White-collar crime is defined as non-violent crimes committed by individuals in high social status positions, primarily for financial gain, and differs from blue-collar crime in complexity and planning. The rise of technology has facilitated the growth of such crimes globally, posing significant challenges in legislation and enforcement, particularly in India where various measures have been introduced to address these issues. The consequences of white-collar crime extend to corporations, employees, customers, and society, highlighting a need for increased awareness and regulatory frameworks.

1. Unit 2
WHITE COLLAR CRIME

2.  The most influential criminologist of
the 20th century and also a sociologist,
Edwin Hardin Sutherland, for the first
time in 1939, defined white collar
crimes as “crimes committed by people
who enjoy the high social status, great
repute, and respectability in their
occupation”.
INTRODUCTION

3.  Marshall Clinard : “a violation of law committed
primarily by groups such as businessmen ,
professionals, politicians in connection with
their occupation.”
 Paul Tappan: “White collar crime is special type
of solitary professional criminality. It involves
real violation of criminal law systematically or
repeated by business, professionals in
connection with their occupation.”
Definitions

4.  It is a crime.
 That is committed by an important person of the
company.
 Who enjoys a high social status in the company.
 And has committed it in the course of his
profession or occupation.
 There may be a violation of trust.
The five attributes of the given
definition are:

5.  Related to the corporate sector, white collar
crimes are defined as non-violent crimes,
generally committed by businessmen and
government professionals. In simple words,
crimes committed by people who acquire
important positions in a company are called
white collar crimes.
 White-collar crime is a non-violent crime where
the primary motive is typically financial in
nature. White-collar criminals usually occupy a
professional position of power and/or prestige,
and one that commands well above average
compensation.

6.  Prior to Sutherland’s introduction of the concept
of white-collar crime, the upper classes of society
were thought to be largely incapable of engaging
in such criminal activity. Such a belief was so
deeply entrenched in society that when
Sutherland first published a book on the subject,
some of America’s largest companies successfully
sued to get the book heavily censored.

7.  The difference between white-collar crime and
blue-collar crime stems from the different types
of criminal activity that the criminal has access
to engage in.
 Blue-collar crime, because of the more limited
means of the people committing it, tends to be
more straight-on – robbery, burglary, etc. In
contrast, white-collar criminals are more often in
a position – such as being a loan officer in a bank
– to commit widespread and complex fraud
schemes.
Blue-Collar vs. White-Collar Crimes

8.  The difference between ‘blue collar crimes’,
which are crime of a general nature, and ‘white
collar crimes’ was laid down by the Supreme
Court of India in the case of State of Gujarat v.
Mohanlal Jitamalji Porwal and Anr Justice
Thakker elucidated that one person can murder
another person in the heat of the moment, but
causing financial loss or say committing
economic offences requires planning. It involves
calculations and strategy making in order to
derive personal profits.

9. 1. Competition
“Survival of the fittest "is the main moto of competition followed
in the market.
It implies that in a battle to succeed, there will always be a
competition between the people, and only the best who is able to
adapt to the conditions shall survive. White-collar crimes usually
eventuate out of the same intent. To win, they do not mind
committing crimes like forgery, bribery and frauds. It is often
seen that professionals are monetarily compensated and elevated
in the organisation for short-term superlative profits. To
maximize their performance in competition to others, some
even hesitate to proceed to circumvent the existing laws. People
who are involved in such crimes are smaller in number, higher in
hierarchy, and losses incurred are huge.
Reasons for the Growth of White
Collar Crimes

10.  With the advancement of technology, white-
collar crimes have become a global phenomenon
and increasing at a tremendous pace in India
too.
 The proliferation of personal computers and
smartphones have further aggravated this
problem as the use of these not just results in the
generation of many more ideas, but also gives
open opportunities to the people residing in any
corner of the world to commit these crimes
Technology

11.  As the nature of these crimes is different from the
traditional ones, people fail to define and understand
them.
 This leads to offenders committing the crimes and later
convincing themselves that the actions performed by
them are not criminal in nature.
 Many stock traders engaged in insider trading view it
as a victimless crime and does not see who is being
cheated.
 Salespeople bribing their clients feel they are doing
their job by putting the deal together, while not
harming anyone.
Rationalisation

12.  Work environments can elicit both- good or bad
behavior out of individuals. The environmental
indicators like poorly designed job incentives or
management nonchalance toward ethics can
tempt individuals to behave very differently
when faced with ethical choices.
 Consequently, certain individuals succumb to
such temptations and compromise on their
ethical values, leading to criminal acts. Rarely, is
there a direct order to break the law.
Work Environment

