WHITE-COLLAR CRIME

If you were asked to picture a criminal in your mind, what image would you be likely to think of first: a scruffy young male with a scowl or sneer on his face, or a handsome, middle-aged man dressed in a three-piece business suit? No doubt the former image would come to mind first, if only because violent crime and property crime dominate newspaper headlines and television newscasts and because many of us have been victims of violent or property crime. Yet white-collar crime is arguably much more harmful than street crime, both in terms of economic loss and of physical injury, illness, and even death. (University of Minnesota, 2015, 8.2 section, para. 14)

How do we define white-collar crime? Edwin Sutherland, a sociologist writing in the 1940s, first introduced the term and defined it as a “crime committed by a person of respectability and high social status in the course of his occupation” (1949, p. 9).

Sutherland examined the behavior of the seventy largest US corporations and found that they had violated the law hundreds of times among them. Several had engaged in crimes during either World War I or II; they provided defective weapons and spoiled food to US troops and even sold weapons to Germany and other nations the United States was fighting. (University of Minnesota, 2015, 8.2 section, para. 15)

There are countless examples of white-collar crime to be found in our communities today. These crimes occur in the form of embezzlement or other forms of theft by employees occupying lower-status jobs in local businesses, such as retail clerks, cashiers, and bookkeepers, or by auto shop repair fraud. While these examples fly in the face of Sutherland’s research, there are plenty of more supportive white-collar crimes being committed under the “respectability and high social status” definition. Today, investigators of white-collar crimes focus on transgressions involving fraud by attorneys, physicians, and elected officials or their agents, as well as other professionals. Investigators also examine illegal behavior by corporate executives which are designed to protect, improve, obscure or launder corporate profits.

Health-care fraud, among other professional fraudulent behaviors, ranks among the highest annually in terms of its breadth and cost to American consumers. “Health-care fraud is thought to amount to more than $100 billion per year, compared to less than $20 billion for all property crime combined” (University of Minnesota, 2015, 8.2 section, para. 17). The crimes concealed within health-care fraud are many, in some cases difficult to detect, and far-reaching in scope. If your physician chooses to bill Medicare and/or private insurance carriers for services that patients are not qualified to receive, or that they don’t really require, the costs likely won’t be questioned by the insurer as they trust the provider of care. In some cases, medical supply companies may provide substandard equipment. Because someone has to be responsible for the economic losses incurred due to health-care fraud, the consumer pays more as a result of medical expenses which are now driven up to compensate for the loss.

Corporate crime is by far and away the leading white-collar crime in terms of the economic loss created, and in the areas of death, physical injury, and illness it creates. Prominent examples of corporate crime include fraudulent activities, price fixing, false advertising, and investment schemes. The 2001 Enron scandal involved the practice of exaggerating profits by the promotion of the energy corporation’s chief executives (Constable, 2021). Month after month, investors and employees were led to believe that the company was thriving and that the financial condition of the business was rock-solid. When the scheme unraveled and the dire financial state was revealed, the company’s stock experienced a near-immediate free fall to irreversible levels and the Enron corporation went bankrupt. Without a mechanism for recovery, thousands of workers were plunged into unemployment, losing not only their jobs but their workers’ benefits and pensions. Loyal investors, none the wiser to the financial condition of the company, lost their fortunes as the stock values lost billions of dollars. By no means was Enron the only example of accounting fraud in the late 1990s through early 2000s–there are several other prominent, major corporations that were actively engaging in (or under scrutiny for) accounting fraud. Enron, however, was the most notorious example of a white-collar scandal during this period.

TRANSNATIONAL AND ORGANIZED CRIME

Organized crime is a general classification referring to criminal activities conducted by groups or organizations whose primary purpose for existing is to commit such crimes. The crimes generally associated with organized crime typically involve goods and services sought after by the public but which are either unavailable in certain areas, or which carry criminal sanctions for engaging in them. Such crimes have historically included trafficking in illegal drugs, pornography, prostitution, gambling, loan sharking, or protection rackets. Human trafficking is currently one of the largest criminal enterprises on the planet, which has quadrupled since the worldwide COVID-19 pandemic (R. Durbin, personal communication, January 24, 2024). Another contemporary example of a transnational crime involves the case of Sam Bankman-Fried, convicted of fraud in a crypto-currency scheme, and sentenced to 25 years in prison (Office of Public Affairs, 2024). Protection rackets are somewhat different from the others in that the activities being protected are legal activities, such as garbage hauling, vending machines, and setting up and operating certain legal establishments like taverns in an area controlled by an organized crime syndicate. Despite decades of attempts by law enforcement to curtail organized crime through the traditional philosophy of arrest, prosecution and incarceration, organized crime continues to flourish. Legal scholars now consider that reducing public demand for the goods and services driving the criminal activity may be one answer to responding to organized crime in America.

