The Types and Impact of White-Collar Crimes - Term Paper Example

? The types and impact of white collar crimes and Section # of Introduction Broadly defined, one can consider white collar crime to be crime of a nature where someone in an affluent position exploits someone without direct consequence and discovery. White collar crime dates back to as early as man can imagine. It is human nature to exploit others for one’s own advantage, especially when one is in a considerably easy position to do so. However with the relatively recent emergence of high-rise corporations and multi-national companies, particularly after the Great Depression, the term has gained an official status, with regulatory laws and definitions being laid down. A far neglected area of crime, is this negligence owing to the fact that attention has been brought to it only recently, or is it more so because the ‘criminals’ who commit these crimes are generally affluent and in a position of high social impact, thereby making them different from the stereotypical poor man turning to crime? But why is that white collar crime generally goes by unnoticed and white collar criminals go by unpunished? Is it the nature of the crime, or the nature of the offender? What constitutes these crimes and what are their effects? Along with a brief history and explanation of white crime these will be the questions the essay will be aiming to answer. Background What is white crime? White crime or white collar crime is a considerably different form of crime than the stereotypical image of street crime that the word ‘crime’ instantly conjures up in our mind. It is a more subtle, under-the-table form of crime, where rather than harm others, the main impact is to benefit one’s self (Shover, 2006). The nature of this crime has existed throughout the centuries, with written definition of it dating back to as early as 1907, where Ross (1907) wrote, ‘The villain most in need of curbing is the respectable, exemplary, trusted personage who, strategically placed at the focus of a spider-web of ?duciary relations, is capable from his office-chair to choose a thousand pockets, poison a thousand sick, pollute a thousand minds, or imperil a thousand lives. It is the [criminaloid] that needs the shackle’, but the term ‘White Collar crime’ was first used by an American sociologist, Professor Edwin Hardin Sutherland, in an address to the American Sociological Society in 1939. After the World War II, in the era of the Great Depression, money was so scarce and the situation so desperate that people wanted to seek benefit in any way that they could. Considering themselves overworked and underpaid, they began to exploit their positions to their own personal advantage (Strader 2002). Sutherland defines the term ‘white collar crime’ as ‘offense committed by an individual or group of individuals who belong to respected and high social class in the course of his occupation’, Sutherland (1949) which basically meant individuals or corporations performing illegal activities which benefited their business in a certain way. Sutherland wished to draw notice to this far neglected area of crime, neglected mainly due to the fact that the ‘criminals’ guilty of these crimes were generally of a higher social status and position, taking them out of the stereotypical definition of a criminal, making them easier to overlook. They were workers who had earned their working positions legally through a certain amount of influence or education, therefore making them appear to be responsible, hard-working citizens of society (Gerhard, 2006). Interpretation of the exact nature of these crimes greatly varies and is not always exactly clear. For example, embezzlement and fraud is quietly obviously a crime, but is false, misleading advertisement a form of white crime or is it simply a business strategy? Is the dumping of toxic waste considered a white crime or is it simply negligence? There are wide varying definitions of what white crime actually constitutes, but they are classified by two main definitions - by the nature of the crime and by the nature of the offender. (Barnet, 2004) The type of offence can include crimes such as corporate crime, fraud, tax evasion etc. and the nature of the offender simply means that the difference in a regular street crime and a white crime would be the background of the offender. Stealing from a storekeeper’s till in the middle of the night is regular theft but being of a privileged class and stealing from the account of a multi-national company would constitute a white collar crime. Various forms of white collar crime. As explained, white collar crime is crime that takes place to for personal financial gain or corporate benefit. These crimes therefore take place in legal, high-rise businesses such as banking, stock-trading, investment companies or other such corporations. Some common types of white-collar crime are investigated below (Braithwaite, 1995). One common type is Money Laundering, where money is obtained from illegal sources but made to appear as though it comes from a legitimate source. These illegal sources can be smuggling, drug trade, theft or general corruption. The money is inserted into various accounts that are spread over the country, or sometime several countries, which divides it into smaller amounts, thereby making it both less noticeable and less easy to trace. The money is either deposited into banks or it is invested in houses, cars, etc. which again make it more difficult to trace. A famous case involving money laundering was Enron Corportation (McBarnett, 2006) where Kenneth Lay, the CEO of the company, and the highest paid in America at the time, was caught and convicted of fraud and conspiracy. The result was Enron Corporation having to declare bankruptcy. Embezzlement is similar to money laundering in the sense that it involves collecting money and hiding it but it is otherwise quite different. The source of money in money laundering is illegal activities, but in embezzlement, it is somebody else’s money or property which is normally entrusted in the guilty party’s care (Green, 2003). This is done either by stealing money directly and depositing it in a bank account, or by providing fake bills to the entrusting party, or taking out loans from a company and then escaping before they are discovered. Possibly the most common form of white collar crime is tax evasion. Tax evasion is when an employee or