscule when
compared to the total assets of the large corporations.
In extreme cases a form of `corporate capital
punishment' has been suggested, but of course
when this happens the impact may fall upon employees
or stockholders who, in fact, played little or
no part in the criminal actions. (Ivancevich 2003)
These problems take on even more complicated
form when the organization is an agency of government.
Commuters can not be expected to be sympathetic
to any action, which would put the train system,
for one example, out of business. A hefty fine,
another possible option, might result simply in
higher fees charged to users of the transit system.
What recent writers on corporate offending have
suggested are new and innovative forms of punishment
designed for corporations, which have been convicted
of serious criminal activity. One such suggestion
is to place the offending company on a form of
probation, with a condition of that probation
being that the company is required to run an extensive
training program so that executives and other
key personnel are educated in the importance of
assuring compliance with regulations and laws.
Another is a form of `equity fine' where in essence
a share of the company is vested in the state,
with the state then assuming some of the profits
of the company.
Other writers have pointed to the importance
of assuring the individuals who are responsible
for the illegal company actions be individually
convicted and sentenced for their involvement
in the wrong doing. Experience has shown, however,
that often the crimes of companies involve many
`layers' within large corporations, and it is
highly likely that in these circumstances lower
level employees will be selected out and presented
by the company as candidates for individual punishment.
(Casper 1995)
Faced with these difficulties, recent American
experts have urged that what needs to be created
is a climate of voluntary company compliance with
business regulations, so that the governmental
regulatory agencies should spend much of their
time negotiating with companies to persuade them
to comply with regulations, reserving criminal
prosecutions for only the most serious and flagrant
of company criminal violations. In short, persuasion
is argued to be the most effective way of achieving
company compliance, although punishment should
always be held in reserve where there is a persistent
pattern of non-compliance with company regulations
and laws.
In summary, in America today there is a considerable
volume of criminal offences committed by individuals
in the course of their work or business activities
where the offenders appear to be otherwise respectable.
The global term used to describe these offences,
a term which is only partially satisfactory, is
`white collar crime.' While intuitively these
crimes, which often occur `in the suites', rather
than in the streets, are in many ways different
from traditional crimes, they, too, will have
their base in the criminal laws of the state.
These crimes vary from simple frauds to complex
frauds, and other company violations where an
organization may in fact violate dozens of laws
and regulations in the course of business activity.
These crimes pose particular problems for the
criminal justice system. The criminal activities
may involve vast and extensive actions, which
cross national borders many times, and thus the
state may be hard pressed to find the resources
necessary to engage in the investigation to obtain
the facts and evidence necessary for prosecution.
Even where a prosecution is mounted, and leads
to a successful conviction, there will then arise
a number of distinctive problems in terms of the
sentencing where there is white collar crime.
Such factors as the apparent 'respectability'
of the offenders, or the peculiar problems faced
with dealing with convicted criminal companies,
have posed a great challenge for the criminal
justice system. Finding appropriate ways of dealing
with white collar crime will continue to be one
of the major problems faced by those who plan
and organize the criminal justice system of the
United States.
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