The term "white-collar crime" refers to financially motivated, nonviolent or non-directly violent
crime
In ordinary language, a crime is an unlawful act punishable by a state or other authority. The term ''crime'' does not, in modern criminal law, have any simple and universally accepted definition,Farmer, Lindsay: "Crime, definitions of", in Ca ...
committed by individuals, businesses and government professionals. It was first defined by the sociologist
Edwin Sutherland
Edwin Hardin Sutherland (August 13, 1883 – October 11, 1950) was an American sociologist. He is considered one of the most influential criminologists of the 20th century. He was a sociologist of the symbolic interactionist school of thought ...
in 1939 as "a crime committed by a person of respectability and high social status in the course of their occupation". Typical white-collar crimes could include
wage theft
Wage theft is the failing to pay wages or provide employee benefits owed to an employee by contract or law. It can be conducted by employers in various ways, among them failing to pay overtime; violating minimum-wage laws; the misclassificati ...
,
fraud,
bribery,
Ponzi schemes,
insider trading,
labor racketeering,
embezzlement,
cybercrime
A cybercrime is a crime that involves a computer or a computer network.Moore, R. (2005) "Cyber crime: Investigating High-Technology Computer Crime," Cleveland, Mississippi: Anderson Publishing. The computer may have been used in committing th ...
,
copyright infringement
Copyright infringement (at times referred to as piracy) is the use of works protected by copyright without permission for a usage where such permission is required, thereby infringing certain exclusive rights granted to the copyright holder, s ...
,
money laundering,
identity theft
Identity theft occurs when someone uses another person's personal identifying information, like their name, identifying number, or credit card number, without their permission, to commit fraud or other crimes. The term ''identity theft'' was c ...
, and
forgery. White-collar crime overlaps with
corporate crime
In criminology, corporate crime refers to crimes committed either by a corporation (i.e., a business entity having a separate legal personality from the natural persons that manage its activities), or by individuals acting on behalf of a corpo ...
.
Definitional issues
Modern criminology generally prefers to classify the type of crime and the topic:
*By the type of offense, e.g.,
property crime
Property crime is a category of crime, usually involving private property, that includes, among other crimes, burglary, larceny, theft, motor vehicle theft, arson, shoplifting, and vandalism. Property crime is a crime to obtain money, property, o ...
,
economic crime
Financial crime is crime committed against property, involving the unlawful conversion of the ownership of property (belonging to one person) to one's own personal use and benefit. Financial crimes may involve fraud ( cheque fraud, credit card fra ...
, and other corporate crimes like
environmental
A biophysical environment is a biotic and abiotic surrounding of an organism or population, and consequently includes the factors that have an influence in their survival, development, and evolution. A biophysical environment can vary in scale f ...
and health and safety law violations. Some crime is only possible because of the identity of the offender, e.g., transnational money laundering requires the participation of senior officers employed in banks. But the
FBI
The Federal Bureau of Investigation (FBI) is the domestic intelligence and security service of the United States and its principal federal law enforcement agency. Operating under the jurisdiction of the United States Department of Justice, t ...
has adopted the narrow approach, defining white-collar crime as "those illegal acts which are characterized by deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force or violence" (1989, 3). While the true extent and cost of white-collar crime are unknown, the FBI and the
Association of Certified Fraud Examiners
The Association of Certified Fraud Examiners (ACFE) is a professional organization of fraud examiners. Its activities include producing fraud information, tools and training. Based in Austin, Texas, the ACFE was founded in 1988 by Joseph T. Wells ...
estimate the annual cost to the United States to fall between $300 and $660 billion.
* By the type of offender, e.g., by social class or high socioeconomic status, the occupation of positions of trust or profession, or academic qualification, researching the motivations for criminal behavior, e.g., greed or fear of loss of face if economic difficulties become obvious. Shover and Wright point to the essential neutrality of a crime as enacted in a
statute. It almost inevitably describes conduct in the abstract, not by reference to the character of the persons performing it. Thus, the only way that one crime differs from another is in the backgrounds and characteristics of its perpetrators.
