Fall 2011- Chapter 1 and Is White Collar Crime Crime

Fall 2011- Chapter 1 and Is White Collar Crime Crime

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Unformatted text preview: The Discovery of White Collar The Discovery of White Collar Crime White Collar Crime CRJU E491W­ Fall 2011 William C. Smith Edwin H. Sutherland Edwin H. Sutherland The term “white collar crime” was introduced by the American criminologist Edwin H. Sutherland in an address to the American Sociological Society in December 1939. Sutherland viewed the concept as “crime in the upper or white­collar class, composed of respectable, or at least respected, business and professional men.” Muckrakers, early 20th­century American journalists who viewed revelation of high­level wrongdoing as a legitimate journalistic enterprise, wrote about the crimes of the “robber barons,” American industrial or financial magnates who became wealthy by unethical means, such as questionable stock­market operations and exploitation of labor. E.A. Ross introduced the concept of the “criminaloid,” a businessman who committed exploitative, if not necessarily criminal, acts out of an uninhibited desire to maximize profit, all the while hiding behind a façade of respectability and piety. Edward Alsworth Ross Edward Alsworth Ross The immunity enjoyed by the perpetrator of new sins has brought into being a class for which we may coin the term criminaloid... Often, indeed, they are guilty in the eyes of the law; but since they are not culpable in the eyes of the public and in their own eyes, their spiritual attitude is not that of the criminal. The lawmaker may make their misdeeds crimes, but, so long as morality stands stock­still in the old tracks, they escape both punishment and ignominy. Unlike their lowbrowed cousins, they occupy the cabin rather than the steerage of society. Relentless pursuit hems in the criminals, narrows their range of success, denies them influence. The criminaloids, on the other hand, encounter but feeble opposition, and, since their practices are often more lucrative than the authentic crimes, they distance their more scrupulous rivals in business and politics and reap an uncommon worldly prosperity. Sin and Society; Chapter 3: The Criminaloid (1907) Defining White Collar Crime Defining White Collar Crime Over seventy years after Sutherland’s introduction of the concept of white collar crime there exists no uniform definition of “white collar crime” or consensus as to what behaviors should be included within the definition. Friedrichs proposes a multistage approach to defining white collar crime, which consists of polemical, typological, and operational stages. The Multiple Stages The Multiple Stages Polemical stage Typological stage Challenging the popular tendency to associate criminality with inner­city residents, minorities, young men, and conventional illegal activities such as homicide, robbery, and burglary. Organizing patterns of crime and criminal behavior into coherent or homogenous categories, to facilitate both explaining and responding to crime. Operational stage Providing a point of departure for focused empirical research or comparative critical analysis. In other words, defining the real world parameters for the study of white collar crime. Comparing White Collar and Conventional Comparing White Collar and Conventional Crime Offenders White collar criminals are educated, intelligent, affluent, and confident opportunists, who take advantage of their circumstances to accumulate financial gain. Their employment provides them access to large sums of money. Otherswho are employed in relatively unskilled positions have fewer circumstances to exploit . Their crime, often referred to as “blue collar” crime, tends to be more blatant and, accordingly, attracts the attention of law enforcement. Conventional offenders tend to be disproportionately young, and male, while white collar offenders are more likely to be middle­ aged, male, and to begin offending at a later age. Conventional offenders are disproportionately lower class and poor. Racial minorities are less likely to commit white collar crimes such as antitrust or corporate violations, but equally likely to commit crimes such as embezzlement. As originally noted by Sutherland, white collar crime is predominantly the crime of upper or “better­off” classes. The Social Movement The Social Movement Against White Collar Crime In the 1970s, white collar crime received increased attention with the start of the social movement against it, which brought together rural populists, muckraking journalists, and organizations of civic­minded businessmen concerned about the excesses and outrages of big business. Those efforts decreased in the more conservative 1980s, when federal investigative resources and budgets of regulatory agencies were curtailed, and a dip in white collar crime convictions occurred. In the 1990s, federal prosecutors appointed by the Clinton administration expressed commitment to intensified efforts against white collar crime and eventually initiated some important cases, such as the antitrust case against Microsoft, which was less rigorously pursued by