1. Lecture 1: The Discovery of White Collar Crime

2. White Collar Crime Versus “Conventional” Crime
Usually involves deceit and concealment (rather than direct violence).
Typically for the purpose of financial gain.
Occurs in a business setting.
Less chance of being caught and punished.
Can be characterized as involving a violation of trust.
More leniency from the justice system (“status shield” protects from harsh penalties of “common” criminal offenders.
Able to secure the best legal counsel.
Usually involves force or violence.
Varying reasons for the commission of offenses.
Usually occurs in non-business settings.
More focused justice system response.
Some crimes can involve violations of trust, but most lack a relationship between the victim and perpetrator.
Generally receive less leniency (victims engender more sympathy than those harmed by white collar criminal activity).
Generally not able to secure expensive legal counsel.

3. Identify The White Collar Criminals
Michael Jackson
Kenneth Lay
Martha Stewart
Scott Peterson
Richard Nixon
Lindsay Lohan

4. Answer Name Crime Result Kenneth Lay Enron WCC Martha Stewart
Lying about stock sale
Michael Jackson
Child Molestation
Not WCC
Richard Nixon
Abuse of Political power
Scott Peterson
Murder
Lindsay Lohan
DWI

5. Defining White Collar Crime
Early Definition:
Term first coined by criminologist Edwin Sutherland
“Crimes committed by a person of respectability and high social status in the course of his occupation”

6. Alternative Approaches To Definng White Collar Crime
Definition by type of offender (i.e., high socioeconomic status and/or position of trust)
Definition by type of offense
Definition in terms of organizational structure

7. Reasons For Lack Of Consensus Regarding Definition
Dispute regarding whether “white collar crime” should only refer to acts defined by criminal law and adjudicated in criminal proceedings.
Dispute regarding whether “white collar crime” should only refer to acts committed by higher-status individuals or institutions.

8. Dispute regarding whether “white collar crime” should refer to acts committed in association with legitimate employment, regardless of socioeconomic status.

9. Difficulties Associated With Identiy Of White Collar Crime
Victims of white collar crime typically do not know that a crime has even occurred
WCC is less visible than the other crimes and witnesses often do not believe that a crime has occurred
City police forces are not organized to respond to white collar crimes

10. Victims that are aware that a white collar crime has been committed may not report it due to embarrassment/shame
Many alleged white collar crime cases fail to reach the proper authorities*
*Statistics obtained from the National Fraud Center approximate that 1 in 3 households is the victim of white collar crime. Of these, only 41% report the incident. Of the number of reported incidents, only 21% are handled by a law enforcement or consumer protection agency. This means that less than 8% of white-collar crimes reach the proper authorities.

11. Informers Typically involved in the illegal activity to some degree.
Usually receive “consideration” in return for revealing knowledge about white collar criminal activity.

12. Whistleblowers
Have an inside perspective on the illegal activity, but not criminally implicated.
Can be current employees, former employees, competitors, subcontractors, and just about anyone else with whom a company does business.

13. Rarely receive a positive response.
Laws prohibit employer retaliation, but many still punished by termination, suspension, demotion, wage garnishment, and/or mistreatment by other employees.

14. Other Sources Of Exposure
Investigative journalists
Public interest groups
Congressional investigative committees
Social scientists
Academic scholars
Prosecutors

15. Direct Costs
Economic
Actual loss suffered by victim

16. Indirect Costs Higher taxes Increased cost of goods and services
Higher insurance rates
Cost of maintaining justice and regulatory systems to address WCC

17. Physical Costs Death Illness from pollution Unsafe working conditions
Unsafe Products

18. “CONVENTIONAL” CRIMINAL OFFENSES WHITE COLLAR CRIMINAL OFFENSES
Justice Served?
“CONVENTIONAL” CRIMINAL OFFENSES
(average in months)
WHITE COLLAR CRIMINAL OFFENSES
Robbery:
Fraud: 18.0
Drug Trafficking: 75.3
Embezzlement: 9.9
Drug Possession: 18.5
Bribery: 16.2
Manslaughter: 26.1
Tax Offenses: 16.6
Larceny: 15.6
Money Laundering: 46.3
Environmental: 14.5
Antitrust: 12.7
Food & Drug: 23.1
*Obtained from Paul Rosenzweig’s March 26, 2003 testimony before the Commission on Sentencing of Corporate Fraud and White Collar Crime