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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
Copyright © 2017 by Pearson Education, Inc.All Rights Reserved
Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
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
Copyright © 2017 by Pearson Education, Inc.All Rights Reserved
Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
A Brief History of White-Collar Crime
• 21st century crimes
Enron
WorldCom Inc.
Adelphia Communications
ImClone
Martha Stewart
Various securities firms
Copyright © 2017 by Pearson Education, Inc.All Rights Reserved
Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
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
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
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
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
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
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
Green's Typology of Occupational Crime
• Organizational occupational crime
• State authority occupational crime
• Professional occupational crime
• Individual occupational crime
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
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.
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
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.
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
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).
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
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.
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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.
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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
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
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
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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.
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
Mass-Marketing Fraud
• Fraud connected with communications media (telemarketing, mass mailings, Internet, etc.)
• Nigeria letter fraud
• Foreign lottery/sweepstakes fraud
• Overpayment fraud
• Welfare fraud
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Money Laundering
• The process by which illegal gains are disguised as legal income.
• Money Laundering Control Act
• Bank Secrecy Act
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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
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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.
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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
continued on next slide
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Causes of White-Collar Crime
• Braithwaite: Integrated theory
White-collar criminals motivated by disparity between corporate goals and limited conventional opportunities
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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.
continued on next slide
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Curtailing White-Collar and Corporate Crime
• 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
continued on next slide
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
Curtailing White-Collar and Corporate Crime
• Sarbanes-Oxley Act (2002)
• Sherman Act (1890)
• Clayton Act (1914)
• Securities Act (1933)
• Securities Exchange Act (1934)
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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
continued on next slide
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
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.
continued on next slide
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
Organized Crime
• In mid-20th century, organized crime in US became domain of Italian Americans.
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
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.
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Activities of Organized Crime
• Racketeering
• Vice operations
• Theft/fence rings
• Gangs
• Terrorism
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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
continued on next slide
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
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
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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.
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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.
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Criminology Today: An Integrated Introduction, 8eFrank Schmalleger
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
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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