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Chapter 13 White-Collar and Organized Crime

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1 Chapter 13 White-Collar and Organized Crime

2 White-Collar Crime Introduction
Historically, criminology focused on street crime Industrialization created problems Wealthy railroad tycoons engaged in crime and questionable business practices as they acquired their fortunes

3 White-Collar Crime Factories with inhumane working conditions
Sherman Antitrust Act (1890) prohibited restraint of trade that raised consumer prices Early 1900s, muckrakers criticized business/ political corruption, and condemned cruel treatment of workers

4 White-Collar Crime Edwin Sutherland
Sutherland coined term white-collar crime In 1940s Studied 70 largest U.S. manufacturing, mining, retail corporations found numerous law violations Questioned assumption crime is due to poverty

5 White-Collar Crime Definition: “A crime committed by a person of respectability and high social status in the course of his occupation” Contemporary Views Other terms used – elite deviance, respectable crime, upper world crime

6 White-Collar Crime Clinard and Quinney – two types of white collar crime Occupational crime: Committed by individual in the course of their occupation for personal gain Corporate crime: Crimes committed by corporation for financial gain Organizational crime: Crime can be done by and on behalf of organizations (some corp., some small businesses)

7 Occupational Crime Lawbreaking for Personal Gain
Employee Theft: Pilferage and Embezzlement About three-fourths of all workers are thought to steal from employers Pilferage: Theft of merchandise, tools, etc. Common reasons: dissatisfaction with pay, working conditions, poor treatment by supervisors Another reason may be workplace culture Embezzlement: Theft of cash and misuse of funds Collective embezzlement in the Savings and Loan Industry

8 Professional Fraud Focus on Healthcare
Estimated annual cost $100 billion Unnecessary surgery Professional fraud Financial fraud

9 Health Care Fraud Exaggerating charges
Billing for services not rendered for real patient Billing for fictitious or dead patients Pingponging Family ganging Churning Unbundling Providing inferior products to patients Inflating charges for ambulance services Paying kickbacks/bribes for referrals of patients Falsifying medical records Billing for inferior products or items never provided Falsifying prescriptions

10 Organizational Criminality
Primary intent of criminal behavior is to benefit the organization Auto-repair fraud Costs more than $20 billion annually Accounts for 30 to 40% of all auto repair expenses Illegitimate businesses Phony home improvement businesses, contests, and charities

11 Corporate Financial Crime
Fraud, cheating, bribery, and other corruption Fraud and corruption performed primarily for the corporation’s benefit, not for the benefit of the corporate executives engaging in these crimes Ponzi scheme: New investments are used to pay the interest on old investments Price fixing: Conspiracy to set high prices Restraint of trade: One company buys out all others to reduce competition False advertising: Making exaggerated claims

12 Corporate Violence Threats to Health and Safety
Workers and Unsafe Workplaces (i.e. exposure to toxic substances) Estimates of Problem: not exact, but around 5,700 deaths each year Examples of Problems Farm workers exposed to dangerous pesticides Mining companies’ failure to observe safety code

13 Corporate Crime Consumers and Unsafe Products The Automobile Industry
Toyota and Ford The Pharmaceutical Industry Knowingly marketing dangerous drugs The Food Industry Distribution of contaminated food

14 The Public and Environmental Pollution
Much of pollution is preventable Weak laws Lax federal monitoring Minimal penalties Consequences are illness, death, disease Dumping toxic waste

15 The Economic and Human Costs of White-Collar Crime
Estimates for property crime/street crime at $18 billion The total cost of white-collar crime reaches over $564.5 billion annually UCR estimates that far more deaths are caused every year from white-collar crime (about 109,800 people per year) in comparison with homicide.

16 Explaining White-Collar Crime
Similarities with Street Crime Both steal and commit violence Break the law when opportunity and motivation present Both use techniques of neutralization

17 Explaining White-Collar Crime
Differences from Street Crime Street criminals argued to have biological and psychological abnormalities Cannot blame social disorganization for white-collar crime Cultural and Social Bases for White-Collar Crime Consider combination of structural and cultural forces Differential association Greed

18 Explaining White-Collar Crime
Lenient Treatment Weak or Absent Regulations Difficulty Proving Corporate Crime Weak Punishment; imprisonment has little impact on corporate criminals Lack of News Media Coverage

19 Reducing White-Collar Crime
Regulatory agencies need larger budgets Media focus more attention More severe punishments Self-regulation and compliance strategies emphasizing informal sanctions (i.e. negative publicity campaigns)

20 Organized Crime History of Organized Crime Earliest example is piracy
Piracy faded in 1720s; merchants realized greater profits by trading with England Began in New York City in early 1800s Development of gangs involved in vice crimes Immigrants turned to organized crime to make ends meet

21 History of Organized Crime
Robber barons role models for gangs and forerunners of organized crime Robber baron analogy indicates organized and corporate crime more similar than we think Organized crime’s power increased during Prohibition After Prohibition gambling was primary source of income for several decades

22 Organized Crime The Alien Conspiracy Model and Myth
Is organized crime controlled by highly organized, hierarchical group? “Mafia mystique” Myth because model ignores history of organized crime before Italian immigration

23 Controlling Organized Crime
As long as public demand for illicit goods and services exist, organized crime will also; thus, we must reduce public demand Legalizing these crimes? Provide alternative economic opportunities for young become who become involved in it each year

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