White Collar Crime—The Classic Statement Related Concepts The Measurement and Cost of Occupational and Corporate Crime The History of Corporate, Organizational, anc Occupational Crime Legal Regulation Occupations and the Law Organizations and the Law Occupational Crime Crimes by Employees Crimes by Employees Against Individuals (the Public) Crimes by Employees Against Employees Crimes by Employees Against Organizations Crimes by Individuals (or Members of Occupations) Corporate Crime Crimes by Organizations/Corporations Against Individuals (the Public) Crimes by Organizations Against Employees Crimes by Organizations (Corporations) Against Organizations. Criminal Careers of Occupational and Organizational Offenders Corporate Environment and Crime Corporate Concentration Rationalizations Societal Reaction Why the Leniency in Punishment? Theory and Crime Summary 294 © chapterOccupational and Corporate Seldom do members of a profession meet, even be it for trade or merriment, that it does not end,up.in some conspiracy against the public or some contrivance to raise prices. —Adam Smith (1776/1983, p. 137) We have no reason to assume that General Motors has an inferiority complex or Alcoa Aluminum Company a frustration-aggression complex or U.S. Steel an Oedipus complex or Armour Company a ait death wish, or that Dupont wants to return to the womb. —Edwin H. Sutherland (1956a) The best way to rob a bank is to own one. —William Crawford, California Savings and Loan Commissioner (quoted in Pizzo, Fricker, & Muolo, 1989, p. 318) White Collar Crime—tThe Classic Statement Although previously discussed in the popular literature, the concept of white collar crime was frst introduced inthe social sciences by Edwin Sutherland ina 1939 presidential address to the American Sociological Association. Defining white collar crime a “a crime committed by a person of respect- and high social status in the course of his occupation” (Sutherland, 1940), important in thatitwas the first major statement on white collar crime in academic criminology. Volk 295296 INTRODUCTION To CRIMINOLOGY (1977) describes Sutherland’ pioneering effort as “the sign of a Copernican revolution in Anglo- Saxon criminology” (p. 13), a radical reorientation in theoretical views of the nature of criminality. Mannheim (1965) felt that if there were a Nobel Prize in criminology, Sutherland would deserve one forhis effort. It certainly represented, to use Kuhn's (1962) notion, “a paradigm revolution,” a new ‘model that served to radically reorient future theoretical and empirical work inthe field. Sutherland's (1949) investigation using records of regulatory agencies, courts, and commissions found that ofthe 70 largest industrialand mercantile corporations studied over a40-year period, every one violated atleast one law and had an adverse decision made against it for false advertising, patent abuse, wartime trade violations, price fixing, fraud, or intended manufacturing and sale of faulty soods. Many of these corporations were recivists with an average of roughly eight adverse decisions issued for each, On the basi ofhis analysis itbecomes obvious that, although he used the general label white collar crime, Sutherland was infact primarily interested in organizational or corporate crime. Sutherland maintained that while “crime in the streets” attractsheadlinesand policeattention, the extensive and far more costly “crime in the suites” proceeds relatively unnoticed, Despite the fact that ‘white collar crimes cost several times more than other crimes put together, most cases are not treated under the criminal law. Whit collar crime differs from lower-class criminality only in the implemen- tation of criminal law that segregates white collar criminals administratively from other criminals (Sutherland, 1949). Furthermore, white collar crime isa sociological rather than allegal entity. Itisthe status ofthe offender rather than the legal uniqueness of the crime that is important (Geis, 2007) ‘The hazard of identifying white collar crime simply by official definitions is demonstrated by Hirschi and Gottfredson (1987, 1989). They (erroneously) dispute the usefulness of the label “white collar crime” because the four UCR measures of white collar crime (fraud, embezzlement, forgery, and counterfeiting) that they measure show that most offenders are middle class nd differ little from traditional offenders. Steffensmeier (1989b) correctly responds that UCR offense categories are not appropriate indicators of white collar crime. Related Concepts One ofthe earliest scholars to discuss types ofbehaviors that later would be described as “white collar crime” was Edward Ross (1907) in an article that appeared in the Atlantic Monthly. Borrowinga