White-Collar Crime Essay

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White-collar crime (WCC) can be defined as theft by deception and similar types of criminal wrongdoing (e.g., corruption schemes such as those characterized by bribery, kickbacks, illegal gratuities, etc.) committed by natural persons, whether individually or in concert, for their personal benefit. WCC overlaps to some extent with corporate crime (also known as economic crime) committed by natural persons for the primary benefit of artificial persons (namely, their employers).

WCC is nonviolent in nature, distinguishable from blue-collar  crime (i.e., street crime) such as robbery  and extortion, which uses force or threats of force to accomplish the criminal objectives. Its method of operation is the application of trickery to deceive its victims into a false sense of secure reliance upon the apparent bona fides of the WCC criminal. Traditionally, WCC is committed by persons of respectability and status— those who are more likely to be found in a suit and tie than in jeans and work boots. With the expanded and pervasive utility of the Internet, the WCC criminal can virtually be anywhere in his or her commission of criminal activity. Computer-based tools not only expand the presence in space of the WCC criminal but also in time; the WCC criminal based in offshore jurisdictions  may be hard at work dissembling his victim while she is asleep in a different time zone.

At face value, the WCC perpetrator commits his or her crimes for profit, personal advantage, and property. In the language of consequentialists, the ends justify the means to these criminals. There may be other motivations; for example, in the crime of embezzlement and other criminal breaches of trust, an excitement from successfully swindling another may arise from the acts of gaining the victims’ confidence and secreting their illicit states of mind and wrongful acts—the thrill of the kill. Whether the WCC perpetrator actually holds a belief that his or her actions are wrongful has not been accurately studied, notwithstanding tales of regret (from getting caught) at sentencing hearings.

The method of operation of WCC is commonly conceived as lying and cheating for the purpose of stealing. This method of operation confers an unfair competitive advantage upon the perpetrator (compare with athletes using banned performance enhancement drugs). The underlying immorality of WCC is its unjust disturbance of a level playing field by breaching the social contract, that is, dealing honestly and in good faith. The harm is not merely private (e.g., individuals cheated of their property) but also public (e.g., society’s perceived meritocracy is corrupted by dishonesty). Thus, the criminal justice system treats WCC both as an act deserving of punishment because it is wrongful (compare with retributivism) and an act deserving of punishment because it promotes desired social objectives (compare with instrumentalism).

Secondary Research

WCC is regarded to have first become a matter of serious discussion in the United States with Edwin H. Sutherland in the late 1930s. Sutherland and others (e.g., Donald  R. Cressey and the fraud triangle) conducted research into the prevalence  of WCC and the reasons  motivating its perpetrators, supporting the development of criminology as a respected field of academic study. Criminology is multidisciplinary, influenced by the disciplines of law, ethics, business, public management, sociology, psychology, and economics, if not other domains of study, so it is not surprising that many attributes about WCC (e.g., a rigorous definition) may be disputable in these disciplines.

As a social science the study of WCC has proceeded like other social sciences (e.g., sociology, economics), using the usual tools of the trade (e.g., government statistics on prosecutions and convictions, media reports, questionnaires, statistical methods) to identify meaningful patterns (e.g., trends of incidents of WCC over the years) and develop theories of explanation (e.g., segregating and assessing endogenous and exogenous factors useful to predict WCC incidents). To a significant extent the study of WCC since Sutherland may be deemed a set of footnotes to his work (e.g., WCC as a product of differential association—the social learning of the acceptability of certain forms of conduct among one’s peers independent of regulators’ opinions  and the society at large).

Whether WCC is conceived as an illicit activity conducted by individuals of social prestige and the upper class (e.g., high managerial agents of large organizations) or conceived as specific illicit activity conducted by anyone (e.g., theft by deception) affects both studies as to the frequency and severity of WCC, as well as studies as to the motivations influencing these individuals. Moreover, whether U.S. legal principles such as due process, equal protection, and prohibition of cruel and unusual punishment that underlie and control the administration of the criminal justice system have disparate applications depending on the attributes of the perpetrator (e.g., upper class versus lower class) is a serious issue, affecting both empirical and normative research into WCC.

Primary Research

Even a cursory perusal of any of the major newspapers (e.g., the New York Times, the Wall Street Journal) leads the reader  to numerous current events that may be classifiable as WCC. From politicians  accepting  bribes  in  exchange  for corrupted official actions  to employees deceitfully padding expense reports submitted to their employers for inflated reimbursements to policyholders exaggerating the valuations of losses in claims submitted to their insurance companies in insurance fraud schemes—there is no shortage of WCC activity reported in the mass media.

In the United States, for example, WCC is subjected to the criminal justice system at the municipal, state, and federal levels (e.g., passing bad checks, theft by deception, and securities fraud, depending  on the attendant circumstances, are punished at the municipal, state, and federal levels, respectively). In many U.S. cases notorious WCC perpetrators may receive criminal sentences for securities fraud (compare with theft of property by deception) greater than those imposed on blue-collar criminals for crimes of violence ( compare with Bernie Madoff’s sentence of imprisonment exceeding 100 years to the 30-year sentence imposed by states such as New Jersey for the crime of murder, N.J.S. 2C:11-3, et seq.).