the administration of George W. Bush. The corporate scandals of the early 21st century, however, forced action by the Bush administration, to include the creation of the National White Collar Crime Center (NW3C). Images of White Collar Crime Images of White Collar Crime Media emphasis upon “sensational” crime has, in large part, resulted in minimal journalistic exploration of white collar crime. Interest was first piqued with the emergence of the 1973 Watergate scandal, which ultimately resulted in the resignation of Richard Nixon as President. Some major political scandals, such as the Whitewater scandal that embroiled the Clintons in the 1980s, and others have caught the attention of the press but, by and large, media sources are more interested in dramatic crime stories that draw wide public attention. The Media Angle The Media Angle The media plays an instrumental role in exposing white collar crime through news coverage on television, radio, newspapers, and magazines. However, the media pays comparatively little attention to white collar crimes compared to conventional crimes. The inattention may be due to the fact that the field of criminology historically has focused on conventional forms of harm, such as homicide, rape, assault, burglary, robbery and theft, rather than the presumptively “unintentional” harm caused by white collar crime. Exposing White Collar Crime Exposing White Collar Crime White collar crime is generally less visible than most types of conventional crime and, as such, is often more difficult to discover. The majority of law enforcement agencies are ill­ equipped to discover, or investigate, white collar crime and, as a result, its occurrence is typically brought to light by non­law enforcement sources, such as informers and whistleblowers. Unlike informers who may have had some complicity in the illegal acts being exposed, whistleblowers are not criminally implicated. Uncovering White Collar Crime Uncovering White Collar Crime Muckraking and Investigative Reporting Muckraking was the term used to describe early 20 th­ century journalists, such as Lincoln Steffens, who established the revelation of high­level wrongdoing as a legitimate journalistic enterprise. Muckraking, commonly referred to today as investigative journalism, experienced a revival in the 1970s as a result of political activism and anti­ establishment sentiments. Today, a small number of investigative reporters continue to pursue this category of news, along with television “magazine” shows such as 60 Minutes, 20/20, PrimeTime Live, and Front Line. Is White Collar Crime Crime? Is White Collar Crime Crime? White Collar Crime CRJU E491W­ Fall 2011 William C. Smith Sutherland’s Observation Sutherland By traditional definition, two criteria must be present before an act can be called a “crime.” A legal description of an act that is socially injurious; and A legal provision of a penalty for the injurious act. Sutherland’s analysis of 547 decisions by various courts and commissions against the 70 largest corporations in the U.S. under antitrust, false advertising, National Labor Relations, and patent, copyright, and trademark infringement laws led him to conclude that only 9% of the cases were treated as criminal although the laws under which the corporate acts were regulated all contained both of the traditional criteria for crimes. The Stigma of Crime The Stigma of Crime Sutherland noted that all 70 corporations had committed “crimes” based on the traditional definition but that “the criminality of their behavior was not made obvious by the conventional procedures of the criminal law” but was, instead, “blurred and concealed by special procedures.” He concluded that a conscious “differential implementation” of the law had come to be applied to the wrongdoing of corporations so as to eliminate the stigma of the corporation’s having committed a crime. Sutherland’s publisher, Dryden Press, however, feared that if Sutherland named the offending corporations, it could be sued for libel and demanded that he delete their names. He agreed to do so. It was not until 1983, when It was not until 1983, when the “uncut version” of Sutherland’s work was published that the seventy corporations were finally named. Prosecution v. Injunction Prosecution v. Injunction Although violation of a criminal statute constitutes a crime, regardless of the procedure used to violate the statute, the government early on ceased relying on criminal prosecution as its preferred method of enforcement against corporations. Instead, injunctions became the government’s principal means of criminal enforcement: a direct reversal of previous practice. An injunction is a court order which requires a party to do, or to refrain from doing, specific acts. Abrogation of Authority? Abrogation of Authority? The government also significantly abrogated its prosecutorial privilege and encouraged private parties, through the promise of receipt of a portion of the recovered damages, to enforce what were essentially criminal violations through the filing of civil suits. The result of the practice was to allow the corporate defendant to avoid appearing in a