wcc- midterm paper

wcc- midterm paper - Susan Martinez February 24, 2010...

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Susan Martinez February 24, 2010 Professor Tony Giunta White Collar Crime Pyramid Schemes: An Ongoing Financial Fraud The classical approach theory on crime states that people choose to violate the law because it brings them pleasure and “financial gain”, and the prospect of pain and apprehension is low. This theory places the idea that crime is a person’s choice to commit because of their lack of fear of punishment. One of the major areas of crime where apprehension is lowest is white collar crime. By definition, white collar crime is a crime committed by a person of respectability and high social status in the course of their occupation. However, this is one of the earlier definitions. White collar crime is now democratic. Anyone can do it, regardless of status, age, race, or creed. It is an illegal act characterized by guile, deceit, and concealment. A white collar crime is not dependent upon the application of physical force, violence, or threats of violence. Many white collar crimes deal with financial violations, such as bank fraud, bribery, embezzlement, forgery, etc. On the contrary, they also include schemes and scams on the general public; one of the most popular being pyramid schemes. Pyramid schemes are a form of white collar crime but can be prevented with proper knowledge of how to detect them. Pyramid schemes are a form of fraud. It is primarily an investment scam because the concept is based off of a business model. The idea of the pyramid scheme is to market a business that requires making money in a short period of time by practically doing nothing except for getting others to enroll into working for the company. However, with time the pyramid scheme always collapses because the business model only involves the exchange of money and never the
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delivery of a product or service to the customer. In turn, a vast amount of people end up losing their money because the money that they receive often has to go back to paying earlier investors. Then it becomes even more difficult to sustain the pyramid once the scheme increases to an uncontrollable number where the promoter cannot raise enough money from new investors and recruits to reimburse the initial investors; thus, causing the entire pyramid to collapse. So, how does this type of crime fall under the category of a white collar crime? First, the basis of it is founded on false advertisement. The participant not only thinks that they are working for a legitimate company, but that they will make a profit off of the profit of incoming recruits and so on. The mere idea of this falls under the pretenses of deceit and guile, which is the first characteristic of a white collar crime. In addition, the participant has to keep the cycle of deceit going by introducing it to the next victim and so on. In this situation, the cycle never ends until the pyramid collapses. The next characteristic that the pyramid scheme upholds in being considered a white
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wcc- midterm paper - Susan Martinez February 24, 2010...

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