1. Chapter 13 White-Collar and Organized Crime

2. White-Collar Crime Introduction
Historically, criminology focused on street crime
Industrialization created problems
Wealthy railroad tycoons engaged in crime and questionable business practices as they acquired their fortunes

3. White-Collar Crime Factories with inhumane working conditions
Sherman Antitrust Act (1890) prohibited restraint of trade that raised consumer prices
Early 1900s, muckrakers criticized business/ political corruption, and condemned cruel treatment of workers

4. White-Collar Crime Edwin Sutherland
Sutherland coined term white-collar crime
In 1940s Studied 70 largest U.S. manufacturing, mining, retail corporations found numerous law violations
Questioned assumption crime is due to poverty

5. White-Collar Crime
Definition: “A crime committed by a person of respectability and high social status in the course of his occupation”
Contemporary Views
Other terms used – elite deviance, respectable crime, upper world crime

6. White-Collar Crime
Clinard and Quinney – two types of white collar crime
Occupational crime: Committed by individual in the course of their occupation for personal gain
Corporate crime: Crimes committed by corporation for financial gain
Organizational crime: Crime can be done by and on behalf of organizations (some corp., some small businesses)

7. Occupational Crime Lawbreaking for Personal Gain
Employee Theft: Pilferage and Embezzlement
About three-fourths of all workers are thought to steal from employers
Pilferage: Theft of merchandise, tools, etc.
Common reasons: dissatisfaction with pay, working conditions, poor treatment by supervisors
Another reason may be workplace culture
Embezzlement: Theft of cash and misuse of funds
Collective embezzlement in the Savings and Loan Industry

8. Professional Fraud Focus on Healthcare
Estimated annual cost $100 billion
Unnecessary surgery
Professional fraud
Financial fraud

9. Health Care Fraud Exaggerating charges
Billing for services not rendered for real patient
Billing for fictitious or dead patients
Pingponging
Family ganging
Churning
Unbundling
Providing inferior products to patients
Inflating charges for ambulance services
Paying kickbacks/bribes for referrals of patients
Falsifying medical records
Billing for inferior products or items never provided
Falsifying prescriptions

10. Organizational Criminality
Primary intent of criminal behavior is to benefit the organization
Auto-repair fraud
Costs more than $20 billion annually
Accounts for 30 to 40% of all auto repair expenses
Illegitimate businesses
Phony home improvement businesses, contests, and charities

11. Corporate Financial Crime
Fraud, cheating, bribery, and other corruption
Fraud and corruption performed primarily for the corporation’s benefit, not for the benefit of the corporate executives engaging in these crimes
Ponzi scheme: New investments are used to pay the interest on old investments
Price fixing: Conspiracy to set high prices
Restraint of trade: One company buys out all others to reduce competition
False advertising: Making exaggerated claims

12. Corporate Violence Threats to Health and Safety
Workers and Unsafe Workplaces (i.e. exposure to toxic substances)
Estimates of Problem: not exact, but around 5,700 deaths each year
Examples of Problems
Farm workers exposed to dangerous pesticides
Mining companies’ failure to observe safety code

13. Corporate Crime Consumers and Unsafe Products The Automobile Industry
Toyota and Ford
The Pharmaceutical Industry
Knowingly marketing dangerous drugs
The Food Industry
Distribution of contaminated food

14. The Public and Environmental Pollution
Much of pollution is preventable
Weak laws
Lax federal monitoring
Minimal penalties
Consequences are illness, death, disease
Dumping toxic waste

15. The Economic and Human Costs of White-Collar Crime
Estimates for property crime/street crime at $18 billion
The total cost of white-collar crime reaches over $564.5 billion annually
UCR estimates that far more deaths are caused every year from white-collar crime (about 109,800 people per year) in comparison with homicide.

16. Explaining White-Collar Crime
Similarities with Street Crime
Both steal and commit violence
Break the law when opportunity and motivation present
Both use techniques of neutralization

17. Explaining White-Collar Crime
Differences from Street Crime
Street criminals argued to have biological and psychological abnormalities
Cannot blame social disorganization for white-collar crime
Cultural and Social Bases for White-Collar Crime
Consider combination of structural and cultural forces
Differential association
Greed

18. Explaining White-Collar Crime
Lenient Treatment
Weak or Absent Regulations
Difficulty Proving Corporate Crime
Weak Punishment; imprisonment has little impact on corporate criminals
Lack of News Media Coverage

19. Reducing White-Collar Crime
Regulatory agencies need larger budgets
Media focus more attention
More severe punishments
Self-regulation and compliance strategies emphasizing informal sanctions (i.e. negative publicity campaigns)

20. Organized Crime History of Organized Crime Earliest example is piracy
Piracy faded in 1720s; merchants realized greater profits by trading with England
Began in New York City in early 1800s
Development of gangs involved in vice crimes
Immigrants turned to organized crime to make ends meet

21. History of Organized Crime
Robber barons role models for gangs and forerunners of organized crime
Robber baron analogy indicates organized and corporate crime more similar than we think
Organized crime’s power increased during Prohibition
After Prohibition gambling was primary source of income for several decades

22. Organized Crime The Alien Conspiracy Model and Myth
Is organized crime controlled by highly organized, hierarchical group?
“Mafia mystique”
Myth because model ignores history of organized crime before Italian immigration

23. Controlling Organized Crime
As long as public demand for illicit goods and services exist, organized crime will also; thus, we must reduce public demand
Legalizing these crimes?
Provide alternative economic opportunities for young become who become involved in it each year