White Collar Crime
WHITE COLLAR CRIME IN CONTEMPORARY SOCIETY 4TH ED.
CHAPTER 4
OCCUPATIONAL CRIME AND AVOCATIONAL CRIME
Trusted Criminals
Designed by: Jordan Land, M.S.
Retail Crime and Service Fraud
- Retail businesses are often thought of as victims of crime, whether by pilfering or embezzling employees, shoplifters, or robbers and burglars
- Retail stores engage in a wide range of deceptive and illegal activities
- Fraudulent advertising
- Illegal pricing practices
- Sale of fraudulently represented merchandise
- Purchase and resale of stolen goods
Retail Crime
- Paul Blumberg has documented illegal and unethical practices by businesses
- He identified other deceptive practices in retail crime
- Adulteration of products
- Short weighing
- Bait-and-switch
- Bar-code prices
- Collection of taxes on nontaxable items
- Wage theft
Defrauding Vulnerable People
- In a study conducted by David Caplowitz, he found that the poor were:
- Being overcharged
- Sold inferior goods
- Victimized by deceptive credit practices, complicated consumer contracts, and lawsuits threatening wage garnishment
- Despite new laws and consumer affairs initiatives, these fraudulent practices are hardly extinct
Service Business Fraud
- Repair service businesses have a notorious reputation for cheating customers
- Complaints about auto repairs constitute the largest percentage of consumer complaints according to the National Highway Traffic Safety Administration
- These frauds include:
- Highway bandits
- Estimate scams
- Maintenance hook schemes
- Part replacement problems
Service Business Fraud
- Many consumers are unaware that they have been victimized
- When they suspect that they have been victimized, they are skeptical to report the crime because they do not believe that it will lead to effective action
- All consumers will be “robbed” by unscrupulous retailers and entrepreneurs
Medical, Legal, Academic & Religious Crime
- Profession refers to occupations characterized by higher education and training; specialized technical knowledge and skills, and a high degree of autonomy
- Semi-professional has been applied to some occupational groups such as pharmacists and nurses
- Some who claim professional status but lack real autonomy
- Lawyers, physicians, scientists
- These individuals work for large corporations
Medical Crime
- Physicians are well compensated, are typically accorded a high level of trust, and exercise unusual power or professional dominance over patients
- Among the specifically illegal and unethical activities committed by physicians:
- Fee splitting
- Taking or offering kickbacks
- Price fixing
- Unnecessary operations
- False and fraudulent billing
Medical Crime as a Violent Crime
- The performance of unnecessary surgery is the single most disturbing of medical crimes
- The most common forms of unnecessary surgery are:
- Removal of tonsils, hemorrhoids, appendixes and uteruses
- Heart-related surgery
- Caesarean section deliveries
- Performing unnecessary surgeries can cause paralysis, blindness or other forms of permanent injury
Medical Crime as Fraud
- Medicaid and Medicare fraud by physicians have been characterized as an especially “pure” form of white collar crime because it occurs within the context of routine occupational activity
- Overutilization is perhaps the most common form of medical fraud, and it is especially difficult to prove and prosecute successfully
- Specific techniques used in this fraud are:
- Ping-ponging, family ganging, steering, upgrading, code games and unbundling
Legal Crime
- Legal crime refers to lawyers engaging in criminal conduct in the course of discharging their professional duties
- It is more common for lawyers to become involved with, facilitate, or help cover up illegal enterprises while maintaining primary commitment to the conventional and legitimate tasks of a lawyer
Legal Crime as Fraud
- The intangibility of a lawyer’s work provides special opportunities for overbilling clients
- It is often proven difficult to establish criminal intent in such cases of alleged fraudulent conduct
Legal Crime as Collusion
- The ethics code of the American Bar Association requires lawyers to keep in strict confidence any knowledge of a client’s past crimes and prohibits lawyers from advising or assisting a client in the commission of any illegal or fraudulent act
- A number of major insider trading cases in the 1980s involved criminal charges against lawyers who passed on privileged information about pending corporate takeovers
Academic Crime:
Professors, Scientists and Students
- The fact that professors engage in less occupationally related crime than do doctors and lawyers is probably more a function of fewer opportunities for such activity than a matter of greater personal integrity among professors
- Academic crimes refer to plagiarism, embezzlement of university discretionary funds, forgery, claims about credentials, etc.
- Plagiarism refers to use or misappropriation of ideas or words of others without giving them credit
Academic Crime:
Professors, Scientists and Students
- Outright embezzlement is hardly unknown in the academic environment
- Administrators and employees often have better opportunities than professors to embezzle or obtain improper payments
- Some academic researchers have taken advantage of the special access they have to rare and valuable artifacts and manuscripts to steal these items and sell them for profit
Academic Crime as Fraud
- It has proven difficult to develop reliable data on the extent of scientific fraud, which principally takes the form of fabricating, manipulating, and suppressing data
- Claims that outright scientific fraud is rare are commonly made, but whether or not they are accurate have not typically been based upon scientific research
Student White Collar Crime
- Students commit various illegal acts that have nothing to do with white collar crime, including vandalism, drunkenness, illicit drug use, car theft, etc.
