CHAPTER 17 (test #3) Flashcards
Who introduced the term “white-collar”
Introduced by Sutherland more than half a century ago
How did Sutherland define white-collar crime?
A crime committed by a person of respectability and high social status in the court of his occupation
Explain the distinction between occupational crime and organization crime/corporate crime
occupational crime: violations of the law committed in the course of practicing a legitimate occupation - exclusively for personal gain
organizational or corporate crime: white-collar crime committed with the support and encouragement of a formal organization and intended, at least in part, to advance the goals of that organization
*it may be difficult to separate the organizational and occupational components of many white collar-crimes
What assumptions do WCC force us to reconsider
That the poor are more criminal than the rich
In reality, financial costs of WCC far exceed the costs of ‘street crime’
Explain the range of offences that are committed by corporations and individuals
(2 categories)
Crimes against the public –> corporate and business crime, crimes by individual and professional practitioners
Crimes within organizations –> offences against the organization, offences against employees
What is corporate homicide?
Deaths of employees due to corporate negligence
- workplace accidents and occupational deaths are often the result of employer carelessness or unsafe conditions, but penalties are very light (at most the companies are ordered to pay small fines)
- corporate executives are rarely held personally responsible for their negligence
What is a similarity of white-collar crime and serious street crimes?
There’s evidence to suggest a small number of offenders are responsible for both serious street crimes and white-collar crime
What are the 3 cultural components of middle-and upper-class life that may shape criminality? (suggested by Shover and Hochstetler)
- A competitive spirit (winning is the only thing)
- Arrogance (rules don’t apply to them)
- Sense of entitlement (they deserve what they stole)
Why is WCC positively correlated to class position?
Ownership and authority positions within a corporation provide power and freedom from control that may be criminogenic –> powerful ppl have the power to be free from the kinds of constraints that may normally inhibit crime
- the modern corporation facilitates this kind of freedom
Competitive pressure and the insecurity it generates among employees may foster a culture that encourages misconduct
People who are in positions of power and authority can develop an arrogance that convinces them that the rules do not apply to them
What is executive disengagement?
the custom by which lower-level employees assume that executive are best left uninformed about certain decisions and actions of employees, or that executives cannot be legally expected to have complete control over individual staff members
**employees don’t inform superior of certain actions so that superior can’t be held responsible
**executives and directors are rarely prosecuted, so there is no incentive for them to act honestly
Explain how Wheeler and Rothman indicated that corporations are treated as juristic persons
For white-collar criminals, the corporation is a tool for obtaining money from victims, just like the gun is the tool for the street criminal
**The law chooses to treat corporations as ‘juristic persons’ –> The legal concept that corporations are liable to the same laws as natural persons. Treating corporations as individuals raises practical difficulties for legal enforcement and punishment
- however, there is no collective corporate conscience so corporate power remains unchecked and is thus criminogenic
Explain the Criminogenic Market Structure
A criminogenic economic market structure tends to produce criminal behaviour
- this competitive market pressures companies, managers, and employees to break the law
- so much pressure on ppl in the organization to produce a level of profit that cannot be achieved by acting legally and ethically
ex. crime-generating feature of the retail automotive industry = the domination by a relatively small number of manufacturers who insist that their dealers sell in high volume at a small per-unit profit
Explain the large scale of corporations and WCC
Access to corporate resources makes it possible to commit very large-scale crimes
- The organizational form has enabled criminal gains of a magnitude that individuals acting alone would find hard to attain
Why have corporate accounting scandals been so common?
How corporate executives are paid may create the conditions for white-collar crime
- executives’ compensation in stock options is an incentive to cheat in the short run to push up stock prices
- huge compensation packages are paid to some CEOs
- the greed of senior executives led directly to two of the largest US bankruptcies: Enron and WorldCom, and the financial collapse of 2008 in which no corporate executive was punished
Explain the significance of Consumer Safety Issues
The consumer movement was established in 1960s - prompted by Nader’s investigation into deaths and injuries caused by faulty car designs (led to tougher government safety regulations)
However, product safety problems and corporate negligence still cause consumer injury and death
Ex. Chinese products
- part of a criminogenic global market structure
- large companies buy from china because of low cost but this low cost is due to low wages and absence of workplace regulations, which results in little quality control
Ex. pharmaceutical companies and doctors being to blame for the opioid epidemic
How effective are legal sanctions in combating WCC?
WCC is often dealt with through the civil courts - however this may have limited impact
- corporation have limited liability so their owners and directors are not personally responsible for many types of corporate misconduct
- research suggests that white-collar offenders are treated differently by the courts and judges the although employers and managers commit the most serious offences, they are least likely to lose their jobs after being convicted
- while some suggest that sufficiently large fines can act as a deterrent, judges remain skeptical of fines
How effective are criminal sanctions in combating WCC?
Historically, sentencing of white collar criminals has been lenient
- offenders experience sanctions differently –> loss of job, licence, or status
- judges are aware of deterrence, disparity, and discrimination in the sentencing of white-collar offenders, so they try to pass sentences that combine different sanctions (fine, prison, probation)
- however, research shows that WCC offenders are advantaged by the types and combinations of sanctions imposed on them
How have sanctions for WCC changed since the 1970s
Public attitudes towards white-collar crime became harsher following the Watergate Scandal in the United States. However, legal sanctions were not affected
Some tougher sanctions have been applied since the 70s
- Harsher sentencing rules did not lead to a reduction in corporate crime, and judges found that the new guidelines were too harsh, so they did not follow them
- there is no convincing evidence that white collar offenders are now treated more harshly, especially in Canada
2004: Canada passed laws to make it easier to prosecute fraud-related offences, max penalties for stock fraud increased - IMETs was created to investigate stock fraud
*however, the convicton record has remained low
Why does the justice system not deal with WCCs more effectively?
