Schmall crim today8e_ppt_ch13

Criminology Today
An Integrated Introduction
CHAPTER
Criminology Today: An Integrated Introduction, 8e
Frank Schmalleger
Copyright © 2017 by Pearson Education, Inc.
All Rights Reserved
White-Collar and
Organized Crime
13

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Frank Schmalleger
A Brief History of White-Collar
Crime
• Financial scandals have a long history
in the U.S.
 Teapot Dome 1929
 Ivan Boesky
• Insider trading 1980s
 Michael Milken
• 1980s securities fraud
 S&L disaster 1980s
 Sham banking operations 1990s
continued on next slide

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Frank Schmalleger
A Brief History of White-Collar
Crime
• 21st century crimes
 Enron
 WorldCom Inc.
 Adelphia Communications
 ImClone
 Martha Stewart
 Various securities firms

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Frank Schmalleger
Understanding White-Collar Crime
• Edwin H. Sutherland's definition
 Crimes committed by a person of
respectability and high social status in
the course of one's occupation
• Emphasized need to study upper-class
criminality
• Said white-collar criminals less likely to
be investigated, arrested, prosecuted
than other types of offenders

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Frank Schmalleger
Definitional Evolution of White-
Collar Crime
• White-collar crime (Edelhertz)
 Committed by nonphysical means and
by concealment or guile…
• Upperworld crime (Geis)
 Crimes by persons not considered the
'usual' kind of offenders

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Frank Schmalleger
Definitional Evolution of White-
Collar Crime
• Blue-collar crime
 Crimes by members of less prestigious
occupational groups
• Occupational crime
 Crimes through opportunity created
during legal occupation

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Frank Schmalleger
Green's Typology of Occupational
Crime
• Organizational occupational crime
• State authority occupational crime
• Professional occupational crime
• Individual occupational crime

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Frank Schmalleger
White-Collar Crime Today
• Early definitions focused on the
violator, rather than the offense when
deciding whether to classify a crime as
"white collar."
• Today, the focus has shifted to the
nature of the crime, rather than the
persons or occupations involved.

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Frank Schmalleger
Corporate Crime
• Corporate crime
 Violation of a criminal statute by a
corporate entity or by its executives,
employees, or agents acting on behalf
of and for the benefit of the corporation
• Culpability greatest when company
officials are shown to have had advance
knowledge
• Corporate liability unique to U.S.

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Frank Schmalleger
Figure 13-2 Types of Financial Crime
Source: Derived from Federal Bureau of Investigation, Financial Crimes Report to the Public, Fiscal Year 2007,
http://www.fbi.gov/publications/financial/fcs_report2007/financial_crime_2007.htm#financial (accessed May 10,
2015).

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Frank Schmalleger
Corporate Fraud
• Accounting schemes, self-dealing by
corporate executives, obstruction of
justice, insider trading, kickbacks,
misuse of corporate property for
personal gain
• Corporate fraud causes significant
financial losses to investors and also
has the potential to cause damage to
investor confidence and US economy.

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Frank Schmalleger
Securities and Commodities Fraud
• Stock market manipulation, high-yield
investment fraud, advance-fee fraud,
hedge-fund fraud, commodities fraud,
foreign exchange fraud, broker
embezzlement
• Associated losses range from
macroeconomic to corporate to
intensely personal.

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Frank Schmalleger
Health Care Fraud
• Particularly target Medicare and
Medicate but all health-care programs
are subject to fraud.
• Not limited to any particular geographic
area, can target large health-care
programs and beneficiaries, becoming
more complex and sophisticated
• Now being committed by organized
crime groups

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Frank Schmalleger
Mortgage Fraud
• Involves material misstatements,
misrepresentation, and/or omissions
related to the property or potential
mortgage relied on by an underwriter
or lender to fund, purchase, or insure a
loan
• Equity skimming, property flipping,
mortgage debt elimination

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Frank Schmalleger
Insurance Fraud
• Insurance industry size makes it a
prime target for criminal activity.
• Insurance fraud involving arson related
to the mortgage crisis
• Workers' compensation fraud increased
greatly with economic downturn.