* By organizational culture rather than the offender or offense which overlaps with
organized crime
Organized crime (or organised crime) is a category of transnational, national, or local groupings of highly centralized enterprises run by criminals to engage in illegal activity, most commonly for profit. While organized crime is generally th ...
. Appelbaum and Chambliss offer a twofold definition:
** Occupational crime which occurs when crimes are committed to promote personal interests, say, by altering records and overcharging, or by the cheating of clients by professionals.
** Organizational or corporate crime which occurs when corporate executives commit criminal acts to benefit their company by overcharging or
price fixing
Price fixing is an anticompetitive agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given ...
,
false advertising, etc.
Relationship to other types of crime
Blue-collar crime
The types of crime committed are a function of what is available to the potential offender. Thus, those employed in relatively unskilled environments have fewer opportunities to exploit than those who work in situations where large financial transactions occur.
Blue-collar crime tends to be more obvious and thus attracts more active police attention such as
vandalism
Vandalism is the action involving deliberate destruction of or damage to public or private property.
The term includes property damage, such as graffiti and defacement directed towards any property without permission of the owner. The term ...
or
shoplifting
Shoplifting is the theft of goods from an open retail establishment, typically by concealing a store item on one's person, in pockets, under clothes or in a bag, and leaving the store without paying. With clothing, shoplifters may put on items ...
. In contrast, white-collar employees can incorporate legitimate and criminal behavior, thus making themselves less obvious when committing the crime. Therefore, blue-collar crime will more often use physical force, whereas in the corporate world, the identification of a victim is less obvious and the issue of reporting is complicated by a culture of commercial confidentiality to protect
shareholder value. It is estimated that a great deal of white-collar crime is undetected or, if detected, it is not reported.
Corporate crime
Corporate crime benefits the corporation (company or other type of business organization), rather than individuals. It may, however, result from decisions of high-ranking individuals within the corporation. Corporations are not, unlike individuals, litigated in criminal courts, which means the term "crime" does not really apply.
Litigation usually takes place in civil courts or by institutions with jurisdiction over specific types of offences, such as the
U.S. Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
that litigates violations of financial market and investment statutes.
State-corporate crime
The negotiation of agreements between a state and a corporation will be at a relatively senior level on both sides, this is almost exclusively a white-collar "situation" which offers the opportunity for crime. Although law enforcement claims to have prioritized white-collar crime, evidence shows that it continues to be a low priority.
When senior levels of a corporation engage in criminal activity using the company this is sometimes called
control fraud
Control fraud occurs when a trusted person in a high position of responsibility in a company, corporation, or state subverts the organization and engages in extensive fraud for personal gain. The term "control fraud" was coined by William K. Black ...
.
Organized transnational crime
Organized
transnational crime Transnational crimes are crimes that have actual or potential effect across national borders and crimes that are intrastate but offend fundamental values of the international community. The term is commonly used in the law enforcement and academic c ...
is organized criminal activity that takes place across national jurisdictions, and with advances in transportation and information technology, law enforcement officials and policymakers have needed to respond to this form of crime on a global scale. Some examples include
human trafficking,
money laundering,
drug smuggling
The illegal drug trade or drug trafficking is a global black market dedicated to the cultivation, manufacture, distribution and sale of prohibited drugs. Most jurisdictions prohibit trade, except under license, of many types of drugs through ...
, illegal arms dealing,
terrorism
Terrorism, in its broadest sense, is the use of criminal violence to provoke a state of terror or fear, mostly with the intention to achieve political or religious aims. The term is used in this regard primarily to refer to intentional violen ...
, and
cybercrime
A cybercrime is a crime that involves a computer or a computer network.Moore, R. (2005) "Cyber crime: Investigating High-Technology Computer Crime," Cleveland, Mississippi: Anderson Publishing. The computer may have been used in committing th ...