- the public is more concerned about street and violent crime
- WCC is complex and costly to prosecute
- WCC may be multi-jurisdictional
- WCC criminals are non-violent and are often paroled to the community quickly
- the government depends on corporations and businesses for economic and employment needs
Why is the conviction record for WWC so bad?
- large corporations can hire the best experts and lawyers
- the IMETS are limited to large, complex cases
- corporations use delaying and obstructing methods
- governments are reluctant to impose tough sanctions on big businesses because of the negative impact on jobs and the economy
What is at the heart of occupational crime?
The violation of trust
Explain Unprofessional Conduct and Malpractice (+ examples)
People who violate legal or ethical codes for their own benefit fall into these categories - often hidden from public because such cases are dealt with privately by governing bodies
- however, far more public attention has led to a greater use of the criminal law –> and professional licensing and regulatory bodies responsible for oversight have often failed
Ex.
- sexual abuse by members of the clergy
- abuse of Indigenous children in residential schools that were run by churches
- medical doctors have been accused of many types of violations
What’s a Ponzi Scheme?
A fraud in which old investors are paid with funds invested by new investors. When the scheme runs out of new investors, it collapses.
What is a “pump and dump” scam?
“Pump and dump” scams occur when stock promoters invent a story about a worthless company to get people to buy stock. If they succeed, stock prices rise. The promoters sell their shares for a profit, leaving investors with worthless shares
What are 3 kinds of investment and security frauds?
- ponzi schemes
- insider trading
- pump & dump
What is insider trading?
a form of securities fraud that occurs when an individual receives information about a company that is not available to the general public –> illegal trading by ppl with knowledge that gives them an advantage over other investors
What is the significance of wrongful convictions?
(form of WCC?)
Ppl who work in the justice system sometimes break the rules - a consequence of this is the imprisonment of innocent people
- in some cases, justice officials have “tunnel vision” and in other cases, exculpatory evidence was deliberately withheld to help convict the accused
Explain the issue of Tax Fraud
Billions of dollars are lost in tax fraud. Canada Revenue Agency (CRA) estimates that failure to pay costs us nearly $5 billion per year
- many people work at jobs that enable them to hide income (ex. servers) or contractors being paid in cash part of an “underground economy”
- People who work full-time for employers do not have the ability to hide income
- some exaggerate deductions to lower their revenue - the usual rationale for avoiding taxes is that they are too high
Explain the issue of political corruption
Various political scandals have affected Canadian politics at the municipal, provincial, and federal government levels, including the federal liberal government under Chretien and the Harper conservative government (however, Canada is relatively well governed)
Corruption and human rights abuses tend to occur on a broader scale in dictatorial regimes; however, democratic societies are not immune
Explain the significance of blue-collar crime
Also called “occupational crime”
Many tradespeople defraud the government by doing work “off the books” to avoid provincial sale tax and GST
- The auto repair sector has a high degree of occupational crime
Explain Employee Fraud
Employee fraud encompasses crimes committed against employers by employees, like…
- taking kickbacks from suppliers
- creating phony invoices
- stealing company property and cash
- losses from internal theft total almost as much as losses from shoplifting
Corporations of all sizes are victimized, but often the toll is greatest on small companies ,such as small restaurants being forced out of business because of theft of money or food by staff.
How many work-related deaths/yr in Canada?
1000/yr
- about 2/3 are likely due to employer negligence
What’s the bottom line of what happened in the 2008 Financial crisis?
Cost trillions of dollar globally and many people were financially ruined
Banks and mortgage companies lent billions of dollar knowing it couldn’t be paid back –> were selling mortgage backed securities that turned out to be worthless
What was Lac Megantic?
Rail accident with a non-passenger trail that killed 46 and $460 million in compensation
Charges of cause of death by criminal negligence were laid against 3 junior employees (engineer and rail traffic controller) - they were acquitted
No charges against the rail company, the fuel ppl who loaded it into unsafe rail cars, or Transport Canada who gave in to years of lobbying to allow 1-person crews, or the Harper government which cut regulatory budgets by 19 percent despite massive increases in oil shipped by rail
What are examples of corporate and business crimes against the public?
- price-fixing - Loblaws and other grocery chains for bread prices
- manipulation of stocks and securities
- commercial and political bribery
- patent and trademark infringements
- misrepresentation and false advertising
Explain the sins of Uber
- business model is violating regulations which they justify by saying they aren’t a taxi company, they’re an app company so they aren’t responsible for the ppl picking up riders
- exploit workers - say they’re self-employed so no benefits, etc.
- toxic sexist work environment
- use of ‘greyball’ technology to evade regulators
- accused of stealing self-driving cars
What are some predisposing factors to WCC
- organizational culture
- lack of effective regulation
- lack of emphasis on ethics
- increasing size and complexity of bureaucracies
- sheer greed