term used by Lombroso (Lombroso-Ferrero, 1972), Ross refersto criminaloidsas “those who prospered by flagitious [shameful] practices which may not yet come under the ban of public opinion” (A. E. Ross, 1907, p.46). Describing the criminaloid as “secure in his quilted armor of lawyer-spun sophistres” (p.32), Ross views such offenders as morally insensible and concerned with success, but not with the proper means of achieving it. C. Wright Mills (1952) usesa similar notion, “the higherimmorality,” tocharacterize this moral insensibility ofthe power elite. Mills felt this wasa continuing, insitution- alized component of modern U.S. society, involving corrupt, unethical, and illegal practices of the wealthy and powerful Avariety of other terms have been proposed as substitutes, synonyms, variations, or related terms for white collar crime, including “avocational crime” (Geis, 1974a), “corporate crime” (Clinard & Quinney, 1986), “economic crime” (American Bar Association, 1976), “elite deviance” (D.. Simon, 1999), “the criminal elite” (Coleman, 1994), “occupational crime” (Clinard & Quinney, 1986; G. Green, 1990), “organizations crime” (Schrager & Short, 1978), “professional crime” (Clinard & Quinney, 1986), and “upperworld crime” (Geis, 1974b).(See also Albanese, 1995; Blankenship, 1995; Friedrichs, 1995; Jamieson, 1995; Schlegel & Weisburd, 1994.) ‘This chapter will concentrate on two key types of criminal activity: occupational criminal behav- jor and corporate (organizational) criminal behavior. Occupational crime refers to personal viola- tions that take place for sef-benefit during the course ofa legitimate occupation, while corporate (organizational) criminal behavior refers to crimes by business or officials, committed on behalf of, the employing organizations. Although organizational crime refers to crime on behalf ofthe orga- nization, it becomes corporate (business) crime when itis done for the benefit ofa private business. ‘Thus, much of what ordinarily would be branded as corporate crime in a free enterprise economy is,Chapter 10. White Collar Crime 297 a on RU eee ee Elite Deviance crime — Economic Crime labeled organizational crime when committed by state bureaucrats in socialist systems. The organi- zational, economic crimes discussed in this chapter are also distinct from political crimes by govern- ‘ment, which willbe discussed in Chapter 1; the latter have more to do with effortsto maintain power, ideology, and social control than with economic advantage. Figure 10.1 depicts the relationship among the many definitions of white collar crime and is an. attemptby this author toaddress the debateamong writersas to whether the best term for this subject of study iselite deviance (D.R. Simon, 1999), whitecollar crime (Coleman, 1994), or economic crime (vari- ‘ous writers). This author views elite deviance as the broadest term, while white collar crime focuses on. elite “crimes” but also includes nonelite activities, for example, employee theft and lower-level occupa- tional crime. When observers ignore the status ofthe offender, economic crime an include minor fraud, ‘embezzlement, and thelike, even when itis not committed by individuals of high status. Theiissueis not hich ofthese conceptsisbest, but rather how each tapsa different dimension of “white collar crime.” The Measurement and Cost of Occupational and Corporate Crime Even in societies that permit a measure of freedom of information, the collection of accurate data ‘on most occupational and corporate crimes is difficult. Our primary sources of data (discussed in Chapter 1), such as official statistics (the UCR), vietim surveys (the NCVS), and self-reports, generally do not include much information on corporate or upper-level occupational crimes.298 regaringoccuptonal INTRODUCTION To CRIMINOLOGY Problems faced by researchers who attempt to examine occupational crime include the following: 1. The higher professions are self regulating, and very often codes of silence and protectionism rather than sanctions greet wrongdoers. 2. Many employers simply ask for resignations from errant workers in order to avoid scandaland, recrimination, 3, Occupational crime statistics are not kept on a systematic basis by criminal justice agencies or by professional associations. 