. Although it is impossible to precisely gauge transnational crime, the
Millennium Project, an international think tank, assembled statistics on several aspects of transnational crime in 2009:
*World illicit trade of almost $780 billion
*Counterfeiting and piracy of $300 billion to $1 trillion
*Global drug trade of $321 billion
Occupational crime
Individuals may commit crime during employment or unemployment. The two most common forms are
theft
Theft is the act of taking another person's property or services without that person's permission or consent with the intent to deprive the rightful owner of it. The word ''theft'' is also used as a synonym or informal shorthand term for som ...
and
fraud. Theft can be of varying degrees, from a pencil to furnishings to a car.
Insider trading, the trading of stock by someone with access to publicly unavailable information, is a type of fraud.
Crimes related to national interests
The crimes related to the national interests consist mainly of treason. In the modern world, there are a lot of nations which divide the crimes into some laws. "Crimes Related to Inducement of Foreign Aggression" is the crime of communicating with
aliens secretly to cause foreign aggression or menace. "Crimes Related to Foreign Aggression" is the treason of co-operating with foreign aggression positively regardless of the national inside and outside. "Crimes Related to Insurrection" is the internal treason. Depending on a country, criminal conspiracy is added to these. One example is
Jho Low
Low Taek Jho (, born 4 November 1981), often called Jho Low, is a Malaysian fugitive businessman, wanted by authorities internationally in connection with the 1Malaysia Development Berhad scandal (1MDB scandal). He has been named the mastermin ...
, a mega thief and traitor who stole billions in USA currency from a
Malaysian government fund and is now on a run as a fugitive.
Demographics
According to a 2016 study,
A considerable percentage of white-collar offenders are gainfully employed middle-aged Caucasian men who usually commit their first whitecollar offense sometime between their late thirties through their mid-forties and appear to have middle-class backgrounds. Most have some higher education, are married, and have moderate to strong ties to community, family, and religious organizations. Whitecollar offenders usually have a criminal history, including infractions that span the spectrum of illegality, but many do not overindulge in vice. Recent research examining the five-factor personality trait model determined that white-collar offenders tend to be more neurotic and less agreeable and conscientious than their non-criminal counterparts.
Punishment
In the United States, sentences for white-collar crimes may include a combination of
imprisonment,
fines Fines may refer to:
* Fines, Andalusia, Spanish municipality
* Fine (penalty)
* Fine, a dated term for a premium on a lease of land, a large sum the tenant pays to commute (lessen) the rent throughout the term
*Fines, ore or other products with a s ...
,
restitution
The law of restitution is the law of gains-based recovery, in which a court orders the defendant to ''give up'' their gains to the claimant. It should be contrasted with the law of compensation, the law of loss-based recovery, in which a court ...
,
community service
Community service is unpaid work performed by a person or group of people for the benefit and betterment of their community without any form of compensation. Community service can be distinct from volunteering, since it is not always performe ...
,
disgorgement
Disgorgement is defined by ''Black's Law Dictionary'' as "the act of giving up something (such as profits illegally obtained) on demand or by legal compulsion."
Overview
Disgorgement is a remedy or penalty used in US securities law. For exampl ...
,
probation
Probation in criminal law is a period of supervision over an offender, ordered by the court often in lieu of incarceration.
In some jurisdictions, the term ''probation'' applies only to community sentences (alternatives to incarceration), such ...
, or other alternative punishment. These punishments grew harsher after the
Jeffrey Skilling
Jeffrey Keith Skilling (born November 25, 1953) is an American businessman who is best known as the CEO of Enron Corporation during the Enron scandal. In 2006, he was convicted of federal felony charges relating to Enron's collapse and eventual ...
and
Enron scandal, when the
Sarbanes–Oxley Act
The Sarbanes–Oxley Act of 2002 is a United States federal law that mandates certain practices in financial record keeping and reporting for corporations.
The act, (), also known as the "Public Company Accounting Reform and Investor Protect ...
of 2002 was passed by the
United States Congress
The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washing ...
and signed into law by President
George W. Bush
George Walker Bush (born July 6, 1946) is an American politician who served as the 43rd president of the United States from 2001 to 2009. A member of the Republican Party, Bush family, and son of the 41st president George H. W. Bush, he ...
