theories of white-collar crime

THEORIES OF WHITE-COLLAR CRIME

The “Discovery” of White-Collar Crime• Today, people are well aware of white-collar crime, and judges are

willing to impose harsh sentences on white-collar criminals

• However, this has not always been the case

• In the 1960s people were very indifferent to white-collar crime and even sympathized with the offenders

• Seen as much less serious than street crime

• Edwin Sutherland changed the field when he published his essay on white-collar criminality

• Argued that respectable executives, physicians, and politicians frequently violated the public’s trust and committed crime

• At this time, white-collar crime was not recognized

• White-collar crime existed but was unseen; rather, the focus was on crime of the lower-class

The “Discovery” of White-Collar Crime• Five factors coalesced to increase concern about white-collar

crime:

1. The turbulence of the 1960s and 1970s (Vietnam, Watergate, Kent State) caused the public to mistrust those in power, including the government and corporate officials

2. The Civil Rights Movement increased the salience of equality before the law

3. Consumer and environmental movements disclosed how corporations were defrauding consumers and polluting the environment

4. Television shows regularly publicized how those in positions of power abused the trust placed in them

5. Celebrated prosecutions of white-collar offenders were greeted with praise by the public

The “Discovery” of White-Collar Crime

• Criminological attention in white-collar criminality increased dramatically after the 1970s

• Rediscovered Sutherland’s work on white-collar crime

• White-collar crime now seen as a specialization in the field

Sutherland: “White-Collar Criminality”• Sutherland worked for more than a decade collecting relevant

materials (since 1928) before setting up his concept of white-collar crime or crime related to business

• Claimed criminality in business was expressed most frequently in the form of misrepresentation in financial statements, manipulation of the stock exchange, commercial bribery, bribery of public officials, misrepresentation in advertising, embezzlement, etc.

• Presented his work at a meeting of sociologists and economists in 1939 and published it in 1940

• This work deemed him the father of white-collar crime

• Argued his intent was scientific in that traditional theories that explain lower-class crime cannot explain business crime

• Claimed he had no intention of reforming the business world

Sutherland: “White-Collar Criminality”• “White-collar” was the term used to describe respected members of the community in trusted occupational positions

• White-collar crime is defined as a crime committed by a person of respectability and high social status in the course of an occupation

• This definition is intentionally vague with many scholars still debating what conduct should be called white-collar crime

Sutherland: “White-Collar Criminality”• Sutherland offered two distinct criteria for white-

collar crime in his 1940 work:1. The crime had to occur in the course of the person’s

occupation

2. The crime had to be committed by a person of respectability and high social status

• Sutherland wanted to focus on the crimes of the rich and powerful

• This criteria causes much difficulty because hard to determine how much respectability a person must possess for it to be white-collar crime

Sutherland: “White-Collar Criminality”• Argued the varied types of white-collar crime could be

reduced to two categories:

1. Misrepresentation of asset values

• Examples: fraud, swindling

2. Duplicity in the manipulation of power

• Example: double-cross

• Offender holds two antagonistic positions

• The trust of one position is violated in the interest of the other position

Sutherland: “White-Collar Criminality”

• Sutherland addressed what should be considered white-collar crime• Some argue that research should only focus on those acts that have resulted in a conviction in a criminal court

• Sutherland rejected this view

• Realized many harms perpetrated by companies were not treated as crimes and they could escape criminal prosecution because they had the power to shape the laws passed and how the statutes were enforced

Sutherland: “White-Collar Criminality”• Sutherland addressed what should be considered white-collar

crime• Argued convictability should be central to the decision on what

counts as white-collar crime

• Whether the white-collar offense could potentially be prosecuted under criminal law or would have been if pressure were not placed on the prosecuting agency

• Also recognized the impact of class bias in the courts

• Recognized other agencies besides the criminal court must be included (e.g., administrative boards, etc.)