citizen gives less tax than they are legally supposed to. This can be done by filing incorrect reports of income, or not filing income tax returns, or by misusing trust schemes. Tax evasion can be a personal crime or it may be one that a corporation or a business commits. The Louisiana Hayride scandals were a famous example of tax evasion and embezzlement where James Monroe Smith, Sr., the president of Louisiana State University was convicted of fraud and income tax evasion. A lesser known sort of white collar crime is environmental crime. An environmental white collar crime can be considered to be the illegal disposal of toxic waste materials or the pollution that occurs due to negligence or a lack of preventative measures. Another example of white-collar crime is Insider trading where individuals who are privy to inside information that is unknown to the public about a specific company trade a stock. This gives them a natural advantage, which in turn keeps the general public at a disadvantage, leading to economic loss. Former Qwest Communications CEO Joseph Nacchio was famously convicted of insider trading. Impact of white collar crime So what is the impact of this white collar crime and who does it most affect? Contrary to popular belief that only rich CEOs or multi-million dollar corporations are affected by white collar crime, it is actually the common man and general economy that is affected the most. The most obvious impact of white collar crime is on finances and the economy. When companies are stolen from or a victim of fraud, they need to make up for their economic losses. This loss is then compensated for by the consumer, where they have to pay in the form of increased prices while at the same time experiencing a decrease in the services this money would normally offer. Similarly for tax evasion, when high rise corporations and businesses avoid paying their due share of tax, the government must compensate for this by raising tax percentages for the average citizen. In the rare case when a case of fraud is caught in a high-rise enterprise, this has a great impact in two forms. One, stockholders suffer an enormous financial loss as the shares fall heavily in price. Secondly, the company more often than not declares bankruptcy in an attempt to repay the losses they are indebted to which leads hundreds of thousands of employees to unemployment. Less commonly known are the psychological or social impacts of white collar crime (Moore & Mills, 1990). First of all, it leads to a relationship of distrust between the common consumer and corporate America. Consumers are not willing to invest in companies when they know that their hard earned money could simply be stolen from them. This leads to difficulty for honest corporations who have to work twice as hard to earn the trust of their consumer. Furthermore, Criminals that conduct white crime are generally not arrested, or owing to their high social status, they are acquitted of their crimes with the help of money and the best lawyers. This too leads to frustration and distrust among the common man who is arrested without bias. White crime also has a drastic effect on economy. When a crime of this nature is caught it is often in big companies that form the foundation of the country’s economy. These crimes then wipe these companies out which lead to obvious financial loss but also less obvious long term economic costs. Conclusion So why is white crime unpunished and why is it such a neglected area of study? Is it because the direct impact of the crime is not clear? The common man is affected through many chains and links, in a considerable yet indirect impact. Or perhaps it is because these crimes are non-violent in nature and largely theoretical as actual bills of money are rarely seen or considered, making the crimes appear to be more like a fraudulent business deal rather than an actual crime that harms someone (Berman, 2007). White collar criminals come from affluent backgrounds and they work their way to a position where they can exploit people and not face any consequences, as they are not directly answerable to any one person. They are generally the ones in control, making it hard to trace and discover these crimes (Spalek 2001). The impact of these crimes however is not on the single corporation that is being embezzled from or just the government that is being deceived out of taxes. The impact is far reaching and has a ladder effect, where one person is affected, which in turn affects another person and so on. Why then is it so easy to get away with a white-collar crime? Is it because these crimes are so hard to trace? Is it because they have highly qualified lawyers that know how to manipulate the very laws that they write? Or is it because corporations rely on these educated minds for their success as well as their demise? Whatever the reasons may be the fact that remains that white collar crime has perhaps as big an impact as any other crime might have. A corporate criminal is just as liable for punishment and arrest as a simple man from the outskirts of a city might be. Any crime in its nature harms somebody else while the offender benefits in some personal way. Whether the nature of this crime is monetary or physical should be irrelevant. References Barnett, C. (2004) The Measurement of White-Collar Crime Using Uniform Crime Reporting Data. U.S. Department of Justice, Federal Bureau of Investigation. Braithwaite, J. (1995), White Collar Crime. Department of Sociology, Research School of Social Sciences, The Australian National University. Berman, N. (2007) On the Moral Structure of White-Collar Crime. Ohio State Journal of Criminal Law, Vol. 5, p. 301, 2007. Gerhard, B. (2006) Some Personality Correlates of Business White-Collar Crime, Applied Psychology. Green, G. (1993) White-Collar Crime and the Study of Embezzlement, The ANNALS of the American. McBarnet, D. (2006) After Enron will ‘Whiter than White Collar Crime’ Still Wash?, The British Journal of Criminology. Moore, E. & Mills, M. (1990) The Neglected Victims and Unexamined Costs of White-Collar Crime. Crime & Delinquency, Vol. 36, No. 3. Shover, N. & Hochstetlr, A. (2006) White-Collar Crime, Cambridge University Press. Spalek, B. (2001) White-Collar Crime Victims and the Issue of Trust, The British Criminology Conference: Selected Proceedings. Volume 4. Strader, J. (2002) Understanding White Collar Crime, Southwestern University School of Law. Read More