Chapter 12 White-Collar and Organized Crime Frank Schmalleger PowerPoint presentation created by Ellen G. Cohn, Ph.D.

White-Collar Crime Sutherland’s definition: Violations of the criminal law committed by a person of respectability and high social status in the course of one’s occupation Today’s criminals are more sophisticated White-collar criminals are less likely to be investigated, arrested, or prosecuted than other types of offenders

White-Collar Crime Insider trading: Bank fraud: Equity trading based on confidential information about important events that may affect the price of the issue being traded Bank fraud: Fraud or embezzlement that occurs within or against financial institutions that are insured or regulated by the United States government

Definitional Evolution of White-Collar Crime The early definitions focused on the violator, rather than the offense Today, the focus has shifted to the nature of the crime, rather than the persons or occupations involved

Definitional Evolution of White-Collar Crime Herbert Edelhertz defined white-collar crime as: any illegal act or series of illegal acts committed by nonphysical means and by concealment or guile, to obtain money or property, to avoid the payment or loss of money or property, or to obtain business or personal advantages Gilbert Geis defined upperworld crime as: a label designed to call attention to the violation of a variety of criminal statutes by persons who at the moment are generally not considered, in connection with such violations, to be the ‘usual’ kind of underworld and/or psychologically aberrant offenders

Definitional Evolution of White-Collar Crime Blue-collar crime: Law-violating behavior by members of less prestigious occupational groups Occupational crime: Any act punishable by law that is committed through opportunity created during the course of a legal occupation

Occupational Crime Organizational occupational crime Crime committed for the benefit of an employing organization State authority occupational crime Crimes by officials through the exercise of their state-based authority

Occupational Crime Professional occupational crime Crimes committed by professionals in their capacity as professionals Individual occupational crime Crimes by individuals as individuals

Corporate Crime Corporate crime: The 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

Corporate Crime Environmental crimes: Violations of the criminal law, which, although typically committed by businesses or by business officials, may also be committed by other individuals or organizational entities, and which damage some protected or otherwise significant aspect of the natural environment. Whaling Intentional pollution

Causes of White-Collar Crime Sutherland White-collar criminality, like other systematic criminality, is learned Theory of differential association applied to white-collar crime

Causes of White-Collar Crime Hirschi and Gottfredson’s general theory of crime White-collar criminals are motivated by the same forces that drive other criminals Self interest, the pursuit of pleasure, the avoidance of pain White-collar crime is fairly rare because the personal characteristics of most white-collar workers produce conformity, not criminality

Causes of White-Collar Crime John Braithwaite White-collar criminals are motivated by a disparity between corporate goals and the limited opportunities available through conventional business practices Integrated theory that includes elements of Strain theories Subcultural theories Labeling theory Control theory

Curtailing White-Collar and Corporate Crime Federal efforts The Corporate Fraud Task Force Sarbanes-Oxley Act (2002) Sherman Act (1890) Clayton Act (1914) Securities Act (1933) Securities Exchange Act (1934)

Curtailing White-Collar and Corporate Crime Coleman’s four areas of reform Ethical Enforcement Structural Political

Organized Crime Organized crime: The unlawful activities of the members of a highly organized, disciplined association engaged in supplying illegal goods and services, including gambling, prostitution, loan-sharking, narcotics, and labor racketeering

History of Organized Crime in the United States Roots predate establishment of the U.S. Italian organized crime in the U.S. The Black Hand (La Mano Negro) Mafia (roots in Sicily)

La Cosa Nostra Ethnic succession: The continuing process whereby one immigrant or ethnic group succeeds another through assumption of a particular position in society Jewish and Italian criminal groups flourished in New York City prior to the arrival of the Italian Mafia Organized crime in the U.S. has largely been the domain of Italian Americans for the last half century

Prohibition and Official Corruption Prohibition gave organized crime a vital boost Mafia operations before Prohibition were “small time” Profits from bootlegging led to bribery of government officials and corruption of law enforcement officers Heritage of Prohibition-associated corruption remains

The Centralization of Organized Crime Organized crime leaders worked to consolidate power during Prohibition Al Capone versus “Bugs” Moran The Saint Valentine’s Day massacre Mafia activity went underground after 1931

The Centralization of Organized Crime The Kefauver Committee A nationwide crime syndicate (the Mafia) exists with tentacles in many large cities The American mafia has international linkages Mafia leaders usually control the most lucrative rackets in their cities Leadership is in a group, not a single individual

The Centralization of Organized Crime Family organization: Boss Underboss Counselor/consigliere Lieutenants/caporegime Soldiers/soldati Those employees below the soldiers are not members of the family

A Typical Organized Crime Family

La Cosa Nostra Today Five of the 24 families in the U.S. operate out of New York Luciano/Genovese family (300-400 core members) Mineo/Gambino family (400-500 core members) Reina/Lucchese family (125 core members) Profaci/Colombo family (100 core members) Bonanno family (75 core members)

Activities of Organized Crime Five types of activity: Racketeering Vice operations Theft/fence rings Gangs Terrorism Primary motivation for all activities is money

Activities of Organized Crime Gambling Loan-sharking Large-scale drug trafficking Fencing Infiltration of legitimate businesses Labor union racketeering Illegal copying and distribution of recorded media Pornographic presentations (snuff films)

Code of Conduct Omerta: The informal, unwritten code of organized crime, which demands silence and loyalty, among other things, of family members Concentrates power in the hands of crime bosses and ensures their protection Key requirements Obey your superiors Keep silent

Other Organized Criminal Groups Black Mafia Cuban Mafia Haitian Mafia Colombian cartels Russian Mafia Asian criminals Inner-city gangs Outlaw motorcycle gangs Latino organized groups

Transnational Organized Crime Unlawful activity undertaken and supported by organized criminal groups operating across national boundaries A major force in world finance Major challenge of the early twenty-first century

Organized Crime and the Law Hobbs Act RICO Racketeer Influenced and Corrupt Organizations statute Asset forfeiture

Money Laundering Money laundering: The process of converting illegally earned assets, originating as cash, to one or more alternative forms to conceal such incriminating factors as illegal origin and true ownership Money Laundering Control Act Bank Secrecy Act

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