Attorney Ray Richards brings to life the realities and the in court moves to create, sustain and win white collar crime cases. The past, present and future of the topic are discussed and Attorney Ray Richards even details how white collar crime with the internet age isn't so exclusive to executives!

1. Chapter 12
Enterprise Crime: White-Collar Crime,
Cyber Crime, and Organized Crime

2. Enterprise Crime
 Crimes of the marketplace
 White-collar crime: Illegal activities of people and institutions who
profit through legitimate business transactions
 Cyber crime: Involves people using instruments of modern
technology for criminal purposes
 Organized crime: Illegal activities of people and organizations,
which profit through illegitimate business enterprise

3. Figure 12.1 Enterprise Crime: White Collar, Cyber Crime, and
Organized Crime

4. White Collar Crime
• Edwin Sutherland coined the phrase “white collar crime” to describe
criminal activities of the rich and powerful
 Contemporary definitions of white collar crime include both
middle-income persons and corporate titans
 Costs of white-collar crime are in the hundreds of billions of
dollars and exceed any other type of crime
 White-collar crimes both kill people and damage property

5. Components of White-Collar Crime
• Stings and Swindles
 A white collar crime in which people use their institutional or
business position to bilk people out of their money
 Swindlers often target elderly and religious organizations
• Religious swindles
 Use of religion and creation of fake religious organizations to bilk
those out of money (Stelter and Vision Oil Company)

6. Components of White-Collar Crime
• Chiseling
 Involves cheating an organization, its consumers, or both on a
regular basis
 Bogus auto repairs
 Professional chiseling: Use their position to chisel clients (doctors
and pharmacists)
 Securities fraud: Commodity and stock markets deceptions
• Churning (repeated unnecessary buying/selling)
• front running (placing personal orders ahead of clients)
• bucketing (skimming profits)
• insider trading ( information giving the trader unfair advantage)

7. Components of White-Collar Crime
• Individual Exploitation of Institutional Position
 Individuals’ exploiting their power or position in organizations to
take advantage of other people who have an interest in how that
power is used.
 Occurs when the victim has a clear right to expect a service and
offender threatens to withhold service unless an additional
payment or bribe is forthcoming.

8. Components of White-Collar Crime
• Influence Peddling and Bribery
 Taking of “kickbacks” in return for contracts or favors
 Influence peddling in government: acceptance of bribes for favor
(Robin HUD and police examples)
 Influence peddling in business: payoffs for business contracts
(Gulf Oil and Lockheed)
 Congress pas the Foreign Corruption Practices Act in 1977 in
response to such violations

9. Components of White-Collar Crime
• Embezzlement and Employee Fraud
 Blue-collar fraud: Acts of pilferage
 Management fraud:
• Converting company assets for personal benefit
• fraudulently receiving bonuses
• fraudulently increasing personal holdings of company stock
• manipulating of accounts
• concealing unacceptable performance form stockholders

10. Components of White-Collar Crime
• Weblink
www.whistleblowers.org/

11. Components of White-Collar Crime
• Client Fraud
 Health care fraud: Includes ping-ponging, Medicare/Medicaid
frauds, kickbacks and self-referrals
 Bank fraud: Includes check kiting, forgery, and illegal transactions
 Tax evasion: Tax fraud by deliberately underreporting taxes

12. Components of White-Collar Crime
• Corporate Crime (Organizational Crime)
 Actual authority: Occurs when a corporation knowingly gives authority
for an employee to act
 Apparent authority: Occurs when third party reasonably believes the
agent has the authority to act
 Illegal restraint of trade and price fixing: Involves a scheme to stifle
competition and create a monopoly (Sherman Antitrust Act)
 Tying arrangement: Requiring customers to use other services
connected to corporation
 Group boycotts: Of retail stores not complying with rules or wishes
 Price fixing: Conspiracy to set and control prices
 Deceptive pricing: Occurs when corporations use incomplete or
misleading information to fulfill contracts (defense contractors)
 False claims and advertising: Involves unjustified claims about a
product (telemarketing)
 Worker Safety/Environmental crimes: includes unsafe working
conditions and pollution

