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  • White-Collar CrimeChapter 20

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • WHAT IS WHITE-COLLAR CRIME?White-collar crimeA non-violent crime committed by an individual or a corporation that is a breach of trust, confidence, or duty.Edwin Sutherland, is credited with having coined the term.White-collar crimes are categorized by:DeceitConcealmentViolation of trust Are not dependent on the application or threat of physical force or violence. Such acts are committed by individuals and organizations to obtain money, property, or services, to avoid the payment or loss of money or services, or to secure a personal or business advantage.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • WHAT IS WHITE-COLLAR CRIME?White-collar crimes are a form of sophisticated theft.Historically, law enforcement has virtually ignored many aspects of white-collar crime. Convicted offenders have typically gotten off with a fine and a slap on the wrist by the courts, and jail time was seldom associated with white-collar crimes. During the past decade, white-collar crimes have become of greater concern to Americans.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • WHAT IS WHITE-COLLAR CRIME?Notable Recent White-Collar TrialsEnronJim BakkerIvan BoeskyMichael Milken

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • IDENTIFYING WHITE-COLLAR CRIMESWhite-collar crimes fall into three major categories:Occupational crimes, Corporate crimes, and Individual crimes.Occupational crimeThe use of ones occupation to illegally obtain personal gain.Corporate crime Any activity that is undertaken by a corporation for its benefit but which violates the law.Individual crimesIndividuals acting on their own behalf or with others to defraud the public.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Categories of White-Collar CrimeHerbert Edelhertz (1970) divided white-collar crimes into four distinct categories:ad hoc violationsabuses of trustcollateral business crimescon gamesAd Hoc Violationsillegal activities committed by individuals for personal gain or profit. Examples: Tax evasion or various welfare and social service frauds

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Categories of White-Collar CrimeAbuses of TrustAbuses of trust include any misuse of authority or malfeasance or public corruption committed by an individual in a place of trust in an organization or government.Examples: embezzlement and briberyCollateral Business Crimesencompass any prohibited activities by which organizations intend to further the business interests of a company. Examples: Falsifying odometer readings on used cars, attempting to conceal environmental crimes, or using uncalibrated gasoline pumps or weighted scales.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Categories of White-Collar CrimeCon GamesConfidence games, or con games, involve a variety of activities designed to swindle people out of their money or property. These may include fraudulent gold mine sales, sales of phony vacations, and other promises of something for nothing that never materialize.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Elements of White-Collar CrimesFive basic elements of white-collar crimes: (1) intent(2) disguise of purpose(3) reliance on the victims ignorance(4) voluntary assistance from the victim(5) concealmentIntentOffenders awareness that the activities are wrong or illegal.Disguise of PurposeRefers to the offenders conduct while carrying out the scheme.Covertness

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Elements of White-Collar CrimesReliance on the Victims IgnoranceLiterally means that the victim is unable to see that he or she is being deceived.Voluntary Assistance from the VictimMost white-collar crimes involve duping or inducing the victim to voluntarily become involved in the crime. Voluntary assistance may refer to actions on the part of the victim who is to be defrauded of money or property.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Elements of White-Collar CrimesConcealmentConcealment to cover up their criminal activities is the goal of all white-collar criminals.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • TYPES OF WHITE-COLLAR CRIMEEmbezzlement and Employee TheftsEmbezzlement - The misappropriation or misapplication of money or property entrusted to ones care, custody, or control.Typically, this sort of white-collar crime involves the use of ones position in a business or organization to steal company funds or company property for personal use, gain, or profit.Industrial EspionageEspionage work undertaken in corporate and industrial areas to keep up with or surpass competitors.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • TYPES OF WHITE-COLLAR CRIMEInsider TradingAn employees or managers use of information gained in the course of his or her job and not generally available to the public to benefit from fluctuations in the stock market.Martha Stewart CaseThe problem for law enforcement investigations involves distinguishing a good stock tip from insider information.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Bribery, Kickbacks, and PayoffsBribe The payment of cash, goods, or services to someone in exchange for some special service, product, or behavior.KickbackThe payment back of a portion of the purchase price to the buyer or a public official by the seller to induce a purchase or to improperly influence future purchases.PayoffReceiving compensation or money from an individual in exchange for some favor.Payola A payment to a disc jockey for a favor such as promoting a favorite recording.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Tax EvasionPerhaps the most common form of white-collar criminality is tax cheating or tax evasion.Average American citizens do it by underreporting their income, claiming false deductions, inflating the amount of charitable contributions, smuggle goods or assets, or undertaking some other type of deception.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Corporate CrimeCorporate crimes are crimes committed for the benefit of a legitimate business organization or enterprise. Corporate crime may take many forms:Price fixingBriberyKickbacksTax evasion or other tax violationsAssorted frauds Environmental crimes or concealments

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Corporate CrimeFor the most part, like many aspects of white-collar criminality, corporate violations are policed by various regulatory agencies. The Federal Trade Commission, established in 1914, is responsible for examining many corporate trade practices. In all, more than fifty federal regulatory agencies have varying degrees of police power over corporate violations of law.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • INVESTIGATING WHITE-COLLAR CRIMEInvestigation at:Federal LevelState LevelCorporations themselvesIn some jurisdictions, local, state, and federal law enforcement agencies and prosecutors offices have teamed together to detect and apprehend white-collar criminals.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Computer and Cyber CrimeSome people have begun referring to computer-related crime as cyber crime and to the people who perpetrate it as cyber criminals. Cyber crimes Crimes committed on the Internet using the computer as either a tool or a targeted victim.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Computer and Cyber CrimeA National Institute of Justice report outlined five distinct categories of computer crime: Internal computer crimesTelecommunications crimesComputer manipulation crimesSupport of criminal enterprisesHardware or software thefts

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Internal Computer CrimesIncludes any alteration of an existing computer program that causes it to operate in a manner other than that for which it was designed.Computer virusA computer program, usually hidden within another computer program, that inserts itself into programs and applications and destroys data or halts execution of existing programs.If an infected computer is discovered soon after a virus has attached itself, it can be cured with any of a number of commercial antivirus programs. Unfortunately, if the virus is discovered too late, it can ruin the data and memory sectors of a computers hard drive.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Telecommunications CrimesInvolve illegal access to or use of computer systems over telephone lines.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Computer Manipulation CrimesInvolve changing data or creating records in a system for the specific purpose of advancing some other crime.Example:Writing false bills to the hospital and then authorizing them to be paid.

    Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

  • Support of Criminal EnterprisesCriminals can use computer-based account ledgers to keep track of their drug business or the profits and expenses of an auto theft ring. Computers may even be used by criminals to maintain information or to simulate a planned crime.Computers can be used to create counterfeit concert, theater,