• Contended people who are accessories to the crime must also be included when counting white-collar crime

Sutherland: “White-Collar Criminality”• Claimed crimes of the lower-class and white-collar crimes

differ principally in the implementation of the criminal laws that apply to them

• Lower-class crime handled by the CJS with penal sanctions, while white-collar crimes often result in no official action or are dealt with as civil cases or by regulatory boards

• The difference in the implementation of the criminal law between lower-class crime and white-collar crime is due principally to the difference in the social positions of the two types of offenders

• Powerful, white-collar offenders are able to influence the law and often bypass it

• Also, white-collar victims are often unorganized, lack technical knowledge, and cannot protect themselves, thus allowing the white-collar offender to better defend himself/herself

Sutherland: “White-Collar Criminality” and The Importance of Studying White-Collar Crime

• In his 1940 piece, Sutherland identified why it was important to study white-collar crime

1. The public’s ignorance about the costs of these white-collar offenses

• A single scandal can costs millions with the financial cost of white-collar crime probably several times as great as the financial cost of all the crimes which are customarily regarded as the “crime problem”

2. White-collar crime has “social costs”

• White-collar crime lowers morale and produces “social disorganization on a large scale”

• Creates distrust that damages social relations

• Lowers confidence in central institutions


3. White-collar crime does take lives and hurts people

• There are “physical costs” where people die, are injured, and are made ill

• Examples: defective products, unsafe working conditions


4. White-collar crime calls into question almost all theories of crime

• Many theories unable to explain this type of crime

• Many traditional theories focus on the role of poverty, and most white-collar offenders are not in poverty

• Need to develop general theories of crime that can explain all varieties of illegal conduct—or—

• Create theories specific to white-collar crime—or—

• Develop general theories that use the same core variables to explain all types of crime but argue that the content of those variables differs across offense types

• Sutherland did this with differential association theory arguing white-collar crime, like all crime, is learned

Sutherland: “White-Collar Criminality” and the Importance of Studying White-Collar Crime

• Corporations have such a large impact because they touch everyday American life through employment and products we consume

• Therefore, we need to study the crime committed by these agencies

Sutherland: “White-Collar Criminality”• Overall, Sutherland made three important contributions

to the field:

1. Introduced the concept of white-collar crime and noted what kinds of actions fell under this umbrella

2. Put to rest that crimes by respectable members of society did little damage

3. Challenged the existing criminological theories of crime

Sutherland’s Book: White Collar Crime• In 1949, Sutherland presented the results of his analysis of 70 of the largest industrial and commercial corporations over the course of their lifetime

• Found every company had at least one adverse legal decision, and they averaged 14 violations

• 98% had two or more transgressions

• Counted criminal convictions and civil court decisions

• Even when restricted to criminal convictions only, 60 percent of the corporations had convictions, with an average of four convictions each

• Thus, most corporations were recidivists

Theories of White-Collar Crime• Tend to incorporate one or more of four central factors:

1. Exposure to a criminal culture

2. Life in a competitive financial system

3. Unique illegitimate opportunities produced by a legitimate work setting

4. The decision to break the law by respectable people

Theories of White-Collar Crime• Exposure to a criminal culture

• Sutherland argued in differential association theory that people offend because they are exposed to definitions favorable to crime and to the techniques needed to commit any given criminal act

• Crime is learned by interacting with others who are already involved in criminal pursuits

• Applied this theory to crime in disorganized inner-city areas

• Also applied this to white-collar crime

Theories of White-Collar Crime

• Exposure to a criminal culture

• Proposed many sectors in the legitimate work world were socially disorganized and more organized for crime than against it

• White-collar crime had similar causes as street crime

• Criminal cultures flourish in many white-collar sectors creating a “normalization of deviance”

• When under pressure to create results, criminal values can arise

• When dangerous risks arise, there is a tendency to define them as technical issues that can be safely ignored or solved

• Norms arise to minimize or normalize the risks

Theories of White-Collar Crime• Exposure to a criminal culture

• People learn certain unethical and illegal business practices are normal

• Efforts made to teach newcomers criminal values and skills

• Resistance is seen as not being a team player

• Companies provide strong differential associations that favor and reward legal violations