- Student white collar crime is best defined as illegal or harmful conduct committed specifically in the context of their student role
- For gain or advantage
- The clearest form is cheating
Student White Collar Crime
- Colleges are also concerned that many applicants engage in “résumé fraud” by making false claims about their achievements and activities
- New technology has greatly increased the opportunity for cheating
- Academic cheating takes many forms:
- Cheating on exams, home work and term papers
Religious Crime
- Religious crime may be the most disturbing of all forms of crimes by professionals
- Religious leaders may generate a bottomless well of trust among gullible believers
- Some religious leaders have defrauded believers and used offerings or donations for corrupt purposes
Employee Crime
- Employees stealing from their employers is one of the more common images of white collar crime
- When managers steal, losses average $250,000
- Executives and managers are often in a position to award themselves huge bonuses and a wide range of expensive “perks”
- Clark and Hollinger define employee theft as:
- The unauthorized taking, control or transfer of money and/or property of the formal work organization perpetrated by an employee during the course of occupational activity which is related to the employment
Employee Crime
- A great deal of employee crime is not readily discovered
- Even when discovered it may not be reported to any official agency
- No agency collects and publishes statistics on the range of activities encompassed
- Only rough estimates based on diverse sources and statistical extrapolations are available for study
Forms of Employee Theft
- Withholding effort at work can be viewed as a form of employee crime
- Employees use office supplies and machinery for personal use, make personal phone calls on a business phone, etc.
- Employee theft occurs on a number of different levels:
- Pilfering refers to petty theft
- Chiseling refers to cheating or swindling
- Fraud is theft through misrepresentation
- Embezzlement refers to the destruction or fraudulent appropriation of another’s money which has been entrusted to one’s care
Employers’ Response to Employee Theft
- Some employee theft is tolerated, sometimes even encouraged, by employers to compensate for low wages and poor working conditions
- Workers who engage in it are less well positioned to organize and make demands
Employers’ Response to Employee Theft
- Many employers are unlikely to involve police when they discover significant employee thefts because:
- To do so risks relationships and productive patterns at work
- Exposes improper or even illegal practices of the employer
- Possibility of garnering bad publicity if arrests and criminal trials ensue
Alternative Forms of Employee Crime
- Theft of ideas, designs and formulas are another form of employee crime
- Such theft can be expected to become an increasingly costly problem in the current “information revolution”
- Not all employee crime against the employer takes the form of theft
- Employees may commit sabotage
- To conceal their own errors, to gain time off or for more pay, or to express their contempt and anger with their work and employer
Some Factors in Employee Theft
- An extensive study of employee theft found that employees who commit theft are more likely to be young males, and unmarried
- Company property refers mainly to basic, bulky components and tools
- Property of uncertain ownership refers to small inexpensive items like nails, bolts, drill bits, etc.
- Personal property refers to monogrammed clothing, wallets, jewelry, personal modified tools, etc.
Conditions in the Workplace
and Employee Crime
- During the period of 1750-1850, opportunities for employee theft became far more widely available
- In the more recent era, technology has facilitated new forms of employee crime
- The most important factors influencing employee theft involve:
- Workplace conditions such as the size of the organization
Conditions in the Workplace
and Employee Crime
- Smigel (1970)found that respondents were more prepared to steal from large organizations than small ones
An employee stealing from a large organization is far less likely to suffer measurable harm from conventional levels of theft
The larger the organization, the smaller the risk of being caught
Conditions in the Workplace
and Employee Crime
- Other studies have found that employees’ dissatisfaction with the company or with supervisors was associated with higher rates of employee theft
- Opportunity to steal is a major determinant of employee theft
- Those who have the greater access to things worth stealing are the most likely to do so
Avocational Crime and White Collar Crime
- Avocational crime refers to occasional economic crimes committed by respectable members of society outside of an occupational context
- Avocational crimes are similar to the concepts of occasional property crime, folk crime and mundane crime
- Occasional crime is an amateur, small-scale property theft or destruction
Avocational Crime and White Collar Crime
- Folk crimes apply to everyday deviance, like traffic violations and poaching
- Mundane crimes are commonplace, innocuous, and often dull or routine opportunistic forms of lawbreaking with relatively low visibility
- Avocational crimes include:
- Evading personal taxes
- Defrauding insurance companies
- Providing false statements in connection with personal loans and obtaining credit
- Stealing services
- Stealing copyrighted material
Income Tax Evasion
- Income tax evasion is classified as a form of occupational or individual white collar crime
- Failure to comply with tax law may take different forms
- Failure to file, non-reporting of income, underreporting of income, etc.
- Tax evasion defined by the IRS is:
- An act involving deceit, subterfuge, and concealment. It is, of course, illegal
- However, tax avoidance, the arraignment of a taxpayer's affairs to minimize tax liability, is legal
Income Tax Evasion
- The complexity of tax law makes it difficult to distinguish between tax evasion and tax avoidance
- Income tax provides 2/3 of federal tax revenue
- The IRS has been more vigorous in the pursuit of tax protesters (those advocating tax evasion) than of tax straddlers (those using illegal tax shelters)
- According to one study, the more prevalent an individual perceives tax evasion to be, the more inclined that individual will be to commit tax evasion
Other Forms of Avocational Crime
- Insurance fraud is widely recognized to be a growing problem in the U.S.
- Doctors, lawyers, insurance adjusters, and the police may be involved in facilitating false injury, damage and theft claims
- Much insurance fraud generally is avocational crime committed by respectable middle or upper class members of society
- Much avocational crime is less stigmatizing than all forms of white collar crime because the primary victims are most typically the government or large corporations, and because the losses appear to be more abstract than for other forms of theft or fraud