schmall crim today8e_ppt_ch13

Criminology TodayAn Integrated Introduction

CHAPTER

Criminology Today: An Integrated Introduction, 8eFrank Schmalleger

Copyright © 2017 by Pearson Education, Inc.All Rights Reserved

White-Collar and Organized Crime

13



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 1990scontinued on next slide



A Brief History of White-Collar Crime

• 21st century crimes

Enron

WorldCom Inc.

Adelphia Communications

ImClone

Martha Stewart

Various securities firms



Understanding White-Collar Crime

• Edwin H. Sutherland's definition

Crimes committed by a person of respectability and high social status in the course of one's occupation

• Emphasized need to study upper-class criminality

• Said white-collar criminals less likely to be investigated, arrested, prosecuted than other types of offenders



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



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



Green's Typology of Occupational Crime

• Organizational occupational crime

• State authority occupational crime

• Professional occupational crime

• Individual occupational crime



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.



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.



Figure 13-2 Types of Financial CrimeSource: Derived from Federal Bureau of Investigation, Financial Crimes Report to the Public, Fiscal Year 2007, http://www.fbi.gov/publications/financial/fcs_report2007/financial_crime_2007.htm#financial (accessed May 10, 2015).



Corporate Fraud

• Accounting schemes, self-dealing by corporate executives, obstruction of justice, insider trading, kickbacks, misuse of corporate property for personal gain

• Corporate fraud causes significant financial losses to investors and also has the potential to cause damage to investor confidence and US economy.



Securities and Commodities Fraud

• Stock market manipulation, high-yield investment fraud, advance-fee fraud, hedge-fund fraud, commodities fraud, foreign exchange fraud, broker embezzlement

• Associated losses range from macroeconomic to corporate to intensely personal.



Health Care Fraud

• Particularly target Medicare and Medicate but all health-care programs are subject to fraud.

• Not limited to any particular geographic area, can target large health-care programs and beneficiaries, becoming more complex and sophisticated

• Now being committed by organized crime groups



Mortgage Fraud

• Involves material misstatements, misrepresentation, and/or omissions related to the property or potential mortgage relied on by an underwriter or lender to fund, purchase, or insure a loan

• Equity skimming, property flipping, mortgage debt elimination



Insurance Fraud

• Insurance industry size makes it a prime target for criminal activity.

• Insurance fraud involving arson related to the mortgage crisis

• Workers' compensation fraud increased greatly with economic downturn.



Mass-Marketing Fraud

• Fraud connected with communications media (telemarketing, mass mailings, Internet, etc.)

• Nigeria letter fraud

• Foreign lottery/sweepstakes fraud

• Overpayment fraud

• Welfare fraud



Money Laundering

• The process by which illegal gains are disguised as legal income.

• Money Laundering Control Act

• Bank Secrecy Act



Environmental Crimes and Green Criminology

• Environmental crimes

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



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.



Causes of White-Collar Crime

• Sutherland: Differential association theory

White-collar criminality is learned

• Hirschi and Gottfredson: General theory of crime

White-collar criminals are motivated by the same forces driving other criminals




Causes of White-Collar Crime

• Braithwaite: Integrated theory

White-collar criminals motivated by disparity between corporate goals and limited conventional opportunities



Curtailing White-Collar and Corporate Crime

• White-collar crimes are difficult to investigate, prosecute, convict.

Not always clear what happened

Offenders better educated and better able to conceal their activities

Evidence often understandable only to financial or legal experts

Offenders can hire excellent defense attorneys.





• 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





• Sarbanes-Oxley Act (2002)

• Sherman Act (1890)

• Clayton Act (1914)

• Securities Act (1933)

• Securities Exchange Act (1934)



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




Organized Crime

• Ethnic succession

Continuing process of one immigrant or ethnic group succeeding another by assuming its position in society

• Jewish and Italian criminal groups flourished in New York City in late 19th/early 20th centuries.




Organized Crime

• In mid-20th century, organized crime in US became domain of Italian Americans.



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.



Activities of Organized Crime

• Racketeering

• Vice operations

• Theft/fence rings

• Gangs

• Terrorism



Other Organized Criminal Groups

• Criminal enterprise

Group of individuals with an identifiable hierarchy, and extensive supporting networks, engaged in significant criminal activity

• Hallmark of true criminal organizations

Function independently of any members

Have continuity over time as personnel change




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



Figure 13-4 International Organized Criminal Groups Whose Activities Impact the United StatesSource: Schmalleger, Frank, Criminology. Printed and Electronically reproduced by permission of Pearson Education, Inc., Upper Saddle River, New Jersey.



Transnational Organized Crime

• Transnational organized crime

Unlawful activity undertaken and supported by organized criminal groups operating across national boundaries

• Globalization of crime requires international coordination of law enforcement efforts.

• U.S. law enforcement activities must expand beyond national borders.



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



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