White-collar crime


White-collar crimes are non-violent crimes, typically performed by members of the upper classes. They are distinguished from "blue-collar crimes" by the lack of physical violence or even threat of violence. White-collar crimes generally involve some form of violation of trust, and may result in significant monetary gain for the perpetrators. Such crimes include fraud, bribery, insider trading, embezzlement, and forgery among others. The punishment for white-collar crime is often less severe than for crimes of violence. However, accusations of embezzlement, fraud, and so forth are embarrassing, and can carry a lasting social stigma which renders the perpetrator unable to continue their previous legitimate career as they have lost the trust of their clients.

While the advent of new technologies such as the internet have brought more opportunities for crime, they are also used by law enforcement to better track illegal activities. However, elimination of this crime depends not so much on legal provisions or the work of law enforcement, but more on the attitude of human beings towards other human beings with whom there exists a trust relationship.

Contents

Definition

The term white-collar crime was coined by the criminologist Edwin Sutherland who was convinced of a connection between social class and crime. In his 1949 monograph White Collar Crime he defined a white-collar crime as "a crime committed by a person of respectability and high social status in the course of his occupation"—one who traditionally wears a suit and white (collared) shirt to work.

The Federal Bureau of Investigation narrowly defines white-collar crime as crimes—usually involving deceit, concealment, or violation of trust—which are not dependent on the application or threat of physical force. Alternatively is the popular definition in which white-collar crime is that which is performed by members of the upper class. Most crime labeled “white-collar” is done so because of the socioeconomic status of the perpetrator, depending on their profession or academic qualification. Most, if not all white-collar offenders are distinguished by lives of privilege.

Types of White-Collar Crime

White-collar crime is usually performed by those with particular access to information or resources, making their non-violent crime possible. White-collar crimes normally occur within the upper reaches of government and business as privilege is necessary to gain access to even commit these crimes. Those crimes most often considered white-collar include:

  • Fraud - Fraud can include the sale of fraudulent goods, false advertising, filing false insurance claims, or false billing
  • Bribery - Though often seen as the price of doing business in some countries, the practice of bribery gives unfair advantages to certain individuals and distorts the efficacy of markets
  • Insider trading - Like bribery, insider trading gives an unfair advantage to certain individuals who are privy to private information that affects the value of stocks or bonds
  • Embezzlement - Embezzlement occurs when someone with access to company or government funds siphons some for their personal use. This crime is a prime example of white collar crime as usually it is only privileged members of society or a company who even have access to company funds to begin with
  • Forgery - Forgery is most threatening when considering the sale of counterfeit goods, but is also relevant to the production of false insurance claims
  • Tax evasion - Tax evasion occurs when people attempt to not pay taxes illegally, which usually occurs when one is making large profits. This can be done by misrepresenting ones income or overstating ones deductions. Tax evasion differs from tax avoidance, which is the legal use of accounting to minimize one's tax burden.

Most of these crimes are committed with the goal of financial gain. The people who commit these crimes do not necessarily have a history of crime, but are usually presented with some opportunity for enrichment through some action that appears morally ambiguous at the outset, though quickly transgresses into a crime. The initial gain of money presents an unavoidable attraction to those who commit these crimes. Though normally carried out for money, white-collar crime can also be committed as an act of sabotage.

Relationship to other types of crime

Blue-collar crime

The types of crime committed are a function of the opportunities available to the potential offender. Thus, those employed in relatively unskilled environments and living in inner-city areas have fewer "situations" to exploit (see Clarke 1997) than those who work in "situations" where large financial transactions occur and live in areas where there is relative prosperity. However, "e-crime," where the opportunities can be more evenly distributed between the classes, has somewhat changed this dynamic (Newman 2003).

Blue-collar crime will more often use physical force whereas white-collar crime will tend to be more technical in nature, such as in the manipulation of accountancy or inventory records. Blue-collar crime tends to be more obvious and attract more active police attention (such as for crimes of vandalism or shoplifting which involve property interests), whereas white-collar employees can intermingle legitimate and criminal behavior and be less obvious when committing the crime. In victimology, blue-collar crime attacks more obvious victims who report the crime, 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.

Interestingly, white-collar crime has been used to convict criminals, particularly members of organized crime, when they have evaded justice for other, more violent crimes. The most famous example would be Al Capone, whose criminal career ended in 1931 when he was indicted and convicted by the U.S. government for income tax evasion.

Corporate crime

White-collar crime is normally a crime against a corporation or organization. This is distinguished from corporate crime, which is crime committed 'by' a corporation or organization. The distinction blurs when the given crime promotes the interest of the corporation and its senior employees as a business entity can only act through the agency of the people whom it employs.

State crime

In terms of social class and status, those employed by the state, whether directly or indirectly, are more likely to be white-collar and so more state crime will be committed through the agency of white-collar employees.

State-corporate crime

Because the negotiation of agreements between a state and a corporation will be at a relatively senior level on both sides, this is almost exclusive a white-collar "situation" which offers the opportunity for crime.

Differential treatment

Those convicted of white-collar crimes often receive lighter sentences or have their sentences commuted, if they are sentenced at all. There are a number of reasons to explain why white-collar criminals are not more rigorously pursued. By virtue of their relative affluence, those accused as white-collar offenders are able to afford the fees of the best lawyers, and may have friends among senior ranks of the political elite, the judiciary, and the law enforcement agencies. These connections often not only ensure favorable treatment on an individual basis, but also enable laws to be drafted or resource allocations to be shifted to ensure that such crimes are not defined or enforced too strictly.

