White collar crime
Published 06 Mar 2017
Within the field of criminology, white-collar crime or ‘incorporated governance’ has been defined by Edwin Sutherland as “a crime committed by a person of respectability and high social status in the course of his occupation” (1949). Sutherland was a proponent of Symbolic interaction and believed that criminal behaviour was learned from interpersonal interaction with others. White-collar crime therefore overlaps with corporate crime because the opportunity for fraud, bribery, insider trading, embezzlement, computer crime, and forgery is more available to white-collar employees. There are a number of reasons to explain why white-collar criminals are not more rigorously pursued. By virtue of their relative affluence, those accused as white-collar offenders are able to afford the fees of the best lawyers, and may have friends among senior ranks of the political elite, the judiciary and the law enforcement agencies.
These connections often not only ensure favourable treatment on an individual basis, but also enable laws to be drafted or resource allocations to be shifted to ensure that such crimes are not defined or enforced too strictly. It is a fact that virtually no police effort goes into fighting white-collar crime, and the enforcement of many corporate crimes is put into the hands of government agencies like the United States Environmental Protection Agency which can act only as watchdogs and point the finger when an abuse is discovered. Another reason for differential treatment might be the fact that criminal penalties tend to be more reflected to the degree of physical force or violence involved than to the amount of monetary loss, all other things being equal. Because white-collar crimes are committed by those with opportunities that do not require violence, they are far less likely to garner more severe criminal penalties. For example, someone who mugs a victim on the street by threatening to knife them, and steals their wallet, might very likely be punished with a more severe sentence than an inside trader who cheats shareholders out of a million dollars.
By Ellen S. Podgor, Jerold H. Israel. White collar crime is a major focus of the U.S. Department of Justice. A structured, broad overview of white collar crime including procedural and evidentiary issues covers specific offenses such as conspiracy; mail, wire, and bank fraud; securities fraud; obstruction of justice; bribery and extortion the Racketeer Influenced and Corrupt Organizations Act (RICO); and computer and tax crimes. Also discusses punishment and sanctions for white collar crimes.
Sutherland’s definition is now somewhat outdated for students of the criminal law. As white collar crime began to capture the attention of prosecutors and the public in the mid-1970s,2 the term came to have definitions quite different from the one Sutherland used. Indeed, studies have shown that crimes we generally consider “white collar,” such as securities fraud and tax fraud, are committed not just by persons of “high social status” but by people of divergent backgrounds.3 Thus, although the term “white collar crime” is a misnomer, it continues in widespread use. This is probably so because “white collar crime” provides a convenient moniker for distinguishing such crime in the public mind from “common” or “street” crime.
As an alternative to the socio-economic definition, many define “white collar crime” based instead upon the manner in which the crime is committed. In 1981, the United States Department of Justice described white collar crime a son violent crime for financial gain committed by means of deception by persons whose occupational status is entrepreneurial, professional or semi-professional and utilizing their special occupational skills and opportunities; also, nonviolent crime for financial gain utilizing deception and committed by anyone having special technical and professional knowledge of business and government, irrespective of the person’s occupation. This definition focuses on the use of deception as the criminal means. The defendant, however, still must be at least “semi-professional” or have “special technical and professional knowledge.” Thus, in some ways, this definition is still too narrow. Not all defendants in white collar cases have professional or semi-professional status, nor do they necessarily possess special skills. A defendant in a tax fraud or false claims case, for example, might have neither of these characteristics. Perhaps a better way to look at white collar crime is to focus on the ways that practitioners and judges distinguish white collar crime from common or street crime. A “white collar” prosecutor or defense attorney, for example, would more likely define “white collar crime” as crime that does not:
- (a) Necessarily involve force against a person or property;
- (b) Directly relate to the possession, sale, or distribution of narcotics;
- (c) Directly relate to organized crime activities;
- (d) Directly relate to such national policies as immigration, civil rights, and national security; or
- (e) Directly involve “vice crimes” or the common theft of property.
One reason white collar crime remains widespread is that it is often very difficult to detect. Unlike street and common property crimes, white collar crimes are usually committed in the privacy of an office or home; usually there is no eyewitness, and only occasionally is there a “smoking gun.”Instead, the government’s proof is more likely to depend upon circumstantial evidence culled from a complex paper trail.
Moreover, the government’s ability to identify white collar crimes is sometimes hampered by lack of resources and expertise. Particularly with respect to financial crimes such as tax fraud and money laundering, prosecutors may require technical assistance from government entities other that the Department of Justice. Finally, the sheer scope of many white collar crimes taxes many United States Attorneys’ offices. Apart from investigations that often last years, trials in complex white collar cases can easily last weeks or months. This is particularly true as the federal government has expanded its white collar efforts in recent decades to areas previously covered primarily by state and local law enforcement.
Perhaps in more than any other area of the criminal law, prosecutors in white collar matters have enormous discretion in deciding whether to bring a criminal case, and in deciding what charges to bring if they do decide to indict. This is true for several reasons. First, as noted above, in some circumstances civil penalties may be available. In that instance, the criminal prosecutor must decide whether civil remedies are sufficient in the context of the particular defendant’s actions. If so, then the prosecutor might decide that criminal charges are unwarranted.
Of course, white collar crimes are governed by the general principles of criminal law. Thus, with some exceptions, to gain a white collar conviction the government must prove (1) the required mental state, (2) the required physical component, (generally either the defendant’s conduct, such as entering into a conspiracy, or a result of the defendant’s actions, such as causing damage to a federal computer), and (3) where the crime requires a result, that the defendant’s acts caused the result. Further, general principles of liability for the acts of others
(“Vicarious liability”) apply in white collar cases, as do principles relating to attempts and other “inchoate,” or incomplete, crimes.