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Friday, September 3, 2010

Criminology - Causes of White Collar Crime


White collar crime is the illegal activities of people and organizations whose acknowledged purpose is profit through legitimate business enterprise. White collar crime involves illegal business practices (embezzlement, price-fixing, bribery) with merchandise that is ordinarily seen as a legitimate business product. Normally, the FTC investigates telemarketing fraud, and the SEC investigates securities fraud. Trust violations are jointly investigated by the FBI and FTC.

In the late 1930s, criminologist Edwin Sutherland first coined the term "white collar crime" to describe the criminal activities of the rich and powerful. He defined it as "a crime committed by a person of respectability and high social status in the course of his occupation." As Sutherland saw it, the rich were engaged in a conspiracy to use their position for personal gain without regard to the law. Today, it is recognized that persons in all social classes can commit white collar crimes, but the notion of getting away with disregard for the law still exists in the justice system's tendency to treat these offenses as civil rather than criminal matters. The following types of white collar crime are recognized today:

Corporate crime -- Usually occurs when a strongly competitive business environment fosters corporate irregularities (antitrust violations, price-fixing, false advertising)
Government crime -- illegal and socially injurious cooperation between governments and corporate institutions (space shuttle disasters)
Occupational crime -- Usually occurs when employees come across an opportunity to make extra money by bending or breaking the rules (theft, pilfering)
Professional crime -- people or groups of people who systematically set out to look for opportunities to make money illegally (fraud, tax evasion, deceitful claims, phantom operations, false pretenses, forgery)
There have been numerous attempts to create typologies of white collar crime. One such typology is the following:

Now in this presentation I mention the names of some of the Criminologist and Social Thinkers on the typology:
1. Stings and Swindles -- pretending to run a business (or religion) in order to bilk people out of their money (e.g. Bank of Credit and Commerce International, or BCCI, in 1991 was believed to be the world's 7th largest bank, but it turned out to be a money laundering facility for Ferdinand Marcos, Saddam Hussein, and Columbian drug cartels)
2. Chiseling -- regularly cheating an organization, its customers, or both (e.g. padding the company expense account, charging for bogus auto repairs, securities fraud, insider trading)
3. Exploitation -- threatening to withhold a service unless an additional payment (bribe) is forthcoming (e.g. business license permits, fire safety inspections)
4. Influence peddling -- when people holding important positions sell power, influence, and information to outsiders who have an interest in the outcome of an activity (e.g. kickbacks, point shaving, election rigging, police corruption, ABSCAM, Operation Greylord, corporate payments to leaders of foreign nations)
5. Embezzlement -- use of a person's fiduciary position to appropriate company money or property for themselves (e.g. pilferage, checkout counter fraud, false raises and bonuses, phantom employees, concealing unacceptable information from stockholders)
6. Client Fraud -- cheating an organization with many individual clients that the organization supports (like welfare or disability assistance), reimburses (like health care providers or Medicare), covers losses of (like insurance companies), or extends credit to (like banks or finance companies)

7. Corporate Crime -- aka organizational crime, socially injurious acts designed to harm the public, the environment, or a company's workers; a corporation cannot be held criminally liable - the executives can if it can be proven they acted within the scope of their employment and had the authority to initiate the harmful activity (violations of the Sherman Antitrust Act, OSHA and Environmental Crimes)
8. Computer Crime -- includes Internet fraud, Internet pornography, use of computers for theft, destruction, or harassment
Now for example I take the American circumstance and the cause there for the White Collar Crime though it is slight devating from the topic but still we would see its relevance in the further presentation. Part 15 U.S.C. Sections 77a-78kk contains the Securities Act (originally passed in 1933 and amended numerous times). It prohibits the use of "manipulative or deceptive devices, mail or wire fraud, making false statements in order to increase market share, conspiracy, and unfair market practices." Some common forms of securities fraud include: churning -- when brokers place repeated, excessive, unnecessary orders for the buying and selling of stock with a customer's money; bucketing -- skimming customer profits by falsifying trade information; front running -- placing orders ahead of a customer's order to profit from market effects of the trade; insider trading -- using confidential, market sensitive information of pending corporate actions to buy stock or give that information to a third party; and illegal arbitrage -- using insider information on such deals as merger negotiations to speculate on the difference between current stock prices and the price the acquiring company pays.
From 1980 to 1990, the savings and loan (S & L) scandal cost taxpayers over $500 billion, the largest single financial disaster in history. It will take about 40 years to recover from it. It started when the government decided to "deregulate" S & Ls, allowing them to do more than just home loans, allowing them to invest in speculative real estate transactions and high-risk commercial lending. In order to compete with the regular commercial banks, the S & Ls offered low-interest loans to just about anybody, and worse yet, restrictions were relaxed on who could own and operate an S & L. Given this green light, they made irresponsible loans to shady businesspeople and risky real estate developers. Sometimes kickbacks accompanied the loans. As most of the banks headed into bankruptcy, many executives, believing that FDIC would cover their customer's losses, "looted" the remaining funds to throw lavish Christmas parties, redecorate their homes, refurbish their offices, purchase airplane fleets, etc. The land bought by the banks was continuously "flipped", or regularly remortgaged, to drive up the assessed valuation, then sold in "reciprocal lending" to another S & L in an illegal industry profit-sharing scheme. The S & Ls also made loans to one another ("linked financing") that were never intended to be paid off.
It can be argued that computer crime is different from cybercrime. Computer crime tends to be traditional crimes of property committed with the use of a computer, and cybercrime tends to refer to new, emerging forms of crime that, as of yet, defy standard criminological classification. Computer crime of the traditional variety tends to fall into one of five categories:
1. Theft of services -- unauthorized user penetrates a system
2. Use of data for personal gain -- blackmail, harassment, etc.
3. Financial gain -- some type of financial processing to obtain assets
4. Theft of property -- extracting money under false pretenses
5. Hacking -- using a virus to disrupt or destroy programs or networks