• Learn the techniques and definitions of crime while developing an ideology that accepts criminal violations

• Variations in illegalities are linked to the degree to which corporate cultures support criminal practices

Theories of White-Collar Crime• Competitive financial world

• Some argue money is the root of all evil

• People may commit crime to solve financial problems

• Donald R. Cressey argued embezzlement was a response to a “non-sharable problem” when the person is in a position of trust and can rationalize the feelings of guilt

• Example: gambling debts, excessive family expenses

• Others argue white-collar crime is nurtured by the ever-present profit motivation

• Maximization of profits supersedes concerns for the well-being of workers, customers, or the community

• Any means necessary used to make money

Theories of White-Collar Crime—Shover and Hochstetler: “Choosing White-Collar Crime”• Opportunities to offend

• Work is filled with both legitimate and illegitimate opportunities

• Shover and Hochstetler use the concept of lure to describe the presence of attractive targets for offending

• Lure is arrangements or situations that turn heads

• However, the chance to offend is not a full-fledged opportunity unless credible oversight is lacking

• Thus, lure is not a criminal opportunity unless there is a lack of oversight

• Lure makes the criminally predisposed and tempted sensitive to whether their actions are being monitored and how oversight can be defeated


• A criminal opportunity is an arrangement that offers potential for criminal rewards with little apparent risk for detection

• Lure is a key determinant of the supply of opportunities for white-collar crime

• People and organizations can be predisposed to exploit lure

• The middle-class and upper-class backgrounds of white-collar criminals can lead to a predisposition to exploit lure


• Middle-class family and community life may be a “generative world”

• Socialized to exert social power in relationships, take risks, and be competitive

• May become arrogant and uncaring toward others or have a sense of entitlement

• Develop linguistic skills to help them neutralize constraints and deny guilt

Theories of White-Collar Crime—Shover and Hochstetler: “Choosing White-Collar Crime”

• Opportunities to offend

• Many white-collar jobs involve trust with little oversight

• The regulatory and criminal justice systems often provide no or ineffective oversight of powerful lures in white-collar settings

• Often place corporate economic interests above the interests of workers or consumers

• Lure becomes opportunity in the absence of credible oversight


• Self-restraint is the first line of defense against criminal decision-making

• Lure is a criminal opportunity when offenders are indifferent to the tug of conscience, reputation, or concern for family and peers

• State oversight is external to the individual

• Not very effective

• Can be direct observation by individuals or impersonal monitoring via periodic audits, television cameras, or computer programs

Theories of White-Collar Crime• Opportunities to offend

• Benson and Moore argue three properties characterize white-collar offenses:

1. The offender has legitimate access to the location in which the crime is committed

2. The offender is spatially separated from the victim

3. The offender’s actions have a superficial appearance of legitimacy

• The above conditions provide ample opportunities to deceive others and to conceal conspiracies to offend

Theories of White-Collar Crime• Decision-making by respectable offenders

• Must deal with the cognitive dissonance of a being a good person doing a bad thing

• Use the techniques of neutralization (Sykes and Matza)

• People have to invoke beliefs that would neutralize normative controls

• Makes breaking the law permissible

Theories of White-Collar Crime— Benson: “Denying a Guilty Mind”• Decision-making by respectable offenders

• Benson calls this “denying the guilty mind” or denying criminal intent

• Do not deny behavior, but deny that their actions were motivated by a guilty mind

• Develops the concept of “accounts” or the justifications white-collar offenders use to permit them to neutralize feelings of guilt before and following criminal behavior

• Two varieties of accounts:

1. Prior to the criminal act or during an ongoing criminal enterprise that might last months or years

• Relieves feelings of guilt and allows the conduct to continue

2. Rationalization occurring after the act

• Allows the offender to cope with the stigma of being publicly defined as criminal