, defining new crimes and increasing the penalties for crimes such as
mail and wire fraud. Sometimes punishment for these crimes could be hard to determine due to the fact that convincing the courts that what the offender has done is challenging within itself. In other countries, such as
China, white-collar criminals can be given the
death penalty under aggravating circumstances, yet some countries have a maximum of 10–25 years imprisonment. Certain countries like
Canada
Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
consider the relationship between the parties to be a significant feature on sentence when there is a breach of trust component involved. Questions about
sentencing disparity
Sentencing disparity is defined as "a form of unequal treatment in criminal punishment that is often of unexplained cause and is at least incongruous, unfair and disadvantaging in consequence".
In the United States men are most adversely affected ...
in white-collar crime continue to be debated. The
FBI
The Federal Bureau of Investigation (FBI) is the domestic intelligence and security service of the United States and its principal federal law enforcement agency. Operating under the jurisdiction of the United States Department of Justice, t ...
, concerned with identifying this type of offense, collects annual statistical information on only three categories: fraud, counterfeiting/forgery, and embezzlement. All other types of white-collar crime are listed in a "miscellaneous" category.
In the United States, the longest sentences for white-collar crimes have been for the following:
Sholam Weiss
Sholam Weiss (born 1954) is a convicted fraudster.
In 2000, Weiss was sentenced to 845 years in prison for racketeering, wire fraud, money laundering, and other charges in connection to the collapse of the National Heritage Life Insurance C ...
(845 years for racketeering, wire fraud and money laundering in connection with the collapse of
National Heritage Life Insurance Company
National Heritage Life Insurance Company (NHLC) was an insurance company based in Orlando, Florida. It collapsed as a result of a fraud scheme, and was liquidated in 1995. It is believed to have been the largest insurance company failure caused by ...
); Norman Schmidt and Charles Lewis (330 years and 30 years, respectively, for "high-yield investment" scheme);
Bernard Madoff
Bernard Lawrence Madoff ( ; April 29, 1938April 14, 2021) was an American fraudster and financier who was the admitted mastermind of the largest Ponzi scheme in history, worth about $64.8 billion. He was at one time chairman of the NASDAQ ...
(150 years for
$65 billion fraud scheme); Frederick Brandau (55 years for $117 million
Ponzi scheme); Eduardo Masferrer (30 years for accounting fraud); Chalana McFarland (30 years for
mortgage fraud
Mortgage fraud refers to an intentional misstatement, misrepresentation, or omission of information relied upon by an underwriter or lender to fund, purchase, or insure a loan secured by real property.
Criminal offenses may be prosecuted in eith ...
scheme); Lance Poulsen (30 years for $2.9 billion fraud).
Theories
From the perspective of an offender, the easiest targets to entrap in "white collar" crime are those with certain degree of vulnerability or those with symbolic or emotional value to the offender.
Examples of these people can be family members, clients, and close friends who are wrapped up in personal or business proceedings with the offender. The way that most criminal operations are conducted is through a series of different particular techniques. In this case, a technique is a certain way to complete a desired task. When one is committing a crime, whether it be shoplifting or tax fraud, it is always easier to successfully pull off the task with experience in the technique. Shoplifters who are experienced at stealing in plain sight are much more successful than those who do not know how to steal. The major difference between a shoplifter and someone committing a white collar crime is that the techniques used are not physical but instead consist of acts like talking on the phone, writing, and entering data.
Often these criminals utilize the "blame game theory", a theory in which certain strategies are utilized by an organization or business and its members in order to strategically shift blame by pushing responsibility to others or denying misconduct. This theory is particularly used in terms of organizations and indicates that offenders often do not take blame for their actions. Many members of organizations will try to absolve themselves of responsibility when things go wrong.
Forbes Magazine lays out four theories for what leads a criminal to commit a "white collar" crime.