13.  The availability of important sensitive
information of individuals such as bank details,
investments, passwords, etc. on their
smartphones and laptops can provoke the
criminal minds to use the data for their own
benefit.
 The target for such white-collar criminals can be
rich people/organizations like banks, casinos and
financial firms where a huge amount of money
flow daily. Hackers can thus steal access codes,
retina images, and other information that can
easily fool biometric systems and manipulate it
further for personal gains.
Access to Information

14.  Human beings are greedy by nature, as rightly
quoted by the father of modern political
philosophy, Machiavelli. He also said that a man
can sooner and easily forget the death of his
father than the loss of his inheritance.
 The same holds true for the people who intend to
commit any type of white-collar crime. Else, why
will a man who is financially secure and belongs
to high social status commit such crimes? It is
this vice- greed which can make a person aim for
the things that has no limit.
Greed

15.  Fraud
 Insider trading
 Ponzi scheme
 Identity theft and other cybercrimes
 Embezzlement
 Counterfeiting
 Money laundering
 Espionage
Types of White-collar Crime

16.  1. Individual crimes(identity theft, hacking,
counterfeiting, and any of dozens of fraud
schemes.)
 2. Corporate crimes
 Some white-collar crime occurs on a corporate
level. For example, a brokerage firm may let its
trading desk employees engage in an insider
trading scheme. Money laundering may also be
conducted on a corporate level.
Classifying White-Collar Crime

17.  In 2014, India was ranked 85th which
subsequently improved to 76th position in 2015
because of several measures to tackle white
collar crimes.
 In 2018, as per the report of The Economic Times,
India was placed at 78th position, showing an
improvement of three points from 2017, out of
the list of 180 countries.
White collar crime in India

18.  Effect on the company
 White collar crimes causes huge loss to
companies. In order to recover the loss, these
companies eventually raise the cost of their
product which decreases the number of
customers for that product. This works according
to the law of demand states that, other things
being equal, when the price of a commodity
rises, it’s demand would fall and when the price
lowers, its demand would increase.
Effects of white collar crime

19.  Effect on the employees
 White collar crimes endanger employees. They become
conscious of their working conditions, whether it is safe
anymore or not. They start doubting if they are safe and
that they can still be given in their trust to the company.
 Effect on customers
 The most important concern of the customers is
whether the products which they are using is safe or
not. This doubt rise to see the rate at which white collar
crimes have been increasing.

20.  Effect on society
 White collar crimes are harmful to the society for those
people who should be cited as a moral example and who
must behave responsibly are one committing such crimes.
The society thus becomes polluted.
 Effect on offenders
 These crimes have no eyewitnesses as they are committed in
camera, which means that the offenders commit these crimes
while sitting in a closed room or in their personal space
using their computers, and nobody could know about what
they are doing on their computer.
 This makes it difficult to track the offenders. All these
loopholes becomes an incentive for the offenders to fearlessly
commit such crimes because the punishment is also for a
short term unlike in blue-collar crimes. Offenders are mostly
seen roaming freely which poses a danger to the society.

21.  n the recommendations by the Committee on
Prevention of Corruption, headed by Shri K.
Santhanam, the Central Vigilance Commission was
created in 1964.
 The Central Vigilance Commission is now the apex
institution for vigilance, independent of any
executive authority.
 Its function is to address corruption in government
offices and to monitor all vigilance under the
Central Government. This organization seeks its
advice in planning, executing and reviewing their
vigilance work.
The Report on the Commission on the
Prevention of Corruption, 1964
o

22.  The Santhanam Committee was the first body to
recognize the intensity of the crimes committed
by the people of high social standards, which was
acknowledged by the 29th report of the Law
Commission released in 1972.
 Santhanam Committee in its report on the
Prevention of Corruption has talked about the
reasons behind the prevalence of white collar
crimes in India.
The Report by Santhanam
Committee

23.  The technological advancement and
development in scientific temperament has been
assigned as the major reason behind the growth
of white collar crimes.
 These large numbers with advanced disposition
is being regulated by only a handful of elite who
form the monopoly.
 The need of this technologically and scientifically
advanced era is to make these masses adhere to
the rules laid down by the elites to conduct them.
Those who fail to do so land up becoming the
offender of white collar crimes.

24.  The committee showed its concern regarding the
great damage that these crime can cause to the
public morals. The case of white collar crimes
are so complex and since people are not much
aware about it, it is only the experts who can
recognize such crimes and protect themselves
from becoming a victim of it.