Another reason for differential treatment is the fact that criminal penalties tend to be more related to the degree of physical force or violence involved than to the amount of monetary loss, all other things being equal. Because white-collar crimes are committed by those with opportunities that do not require violence, they are thus less likely to garner severe criminal penalties. For example, someone who mugs a victim on the street by threatening to stab them might be punished with a more severe sentence than an inside trader who cheats shareholders out of a larger sum without their being aware of the loss, due to the violent nature of the former crime. Nevertheless, the stigma attached to being charged with a crime may have socially damaging effects on the perpetrator of white-collar crime, even if the court-determined punishment is less than that for violent crime.

However, in the early years of the twenty-first century more severe penalties for white-collar crime began to be imposed. For example, Bernard Madoff was sentenced to 150 years in prison when convicted of operating a Ponzi scheme that defrauded thousands of investors of billions of dollars. The judge in passing sentence described his crimes as “extraordinarily evil.”

Prevention

Due to the urgency of violent street crime, comparatively little effort goes into fighting white-collar crime. The enforcement of many corporate crimes is put into the hands of government agencies which can act only as watchdogs and point the finger when an abuse is discovered. This more benign treatment is possible because the true cost of white-collar crime, while high in nationally consolidated accounts, is diffused through the bank balances of millions either by way of share value reductions, or nominal increases in taxation, or increases in the cost of insurance. Also there are differences in the level of public interest, case complexity, and a lack of white-collar related literature, all of which has a significant effect on the way white-collar offenders have been sentenced, punished, and perceived by the public.

A rash of famous cases of white-collar crime in the early twenty-first century, along with copious press coverage, has aroused public attention. Courts and prosecutors responded to public opinion and increased their efforts to bring perpetrators of white-collar crime to justice. Some recent examples of those indicted, convicted, and sentenced for white-collar crime include Martha Stewart, convicted of insider trading; Bernard Madoff, convicted of fraud for operating a Ponzi scheme; Enron executives Kenneth Lay and Jeffrey Skilling, convicted of fraud for misrepresenting Enron's financial health; also stemming from the Enron scandal was the dissolution of the accounting firm Arthur Andersen, which was responsible for auditing Enron's records; and WorldCom under the leadership of Bernard Ebbers, inflated its value by up to $11 billion and was forced to declare bankruptcy.

Developing stricter computer security is one possible method of preventing more white-collar crime. As employees’ actions are tracked, it becomes more difficult to commit crimes under the protection of anonymity once offered by massive computer systems. Tracking employee e-mail, web browsing, and keeping rigorous accounting records are some methods employed to fight white-collar crime.

References

  • Appelbaum, Richard P. and William J. Chambliss. 1997. Sociology: A Brief Introduction. New York: Longman. ISBN 0673982793
  • Barnet, Cynthia. “The Measurement of White-Collar Crime Using Uniform Crime Reporting (UCR) Data.” Retrieved June 30, 2007.
  • Clarke, Ronald (ed.). 1997. Situational Crime Prevention: Successful Case Studies, 2nd ed. New York: Criminal Justice Press. ISBN 0911577386
  • Friedrichs, David O. 2003. Trusted Criminals: White Collar Crime in Contemporary Society. Wadsworth. ISBN 0495006041
  • Geis, G., R. Meier and L. Salinger (eds.). 1995. White-collar Crime: Classic & Contemporary Views. New York: Free Press.
  • Green, Stuart P. 2006. Lying, Cheating, and Stealing: A Moral Theory of White Collar Crime. New York: Oxford University Press.
  • Henriques, Diana B. 2009. "Madoff Is Sentenced to 150 Years for Ponzi Scheme," New York Times, June 29, 2009. Retrieved June 30, 2009.
  • Lea, John. 2001. “Crime as Governance: Reorienting Criminology.” Retrieved June 30, 2007.
  • Leap, Terry L. 2007. Dishonest Dollars: The Dynamics of White-Collar Crime. Ithaca, NY: Cornell University Press. ISBN 978-0801445200
  • Newman, Graeme R. and Ronald V. Clarke. 2003. Superhighway Robbery: Preventing E-commerce Crime. Portland, OR: Willan Publishing. ISBN 1843920182
  • Reiman, J. 2006. The Rich get Richer and the Poor get Prison, 8th ed. Boston: Allyn & Bacon. ISBN 0205461727
  • Rosoff, S., H. Pontell and R. Tillman. 2006. Profit Without Honor: White-collar Crime and the Looting of America, 4th ed. Upper Saddle River, NJ: Prentice Hall. ISBN 0131722328
  • Shapiro, B. 1995. "Collaring the Crime, not the Criminal: Reconsidering the Concept of White-collar Crime." American Sociological Review 55: 346-365.
  • Simon, D. & D. Eitzen. 2005. Elite Deviance, 8th ed. Boston: Allyn & Bacon. ISBN 0205443982
  • Simon, D. & Hagan, F. 1999. White-collar Deviance. Boston: Allyn & Bacon. ISBN 0205275087
  • Shover, Neal and John Paul Wright (eds.). 2000. Crimes of Privilege: Readings in White-Collar Crime. Oxford: Oxford University Press. ISBN 0195136217
  • Sutherland, Edwin Hardin. 1949. White Collar Crime. Reprint edition, 1983. Westport, CT: Greenwood Press. ISBN 0313242275
  • U.S. Department of Justice, Federal Bureau of Investigation. 1989. 'White Collar Crime: A Report to the Public. Washington, DC: Government Printing Office.

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