WHITE COLLAR CRIME IN CONTEMPORARY SOCIETY 4TH ED. CHAPTER 3 CORPORATE CRIME Trusted Criminals Designed by: Jordan Land, M.S. Historical Development of the Corporation and Corporate CrimeIn the Anglo-American tradition, the earliest corporations were churches, towns, guilds and universities Over time, these corporations were recognized as trusts with legal control over certain property These trading corporations played a central role in massively harmful actsDevastation of the Native Americans and the slave trading of Africans Historical Development of the Corporation and Corporate CrimeThe Industrial Revolution gave rise to powerful and wealthy capitalist corporations with relatively little regulation The Robber Barons were involved in every manner of bribery, fraud, stock manipulation, price gouging, exploitation of labor, etc. These corporations were largely invulnerable to legal controls The Corporation in Modern SocietyCorporations are widely regarded as the centerpiece of a free-market capitalist economy and as a powerful manifestation of entrepreneurial initiative and creativityMillions of people are employed by corporations and regard them as their providersCorporationsProduce products we purchase and consumeSponsor forms of entertainmentImportant benefactors for charities The Corporation in Modern SocietyThere is a dark side to most corporations which was recognized by Karl Marx He regarded corporations as a capitalist system that exploits and dehumanizes workers and deprives them of a fair return on their labor The pursuit of profit is the principle rational for the corporation The Corporation in Modern SocietyIn the 21st century, American corporations characterized as “the new sovereigns”Their pursuit of profit takes precedence over all other considerationsTheir resources give them great influence over politicians on all levels and play a major role in shaping public policyPower elite have interlocks that enable them to advance their interrelated interests and move quite easily between private and public sector positions The Corporation in Modern SocietyCorporations are increasingly controlled by paper entrepreneurs or investors who are principally concerned with short-term profit They have been the driving force behind the intensified wave of corporate takeovers This has led to devastating personal consequences, benefits, salaries, and indirect cost for consumers A Typology of Corporate CrimeThere are four approaches that can best categorize the different forms of activities encompassed by the term corporate crime: Adopt a typology emphasizing the primary victims Focus on the nature of the harmful activity Emphasize the size or scope of the corporate entity Classify corporate crime according to the type of product or service involved Corporate ViolenceCorporate violence differs from conventional interpersonal violence in several ways: It is indirect in the sense that victims are not assaulted by an.

1. WHITE COLLAR CRIME IN CONTEMPORARY SOCIETY
4TH ED.
CHAPTER 3
CORPORATE CRIME
Trusted Criminals
Designed by: Jordan Land, M.S.
Historical Development of the Corporation
and Corporate CrimeIn the Anglo-American tradition, the
earliest corporations were churches, towns, guilds and
universities
Over time, these corporations were recognized as trusts with
legal control over certain property
These trading corporations played a central role in massively
harmful actsDevastation of the Native Americans and the slave
trading of Africans
Historical Development of the Corporation
and Corporate CrimeThe Industrial Revolution gave rise to
powerful and wealthy capitalist corporations with relatively
little regulation
The Robber Barons were involved in every manner of bribery,

2. fraud, stock manipulation, price gouging, exploitation of labor,
etc.
These corporations were largely invulnerable to legal controls
The Corporation in Modern SocietyCorporations are widely
regarded as the centerpiece of a free-market capitalist economy
and as a powerful manifestation of entrepreneurial initiative and
creativityMillions of people are employed by corporations and
regard them as their providersCorporationsProduce products we
purchase and consumeSponsor forms of entertainmentImportant
benefactors for charities
The Corporation in Modern SocietyThere is a dark side to most
corporations which was recognized by Karl Marx
He regarded corporations as a capitalist system that exploits and
dehumanizes workers and deprives them of a fair return on their
labor
The pursuit of profit is the principle rational for the corporation
The Corporation in Modern SocietyIn the 21st century,
American corporations characterized as “the new
sovereigns”Their pursuit of profit takes precedence over all
other considerationsTheir resources give them great influence
over politicians on all levels and play a major role in shaping
public policyPower elite have interlocks that enable them to
advance their interrelated interests and move quite easily
between private and public sector positions