25.  Blackmail:
 For blackmailing to be considered under the
ambit of white collar crime, it should be
committed by or show an involvement by
someone enjoying higher social status in an
occupation.
Types of white collar crime in India

26.  Credit card frauds
 These frauds are committed when one person uses the
credit card of another person unauthorized to obtain
goods of value, he is said to have committed credit card
fraud against the other person.
 For example, in 2003 in Mumbai, Amit Tiwari, a 21
years old engineering student was arrested for using
too many names, for having too many bank accounts
and too many clients, all false managed to defraud a
Mumbai-based credit card company, CC Avenue, of
around 9 lakhs rupees.
 This case brought to the notice of the authorities that
credit card frauds have not been recognized by the
Information Technology Act, 2000. The loophole in the
law has caused a great loss to the company.

27.  Imitating a financial institution
 False approval of loans
 Bank fraud using internet
Bank Frauds

28.  Where public official bribes or is bribed
 Where a witness is bribed
 Bribing bank officials
 Bribing sportsman/athelete to play or
fix a match
Bribery

29.  Against property
 Against individual
 Against government
Cybercrimes

30.  Investment
 Manipulating details
 Making illegal, legal
 In the case of Anosh Ekka v. Central Bureau of
Investigation, Anosh Ekka was alleged to have been
involved in money laundering as, after becoming the
minister acquired a huge amount of movable and
immovable assets in his name and in the name of his
family within a short span of 3 years. The Supreme
Court held the accused liable for looting and laundering
huge amount of public wealth.
Money Laundering

31.  Tax evasion is when a person deliberately forges
his state of affairs in order for the authorities to
levy less amount of tax. This can either be done
by an individual, a corporation or a trust. It is a
false means of escaping government taxes. In
simple terms, Tax evasion and avoidance both is
an offence which is used to reduce one’s tax
burden. The offence of tax evasion is punishable
under Chapter XXII of the Income-tax Act, 1961,
which can impose heavy amount of fine or even
send you to jail.
Tax Evasion

32.  Counterfeiting is a criminal act defined under
section 28 of the Indian Penal Code, 1860, where
the imitation of something authentic takes place
in order to steal, destroy or replace somebody’s
original work. This facilitates gaining profits
from illegal transactions and deceiving a person
who believes that the representation is made to
him is true and the imitated work is of more
value
Counterfeiting

33.  The crime of using counterfeiting is generally
related to coins and currencies and is punishable
under section 489B of the Indian Penal Code,
1860. In some cases, it also relates to imitating of
products like clothes, bags, shoes, watches, art,
toys, etc. Counterfeit products carry fake logos
and brand names and in some products, harmful
chemicals have also been found leading to the
death of the person using it.

34.  Extortion is a crime under section 383 of the
Indian Penal Code, 1860. When one party coerces
another party for payment of money, or property
or services, he is said to have committed the
crime of extortion. It is called a white collar
crime because an officer may use his official
right and make use of his higher position in the
company to threaten another person for giving
money, or transferring property, or for providing
services.
Extortion

35.  It is true that most of the white-collar crimes are
pre-meditated i.e. there is proper planning
involved before it is executed. It is well planed,
the targets, marketing theme and even the
strategies are well defined in advance. The
geographical spread and finances for the
criminal activity too are taken care of in order to
facilitate proper implementation.
Are White Collar Crimes Accidental or
Pre Medidated?

36.  The famous Kotler’s principle of 4P is practiced and implemented
in such cases- in order to deceive the customers, accumulate their
target money and then proceed to exit quickly. ·
 P1-Product- Identification of which product to launch in the
fraudulent scheme. · · ·
 P2-Price- Identification of the price for the product which needs
to be sold to the target audience.
 P3-Placement- Identification of the deemed gullible target
population for the product.
 P4-Promotion- Identification of the marketing strategy aimed to
attract such gullible customers to invest/ purchase their products.
Cont…

37.  According to this theory corporations as nothing more than collectives of
individuals.
 Realist Theory: According to these theory corporations have an
existence, which is to some extent independent of the existence of its
members. Here, the responsibility of corporation is primarily. In my
opinion realist theory looks more convincing and practically applicable.
 One of the argument which sustains the presumption that corporate can
be held criminally liable is that in many cases it is the corporation itself,
through its policies or practices, that has done wrong, and prosecution
and punishment should be directed at the real wrongdoer. In many cases
there is no individual who, alone, has committed a crime. It is the
conjunction of the practices of several individuals, all-acting in
compliance with a company's sloppy or non-existent procedures that
have caused the harm. Alternatively, in many cases companies have
complex structures with responsibility buried at many different layers
within the corporate hierarchy making it difficult, if not impossible, to
determine where the true fault lies.
Theory of Corporate Personality