4, Probes of occupational wrongdoing by outsiders are usually greeted by secrecy or a professional version of “honoramong thieves.” ‘The cost of white collar crimes far exceeds the cost of traditional crimes as recorded in official police statistics and as previously discussed in Chapter I. The Senate Subcommittee on Investigations (Senate Permanent Subcommittee, 1979) estimated that cost at roughly $36 billion in 1976. Estimates for the early 1980s place the figure at upward of $50 billion, a costly sum considering that FBI esti- ‘mates for all UCR property crimes such as burglary, larceny, and robbery were inthe $10 billion range in the early 1980s, Much higher estimates of costs incurred from white collar crime have been made by the Judiciary Subcommittee on Antitrust and Monopoly, which put the figure between $174 bil- Jion and $231 billion annually in the late seventies (Clinard & Yeager, 1980, p.8). By the nineties, the estimated cost of $500 billion for bailing out savings and loan companies alone, with 5 to 40 percent of the losses due to fraud, justifies even higher estimates. Among others, Clinard and Yeager (1978, pp. 255-272) and Geis and Meier (1977, pp. 34) suggest that there area number of reasons forthe lack of research on corporate crime in the past: 1, Many social scientists are inexperienced in studying corporate crime, which often requires some sophistication in areas of law, finance, and economics. 2. Corporate violations often involve administrative and civil sanctions to which criminologists have limited exposure. 3, Enforcement is often carried out by state and federal regulatory agencies rather than by the usual criminal justice agencies. 4, Funds for such studies have not been generally availablein the past. Corporate crime is complicated by the very complexity of corporations. Research data are not readily available because of the imperviousness ofthe corporate board 2. Corporate crime raises special problems of analysis and research objectivity. Despite these obstacles, rising public concern about corporate wrongdoing has encouraged increased research into corporate crime. ‘Simpson (2003, p. 4) points out: In my opinion, the main difficulties confronting [white collar] crime scholars have to do with access, measurement, quality and type of available data, and the unit of analysis, To conduct, research with executives or other corporate personnel, one must penetrate the corporate veneer and there isa skill in ‘marketing’ the research problem to guardians atthe gate. Corporations are image sensitive and fear any kind of exposure that may cause reputational damage. Thus, just gettinga foot in the door is often a major accomplishment, Getting executives to talk about crime isan even greater challenge. Ifone company allows research access, the next issue relates, to sampling. With whom does one talk or survey? Usually access i limited to select personnel and not to the entire company. Thus, representativeness of respondents is an additional issue. Finally, itis important to recognize that getting into one company does not guarantee access anywhere else. The situation is afar cry from the relative ease of gathering self-reports from. high school and university students.Chapter 10. White Collar Crime = 299 The History of Corporate, Organizational, and Occupational Crim Carrent publicity and concern with corporate, organizational, and occupational crime sometimes create the false impression that such activities did not exist inthe past. Nothing could be further from the truth. Infact, history is replete with examples of past corporate wrongdoing; the current business climate probably sts higher moral expectations than ever before. In the early history of capitalism and the Industrial Revolution, fortunes were made by unscru- pulous“robberbarons,” who viewed the state and lawsas negotiable nuisances. Cornelius Vanderbilt, the ailroad magnate, when asked whether he was concerned with the legality of one of his operations, ‘was aid to have stated, “Law! What do care about Law. Hain' I got the power?” (quoted in Browning & Gerassi 1980, p. 201) Journalistic “"muckrakers,” or specialists in exposing what Becker (1954) calls “sex, in, and sew- age” (p. 145), preceded criminologists in analyzing abuses in high places. Works such as Lincoln Steffens’ The Shame of the Cities (1904) and Upton Sinclair's The Jungle (1906) dramatically focused (on and aroused public interest in corruption and abuse in public and private organizations. John Kenneth Galbraith tells the story of John D. Rockefeller, the founder of the family fortune, and a lecture he was fond of giving to Sunday school classes: “The growth of alarge business is merely the survival ofthe fittest... ..The American Beauty rose can be produced in the splendor and fragrance hich bring cheer toits beholder only by sacrificing the early buds which grow up around it” (quoted in Peter, 1977,p.87).Browningand Gerassiin The American Way of Crime (1980) claim thatthe period between the Civil War and World War I was probably the most corrupt in US. history and describe this time as a “dictatorship of the rich.” No one valued private property more than the industrial ‘magnates who were stealingit (p. 210). Jay Gould, acaptain of industry, gobbled up railroads through stock manipulation, rate wars, the falsifying of profit records, and the intimidation of competitors by means of hired thugs, suchas the Hells Kitchen mob (pp. 133-136). G. Myers in The History of Great American Fortunes (1936, pp. 13,17) reportsan episode in which Russell Sage (a New York financier and poli- tician) and his business associates masterminded a swindle against their creditors; after it succeeded, Sage conned his own, partners out of thei proceeds from the caper Political corruption, bribery, kickbacks, and influence peddling among politica officeholders federal, state and local have been rife since the very beginnings of the republic. The widespread acceptance of such corruption has given rise toa number of humorous comments, for example, the descrip- tion of Mayor Curley of Boston ashaving been so crooked that, when they buried him, they had to screw him into the ground, ‘Another eynical remark claims that it was so cold the other day, the politicians had their handsin their own pockets. States, such as Illinois, New Jersey, and Louisiana have had particu- lar problems with public corruption in the first decade of the twenty-first century. Louisiana was described thus: “Half of Louisiana is under water and the other half is under indict- ‘ment” (“Jindal”, 2009). In Illinois, Governor Rod Blagojevich was arrested for demanding payoffsin return for appointment to President Obama's vacated senate seat and in New Jersey, ‘more than 130 officials were found guilty of corruption over 7-year period. ‘tom witecolr criminals. Photo 10.1 John D. Rockefeller ‘aa20-1937) founded the Standard (1 Company anc eventually became americas frst billionaire,Photo 10.2 emmard Ebbers is current servinga 25-year prsonterm ‘at Oakdale Federal Ccorectional Complex in Louisiana, INTRODUCTION To CRIMINOLOGY In the post-Civil War period in the United tates, political machines were epitomized by “Boss” Tweed's ‘Tammany Hall (New York City's Democratic Party), in which wide- spread vice and corruption were combined with political favorit- ism and voter fraud. More than one political election was won with stuffed ballot boxes or the “grave- yard vote.” S. Ross in Fall From Grace: Sex, Scandal, and Corruption in American Politics From 1702 to the Present (1988) documents the fact that political scandals have struck in nearly every decade since before the American Revolution. In 2007, a total of 11 New Jersey officials were charged with taking thousands of dollars in bribes in exchange for promising municipal business to undercover officers posing as insurance brokers (Chen, 2007). More than 100 public officials in New Jersey had been convicted of federal corruption charges between 2001 and 2007. ‘The frst years of the twenty-first century were racked with corporate scandals. On July 14,2005, Bernard Ebbers, CEO of WorldCom, was sentenced for what was describedas the largest corporate fraud in US. history, an $11 billion accounting fraud (see Photo 10.2). Around the same time, stiff sentences were handed out to other corporate executives. Adelphi Communications founder John Rigas received 15yearsin prisonand his son Timothy 0 years for conspiracy, bank fraud, and securities fraud. Others included Tyco International CEO Dennis Kozlowski and Chief Financial Officer Mark H. Schwartz, who were convicted of grand larceny, conspiracy, securities fraud, and falsifying business records. They were found guilty oflooting the company of over $600 million to pay for extravagant lifestyles. Former CEO Richard Scrushy of HealthSouth wasacquitted on June 28, 2005, on 36 counts of conspiracy false reporting, fraud, and money laundering. He pointed the finger at 15 HealthSouth executives, who all pleaded guilty. Former chief financial officer of Enron, Andrew Fastow, pleaded guilty to two counts of conspiracy and received a 10-year sentence, and former Enron Treasurer Bill Gilson, Jr received a 5-year sentence for his role inthe fraud. Enron founder Ken Lay was found guilty on fraud charges in May 2006, buthe died before further charges could be prosecuted (Fichenwald, 2006), Sometimes described as the poster gil for white collar crime, lifestyle guru Martha Stewart was convicted of insider trading, She served 5 months in prison and an additional 5 months of house confinement for conspiracy, obstruction of justice, and making false statements, Her broker, Peter Bacanovic, also served a 5-month sentence. Although Stewart was a client rather than a corporate executive, focus on her case may have been misleading. A 2004 study (AccountingWEB, 2004) by KPMG, a corporate fraud investigation firm, found that, ofthe 100 