Crime in the Business World
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Crime in the Business World






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    Crime in the Business World Crime in the Business World Presentation Transcript

    • Crime in the Business World
    • I. Costs
      A. Crime is most often associated with the lower class
      (street crime) but crime in the business world is the most
      costly type of crime in the US.
      1. Approx. $300 B lost to business crime each year
      compared to about $20 B for street crimes (violent
      and property). 
      2. In 2005, nearly 17,000 people were reported
      murdered in the US. In contrast, corporate crime
      may result in at least 20 million serious injuries and
      30,000 deaths.
    • 3. Consumers often pay in the form of hidden costs. For example, Insurance fraud (non-health
      insurance) costs the average family between
      $400 and $700 per year, with a total cost
      exceeding $40 billion
    • II. Turning a Blind Eye?
      A. Statistics on corporate crime are not collected on a
      regular basis by any official government
      B. Prosecution is unreliable and sporadic
      C. Since corporations cannot be prosecuted
      determining who is responsible can be difficult
    • III. Corporate Culture Theory
      A. Some businesses place high demands on employees
      while simultaneously maintaining a climate that is
      tolerant of employee deviance.
      1. Differential Associations? (Fill in the blanks)
      B. Many corporate employees violate the law with enough
      frequency that they could be considered habitual
    • IV. Types of Business Crime
      A. Corporate Crime
      1. Definition: Illegal acts committed for the economic
      benefit of the company in which the offender is
      a. Individuals benefit indirectly as the company prospers.
      2. Goals of corporate crime:
      a. Rig the "free enterprise" system
      b. Make the company appear more profitable.
    • B. White Collar Crime
      1. Definition: Crimes committed by employees of a
      company for personal gain, in the course of
      their work, and without the knowledge of their
      a. Can be either against the company or
      against customers or clients of a company
    • 2. Occurs in all aspects of the business world:
      a. Big business where it may be easier to cover
      b. Small business where only one employee may
      be handling the books
      c. Finance industry that deals with “other people's
      d. Service industry where there is no inventory to
      match against records
    • V. Famous Examples:
      1. Enron (2002)--securities fraud, insider trading, obstruction of
      justice, conspiracy. Wiped out the savings, pensions and jobs
      of thousands of former employees, and cheated California
      energy consumers out of millions of dollars. At least 3
      executive are serving prison time, including Jeff Skilling, who
      began his 24-year sentence in Waseca. CEO Kenneth Lay
      died of heart failure before he served any time.
      2. ADM (1993)--Price fixing. $100 million fine
      This American Life podcast: The Fix is In
      3. Martha Stewart (2004)--insider trading. 5 mos. prison, $30,000 fine
      4. Michael Milken (1989)--securities fraud. Fined $1 billion, 22 mos. in
      prison (Don't worry about him, he's still worth over $2 billion!)
    • Questions
      1. Why do we tend to focus more on street crime than
      corporate crime?
      2. Should we spend more money on prosecuting white
      collar criminals and corporate crooks? Would that be a
      good investment of public money?
      3. How would you maintain high ethical standards in an
      environment where you have the opportunity to take
      money or goods you have been entrusted with?