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Frank Schmalleger
Mass-Marketing Fraud
• Fraud connected with communications
media (telemarketing, mass mailings,
Internet, etc.)
• Nigeria letter fraud
• Foreign lottery/sweepstakes fraud
• Overpayment fraud
• Welfare fraud

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Frank Schmalleger
Money Laundering
• The process by which illegal gains are
disguised as legal income.
• Money Laundering Control Act
• Bank Secrecy Act

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Frank Schmalleger
Environmental Crimes and Green
Criminology
• Environmental crimes
 Violations of the criminal law that
damage some protected or otherwise
significant aspect of the natural
environment
• Green criminology
 The study of environmental harm, law,
regulation, victimization, and justice

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Frank Schmalleger
Terrorism and White-Collar Crime
• Terrorist activity frequently involves
white-collar crime.
 Terrorists need money.
 Lower profile than street crimes
• One way to curtail terrorist activities is
through legislation criminalizing the
financing of terrorism.

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Frank Schmalleger
Causes of White-Collar Crime
• Sutherland: Differential association
theory
 White-collar criminality is learned
• Hirschi and Gottfredson: General theory
of crime
 White-collar criminals are motivated by
the same forces driving other criminals

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Frank Schmalleger
Causes of White-Collar Crime
• Braithwaite: Integrated theory
 White-collar criminals motivated by
disparity between corporate goals and
limited conventional opportunities

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Frank Schmalleger
Curtailing White-Collar and
Corporate Crime
• White-collar crimes are difficult to
investigate, prosecute, convict.
 Not always clear what happened
 Offenders better educated and better
able to conceal their activities
 Evidence often understandable only to
financial or legal experts
 Offenders can hire excellent defense
attorneys.

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Frank Schmalleger
Corporate Crime
• President G.W. Bush
 Corporate Fraud Task Force
 Sarbanes-Oxley Act
• President B. Obama
 Financial Fraud Enforcement Task Force
 Fraud Enforcement and Recovery Act
 New initiatives targeting financial crimes
and unfair trading practices

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Frank Schmalleger
Corporate Crime
• Sarbanes-Oxley Act (2002)
• Sherman Act (1890)
• Clayton Act (1914)
• Securities Act (1933)
• Securities Exchange Act (1934)

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Frank Schmalleger
Organized Crime
• Organized crime
 Unlawful activities of a highly organized
group engaged in supplying illegal
goods/services
• Italian criminal organizations came to
the U.S. in late 19th/early 20th
centuries.
• Became a quasi-police organization in
Italian ghettos of American cities

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Frank Schmalleger
Organized Crime
• Ethnic succession
 Continuing process of one immigrant or
ethnic group succeeding another by
assuming its position in society
• Jewish and Italian criminal groups
flourished in New York City in late
19th/early 20th centuries.

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Frank Schmalleger
Prohibition and Official Corruption
• Prohibition was a godsend for the
Mafia.
• Existing infrastructure allowed efficient
entry into running/sale of contraband
liquor.
• Huge profits led to wholesale bribery of
government officials, quick corruption
of many law enforcement officers.

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Frank Schmalleger
Other Organized Criminal Groups
• Criminal enterprise
 Group of individuals with an identifiable
hierarchy, and extensive supporting
networks, engaged in significant
criminal activity
• Hallmark of true criminal organizations
 Function independently of any members
 Have continuity over time as personnel
change

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Other Organized Criminal Groups
• State laws defining criminal enterprise
more inclusive than federal statutes
• Stereotype is Italian and Sicilian
Mafioso.
 Face of organized crime in US changed
 Threat broader, more complex
 Groups of different nationalities operate
in US or target US citizens from afar

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Frank Schmalleger
Figure 13-4 International Organized Criminal Groups Whose Activities Impact the United States
Source: Schmalleger, Frank, Criminology. Printed and Electronically reproduced by permission of Pearson
Education, Inc., Upper Saddle River, New Jersey.

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Frank Schmalleger
Transnational Organized Crime
• Transnational organized crime
 Unlawful activity undertaken and
supported by organized criminal groups
operating across national boundaries
• Globalization of crime requires
international coordination of law
enforcement efforts.
• U.S. law enforcement activities must
expand beyond national borders.

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Frank Schmalleger
Organized Crime and the Law
• Hobbs Act
 The first federal legislation aimed
specifically at curtailing the activities of
organized crime
• RICO
 Racketeer Influenced and Corrupt
Organizations statute
 Asset forfeiture

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Frank Schmalleger
Policy Issues: The Control of
Organized Crime
• Increase the resources available to law
enforcement agencies
• Increase law enforcement authority
• Make legitimate opportunities more
readily available
• Decriminalization or legalization to
decrease opportunity

Schmall crim today8e_ppt_ch13

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