The first is that there are poorly designed job incentives for the criminal. Most finance professionals are given a certain type of compensation or reward for short-term mass profits. If a company incentivizes an employee to help commit a crime, such as assisting in a Ponzi Scheme, many employees will partake in order to receive the reward or compensation. Often, this compensation is given in the form of a cash "bonus" on top of their salaries. By doing a task in order to receive a reward, many employees feel as though they are not responsible for the crime, as they have not ordered it. The "blame game theory" comes into play as those being asked to carry out the illegal activities feel as though they can place the blame on their bosses instead of themselves. The second theory is that the company's management is very relaxed when it comes to enforcing ethics. If unethical practices are already a commonplace in the business, employees will see that as a "green light" to conduct unethical and unlawful business practices to further the business. This idea also ties into Forbes' third theory, that most stock traders see unethical practices as harmless. Many see white collar crime as a victimless crime, which is not necessarily true. Since many of these stock traders cannot see the victims of their crimes, it seems as if it hurts no one. The last theory is that many firms have unrealistic, large goals. They preach the mentality that employees should "do what it takes".
See also
*
Accounting scandals
Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "language ...
*
Bernie Madoff
*
Con man
A confidence trick is an attempt to defraud a person or group after first gaining their trust. Confidence tricks exploit victims using their credulity, naïveté, compassion, vanity, confidence, irresponsibility, and greed. Researchers have def ...
*
Corporate crime
In criminology, corporate crime refers to crimes committed either by a corporation (i.e., a business entity having a separate legal personality from the natural persons that manage its activities), or by individuals acting on behalf of a corpo ...
*
Franchise fraud
Franchise fraud is defined by the United States Federal Bureau of Investigation as a pyramid scheme.
Franchise fraud in U.S. federal law
The FBI website states:
:"pyramid schemes — also referred to as franchise fraud or chain referral scheme ...
*
Immigration and Customs Enforcement
The U.S. Immigration and Customs Enforcement (ICE) is a federal law enforcement agency under the U.S. Department of Homeland Security. ICE's stated mission is to protect the United States from the cross-border crime and illegal immigration th ...
(ICE)
*
Industrial espionage
*
INTERPOL
The International Criminal Police Organization (ICPO; french: link=no, Organisation internationale de police criminelle), commonly known as Interpol ( , ), is an international organization that facilitates worldwide police cooperation and cri ...
*
IRS Criminal Investigation Division
Internal Revenue Service, Criminal Investigation (IRS-CI) is the United States federal law enforcement agency responsible for investigating potential criminal violations of the U.S. Internal Revenue Code and related financial crimes, such as mone ...
(IRS-CID)
*
Office of Criminal Investigations
The United States Food and Drug Administration (FDA) Office of Criminal Investigations (OCI) provides the FDA with a specific office to conduct and coordinate its criminal investigations.
OCI special agents employ federal law enforcement methods ...
(OCI)
*
Organi-cultural deviance
In criminology, corporate crime refers to crimes committed either by a corporation (i.e., a business entity having a separate legal personality from the natural persons that manage its activities), or by individuals acting on behalf of a corpor ...
*
Penny stock scam
*
Securities and Exchange Commission (SEC)
*
Securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in lo ...
*
Terrorist financing
Terrorism financing is the provision of funds or providing financial support to individual terrorists or non-state actors.
Most countries have implemented measures to counter terrorism financing (CTF) often as part of their money laundering l ...
*
United States Marshals Service
The United States Marshals Service (USMS) is a federal law enforcement agency in the United States. The USMS is a bureau within the U.S. Department of Justice, operating under the direction of the Attorney General, but serves as the enforc ...
*
United States Postal Inspection Service
The United States Postal Inspection Service (USPIS), or the Postal Inspectors, is the law enforcement arm of the United States Postal Service. It supports and protects the U.S. Postal Service, its employees, infrastructure, and customers by enf ...
*
United States Secret Service
The United States Secret Service (USSS or Secret Service) is a federal law enforcement agency under the Department of Homeland Security charged with conducting criminal investigations and protecting U.S. political leaders, their families, and ...
*
Wood laundering
*
Jordan Belfort
Jordan Ross Belfort (; born July 9, 1962) is an American entrepreneur, speaker, author, former stockbroker, and financial criminal. In 1999, he pleaded guilty to fraud and related crimes in connection with stock-market manipulation and running ...