fraud cases they had been asked to investigate from 2002 to 2003, senior managers or directors committed over two thirds of the crimes. In 72 percent ofthe cases, the perpetrators were all males. Thirteen percent involved males and females, and only 13 percent ofthe cases involved females only. The finance department was the ‘most likey targeted area with 40 percent ofthe cases. The Wall Street Journal (cited in Tolson, 2002) said “the scope and scale of corporate transgressions is greater than anything Americans have seen since the years before the Great Depression.” ‘Awidely cited typology of white collar crime isthe one proposed by Edelhertz(1970). He identities the following:1. Crimes by persons operating on an individual ad hoc basis (eg, income tax violations, credit card frauds, bankruptey frauds) 2. Crimes committed in the course ofthe occupations of those operating inside business, govern- ‘ment, or other establishments, in violation of their duty of loyalty and fidelity to employers or clients (e.g, embezzlement, employee larceny, payroll padding) 3. Crimes incidental to, and in furtherance of, business operations, but not central to the purpose Chapter 10. White Collar Crime ofthe business (eg, antitrust violations, commercial bribery food and drug violations) 4. White collar crime as a business, or as the central activity (pp. 19-20). (This is covered in this text under the label “professional crime’ it refers to activities such as medical and, health frauds, advance fee swindles, and phony contests.) Eliminating Edethert2sitem 4s more appropriately an example of professional crime, Table 10.1 proposes an occupational/organizational crime grid, which classifies the crimes in terms of both perpetrators and victims. Goff and Reasons (1986) have proposed a similar model for organizational TABLE 10.1 m The Occupational/Organizational Crime Grid ‘rime Committed Aganst (Victim) Tre a or a ay or 6 ay @ @ “Theses ma et have dec corral or cerupatira aati. cin Cnt by (Peet va orynztin cratcoiney Emo Coat St) @ a 3 Mertatecosme | tat | Pot tne Pocsoavcet | Cautin at Ponts | Cease @ 9 @ svete | cus ethan cote ont Sra ses ene ts El @ @ @ rumination | parece | ernst | tiie wr vmertnae | ‘Unacomesn coal Patent Violations Danii Individuals. nv) Employes. Irdhiua (Pubic) Organizations. Indica (Publ) Indiuals, Employer Epes Employee Organizations. Employee Individuals. Organization Employees Organization ‘Organatons, Organization 301302 INTRODUCTION To CRIMINOLOGY ‘While many crimes in fact defy placement in mutually exclusive, homogenous categories, these types offera useful scheme for organizing the presentation of occupational crimeand organizational/ corporate crime in this chapter. Legal Regulation woreda, Occupations and the Law In Western societies, the legal regulation of occupations is often “self-regulation.” Although lawsand codes of ethics purportedly exist to protect the public from harmful occupational activity, much self governance has been used instead to protect the interests of members ofthe occupation. The more developed professions attempt to convince legislatures that they possess highly sophisticated, useful, esoteric knowledge; that they are committed to serving societal needs through a formal code of eth- ics; and that they therefore should be granted autonomy, since they and only they arein a position to evaluate the quality oftheir service. In fact, the actual legal codes that control occupational practice tend to be formulated by the occupations themselves in order to dominate or monopolize aline of work. Playwright George Bernard Shaw (1941) in The Doctor’ Dilemma hasone of his characters state that “all professions area conspiracy against the laity” (p. 9). More developed occupations (profes- sions) virtually control the law-making machinery affecting their work. Professional organizations and thei political action committees are quite effective in blocking legislation that maybe detrimen- talto their interests, Anexample of professional power is the AMA (American Medical Association), which Friedson (1970) describes as “professional dominance” and Harmer (1975) as “American Medical Avarice.” ‘The AMA as a lobbying organization appears more concerned with guarding profit, competition, and private enterprise in the business of medicine than supporting legislation that would improve the quality of medical care delivery. According to the 1968 Report ofthe National Advisory Commission (on Health Manpower (cited in Skolnick & Currie, 1982), the health statistics of certain groupsiin the United States, particularly the poor, resemble those ina developing country. Occupational crime can be controlled by professional associations themselves, by traditional criminal