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White-Collar and Organized Crime

Criminology Today

An Integrated Introduction

CHAPTER

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

A Brief History of White-Collar Crime

Financial scandals have a long history in the U.S.

Teapot Dome 1929

Ivan Boesky

Insider trading 1980s

Michael Milken

1980s securities fraud

S&L disaster 1980s

Sham banking operations 1990s

continued on next slide

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

A Brief History of White-Collar Crime

21st century crimes

Enron

WorldCom Inc.

Adelphia Communications

ImClone

Martha Stewart

Various securities firms

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Understanding White-Collar Crime

Edwin H. Sutherland's definition

Crimes committed by a person of respectability and high social status in the course of one's occupation

Emphasized need to study upper-class criminality

Said white-collar criminals less likely to be investigated, arrested, prosecuted than other types of offenders

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Definitional Evolution of White-Collar Crime

White-collar crime (Edelhertz)

Committed by nonphysical means and by concealment or guile…

Upperworld crime (Geis)

Crimes by persons not considered the 'usual' kind of offenders

continued on next slide

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Definitional Evolution of White-Collar Crime

Blue-collar crime

Crimes by members of less prestigious occupational groups

Occupational crime

Crimes through opportunity created during legal occupation

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Green's Typology of Occupational Crime

Organizational occupational crime

State authority occupational crime

Professional occupational crime

Individual occupational crime

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

White-Collar Crime Today

Early definitions focused on the violator, rather than the offense when deciding whether to classify a crime as "white collar."

Today, the focus has shifted to the nature of the crime, rather than the persons or occupations involved.

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Corporate Crime

Corporate crime

Violation of a criminal statute by a corporate entity or by its executives, employees, or agents acting on behalf of and for the benefit of the corporation

Culpability greatest when company officials are shown to have had advance knowledge

Corporate liability unique to U.S.

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Figure 13-2 Types of Financial Crime Source: Derived from Federal Bureau of Investigation, Financial Crimes Report to the Public, Fiscal Year 2007, http://www.fbi.gov/publications/financial/fcs_report2007/financial_crime_2007.htm#financial (accessed May 10, 2015).

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Corporate Fraud

Accounting schemes, self-dealing by corporate executives, obstruction of justice, insider trading, kickbacks, misuse of corporate property for personal gain

Corporate fraud causes significant financial losses to investors and also has the potential to cause damage to investor confidence and US economy.

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Securities and Commodities Fraud

Stock market manipulation, high-yield investment fraud, advance-fee fraud, hedge-fund fraud, commodities fraud, foreign exchange fraud, broker embezzlement

Associated losses range from macroeconomic to corporate to intensely personal.

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Health Care Fraud

Particularly target Medicare and Medicate but all health-care programs are subject to fraud.

Not limited to any particular geographic area, can target large health-care programs and beneficiaries, becoming more complex and sophisticated

Now being committed by organized crime groups

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Mortgage Fraud

Involves material misstatements, misrepresentation, and/or omissions related to the property or potential mortgage relied on by an underwriter or lender to fund, purchase, or insure a loan

Equity skimming, property flipping, mortgage debt elimination

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Insurance Fraud

Insurance industry size makes it a prime target for criminal activity.

Insurance fraud involving arson related to the mortgage crisis

Workers' compensation fraud increased greatly with economic downturn.

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Mass-Marketing Fraud

Fraud connected with communications media (telemarketing, mass mailings, Internet, etc.)

Nigeria letter fraud

Foreign lottery/sweepstakes fraud

Overpayment fraud

Welfare fraud

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Money Laundering

The process by which illegal gains are disguised as legal income.

Money Laundering Control Act

Bank Secrecy Act

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Environmental Crimes and Green Criminology

Environmental crimes

Violations of the criminal law that damage some protected or otherwise significant aspect of the natural environment

Green criminology

The study of environmental harm, law, regulation, victimization, and justice

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Terrorism and White-Collar Crime

Terrorist activity frequently involves white-collar crime.

Terrorists need money.

Lower profile than street crimes

One way to curtail terrorist activities is through legislation criminalizing the financing of terrorism.

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Causes of White-Collar Crime

Sutherland: Differential association theory

White-collar criminality is learned

Hirschi and Gottfredson: General theory of crime

White-collar criminals are motivated by the same forces driving other criminals

continued on next slide

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Causes of White-Collar Crime

Braithwaite: Integrated theory

White-collar criminals motivated by disparity between corporate goals and limited conventional opportunities

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Curtailing White-Collar and Corporate Crime

White-collar crimes are difficult to investigate, prosecute, convict.

Not always clear what happened

Offenders better educated and better able to conceal their activities

Evidence often understandable only to financial or legal experts

Offenders can hire excellent defense attorneys.

continued on next slide

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Curtailing White-Collar and Corporate Crime

President G.W. Bush

Corporate Fraud Task Force

Sarbanes-Oxley Act

President B. Obama

Financial Fraud Enforcement Task Force

Fraud Enforcement and Recovery Act

New initiatives targeting financial crimes and unfair trading practices

continued on next slide

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Curtailing White-Collar and Corporate Crime

Sarbanes-Oxley Act (2002)

Sherman Act (1890)

Clayton Act (1914)

Securities Act (1933)

Securities Exchange Act (1934)

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Organized Crime

Organized crime

Unlawful activities of a highly organized group engaged in supplying illegal goods/services

Italian criminal organizations came to the U.S. in late 19th/early 20th centuries.

Became a quasi-police organization in Italian ghettos of American cities

continued on next slide

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Organized Crime

Ethnic succession

Continuing process of one immigrant or ethnic group succeeding another by assuming its position in society

Jewish and Italian criminal groups flourished in New York City in late 19th/early 20th centuries.

continued on next slide

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Organized Crime

In mid-20th century, organized crime in US became domain of Italian Americans.

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Prohibition and Official Corruption

Prohibition was a godsend for the Mafia.

Existing infrastructure allowed efficient entry into running/sale of contraband liquor.

Huge profits led to wholesale bribery of government officials, quick corruption of many law enforcement officers.

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Activities of Organized Crime

Racketeering

Vice operations

Theft/fence rings

Gangs

Terrorism

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Other Organized Criminal Groups

Criminal enterprise

Group of individuals with an identifiable hierarchy, and extensive supporting networks, engaged in significant criminal activity

Hallmark of true criminal organizations

Function independently of any members

Have continuity over time as personnel change

continued on next slide

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Other Organized Criminal Groups

State laws defining criminal enterprise more inclusive than federal statutes

Stereotype is Italian and Sicilian Mafioso.

Face of organized crime in US changed

Threat broader, more complex

Groups of different nationalities operate in US or target US citizens from afar

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Figure 13-4 International Organized Criminal Groups Whose Activities Impact the United States Source: Schmalleger, Frank, Criminology. Printed and Electronically reproduced by permission of Pearson Education, Inc., Upper Saddle River, New Jersey.

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Transnational Organized Crime

Transnational organized crime

Unlawful activity undertaken and supported by organized criminal groups operating across national boundaries

Globalization of crime requires international coordination of law enforcement efforts.

U.S. law enforcement activities must expand beyond national borders.

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Organized Crime and the Law

Hobbs Act

The first federal legislation aimed specifically at curtailing the activities of organized crime

RICO

Racketeer Influenced and Corrupt Organizations statute

Asset forfeiture

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Policy Issues: The Control of Organized Crime

Increase the resources available to law enforcement agencies

Increase law enforcement authority

Make legitimate opportunities more readily available

Decriminalization or legalization to decrease opportunity

Criminology Today: An Integrated Introduction, 8e

Frank Schmalleger

Assignment

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