• Furnishes an excuse for their conduct


• Benson argues these people break the law but deny they are a “true criminal”

• Do not have a past arrest record

• Accounts explain why crime is not really serious and why the offender is not really blameworthy

• Accounts are tied to the offender’s social situation

• In a capitalist society, offenders are likely to explain criminality by arguing illegal practices were necessary to make profits for shareholders and to keep the firm afloat

• In a bureaucracy, offenders can argue they were just following orders or did not have the decision-making power because of the diffusion of responsibility


• Accounts are also shaped by the specific criminal enterprises in which they are engaged

• Antitrust violators

• Focused on the everyday character and historical continuity of their offenses and argued they were following established and necessary industry practices

• Need to make profit to survive

• Their actions were blameless and a harmless business practice

• Were very critical of the motives and tactics of prosecutors

• Compared their crimes to the crimes of street criminals



• Tax violators

• Claim everyone cheats somehow on their taxes

• See self as getting an unlucky break

• Argue they did not know due to the complexity of the tax laws

• Simple errors resulting from ignorance

• Poor recordkeeping

• Argue they have altruistic motives• Compare self to street criminals



• Violations of financial trust (embezzlement)

• Unlike the other offenders, admitted responsibility

• Argued they were under extraordinary circumstances and the offense was an aberration in their life history

• Argued they had some restraint because they did not take more money

• “Was not himself” during the crime

Theories of White-Collar Crime—Benson: “Denying a Guilty Mind”• To effectively deny the guilty mind, the offender must:

1.Minimize the seriousness of their criminal act

• Argue they may be helping others

• Contend everyone was doing it, so it was normal

• Lack of identifiable victims

2.Convince others their blameworthiness was slight

• Argue the complexity of the laws and regulations are to blame

• Crimes due to ignorance or inattention—accidental

• Contend there were extenuating circumstances

• The decision to offend is shaped by the offender’s location in the life course, in a particular society, and in a specific occupation

Theories of White-Collar Crime— Shover and Hochstetler: “Choosing White-Collar Crime”

• Decision-making by respectable offenders

• Shover and Hochstetler argue that white-collar crime is a reasoned choice

• Assert that it is rational to the extent that offenders weigh the costs and benefits of the crime

• But, like street criminals, offenders weigh the potential payoffs of crime more heavily than the estimated risks

• Individual propensities shape what offenders weigh and choose

Theories of White-Collar Crime— Shover and Hochstetler: “Choosing White-Collar Crime”• Decision-making by respectable offenders

• This rational choice is also placed within the social context of the offender

• White-collar settings are filled with lure and little oversight

• Individuals respond differently to opportunities (lure) depending on their internal self-restraints and their criminal predispositions

• Thus, the choice to offend is a product of lure, oversight, and the internal restraints and motivation of the offender

• White-collar offenders often pay more attention to the profits from their schemes than to the risk of being detected

• Benefits are easily seen as large, with little state oversight

• White-collar crime is committed when people estimate the payoff as greater than the risks or consequences of being caught

Theories of White-Collar Crime— Shover and Hochstetler: “Choosing White-Collar Crime”• Decision-making by respectable offenders

• The key in lowering white-collar crime is to use public policy to constrain individual decision-making so that those who consider crime do not find it to be a profitable option

• To determine the effectiveness of deterrence of white-collar crime, one needs to examine the subsequent, short-term effects of increased sanctions on specific types of white-collar offending

• The results are mixed

Summary• Sutherland introduced the concept and study of white-collar crime• Many theorists since Sutherland have tried to explain why white-

collar crime occurs

• Some argued that exposure to a criminal culture in a work setting was the cause (Sutherland)

• Others focused on the competitiveness of the corporate world

• Still others examined the opportunities for and lure of white-collar crime (Shover and Hochstetler)

• And finally, others explained white-collar crime by the decisions of offenders and their ability to rationalize the behavior or deny their guilt (Benson, Shover, and Hochstetler)

theories of white-collar crime

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