law, by civil aw, and by administrative law. Actions by professional ethics boards can include suspensions, censure, temporary or permanent removal of license and membership, and the like. ‘Traditional criminal prosecution also occurs, such as for larceny, burglary, and criminal frauds civil actions by the government may include damage and license suspension suits, Administrative proceed- ings may cal for taking away licenses, seizing illegal goods, and charging fines. ‘The FBI in its early history was involved primarily in investigating and enforcing white collar crimes, such as false purchases, security sales violations, bankruptcy fraud, and antitrust violations; only later did it become preoccupied with its gangbuster image (Lowenthal, 1950, p. 12). Aslate as 1977, however, the House Judiciary Committee charged thatthe FBI was softon white collar crime and that its idea of white collar crime was small-scale fraud (D. R. Simon & Swart, 1984). Organizations and the Law Acorporation isa legal entity that permits business to make use of capital provided by stockholders. Although the federal government hashad the power to charter corporations ince the 1791 McCulloch ‘Maryland decision, it rarely usesit; most chartering is done by the states. Corporations have been con- sidered legal “persons” sincea Supreme Court decision in 1886 (Clinard & Yeager, 1980, pp. 25-28). Inthe United States, beginningin the nineteenth century, certain business activities were defined, asillegal. These included restraint of trade, deceptive advertisements, bank fraud, sale of phony secu- rities, faulty manufacturing of foods and drugs, environmental pollution, and the misuse of patentsChapter 10. White Collar Crime and trademarks (Clinard & Quinney, 1986, p.207).In thelate nineteenth century, concern grew about the development of monopolies, which threatened to control economies and stifle competition and thereby jeopardized the very philosophy of free-market enterprise. ‘The Sherman Antitrust Act (1890) was the first of many regulatory laws passed to control corpo- rate behavior. This law forbids restraint of trade and the formation of monopolies; it currently makes price fixing a felony, with a maximum corporate fine of $1 million, and authorizes private treble (triple) damage suits by victims of price fixing. For the most part, the policing of corporate violations is done by federal regulatory agencies—for example, the Federal Trade Commission (FTC), which was set up in 1914.at the same time as the Clayton Antitrust Act and the Federal Trade Act. There are ‘over 50 federal regulatory agencies with semi-policing functions with respect to corporate Violations. ‘Among these agencies are the Civil Aeronautics Board (CAB), the Environmental Protection Agency (EPA), the Federal Communications Commission (FCC) the Food and Drug Administration (FDA), the Federal Power Commission (FPC), the Interstate Commerce Commission (ICC), the National Labor Relations Board (NLRB), the Nuclear Regulatory Commission (NRC), the Occupational Safety and Health Administration (OSHA), and the Securities and Exchange Commission (SEC). Some areas regulated by these agencies and discussed in this chapter are air safety, air and water polation, unfairadvertising safe drugs and healthy food, public tility services, interstate trucking and com- ‘merce, labor-management practices, nuclear power plants, health and safety in the workplace, and the sale and negotiation ofbonds and securities. Regulatory agencies havea number of sanctions they can use to force compliance with their orders: ‘warnings, recalls, orders (unilateral orders, consent agreements, and decrees), injunctions, monetary penalties, and criminal penalties (Clinard & Yeager, 1980, p.83). Inaddition to criminal proceedings, acts such as the Clayton Act (Section 4) permit “treble damage suits” by harmed parties. Guilty com- panies, with their batteries oflawyersand accountants, generally have more expertise, time, nd staff to devote to defense than the Justice Department, under its Antitrust Division, has for prosecution. Indefinite delaysand appealsare not uncommon. Ifthe government appears to have a solid case, corporations are permitted to plead nolo conten- dere, or “no contest,” to charges. This is notan admission of guilt, and thus enables corporations to avoid the label of criminal. Consent decrees amount to a hand slap; that is, the corporation simply agrees to quit committing the particular violation with which it was charged. ‘A number of criticisms have been levied against federal regulatory agencies and their efforts against corporate crime: 1. Lacking sufficient investigative staff, the agencies often rely on the records of the very corpora- tions they are regulating to reveal wrongdoing. 