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White-Collar Crime

August 2, 2007
by Russ Long

The concept of white-collar crime draws attention to definitions of deviance which are determined by the powerful. Edwin Sutherland initially coined the term "white-collar crime" in order to point out weaknesses in typical crime theory that considered social pathology as the primary explanation behind criminal behavior. White-collar crime refers to crimes that are committed by "respectable people" during the course of their occupation. Crimes which are considered white-collar include embezzling, price fixing, insider buying, fraud, falsification of expense accounts (or other records), and theft of materials. This category of crime casts doubt on the notion that poverty breads crime.

I.     Types of White-Collar Crime

Appelbaum and Chambliss (1997:117) call attention to two types of white-collar crime.

A.     Occupational Crime

Occupational crime occurs when crimes are committed to promote personal interests.  Crimes that fall into this category include altering books by accountants and overcharging or cheating clients by lawyers.

B.     Organizational or Corporate Crime

A much more costly type of white collar crime occurs when corporate executives commit criminal acts to benefit their company.  There are a variety of corporate crimes that include

II.     The Cost Of White-Collar Crime

The dollar loss attributed to white-collar crimes, according to Sutherland, is probably greater than the dollar loss from all other types of crimes. For example, the American business community lost $50 billion in 1980 to white-collar crime. This was nearly 10 times more than the monetary value of all forms of street crimes (from Eitzen, 1986:426).

III.     The Goals of White-Collar Crime: Profit And Political Power

Money is not the only motive for engaging in white-collar crime. Often political power is the goal. In the 1950s and 1960s, when the FBI illegally broke into offices of left-wing political organizations, enhancing power was the objective, not money (see Coleman and Cressey, 1984:416). The entire Watergate affair was oriented toward enhancing power.

IV.     Murder By Neglect

White-collar crime can describe situations where companies or individuals knowingly use substandard building material, market untested drugs, or knowingly (and illegally) pollute the environment. Neglect of worker safety requirements may also be considered white-collar crime. Every year in the U.S. between 120,000 and 200,000 people die from work related illness and 14,000 die from on-the-job accidents (Charon, 1986:334).

Many occupational deaths are a result of organizational negligence. Chemical companies, coal mines, and asbestos operations represent organizations that experience high rates of death while organizations make profit.

In all cases, the companies involved were aware of the consequences of their actions.

In the case of Dioxin, the deadly effects are well documented. Dioxin is one of the most toxic substances known to human beings. Three ounces can kill one million people. At Love Canal, the Hooker Chemical Company dumped 200 tons of chemical waste that contained 130 pounds of Dioxin (Eitzen, 1986:96). In the case of the Pinto, the company failed to recall cars even after the problem relating to the position of the Pinto's gas tank was well documented. Ford found it more profitable to pay settlements after accidents occurred than to recall the Pinto for repairs. Deaths that result from corporate neglect should be considered "murder by neglect," but white-collar crime is not seen in the same light as street crime.

V.     Penalties For White-Collar Crime

The difference in how we respond to white-collar crime and "regular" crime is dramatic. If an individual shot and killed another individual with a hand gun, the death penalty would be considered. What happens when people are killed because a contractor uses substandard building material?

As a result of differences in perceptions between white-collar crime and regular crime, the accident in Kansas City was seen as a misfortune while an individual who shoots another individual is seen as a murderer. White-collar criminals almost never go to jail.

Incarceration rates dramatize the differential perceptions of white-collar crime compared to other types of crime. According to the American Bar Association (ABA),

Such statistics are indeed peculiar given that the average dollar loss that results from street crime is much less than the dollar loss experienced from white-collar crime. In Florida, for example, street crime amounted to $35 per crime while the average loss to white-collar criminal activities was $621,000 (data is from Eitzen, 1986:427).

The following two examples demonstrate the costs of white-collar crime, as well as the leniency that white-collar criminals experience from the legal system.

"Jack L Clark's Nursing Home Construction Company was founded guilty of a gigantic stock fraud that bilked shareholders of $200 million. $10 million of this swindled money allegedly went for Clark's personal use, and prosecutors accused him of hiding another $4 million as well. Clark apologized to the court, pleaded guilty to one count (out of sixty-five), and was sentenced to one year in prison, eligible for parole after four months, with no fine" (from Eitzen, 1986:427).

"C. Arnolt Smith, Chairman of U.S. National Bank, entered a plea of no contest to charges of conspiracy, misapplication of bank funds, filing false statements, and making false entries in his bank books. His case involved one of the largest swindles in American history (some estimates are as high as $250 million). His penalty for this crime was a $30,000 fine, to be paid at the rate of $100 a month over twenty-five years -- with no interest" (Eitzen, 1986:427).

VI.     Why Don't White-Collar Criminals Go To Jail?

Clearly a double standard exists between white-collar crimes and street crimes. The following are some reasons that explain why white-collar criminals are not more rigorously pursued.

A.     The Best Lawyers

White-collar criminals have money and can therefore afford the best legal advice.

B.     Favorable Laws

Laws are generally written in favor of the white-collar criminal. People who commit white-collar crimes are sometimes the same people who are in a position to see to it that their crimes are not defined too negatively.

C.     Individual Perception

Whereas the impact of white-collar criminals on the nation is great, the cost to each individual is small. White-collar crimes do not impact individuals with the same intensity as when one individual is victimized by a petty criminal.

D.     Little Police Effort

Virtually no police effort goes into fighting white-collar crime. Enforcement is many times put in the hands of government agencies (like the Environmental Protection Agency - EPA). Often these agencies can act only as watchdogs and point the finger when an abuse is discovered.

E.     Difficult to Assign Blame

Assigning blame in white-collar crime cases can be difficult. For example, pollution may be the result of corporate neglect, but corporation cannot be sent to jail. Corporations could be heavily fined (a viable option), but the social impact of severely punishing an institution that may provide jobs to hundreds of people, as well as supply social necessities, may be more detrimental than the initial violation of the law.


Bibliography

Appelbaum, Richard P. and William J. Chambliss

1997 Sociology: A Brief Introduction. New York: Longman.

Charon, Joel

1986 Sociology: A Conceptual Approach. Boston: Allyn and Bacon.

Coleman James and Donald Cressey

1984 Social Problems, (2nd Ed). New York: Harper & Row.

Eitzen, D. Stanley and Maxine Baca-Zinn

1986 Social Problems. (3rd Ed.) Boston: Allyn and Bacon.

Reiman, Jeffrey

1998 The Rich Get Richer and the Poor Get Prison: Ideology, Class, and Criminal Justice. Boston: Allyn and Bacon.