1. 12
White-Collar and Organized Crime

2. 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

3. A Brief History of White-Collar Crime
21st century crimes
Enron
WorldCom Inc.
Adelphia Communications
ImClone
Martha Stewart
Various securities firms

4. Understanding White-Collar Crime
Edwin H. Sutherland’s definition:
violations of the criminal law committed by a person of respectability and high social status in the course of one’s occupation
Emphasized need to study the criminality of the upper-class
continued on next slide

5. Understanding White-Collar Crime
Said white-collar criminals are less likely to be investigated, arrested, or prosecuted than other types of offenders

6. 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

7. 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

8. Green’s Typology of Occupational Crime
Organizational occupational crime
State authority occupational crime
Professional occupational crime
Individual occupational crime

9. 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

10. 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.

11. Financial Crime Corporate fraud
accounting schemes, self-dealing by corporate executives, obstruction of justice, insider trading, kickbacks, misuse of corporate property for personal gain
continued on next slide

12. Financial Crime Securities and commodities fraud
stock market manipulation, high-yield investment fraud, advance-fee fraud, hedge-fund fraud, commodities fraud, foreign exchange fraud, broker embezzlement
continued on next slide

13. Financial Crime Health-care fraud Mortgage fraud
Particularly target Medicare and Medicate but all health-care programs are subject to fraud
Mortgage fraud
Corporate fraud involving subprime mortgage lending companies
continued on next slide

14. Financial Crime Insurance fraud
Insurance industry size makes it a prime target for criminal activity
continued on next slide

15. Financial Crime Mass-marketing fraud Money laundering
fraud connected with communications media (telemarketing, mass mailings, Internet, etc.)
Money laundering
the process by which illegal gains are disguised as legal income

16. Environmental Crimes and Green Criminology
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

17. 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

18. Causes of White-Collar Crime
Sutherland – differential association theory
White-collar criminality is learned
Hirschi and Gottfredson – general theory
White-collar criminals are motivated by the same forces that drive other criminals
continued on next slide

19. Causes of White-Collar Crime
Braithwaite – integrated theory
White-collar criminals motivated by disparity between corporate goals and limited conventional opportunities

20. Curtailing White-Collar and Corporate Crime
White-collar crimes are difficult to investigate, prosecute, convict
Not always clear what happened
Offenders better educated – 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

21. 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

22. Curtailing White-Collar and Corporate Crime
Sarbanes-Oxley Act (2002)
Sherman Act (1890)
Clayton Act (1914)
Securities Act (1933)
Securities Exchange Act (1934)

23. 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

24. Organized Crime Ethnic succession
The continuing process whereby one immigrant or ethnic group succeeds another through assumption of a particular position in society
continued on next slide

25. Organized Crime
Jewish and Italian criminal groups flourished in New York City in the late 19th/early 20th centuries
In mid-20th century, organized crime in the US became the domain of Italian Americans

26. 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

27. Activities of Organized Crime
Racketeering
Vice operations
Theft/fence rings
Gangs
Terrorism

28. Other Organized Criminal Groups
Criminal enterprise
Group of individuals with an identifiable hierarchy, and extensive supporting networks, engaged in significant criminal activity
continued on next slide

29. Other Organized Criminal Groups
Key elements of true criminal organization
Function independently of any members (including leader)
Have continuity over time as personnel change
continued on next slide

30. 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

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

32. Transnational Organized Crime
Unlawful activity undertaken and supported by organized criminal groups operating across national boundaries
Major 21st century challenge
continued on next slide

33. Transnational Organized Crime
Globalization of crime requires coordination of law enforcement efforts around the world
U.S. law enforcement activities have to expand beyond national borders

34. 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

35. 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