39.  The government of India has introduced various
regulatory legislations, the breach of which will
amount to white-collar criminality.
 Some of these legislations are Essential
Commodities Act 1955, the Industrial
(Development and Regulation) Act, 1951.,The
Import and Exports (Control) Act, 1947, the
Foreign Exchange (Regulation) Act, 1974,
Companies Act, 1956, Prevention of Money
Laundering Act, 2002.
Laws relating to White Collar Crimes

40.  The Indian Penal Code contains provisions to
check crimes such as Bank Fraud, Insurance
fraud, credit card fraud etc. In case of money
laundering several steps have been taken by the
government of India to tackle this problem.
 The Reserve Bank of India has issued directions to
be strictly followed by the banks under KYC
(Know Your Customer) guidelines. The banks and
financial institutions are required to maintain the
records of transactions for a period of ten years.

41.  In order to tackle with computer-
related crimes, Information Technology
Act, 2000 has been enacted to provide
legal recognition to the authentication
of information exchanged in respect of
commercial transactions.
 Section 43 and 44 of Information
Technology Act prescribes the penalty
for the following offences:

42.  Unauthorised copying of an extract from any
data.
 Unauthorised access and downloading files.
 Introduction of viruses or malicious
programmes.
 Damage to computer system or computer
network.
 Denial of access to an authorised person to a
computer system.
 Providing assistance to any person to facilitate
unauthorised access to a computer.

43. 1. In Medical And Health:
 Making of false medical certificates by the
doctors.
 Fake and intended prolong the treatment in
order to increases the bills.
 Sex discrimination of the child by the doctors
on the compulsion of the patient to gain money.
 Delaying of time by doctors to increase the
amount of money in the bills.
 Sale of sample medicines which are not
allowed to the chemists.
White Collar Crime In Different Professions:

44. • Fabrication of forged
documents.
• Threatening the witnesses of
the other party.
• Violation of ethical standard of
legal profession to gain money.
In Legal Profession:

45.  Collecting huge sums of money in the
name of donations by students in order to
give them admission.
 Merit based admission is replaced by
donations.
 Collect huge amount of money in the
name of government grants.
In Education:

46.  Companies Act, 1960.
 Income Tax Act, 1961.
 Indian Penal Code, 1860.
 Commodities Act, 1955.
 Prevention of corruption Act, 1988.
 Negotiable Instrument Act,
 Prevention of money laundering Act, 2002.
 IT Act, 2005.
 Imports and Exports (Control) Act, 1950.
Legislations Against The White Collar
Crime In India:

47. 1. Employee Screening be made more strict
2. Introduce multi-level Verification System
3. Monitoring Activities of Employees
4. Prioritise Internal Audit Function
5. Inventorying Equipment
6. Creating awareness among users
7. Transparency
Measures to Curb White Collar Crime

48. 1. Enacting laws and regulations
2. Implementing Strong Regulatory Policies
3. Proper Training of Investigating Officers
4. Strict Enforcement of Laws
5. Spreading Awareness
Government Action

49.  When India is moving steadily up the growth scale, enforcement
agencies such as the Central Investigative Agency (CBI), Serious
Fraud Investigation Office (SFIO), Enforcement Directorate (ED),
Income Tax (IT), Department of Vigilance DFS of Ministry of
Finance, SEBI, RBI and IRDA are duly motivated to improve their
capabilities to meet the challenges of the changing scenario
though reactive in nature.
 These departments which are the eyes and ears of the Govt for
combating white-collar criminals are trying to revamp their
capabilities in terms of manpower, technical capabilities and the
spear of their activities. They either thinking or some have already
of the way forward to cope with the rise in white collar crimes to
defend the greater economic interest of various investors.
Enforcement agencies

50.  Stockbroker Harshad Mehta founded Grow More Research
& Asset Management Limited, a security company, in 1990.
Investors blindly followed Mehta’s lead because he was a
well-known name in the stock market and was known as the
“Sultan of Dalal Street.”
 He created a fictitious market by borrowing sizable sums
from the bank and buying the scrips at exorbitant prices. He
took advantage of his position to manipulate certain scrips’
stock prices for his own benefit. This led to an unnatural
infusion of cash into the stock markets, which abnormally
increased the price of these shares. Despite being immoral,
Harshad Mehta’s action was legal.
Harshad Mehta Securities Fraud (1988-1995)