References
Further reading
*Barnett, Cynthia. (2000).
The Measurement of White-Collar Crime Using Uniform Crime Reporting (UCR) Data'.
*Cox, Steven P. (2017)
White-Collar Crime in Museums, Curator:The Museums Journal 60(2):235–248.
*Dillon, Eamo
''The Fraudsters – How Con Artists Steal Your Money'' Chapter 5, Pillars of Society, published September 2008 by Merlin Publishing, Ireland
*Geis, G., Meier, R. & Salinger, L. (eds.) (1995). ''White-collar Crime: Classic & Contemporary Views''. NY: Free Press.
*Green, Stuart P. (2006). ''Lying, Cheating, and Stealing: A Moral Theory of White Collar Crime''. Oxford:
Oxford University Press
Oxford University Press (OUP) is the university press of the University of Oxford. It is the largest university press in the world, and its printing history dates back to the 1480s. Having been officially granted the legal right to print books ...
.
*.
* Karson, Lawrence. ''American Smuggling as White Collar Crime.'' (New York: Routledge, 2014).
*Koller, Cynthia A. (2012). "White Collar Crime in Housing: Mortgage Fraud in the United States." El Paso, TX:
LFB Scholarly. .
*Koller, Cynthia A., Laura A. Patterson & Elizabeth B. Scalf (2014). When Moral Reasoning and Ethics Training Fail: Reducing White Collar Crime through the Control of Opportunities for Deviance, 28 Notre Dame J.L. Ethics & Pub. Pol'y 549 (2014). Available at: http://scholarship.law.nd.edu/ndjlepp/vol28/iss2/5
*Lea, John. (2001).
Crime as Governance: Reorienting Criminology.
*Leap, Terry L. (2007) ''Dishonest Dollars: The Dynamics of White-Collar Crime''. Ithaca:
Cornell University Press
The Cornell University Press is the university press of Cornell University; currently housed in Sage House, the former residence of Henry William Sage. It was first established in 1869, making it the first university publishing enterprise in t ...
.
*Newman, Graeme R. & Clarke, Ronald V. (2003). ''Superhighway Robbery: Preventing E-commerce Crime''. Portland, Or: Willan Publishing.
*Rolón, Darío N
Control, vigilancia, y respuesta penal en el ciberespacio Latinamerica's new security Thinking, Clacso 2014.
*Reiman, J. (1998). ''The Rich get Richer and the Poor get Prison''. Boston: Allyn & Bacon.
*Pontell, H. & Tillman, R. (1998). ''Profit Without Honor: White-collar Crime and the Looting of America''. Upper Saddle River, NJ: Prentice Hall.
*Shapiro, Susan P. (1990). "Collaring the Crime, not the Criminal: Reconsidering the Concept of White-collar Crime", ''American Sociological Review'' 55: 346–65.
*Simon, D. & Eitzen, D. (1993). ''Elite Deviance''. Boston: Allyn & Bacon.
*Simon, D. & Hagan, F. (1999). ''White-collar Deviance''. Boston: Allyn & Bacon
*
Thiollet, J.P. (2002). Beau linge et argent sale — Fraude fiscale internationale et blanchiment des capitaux, Paris, Anagramme ed.
*U.S. Department of Justice,
Federal Bureau of Investigation
The Federal Bureau of Investigation (FBI) is the domestic intelligence and security service of the United States and its principal federal law enforcement agency. Operating under the jurisdiction of the United States Department of Justice, ...
(1989). ''White Collar Crime: A Report to the Public''. Washington, D.C.:
Government Printing Office
The United States Government Publishing Office (USGPO or GPO; formerly the United States Government Printing Office) is an agency of the legislative branch of the United States Federal government. The office produces and distributes information ...
.
*Notre Dame College Online "White-Collar vs. Blue-Collar Crime
2019. South Euclid, Ohio.
External links
White-Collar Crime
{{DEFAULTSORT:White-Collar Crime
White-collar criminals,
Corporate crime
Crime
1930s neologisms