3. The Corporation in Modern SocietyCorporations are
increasingly controlled by paper entrepreneurs or investors who
are principally concerned with short-term profit
They have been the driving force behind the intensified wave of
corporate takeovers
This has led to devastating personal consequences, benefits,
salaries, and indirect cost for consumers
A Typology of Corporate CrimeThere are four approaches that
can best categorize the different forms of activities
encompassed by the term corporate crime:
Adopt a typology emphasizing the primary victims
Focus on the nature of the harmful activity
Emphasize the size or scope of the corporate entity
Classify corporate crime according to the type of product or
service involved
Corporate ViolenceCorporate violence differs from
conventional interpersonal violence in several ways:
It is indirect in the sense that victims are not assaulted by
another person
The effects of corporate violence are removed in time from the
implementation of the action that caused the harm
Involves a large number of individuals acting collectively, who
are responsible for the actions that result in physical injury or
death
Is motivated by the desire to maximize corporate overhead
Unsafe Environmental PracticesThe most common form of
corporate violence is the contributions of poisoning the

4. environmentAlthough this crime has received little attention
from criminologistsThe disposal of wastes was little regulated
or controlledThe lack of proper disposal of wastes contributed
to unsanitary living conditions, spread of disease and premature
death
Unsafe Environmental PracticesThe overall harmful
consequences of such practices for the health of Americans is
evident to may observersCancer is the only major cause of death
that increased in the 20th centuryOther maladies and serious
health problems are: heart disease and lung disease, birth
defects and genetic disorders and sterilityMuch evidence
indicates that corporations either knew or should have known of
the risks arising from their dumping of toxic wastes
Toxic WasteLove Canal Case:In the 1940s a corporation began
dumping huge metal drums filled with toxic chemical
wastesSchools and residents were built in that area and were
exposed to noxious fumes and surfacing chemicalsEventually,
several hundred families were evacuated from the areaHooker
Chemical was compelled to pay $20 million to former Love
Canal residents
Air PollutionAutomobile emissions constitute a significant
proportion of the air pollution problem and some cities have
generally unhealthful air conditions much of the yearFor years,
car manufacturers resisted the imposition of clean-air
standards.1930 - GM bought out the electric street car and
replaced it with buses1949 - GM and others were convicted of
violating antitrust law by conspiring to eliminate the electric

5. streetcar and monopolize the sale of buses
Corporate Violence against Consumers:
Unsafe ProductsCorporations will inflict harm on consumers
when the drive to maximize profits in the marketplace takes
precedence over concerns about consumer safety2008, U.S.
Consumer Product Safety Commission issued product recalls for
numerous different products found to be potentially dangerous,
including:Cordless screwdrivers, children’s hooded sweaters,
wooden infant toys, strollers, and indoor lighting fixtures
Food ProductsThe Meat Inspection Act of 1906Food products
are inspected according to government standards to protect
consumers
Evidence indicates bribery of government meat inspectors and
deception through the use of dyes and by other meansThis
resulted in the foisting of much unhealthy meat on the American
public
Pharmaceutical Products and Medical DevicesPharmaceutical
companies can be characterized as “pushers” insofar as they
spend millions of dollars on advertising and encourage their
sales representatives to use various inducements to persuade
physicians to prescribe new drugs and other products
The common element in all pharmaceutical product cases was
that the corporations put the pursuit of profits ahead of
scrupulous concern for the health and safety of their products’
users

