Financial Crime and Fraud Investigation: Theories of Motivation

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Learning outcomes

Understand how white collar crime is defined and the problems arising from that definition

Appreciate the dynamic nature of the changing definitions

Understand the variety and number of the motivational theories propounded in this area and their genesis

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Defining white collar crime

Different to street crime as it is obscured and innocuous.

Street crimes are committed by confronting victims or entering their homes

White collar crimes are committed by guile, deceit, or misrepresentation

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Defining white collar crime

Began to be differentiated in the early 1900’s

For example Ross (1907) “criminaloids”The villain most in need of curbing is the

respectable exemplary trusted personage who ... is able from his office chair to pick a thousand pockets, poison a thousand sick, pollute a thousand minds, or imperil a thousand lives

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Defining white collar crime

Not to do with poverty Not to do with social pathology Not to do with physical or psychological

pathology

‘crime committed by a person of high status and respectability in the course of his occupation’ (Sutherland 1949)

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Defining white-collar crime

White-collar crime may be defined approximately as a crime committed by a person of respectability and high status in the course of his occupation. . . the financial cost of white-collar crime is probably several times as great as the financial cost of all the crimes which are customarily regarded as the crime problem. (Sutherland)

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Problems with defining white-collar crime High-status offender? Definitional ambiguity Little distinction between crimes

committed by businesses and crimes carried out against an organisation

‘crime committed in the course of legitimate employment involving the abuse of an occupational role’ (Croall 1992)

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‘if it can be shown that white collar crimes are frequent, a general theory that crime is

to do with poverty and its related pathologies is shown to be invalid’

(Sutherland 1949)

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Definitional

Because of this definitional difficulty Clinard and Quinney (1967) suggested replacing the term white collar crime with two constitutive terms “corporate” and “occupational” crime

“Crimes of the middle classes” Weisburd et al (1991)

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Occupational crime

For personal gain: Employee theft/computer time, telephone

embezzlement etc. Fraud with customers (charging for work

not done) Fiddling expenses, embezzlement, tax

evasion.

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Corporate crime

Offences against employees Offences against investors Offences against consumers Offences against the public Offences against the state

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Understanding corporate crime

Organisational goals: profit, growth, market control

Individual characteristics: anomie of success = unlimited ambition,

shrewdness and moral flexibility (anomie is the lack of usual social or ethical

standards)

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Understanding corporate crime

The motive: a rational solution to the corporate problem

The means: ideology – structured immoralities of

irresponsibility + a lack of law enforcement The opportunity:

low surveillance

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Why are corporate crimes different ? Offences tend to be invisible The acts/offences tend to be very complex There often is no one offender May be no victim or many victims Ambiguous criminal status e.g proof of

intent

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Criminology of White Collar Crime

No general theory of crime existsSuch a theory would be able to explain not

only different crimes but provide similar reasons why males, females, minorities and non-minorities commit crime.

Number of master concepts around disciplinary schools: Biology, psychology, sociology

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Criminology of White Collar Crime Biology discredited e.g. physical

manifestations such as facial appearance Psychological theories for general crime;

Childhood traumaPersonality traits most studied: risk taking,

recklessness. Characterised by Gottfredson and Hirschi (1990) – Low Self Control theory: argued as first six years of life which matter

Punch (2000) argues egocentricity is best explanation, within WCC this is over the top bordering on paranoid meglomania

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Criminology of White Collar Crime Sociological approaches centre around

idea of relative deprivationSense of envy or jealousy about what other

people have Different to absolute deprivation instead of

deep anger, produces brooding “get even” type of resentmentAnother area is the idea of deviant

organisational culture and networks

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Criminology of White Collar Crime

Traditional criminological theories applied to WCCRoutine activities theory: absence of

guardians and pool of victims

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Shover and Hochstetler (2006)

Concept of rational choiceBelieved to explain significant variation in all

crimes across time, space, populations and individuals

Assumes that “when punishment is not only uncertain but altogether improbable, crime rises precipitously”

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Criminology of White Collar Crime Traditional criminological theories applied

to WCCSocial control theory: assumes pre-motivated

offenders but based upon weakness in social bonds.

Learning theory

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Edwin Sutherland

Theory of differential association: Criminal behaviour is learned not inherited Learned in interaction with other persons Carried out within intimate personal groups (ie

not from impersonal activities such as films or TV)

Not just techniques that are learned but motivations and rationalisations

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Edwin Sutherland

Direction of motives and drives is learned from definition of legal codes as favourable or unfavourable

Person becomes delinquent when has an excess of definitions favourable to law violation contrasted with definitions unfavourable to violation

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Criminology of White Collar Crime Traditional criminological theories applied

to WCCStrain theory: holds that even good people

commit crime when they become confused about the goals and means of material success

Labelling theory: sensitising concepts/symbolic meanings/identity processes

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Interactionist theory

Focus on the way in which individuals (or “social actors”) act rather than react to social stimulation

The way “social actors” interpret behaviour is significant as a means of understanding the way the world is socially constructed

This construction focuses upon meanings people give to behaviour

Example of traffic lights social construct Go through red wrong/illegal unless…

If this is so then concept of crime is socially constructed

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Interactionist theory

The ability to develop shared meanings is the key to understanding human interaction. Our ability to think means what we effectively do, according to Interactionists, is to create a sense of society and culture in our minds. We behave "as if" these things physically exist.