Theft, followed closely by fraud, tend to be the most common types of computer crime:
Trojan horse -- using one computer to reprogram another
Salami slice -- using a dummy account to extract a few cents
Super-zapping -- using diagnostic program to crack system
Logic bomb -- using a subroutine that waits for an error to occur
Impersonation -- using an authorized identity for unauthorized access
Data leakage -- using printouts of small amounts of data
Computer Laws are extraordinarily complex. There's the problems of definition, jurisdiction, and evidence. A good primer on cybercrime investigation can be found elsewhere, and then, a whole course could be established in computer forensics. Most offender profiling techniques rely upon the distinction between insiders and outsiders, with insiders (employees or those with legitimate access to their targets) comprising about 75% of all offenders. The FBI is continually surprised, when under the plain view doctrine, they investigate an insider threat and find examples of child pornography, organized crime connections, and even recreational hacking. Employees also often waste a lot of company time using their network access to surf, shop, or engage in other instances of lost productivity.
One of the more prominent theories is that offenders possess an "unshareable financial problem", the result of living beyond their means, piling up gambling debts, etc. (the three Bs: Babes, Booze, Bets), and feel they cannot let anyone know about their situation without ruining their reputation. Other theories stress the "culture at the top" notion, which sets the tone for the ethical climate in the organization. The whole world of business is kept in line by what is called "economism" -- a self-regulating compliance strategy based on the deterrent effects of economic sanctions and civil penalties. This inherently places a lot of trust in the personalities of those who work in business.
Regardless of the motivation, the offenders are probably as complex as the laws and regulations in this area. The required mental states, for example, range from "negligently" to "recklessly" to "knowingly", depending upon what type of white collar crime you're talking about. Prosecution, or more specifically, deciding who prosecutes, opens up a cornucopia of agencies, all with joint and/or overlapping responsibilities. In some cases, the level of cooperation is well-known, such as between the FBI (threat of criminal charges) and FTC (civil cease & desist orders), but OSHA inspectors have only recently been equipped with police powers, and the investigative arms of many other agencies are not well known.
One of the most important things in investigation of white collar crime is the need for partnership and teamwork. Intelligence work in this area is often disorganized and inefficient, and a team approach can solve this. The Treasury Dept., for example, may have the money laundering analysis expertise, and a local police department may have a proven ability to produce analytical activity charts. The "strike force" model is one of the most common team approaches in law enforcement. This establishes a network of agencies all working on different aspects of the problem.
Another thing that should not be overlooked is the corporation itself. Businesses spend millions of dollars a year conducting internal audits. Along these lines, one should not neglect the private security force employed by the corporation. Their employees can be valuable sources of information. In addition, sometimes the employees of the organization itself can be induced to "snitch" or "whistle blow" on other employees.
The main piece of evidence that will be viewed most strongly in court is any evidence of disguise or coverup. This will ordinarly be presumed as evidence of intent under most legal standards. Concealment of the violation is therefore the most vital piece of evidence to look for. This necessarily involves unraveling the "paper trail" and pouring over a large roomful of obscure documents. Many agencies have hired college students or recruited interns to temporarily help them with these chores. Records analysis is something that may take years to complete, but then you have to focus on individual offenders eventually.

Beside proof of intent (via habit and character evidence) which satisfies the mens rea element of crime, and proof of destruction or coverup (via shredded or duplicate documents) which satisfies the actus reus element of crime, AND the testimony of at least one witness (via an informant or snitch co-worker), the intelligence analyst should be prepared for the court to expect the introduction of charts diagramming the scheme or conspiracy. Such charts require an understanding of conspiracy.
Con Game Process:
1. Making the mark (investigating & locating victims)
2. Playing the con (gaining the victim's confidence
3. Roping the mark (steering him to the inside man)
4. Telling the tale (showing him how to make money)
5. Giving the convincer (permitting him to make a profit)
6. Having him invest further
7. Sending him after more money
8. Playing him at the big store
9. Getting him out of the way
10. Cooling the mark out (having him realize he can't turn to the law)
11. Putting in the fix (bribing or influencing the law)
Money laundering is the process by which cash derived from a criminal enterprise is exchanged, intermingled, or converted with other cash which produces no trace of origin for the original cash. The term goes back to the Al Capone days of Chicago mobsters in the 1920s who used local laundries to cover up their profits from gambling, racketeering, and bootlegging. It is the process of converting funds derived from illegal activities into spendable or consumable form. "Hiding" dirty money is not the same as "laundering" it. Money laundering is regarded as the world's third largest business, following the legitimate financial sector and manufacturing. The United States, not offshore banks or other places, is responsible for about half of the $750 billion that are laundered every year. Some 60-80% of all federal money laundering prosecutions involve drug-related "kingpins" although terrorists, arms dealers, and international criminal organizations also launder money quite regularly.
Thus I conclude that Causes of white Collar Crime is not one but as there are no. of crimes so there are no. of explanations for each of the crime.

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