51.  A confession letter written by B. Ramalingam Raju, founder
and chairman of Satyam Computers Services Limited, and
published in Times of India on January 7, 2009, revealed this
scam. In the letter, he admitted to tampering with his books of
accounts by inflating assets and understating liabilities.
 The company’s financial situation is reflected in the books of
accounts. Before making an investment, investors can rely on
them as a crucial tool. Accounts books were falsified in order
to defraud shareholders and investors.
 The total cost of the fraud was around 14,000 crore, and it is
thought to have played a significant role in the 2009 recession.
Satyam Scandal: biggest-ever corporate accounting
fraud

52.  In response to this scandal, SEBI responded forcefully,
finding Ramalinga Raju and nine significant associates
guilty of insider trading as well as engaging in dishonest
and unfair business practices.
 In addition to prohibiting the accused from entering the
security markets in any way for a period of 14 years, SEBI
ordered the accused to pay approximately 3000 crores
within 45 days. In order to ensure that a similar scam
never occurred again, SEBI was able to respond strongly.
Cont…

53.  From 1999 to 2001, Parekh engaged in circular trading and
stock manipulation. He borrowed money from financial
institutions like Global Trust Bank and Madhavpura Mercantile
Co-operative Bank and used it to manipulate many K-10
stocks. The scandal cost roughly 1,250 crore. Despite serving
₹
only one year in prison, he will not be permitted to trade on the
Indian stock market until 2017.
 Although he has been accused of performing from behind the
scenes his name still echoes down the street. Parekh and his
associates were allegedly involved in insider trading and
circular trading through front companies, according to an
Intelligence Bureau Report.
Ketan Parekh Security Scam

54.  The collapse of the Ponzi scheme run by Saradha Group, a
group of 200 private companies that were allegedly
running collective investment schemes popularly and
incorrectly referred to as Chit Fund, resulted in a
significant financial fraud as well as an alleged political
scandal.
 With the promise of a multiplied substantial sum in return
in the form of cash or real estate and other assets, this
group amassed around 30,000 crores from more than 17
₹
lakhs depositors.
Saradha chit fund case

55.  It was claimed that at least 10 Saradha group entities had
defrauded the public by participating in money-pooling
schemes.
 SEBI banned Saradha Realty India and its managing
director Sudipta Sen from the securities market until the
group wound up all the Collective Investment Schemes
(CIS) and made the refund, as the same amounts to CIS
Violation, despite ongoing public protest against the
group’s alleged fraudulent activities.
Cont...

56.  The 85th richest person in India is the diamantaire and eminent
jewelry designer Nirav Modi.
 Bank claimed that Modi and the businesses connected to him
conspired with the bank’s representatives to obtain guarantees or
letters of undertaking from other foreign banks to help finance
buyer’s credit.
 According to PNB’s preliminary investigation, two bank employees
fraudulently issued Lous to the aforementioned firms without
following the proper procedure. Then, based on these Los, credit was
extended to the aforementioned firms via the SWIFT messaging
system.
 PNB claimed that the money purportedly raised for the purpose of
buying and selling diamonds was not put to use.
 PNB released information to the stock exchange regarding the
identification of unauthorised and fraudulent transactions. A 11,400
₹
crores fraud was discovered at PNB, making it one of the biggest in
the Indian banking industry.
Punjab National Bank Fraud

57.  This scheme involves the fixed-price sale of licenses for the 2G
spectrum. A Raja also took this action because using an auction
resulted in less profit. He granted licences to applicants who
weren’t qualified. In addition to lying, these applicants provided
false information, missing information, and concealed them. As a
result, 1.76 lakh crore were lost as a result.
₹
 On November 16, 2010, the Comptroller and Auditor General of
India released a report on their crime. Also, the charge sheet was
80,000 pages long because the crime was so heinous. Additionally,
the CAG report noted that these significant stakes were sold to both
Indian and foreign companies at a high premium.
 Then, they completed the task in a very short amount of time.
Finally, they assert that the value earned by these ineligible
applicants and the real value of the spectrum were exactly the same.
2G Scam

58.  Athletes from the Commonwealth of Nations compete in a variety of sports at
the Commonwealth Games, which is an international competition. It occurs
once a year. It is run by the Commonwealth Games Federation. The
Commonwealth Games scam was carried out by Suresh Kalmadi. He oversaw
the Games’ planning committee as its chairman. As a result, he awarded the
Swiss Timings the 141 crores contract. Furthermore, Swiss Timings’ time
₹
equipment cost 95 crores.
₹
 Additionally, the sports officials were required to live in subpar
accommodations by the chairman. The Central Vigilance Commission learned
about the CMW scam at this time. Along with providing fewer facilities for
athletes, this scam resulted in the theft of 70,000. They were detained on
₹
charges of cheating, conspiracy, corruption, and forging documents with the
intent to cheat. In India, this is unquestionably a serious white-collar crime.
CWG scam