Thus, the world humans inhabit is a social construction. This involves the idea that society is a product of our ability to think and express our thoughts symbolically. The things that we recognise as being "part of our society" or "part of our culture" are simply products of our mind.

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Interactionist theory Society is an elaborate fiction we create to help us make

sense of our relationships and impose some sort of order on them.

We create this fictional universe to make social life possible, since without a sense of shared meanings about what we see and do, interaction would, at best, be very difficult and, at worst, impossible.

Cultures, therefore, represent the general store of shared meanings that people create to give them a feeling of having things in common and as the basis for constructive social interaction.

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Interactionist theory

For example, think of any dealings you have had with people who do not behave in ways that conform to your cultural expectations.

People who are drunk, for example, frequently fail to observe expected cultural norms and this makes it very difficult for us to interact with them on anything but a very basic level of understanding.

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Interactionist theory

In simple terms, therefore, we have to consider the process whereby individuals "agree to agree" about what they are doing (the purpose of interaction) and why they are doing it (the meaning of interaction).

Interactionists generally start to explain this process by referring to the concept of a definition of the situation.

How we define a situation affects how we behave when we are in that situation.

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Interactionist theory

Thus, when someone we meet reveals one of their social labels to us ("I'm an accountant", for example) we mentally "open the box" that contains our store of knowledge about “accountants".

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Interactionist Theory of Motivation

Interactionist theory seems well suited to white collar crime

Interactionists see motivation as a symbolic construct ie. the meaning that individuals attribute to a particular situation

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Interactionist Theory of Motivation

This meaning of their social reality in general structures their experience.

It makes certain courses of action seem appropriate while others are excluded.

Cressey (1953) found that embezzlers “adjust” the symbolic construction of their behaviour to fit societal expectations

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Rationalisations

Rationalisations are not after the fact but an integral part of an “actor’s” motivation (most common are)

1. Just borrowing the money2. Denial of harm ie. No-one gets hurt3. Unjust laws ie. Government interference4. Act necessary to achieve economic goal or to survive ie.

therefore must comply especially in work environment5. Transfer of responsibility ie everyone is doing it6. Deserve the money

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Coleman

Interactionists argue that symbolic constructs are learned from association with others ie back to Sutherland’s differential association theory

Coleman argues that the interactionist theory does not explain the motivations of white collar crime

Looks to modern industrial capitalism as a factor

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Culture of Competition

The idea that wealth and success are central goals of human endeavour is part of a larger complex of beliefs that may be termed the “culture of competition”

The pursuit of economic self interest and the effort to surpass their fellows in the accumulation of wealth and status are of critical importance to these … actors (Coleman, ibid)

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Culture of Competition

Creates a pervasive sense of insecurity as an undercurrent in industrial capitalism

This fear of failure permeates every stratum of contemporary society.

It is a corollary of the demand for success. These factors have grown in the 21st

century

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Culture of Competition

Some crimes result from the efforts of individuals trying to live up to expectations of associates and friends.

When viewed at group level the culture of competition still appears.

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Culture of Competition

Anthropological studies of hunting and gathering societies find little of this acquisitive materialism we see in society

First such individualism noted in early days of the modern capitalist society

Previously little surplus wealth existed

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Normative Boundaries

Ethical standards for economic behaviour are easily combined at a theoretical level.

However public see the contradiction between the two i.e. “nice guys finish last”

Major conflict in society

Link to relative deprivation idea and anomie

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Subcultures

Given this societal conflict there are in addition occupational subcultures present

Each complex organisation has an “ethical tone” that either reinforces or opposes the normative standards for economic behaviour

Industry subcultures Occupational subcultures which cut across

industries and organisations

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Subcultures

Because of this isolation, work related subcultures are able to maintain certain criminal activities as acceptable or recognised behaviour.GE price fixing example – they had forgotten

it was illegal Subcultures can also work to positive

effect

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Punishment

The severity of punishment for white-collar crime varies inversely with the power and influence of the typical offender

Studies show that street crimes are punished more severely than occupational crimes.

Stay in nicer prisons Same inverse relationship also applies to

likelihood of prosecution

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Some key texts

Sutherland, E. (1949) White Collar Crime, Dryden. Clinard, M. and Quinney, R. (1967) Criminal Behavior

Systems: A Typology, Holt Rhinhart & Winston. Coleman, J. (1987) Toward and Integrated Theory of White

Collar Crime, The American Journal of Sociology, 93, (2). Gottfredson, M. and Hirschi, T. (1990) A General Theory of

Crime, Stanford University Press Croall H. (1992) White Collar Crime,OUP. Punch, M. (2000). Suite violence: Why managers murder and

corporations kill. Crime Law & Social Control. 33:243-80. Shover, N and Hochstetler, A. (2006) Choosing White-Collar

Crime, CUP.