The fear factor generated by crimes of violence such as assault and robbery dwarfs the public’s perception of WCC. Acts that directly overbear the victim’s will (e.g., extortion) are often perceived as more threatening and immoral than acts that indirectly influence the victim’s decision making by causing, in effect, an uninformed decision through another’s acts of deceit (e.g., reliance on intentional material misrepresentations).

However, in cases such as the infamous Madoff swindle, the number  of victims and aggregate value of property wrongfully taken serve to support the imposition of severe criminal fines and lengthy terms of incarceration, suggesting that, at least in the United States, the value of property wrongfully taken may be worthy of harsher treatment by the criminal justice system than the loss to society (and immediate family) of a murder victim. Things that are readily measurable (e.g., portfolio value of debt and equity investments) may carry more weight in the criminal justice system than things that are comparatively immeasurable (e.g., pain and suffering from the loss of a beloved spouse or parent).

Conclusion

Decisions by natural persons, whether of influence, whether in democracies or under any form of government, are more or less subjective; these decisions are based on personal interpretation of a complex set of factors such as inferences from admissible evidence, meaning and intent of laws and regulations, and probable influence on professional career opportunities, among others. Whether to commit a WCC and how to punish WCC are decisions not made in vacuums  but made in a world of error, uncertainty, and injustice. Moreover, decisions to robustly challenge administration of the criminal justice system by accused WCC perpetrators require economic and financial resources, especially as criminal conduct is ordinarily not insurable, beyond the capacity of most individuals. Generally, the WCC perpetrator is no match for the criminal justice system.

Enhancements of punishments meted out to perceived scoundrels such as Madoff serve both to signal a willingness on the part of the criminal justice system to lock up and throw away the key for white-collar criminals in the nature of thefts of property by deception, and to signal the system’s willingness to make scapegoats of certain WCC perpetrators for self-interested individuals’ purposes not publicly disclosed and examined by monitors of the criminal justice system. (Examples of these purposes include career development and promotion arising from the perceived good press of seeming tough on crime in the case at issue, as well as influence over and actual or potential conflicts of interest arising from nonprosecution and deferred  prosecution agreements  administered by the criminal justice system, especially the U.S. Department of Justice against domestic concerns and public filers, in responding to both corporate crime and its natural person WCC components.)

The instrumentalist approach deployed by the criminal justice system (namely, consequentialism) applies more broadly than traditionally assumed. Toughness (or softness, depending on the facts) on WCC advances some individuals’ professional development more than promoting development of the general welfare of the community at large through such applications (or nonapplications) of punishment and principles of restorative justice.

Whether and to what extent noninstrumentalist approaches (e.g., retributivism) motivate the criminal justice system in relation to WCC are matters of speculation and subjectivity. Just deserts measured in years of incarceration, magnitude of fine, and other disabilities is more a normative issue than an empirical object.

Societies continually wrestle with the practical issues arising from the existence and covert nature of WCC. Endogenous techniques such as multilayered systems of accounting controls and independent checks on performance addressing WCC before the fact, and administrative policies and procedures addressing WCC after the fact, may or may not influence the criminal justice system (e.g., whether self-reporting by an entity of an associated individual’s alleged violations of the Foreign Corrupt Practices Act, 15 U.S.C. 78 dd-1, et seq., moderates the criminal justice system’s response against the entity is unclear).

Exogenous control systems such as the risk of shame through public exposure in mass media publications, the arsenal of punishments, other sanctions, and resources available to the multilayered criminal justice system at play in the United States serve both to mitigate the risk of WCC and to increase the costs of WCC. Criminal justice system issues such as the exercise of prosecutorial discretion and declinations of prosecution, the effects of the availability of an accused’s economic resources on the system’s administration (as defending oneself against the system is exorbitantly expensive in the United States), and the ethics of revolving-door practices between criminal justice system officials and the private sector should be subjected to further study by independent researchers.

Bibliography:

  1. Gottschalk, Petter. “Rotten Apples Versus Rotten Barrels in White Collar Crime: A Qualitative Analysis of White Collar Offenders in Norway.” International Journal of Criminal Justice Sciences, v. 7/2 (2012).
  2. Green, Stuart P. and Matthew B. Kugler. “Public Perceptions of White Collar Crime Culpability: Bribery, Perjury, and Fraud.” Law and Contemporary Problems, v.75/33 (2012).
  3. Holtfreter, Kristy, Nicole Leeper Piquero, and Alex R. Piquero. “And Justice for All? Investigators’ Perceptions of Punishment for Fraud Perpetrators.” Crime, Law and Social Change, v.49/397 (2008).
  4. Slyke, Shanna Van and William D. Bales. “A Contemporary Study of the Decision to Incarcerate White-Collar and Street Property Offenders.” Punishment & Society, v.14/2 (2012).
  5. Sutherland, Edwin H., Donald R. Cressey, and David F. Luckenbill. Principles of Criminology. 11th ed. Lanham, MD: General Hall, 1992.
  6. Welch, Kelly. “Unorthodox Criminologists: A Special Issue—Part V. Howard Zinn’s Critical Criminology: Understanding his Criminological Perspective.” Contemporary Justice Review, v.12/4 (2009).

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