13. CNN Clip - Tyco CEO On Trial

14. Causes of White- Collar Crime
• Greedy or Needy
 Motivations include a need to keep or improve a job, satisfy egos,
or keep up with inflation to support a family
• Corporate Culture Theory
 Involves placing excessive demands on employees
• Self-Control View
 Quick benefits with minimal effort

15. White-Collar Law Enforcement Systems
• Controlling White-Collar Crime
 Compliance strategies: Involve cooperation and self-policing
among businesses (SEC and FDA)
 Sarbanes-Oxley legislation (SOX) limits nonaudit services that
auditing firms can perform publicly
 Compliance strategies create marketplace incentives to obey the
law and avoid the stigmatization of their crimes
 Deterrence strategies: Involve detection and punishing the
offenders

16. White-Collar Law Enforcement Systems
• Is the Tide Turning?
 Growing evidence that white-collar crime deterrence strategies
have become normative
 Get-tough approach appears to be affecting all classes of white-
collar criminals
 U.S. Sentencing Commission increased penalties in April 2001

17. Internet Crime
• Involves the use of computers to illegally take possession of
information, resources, or funds
 Distributing Sexual Material
 Denial of Service Attack
 Illegal Copyright Infringement (I.E. warez)
 Internet Securities Fraud
• Market manipulation: Pump and dump and cyber-smear
• Fraudulent offerings of securities
• Illegal touting
• Identity Theft
 Ponzi/Pyramid Schemes
 Nondelivery of Goods/Services (I.E. Ebay)

18. Computer Crimes
 Theft of services
 Use of computer data for personal gain
 Unauthorized use for financial processing
 Illegally copying and selling of software
 Use of viruses to destroy data

19. Computer Crimes
• Common Techniques
 The Trojan horse: reprogramming computers for illicit purposes
 The salami slice: dummy account in company records
 Super-zapping: bypassing antitheft standards
 The logic bomb: secret programs for monitoring a company’s
computer system
 Impersonation: Unauthorized access to computer systems
 Data leakage: Illegally obtaining data in small amounts
 Computer virus: Worms intended to disrupt or destroy programs

20. Controlling Cyber Crime
• Counterfeit Access Device and Computer Fraud and Abuse Law
(1984) and the National Information Infrastructure Protection Act
(NIIPA) 1996
 Controlling Internet Crime
• Identity Theft and Assumption Act-1998
• Creation of working groups
• Internet Fraud Complaint Center
• Private security companies

21. Organized Crime
• Characteristics of Organized Crime
 Conspiratorial activity
 Economic gain is the primary goal
 Not limited to illicit services
 Employs predatory tactics
 Effective control of its members
 Mafia is a stereotype for organized crime
 Terrorism is not associated with organized crime

22. Organized Crime
• Activities of Organized Crime
 Narcotics distribution
 Gambling
 Prostitution
 Loan-sharking
 Pornography
 Theft-rings

23. Organized Crime
• The Concept of Organized Crime
 Mafia: first organized in Italy/Sicily
 Alien Conspiracy Theory: national syndicate of 25 or so Italian-
dominated crime families called La Cosa Nostra
 Contemporary Organized Crime Groups: include Chicano,
Cuban, and Asian racketeers
 Eastern European Crime Groups: Include Russian and other
groups (i.e. YACS)

24. Organized Crime
• Controlling Organized Crime
 In 1970 Congress passed the Organized Crime Control Act (Title
IX-RICO)
 Influenced and Corrupt Organization Act (RICO) created new
categories of offenses:
• Deriving income from racketeering
• Acquiring an interest or control over an enterprise engaged in
interstate or foreign commerce
• Conspiring to make income, loans, or conducting business
through racketeering means
 Enterprise theory of investigation (ETI): model used by the FBI as
an investigative tool that focuses on the structure of the criminal
enterprise rather than on the criminal acts

25. Organized Crime
• The Future of Organized Crime
 Traditional crime syndicates are declining
• Age of reining family heads
• Lack of skill of younger generation
• Active enforcement policies
• Changing values in society