6. Transportation Products and ServicesEach year some 50,000
people are killed in automobile accidents that are blamed on
driver recklessness or error, or on weather and road conditions
It has become recognized that design defects in automotive
products contribute to accidents and fatalities
Despite greater attention to safety features in more recent years,
unsafe vehicles still reach the market
Transportation Products and Services
Other segments of the transportation industry have been accused
in defective-product cases
The airline industry has been accused of flying planes with
safety defects and of falsifying airplane maintenance records
Corporate Violence against Workers:
Unsafe Working ConditionsFor most of history, employers were
not liable for death, injuries and illnesses suffered by workers
as a consequence of workplace conditionsAccording to various
sources, work-related accidents and diseases have been the
single greatest cause of disability and premature death in the US
todayThere is no single way to compile death and disease
statisticsJob-related deaths may be underreported or
overreported, depending on the definition of “job-related”
Corporate Violence against Workers:
Unsafe Working Conditions

7. In the interest of keeping labor costs low, American corporate
manufactures are now carried out in factories located in
developing countries that are subject to little regulation and
conditions are often hazardous or deadly dangerous
Workers recognize that management is mainly concerned with
external appearances and efficiency rather than the safety of the
production process
Corporate Abuse of Power,
Fraud, and Economic ExploitationMuch corporate crime wreaks
no violence but has vast political and economic
consequencesSutherland focused entirely on corporate fraud that
had economic rather than violent consequencesHe concluded
that for large corporations, profits took precedence over
patriotismDirect bribery of government officials has long been a
common practice of corporationsA great deal of corruption is
less blatant
Defrauding the Government
and Corporate Tax Evasion
Corporations with contracts to provide goods and services to the
government have defrauded the government of billions of
dollars
Citizens and tax payers ultimately foot the bill for these frauds
Defense Contract FraudContract frauds are numerous and costly
Corporate contractors have charged unreasonable prices,
collected tens of millions on cost overruns, falsified test data,

8. etc.
Several aspects of defense fraud:Large amounts of
moneyOffenders are major corporationsCorporations do not
seem to be deterred by publicized prosecutions
Health Care Provider FraudHospitals are believed to defraud the
government of billions of dollars annually through Medicaid
and Medicare programs
Criminal prosecutions are complicated and relatively uncommon
Health care fraud is best understood in terms of the objective of
reaping the largest possible profit and gain taking precedence
over all other considerations
Corporate Tax EvasionMajor corporations cost U.S. taxpayers
huge amounts by evading their fair share of the tax burdenMajor
corporations with net incomes in the hundreds of millions were
paying virtually nothing in taxesFollowing 9/11 attacks, a
“stimulus bill” was introduced calling for a repeal of the
corporate minimum taxThis type of legislation can be seen more
as reflective of corporate political clout than as a demonstrably
effective way to respond to an economic downturn
Price FixingThis is when industry leaders set inflated prices and
supposed competitors adjust their own prices accordinglyPrice
fixing was prohibited by the Sherman Antitrust Act of 18901991
- in recognition of the widespread violation of price fixing
prohibition, Congress moved to reform the law to make the
practice more difficult

9. Price Gouging and ManipulationCharges of price gouging have
also been directed at various industries and corporations when
they take advantage of vulnerable classes of consumers Many
states prohibit price gouging by lawPharmaceutical industry has
long been accused of price gouging with huge markupsPrice
gouging clearly occurs in other industries as well, including the
auto-rental, meat, infant formula, and oil sectors
False Advertising & Product MisrepresentationProsecutions of
false advertising had proven difficult under the fraud laws due
to the absence of major, highly motivated victims and problems
of proving intent and damageWith the passage of special laws
and the Federal Trade Commission (FTC), action against false
advertising was somewhat facilitatedThe basic response to false
advertising has been to require a modification or
discontinuation of a misleading advertising campaign, with
criminal prosecutions rare
Economic Exploitation of Employees
Various corporate efforts to drive down employee wages and
benefits have been evident since the early 1970s
The driving down of wages was accomplished by decreasing the
number of high-wage union jobs and reducing wages of US
workers
Corporate Stealing from EmployeesThefts from employees
clearly violate existing lawsMajor corporations have been
accused of cheating employees out of overtime pay, illegally
denying workers their pensions and even extorting money from

