Although white collar crime costs an estimated $300 billion annually in the United States alone, few perpetrators are caught and even fewer of receive any sort of punishment. Analysis white collar crime focuses on two types: the individual perpetrator having special knowledge or occupational expertise or access that permits him or her to gain illegal financial advantage over others and corporate or organizational perpetrators, including organized and governmental crime. Since white collar crime is intermingled with legitimate business activities and often involves complex and sophisticated technical actions and internal networks, detection is difficult. Estimates are that less than 10 percent of perpetrators are caught. Analysis of federal sentences of corporations convicted of crimes during the late 1980s showed that 80 percent of the offending entities received fines of $25,000 or less, regardless of the severity or impact of their crimes. While the public has demanded greater accountability and more severe punishment, the reality is that white collar crime occurs with little likelihood of punishment compared to street crime. With the passage of the Sarbanes-Oxley Act in 2002, the US Congress instituted severe penalties for some types of corporate fraud and financial report falsification. Following the global financial crisis that began in late 2007, many people were angered over the fact that few financial institutions or executives were brought to trial over the systemic mismanagement of high-risk investments and widespread securities and mortgage fraud.
Keywords Bribery; Crime in the Suites; Cronyism; Culpability; Embezzle; Extortion; Guilty Mind; Mens Rea; Organizational Deviance; Power Crimes; Restitution; RICOSarbanes-Oxley Act
White Collar Crime
According to the Federal Bureau of Investigation (FBI) data, white collar crime costs the United States more than $300 billion dollars annually. While this total greatly exceeds the annual costs of crimes in the streets, estimated by the FBI to be $3.8 billion a year, most people are not as concerned about "crime in the suites." Despite the cost to our society, white collar crime often goes undetected. If discovered, white collar criminals frequently are dealt with within the civil law framework rather than the criminal law system. Under civil law, regulations deal with economic losses between private parties, so repayment becomes the focus rather than punishment.
Although criminologists continue to debate which specific crimes qualify as white-collar crime, in general white collar crime encompasses a variety of nonviolent crimes usually committed in commercial situations for financial gain. Types of white-collar crime include:
• Financial fraud
• Mail fraud
• Computer & Internet fraud
• Public corruption
• Money laundering
• Price fixing
• Tax evasion
• Securities fraud
• Insider trading
• Trade secret theft
• Back-dating stock options
• Phone & telemarketing fraud
• Consumer fraud
• Credit Card fraud
• Bankruptcy fraud
• Healthcare fraud
• Environmental law schemes
• Insurance fraud
• Government fraud
• Investment schemes
• Welfare fraud
• Weights & measures fraud
The tools of the trade are fast-talking, internal networks, accounting systems, and computers. Usually, criminal complaints are brought against individuals, but sometimes corporations are held accountable as well, especially in terms of restitution and fines. Technically speaking, however, offenses committed by a corporation are called "corporate crime," or "organizational crime." Both are considered one type of white collar crime. This division of white collar crime categories into two types—occupational and corporate—was advanced by criminologists Marshall B. Clinard and Richard Quinney in the 1960s, and it remains influential to this day.
Although most individuals conceptualize white collar crime as being nonviolent, in reality this definition is faulty. Corporations that knowingly engage in the production of substandard food, drugs, or building materials, or who intentionally expose their employees to dangerous working conditions, can be held liable for crimes that fall into the white collar framework of analysis. According to statistics from the US Bureau of Labor Statistics, an estimated three million nonfatal workplace injuries and illness were reported by private employers in 2011, with nearly five thousand fatal work injuries. Despite this staggering loss of life, however, few corporations or their leaders are held criminally liable for their misconduct. There are numerous reasons explaining why little is done about white collar crime in general, and these deaths in particular, and they will be discussed later in this article.
Given the current condition of federal and state data collection methods, it is difficult to perform statistical analyses of white collar crime. There are no socioeconomic or occupational data about offenders in the Uniform Crime Reporting (UCR) data, for example, and no information other than the arrest records of corporate criminal actors. Similarly, FBI crime statistics collect information on only three categories of what is considered to be white collar crime: fraud, counterfeiting and forgery, and embezzlement. All other related crimes are encompassed in the category of "other." The FBI's estimate of $300 billion in losses a year, therefore, is probably low. The collapse of the savings and loan industry, for example, cost the American public between $300 and $500 billion dollars, while some estimates place health care fraud alone at between $100 billion and $400 billion per year (Mokhiber, 2007). The cost of the 2008 global financial crisis, which was spurred by widespread insurance, mortgage, and securities fraud and mismanagement by financial institutions, has been estimated to be in excess of $30 trillion.
Edwin H. Sutherland
The term "white collar crime" was used first in 1939 by sociologist Edwin H. Sutherland, who defined it as "a crime committed by a person of respectability and high social status in the course of his occupation." Since colored dress shirt fabrics did not come into use until the 1960s, executives and office workers across the nation wore white shirts to work every day, resulting in the label "white collar crime."
Because the term "white collar crime" has gained such acceptance with the public and scholars, it is hard to appreciate the revolutionary nature of Sutherland's arguments. Previously, crime analysis had focused on street crime and violence, rather than on the illegal actions of the rich and powerful. Sutherland sought to expose these crimes and bring justice to individuals harmed by those with powerful social, political, and economic connections. Edward Ross had articulated these same concerns in an article published in The Atlantic Monthly in 1907, but Sutherland's presidential address to the American Sociological Association's national convention in 1939 made front page news nationwide (Wong, 2005). Albert Morris had also examined upper- class criminals in his 1935 book on crime, but Sutherland's public platform, catchy terminology, and theoretical research framework launched the subdiscipline. Suddenly, the theoretical analyses of crime based upon poverty and poor socioeconomic conditions were shown to be inadequate as general explanations of criminal conduct (Wong, 2005).
Although the term "white collar crime" has gained public acceptance over the decades, sociologists and criminologists have engaged in an extensive debate over how to define the concept. Sutherland's argument that white collar criminals were of high status and respectability was challenged with research of the wide variety of individuals who engaged in white collar crime. Sutherland's argument that murder, robbery, and burglary were “blue-collar crimes” also was challenged. Similarly, scholars argued that the terms "respectability" and "high social status" were too vague and subjective for scholarly study. Thus, Sutherland's efforts to make a class-based definition of crime that focused on the perpetrator failed to withstand scrutiny. In part, this failure can be attributed to each individual's right to equal protection under the law. Within the US legal system, race, gender, wealth, occupation, and ethnicity cannot be used to discriminate among offenders.
Sutherland's assertion that white collar crime was related to occupation has been accepted in both sociological literature and in criminal practice. In 1981, for example, the United States Department of Justice's definition of white collar crime was dependent upon the professional status and/or special knowledge of the offender. It stated that white collar crime was:
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