Exhibiting many of the hallmark characteristics of organized crime, transnational crimes exploit all corners of the globe. Many policy issues exist: anti-corruption and transparency in governance, arms control and nonproliferation, climate and environment, drugs and associated crimes, and of course, terrorism, are but a few transnational crimes.

In an effort to combattransnational crimes, with specific focus on human and sex trafficking and drug cartels, President Donald J. Trump signed Executive Order 13773, Enforcing Federal Law with Respect to Transnational Criminal Organizations and Preventing International Trafficking, in 2017. This Executive Order also bolsters existing federal laws such as the Lacey Act (1900), RICO Act (1970), and other federal laws crossing state and international borders. Because of the complex issues of authority and jurisdiction involved with world law enforcement, the Diplomatic Security Service (DSS), a division within the U.S. Department of State is considered the most appropriate agency in the world to enforce transnational laws. The DSS is widely represented globally with over 2,000 special agents and hundreds of local criminal investigators, forensics specialists, and assistants whose mission is to combat transnational crime abroad. The broad-based inventory of possible crimes–visa and passport fraud, wildlife trafficking, cybercrime, document fraud, and money laundering, creates a diverse opportunity for people motivated to protect their country and the world from exploitation and the greedy, self-serving acts of others.

CAUSATION OF THE ENTERPRISE CRIME

Enterprise crime is the overarching umbrella of criminal activity which includes white-collar crimes, organized crime and even state-sponsored crimes. An important, often identifying factor in the definition of enterprise crimes is to commit the crime without violence. It would follow that facilitative crimes such as those committed by drug cartels and organizational-enforced protection rackets are so violent as to not be classed as a true enterprise crime.

Turning quick profits on the misfortune of victims of fraud, auto theft, blackmail, forgery, and bribery are but some of the causal factors to enterprise crime. In some regions of the country, many vehicles are stolen every day. While some are taken for mere “joy rides,” many are taken to clandestine garages where the cars or trucks are “chopped.” The chopping process involves literally taking a vehicle apart, and in some cases, cutting it to pieces. The components may be then resold either on the black market, or to repair shops who represent them as “original equipment replacement parts.” In more sophisticated operations, the vehicles receive new (but illegal) Vehicle Identification Numbers (VIN) and are re-titled for sale in the U.S. or markets abroad.

Individuals who engage in enterprise crime tend to have higher education levels, specifically in computer science, accounting, and business practices. This does not mean that individuals with high self-esteem, charisma, and leadership qualities, are excluded. The common denominators in all of this level of crime seem to be that the criminals have the ability to communicate well and are well-connected with corporations and/or government entities, and that they have creative minds.

One other type of enterprise crime is tax evasion. Crimes like embezzlement of funds, transnational smuggling, and money laundering can often be cleverly disguised from the government. The U.S. tax code is a mandated annual exercise required of individuals and businesses. Although many attempts have been made to “simplify” the code, it is still complex and overwhelming to many. There also exist many loopholes and situational opportunities where monies can be sheltered from taxation (which is not an illegal practice unless doing so in an effort to evade taxation) by the government. Even though the Internal Revenue Service (IRS) is a large investigative organization chartered to monitor and enforce the tax code, it cannot possibly catch each and every error or intended breach of the filing of taxes through either under-reporting or underpayment of taxes. While more than 80% of U.S. taxpayers report and pay taxes on time, American corporations under-report approximately $41 billion per year, and some of America’s wealthiest individuals keep trillions of dollars of personal assets in offshore tax havens (Tørsløv et al., 2022), which is not an illegal practice unless the depositor does so to intentionally evade taxes.

Attributions

1. Figure 3.22: Crime by Nick Youngson is released under CC BY-SA 3.0