2. The criminal fines authorized by law are insignificant compared with the economic costs of corporate crimeand become, in effect, minor nuisance, a “crime tax,” a “license tostea,” but certainly nota strong deterrent. 3, Other criminal penalties such as imprisonment are rately used and, when they are, tend to reflect a dual system of justice: Offenders are incarcerated in “county club” prisons or are ‘weated in a far more lenient manner than traditional offenders. 4, The enforcement divisions of many regulatory agencies have been critically understaffed and cut back, as in the Reagan administration's EPA and other agencies, to inoperable levels. 5. The top echelons of agency commissions are often filled with leaders from the very corpora~ tions or industries tobe regulated, creating potential conflict of interest. 6. Relationships between regulators and regulated are often too compatible, with some agency ‘employees more interested in representing the interests ofthe corporations they are supposed. tobe regulating than in guaranteeing the public well-being. The fact that many retiring agency ‘employees are hired by the formerly regulated companies lends support to this argument.304 ‘tansnatona copoatons INTRODUCTION To CRIMINOLOGY In reviewing the state of regulation of illegal corporate activity, Clinard and Yeager (1980) state, (One may well wonder why such small budgets and professional staffs ate established to deal with business and corporate crime when billions of dollars ate willingly spent on ordinary crime control, including 500,000 policemen, along with tens of thousands of government, prosecutors and officials. (p.96) Gross (1980) in his book Friendly Fascism answers their question by letting usin on what he calls, “dirty secrets” We are not letting the public in on our era’s dirty little secret: tha those who commit the time which worries citizens most—violet street crime—are, for the most part, products of poverty, unemployment, broken homes, rotten education, drug addiction, alcoholism, and other social and economic ills about which te police can do lite if anything... Bu, all the dirty little secrets fade into insignificance in comparison with one dirty big secret: Law enforcement offical, judges aswell as prosecutors and investigators are soft on corporate crime... The corporation's "mouthpieces and “fixers” include lawyers, accountants, public relations experts and public officials who negotiate loopholes and special procedures in the laws, prevent most illegal activites from ever being disclosed and undermine or sidetrack “overzealous” law enforcers. Inthe few cases ever brought to court, they usally negotiate penalties amountingto “gentle taps on the wrist.” (pp 10, 113-115) While every year the FBI publishes its Uniform Crime Reports to give an annual account of primarily street crime, no such annual report exists to measure the far more costly corporate crime. Robert Mokhiber (1999), editor of the Washington, D.C.-based Corporate Crime Reporter, ranked the “Top 100 Corporate Criminals of the 1990s.” These were only the tip ofthe iceberg in that the majority of corporate wrongdoing ishandled under civil law. This is includes only those who were caught and criminally fined. The 100 corporate criminals fell into 14 categories of crime (http:/! www.corporatepredators.org/top100.htm)): environmental (38), antitrust (20), fraud (13), cam- paign finance (7), food and drug (6), financial (4), false statements (3), illegal exports (3), illegal boycott (1), worker death (1), bribery (1), obstruction of justice (1), public corruption (1), and tax. evasion (1). The top 10 corporate criminals ofthe 100 identified by Mokhiber were the following: 1. F. Hoffman-LaRoche Ltd. The Swiss pharmaceutical company pleaded guilty and paid a record $500 million criminal fine for fixing prices on vitamins. 2. DaiwaBankcLtd. The bank pleaded guilty to 16 federal felonies and paid a $340 million crimi- nal fine. It pleaded guilty to two counts of conspiracy to defraud the United States and the Federal Reserve Bank, misprision (concealment) of felony, 10 counts falsifying bankrecords, 2 counts of wire fraud, and 1 count of obstructing a bank examination. 3. BASF Aktiengesellschaft This German pharmaceutical company pleaded guilty and agreed to $225 million criminal fine for fixing prices on vitamins. 