10. employees falsely accused of theftOther violations
include:Minimum wage lawsFailure to make legally ordained
social security payments on behalf of their employeesImproper
use of employee pension funds
Unfair Labor PracticesCorporate management has resisted the
right of labor to organize, to strike, and to bargain collectively
Workers collectively have also lost countless millions by being
deprived of adequate and effective representations in
negotiations with management
In more recent years, a series of laws has rendered such
discrimination less common and more vulnerable to legal action
Corporate Surveillance of EmployeesAnother form of corporate
crime is the use of intrusive technologies
This activity is indeed a form of corporate theft, as it is an
infringement on a traditional and important right to privacy
From the corporate management perspective, this surveillance is
necessary to combat another form of white collar
crime:Employee theft
Discounts and Chargeback FraudsLarge corporations often have
a considerable advantage in their dealings with countless small
franchisees and suppliers
Saks 5th Ave. department store corporation was investigated on
claims that it had imposed improper “chargebacks” on its
suppliersChargebacks are deductions that large departments
store chains take to reduce their payments to suppliers on the
claim that the merchandise was defective or unwanted

11. Monopolistic Practices and Theft of Trade SecretsCompetitors
have historically been victims of unethical and illegal acts by
large corporationsThe Robber Barons used virtually every
imaginable means to destroy their competitors, and they were
often successfulJohn D. Rockefeller of Standard Oil is the most
famous example of a corporation ruthlessly undercutting all
competitors; by the end, Rockefeller obtained a virtual
monopoly by controlling 95% of the market
Monopolistic Practices and Theft of Trade SecretsSutherland
identified 2 principle methods which 19th century corporations
used to annihilate competitors:Reducing their sales and
increasing their costs
Sutherland also observed that corporate illegalities directed at
competitors can take a number of different forms,
including:Patent infringementTrademark infringementCopyright
infringement
Managerial Accounting Fraud,
Self-Dealing & Strategic BankruptcyOwners themselves can be
victimized by corporate crime
The owners are the stockholders and management consists of
the executives who run the corporation and typically also own
some of its stock
Corporate CEOs also benefit disproportionately in mergers and
buyout deals with company stakeholders often losing out

12. Managerial Accounting Fraud,
Self-Dealing & Strategic BankruptcyCorporate managers may
not have complete freedom of action, but they do have
significant opportunities for self-dealingInsiders have often
defrauded investors and would-be owners through false
financial statements, stock price manipulations, and other
strategies In the bull market of the 1990s, corporate
management felt increasing pressure to produce high levels of
profit and growth and keep the company’s stock prices high
Managerial Accounting Fraud,
Self-Dealing & Strategic BankruptcyThe executives involved
may have been seeking self-preservation, or they may have been
setting up an outright swindle
Misstatements of financial data by corporations become quite
common, especially by software and “dot com” companies
In these frauds, corporate managers collected salaries and
bonuses while the stockholders lost large sums due to drastic
changes in stock price
Managerial Accounting Fraud,
Self-Dealing & Strategic Bankruptcy
Corporations may commit crimes against their creditors by
using various strategies to evade payment of debts and
obligations
In recent years, some major corporations have pursued strategic
bankruptcy to avoid meeting certain burdensome financial
obligations, including obligations to creditors

13. Are Universities and Colleges
Corporate Criminals?Some academic institutions are plagued
with corruptionAdmissions, and diplomas awarded through
bribery
Some universities have huge financial commitments and are
engaged in vigorous competition with comparable institutions
Various prestigious research institutions have been accused of
charging numerous improper items and activities to federal
grant programs
Are Universities and Colleges
Corporate Criminals?Institutions of higher learning are also
accused of cheating taxpayers by making fraudulent claims in
connection with federal student-aid programsInstitutions can
defraud students by not giving them the quality of education
promisedIn some institutions, undergraduates are taught by
overworked, underpaid and poorly supervised graduate students
or teaching assistants Institutions have been investigated for
price fixing of tuitionAthletic programs have been accused of
exploiting student athletes by using them for economic gain
without attending to their educational needs