criminal court and, accordingly, avoid allegations thatthe corporation had committed a crime. Not Your “Usual” Criminals Not Your The reasoning of the U.S. Department of Justice for permitting the use of severe civil fines in antitrust cases was as follows: “While civil penalties may be as severe in their financial effects as criminal penalties, they do not involve the stigma that attends indictment and conviction. Most of the defendants in antitrust cases are not criminals in the usual sense. There is no inherent reason why antitrust enforcement requires branding them as such.” Today: Qui Tam Actions Today: Qui Tam Actions The False Claims Act (31 U.S.C. § 3729–3733) allows people who are not affiliated with the U.S. government to file actions against federal contractors who are alleged to have committed fraud against the government. The person filing is called a qui tam relator and, under the Act, stands to receive a portion of any damages recovered from the contractor. At common law, a writ of qui tam was a writ by which a private individual who assisted a criminal prosecution could receive all or part of any penalty imposed by the crown. Qui tam is an abbreviation of the Latin phrase “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” meaning "[he] who sues in this matter for the king sues as [well as] for himself." Who Can File a Qui Tam? Who Can File a Qui Tam? Employees and former employees Competitors Many relators are companies in direct competition with the company committing the fraud. State and Local Governments Current employees may file a qui tam lawsuit as a last resort, after attempting to resolve the issue at question multiple times through the company or organization itself. Former employees may choose to file qui tam action, having quit their positions, or been wrongfully terminated, after attempting to stop the fraud and choosing to pursue action later. Since 1986, local and state governments have been allowed to file suit against both contractors and medical providers to recover finances lost as a result of fraudulent schemes. Other possible relators include public interest groups and private organizations with an interest in stopping the fraud. Avoiding Stigma Avoiding Stigma The stigma of being charged with a crime has become something of a penalty in and of itself. A civil fine may be a penalty but it lacks the “brand” of criminal stigma. When the stigma of the criminal charge is imposed, it places the defendant in the category of being “criminal” and the defendant is then is viewed through a popular stereotype. In modem society, that which is deemed “criminal” is generally perceived to be lacking in cultural esteem or trustworthiness. For corporations, such stigmatization could have drastic economic and shareholder impact, outside of any criminal penalty itself, and is to be avoided at all costs. Explanations Explanations Sutherland felt that three factors helped explain “differential implementation” of the law with respect to white collar crimes: 1) the status of the businessman in society 2) the general trend away from punishment; and 3) the relatively unorganized resentment of the public against white collar criminals. Status of Businessmen Status of Businessmen The societal view of businessmen includes a combination of fear and admiration. Legislators admire and respect them, cannot conceive of them as “criminal,” andare afraid to antagonize them due to the fear of the possible loss of campaign contributions. They also believe that their misconduct can be reformed with “very mild pressure.” Trend Away from Punishment Trend Away from Punishment The trend, according to Sutherland, was seen in the almost complete abandonment of the most extreme penalties, such as the death penalty. He felt that the trend was to some extent attributable to the inclusion of members of the upper class within the scope of newly emerging penal laws, such as traffic violations. Today conventional penal measures have been in large part supplanted by non­penal measures such as probation, work release, and community service. Unorganized Resentment Unorganized Resentment Sutherland proposed that because white collar crime is not as “obvious” as traditional crime, members of the public do not readily appreciate their criminality. Additionally, a corporation may violate the law for years before its acts are discovered, at which time some members of the public may have come to view the conduct as “acceptable.” Finally, because media communication about white collar crime may not be particularly effective especially where a corporate offender controls the media outlet or those who control the outlet. Sutherland’s Conclusion Sutherland The relation between the law and social mores tends to be circular. Mores are captured in the law and enforcement of the laws tends to re­enforce the mores. This is especially true where criminal statutes are concerned. However, laws addressing white collar crime, many of which serve to conceal the criminality of the underlying behavior, are far less effective than purely criminal laws in re­enforcing social mores. ...
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