4, SGL Carbon Aktiengesellschaft The world’s largest producer of graphite and carbon prod ucts pleaded guilty to price fixing and paida $135 million fine. 5. Exxon Corporation Exxon pleaded guilty to criminal charges related to the 1989 Exxon. Valdez oil spill and paid a $125 million fine. This was the largest criminal recovery obtained, inan environmental case. 6, UCAR International Inc. The largest producer of graphite electrodes in the United States pleaded guilty to fixing prices and paid a$110 million criminal fine. 7. Archer Daniels Midland Pleading guilty to charges of price fixing of lysine and citric acid ‘markets, the company paid a $100 million fine.Chapter 10. White Collar Crime 8. (tie) Banker's Trust The bank was fined $60 million for making false reports of financial performance, having made false entries in books and records. 8. (tie) Sears Bankruptcy Recovery Management Services Sears pleaded guilty to bankruptcy fraud and agreed o pay $60 million fine. The company had already paid over $180 million in restitution to 188,000 debtors and $40 million in civil fines to 50 state attorneys general Sears had systematically misled those in bankruptcy into believing they had to pay certain debts 10, Harman and Reimer Corporation A subsidiary of the German Bayer AG, the corporation pleaded guilty and agreed to pay a $50 million fine for fixing prices on the citric acid world- wide market. = 305 Occupational Crim Crimes by Employees Although there are cases of overlap, both “crimes by employees” and “crimes by individuals” can be examples of occupational crime committed in the course of a legitimate occupation for one’s own, benefit. While the types of activities to be discussed in this section are executed by employees (those ‘who work for someone else), those to be examined in “crimes by individuals” will primarily becrimes by professionals. Edelhertz’s Typology Oneattempt to delineate white collar crime isthe widely ited typology and examples provided by Edelhertz (1970, pp. 73-75) (see Table 10.2) ‘While Edelhertz had two other types of white collar. listed in his “crimes by persons operating on an individual ... basis” are not necessarily occupational in nature, except that the victims often happen to be organizations (business or the state). Some examples that he gives include bankruptcy frauds and violations of Federal Reserve regulations by pledging stock for further purchases, flouting margin requirements. His category of “white-collar crime as business, oras the centralactivity” better fits the definition of professional crime as defined in Chapter 9, Edelhertz’s category A fits our discussion of “occupational crime,” while category Bbetter fits our definition of “corporate crime.” 3 in his classification, many of those Crimes by Employees Against Individuals (the Public) Self-aggrandizing crimes by employees against the public type 2 in Table 10.1) take the form of polit- cal corruption by public servants or office holders (public employees), or commercial corruption by employees inthe private sector. These activities are distinguished from corporate or organizational criminal activities of the same type by the fact that in this case the employee personally benefits from theviolation. Public Corruption “Cigar smoke, booze, and money delivered in brown paper bags’—this is how Hedrick Smith envisions th backroom world of poiticsin the PBS telecast The Power Gamte (Smith, 1989). The list of ‘ccupation-related crime on the part of political employees or office holders may include Furnish- ing favors to private businesses suchas illegal commissions on public contracts, fraudulent licenses, tax exemptions, and lower tax evaluations (Clinard & Quinney, 1973, p. 189). Asan example, health308 INTRODUCTION To CRIMINOLOGY TABLE 10.2 mi Edelhertz’s (1970) Typology of White Cola Crime Ethers typology of white colarcrime details varity offenses: ‘A. Crimes carmen he couse ofthe eccupatonsy tos petabginsebsness, geen. er etbishmeis in viatonof ther duy ofa nd ety emplyerr caer 2. Bankvidos bybankofcess, empcjes and rectors 4_Secutes ud by sider tating thet acantage bythe use of special knowledge 6._Froutsby computer causing unauthrzed payments '._Embezementorsel.cealng by atlomes, tustes and fduiaes B_Cemesinieniltadin three of usness pears, tt nthe cent pose he busess 2. potusvaltins 4. Feed and ug vitors 6. oahonsoTh.in-Lening Alby msereseaton fret iemsand pres 8. Usedtictinseromeduedcole 10 SecuiesAcvidaons (sale of norregisered seus olan opting capa alse pray salem, ‘manputon of market tasupportcorprl recor accessto capital mares) 12. Dispercingtyphamacstsin vin olay exclude nacoestaickie 14 Housing code viotons y lands 16, Fraud agate gnemment: a. Faeckims i. Fabestatements (1) Sltements made induce contacts (2) Aiding aud (3) Housing aud (4) Smal Business Adnan au, such asbotsapping sl dealing, cross desing ec, or ablaningaect loans y use ofa fancal statements Moving conacsin urban renewal 18 Cormerclespionage Web ResearchProject sie keyword search, examine white colar cme" Whatare some ype dscussedinthe articles?