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White Collar Crime > Final Exam Review > Flashcards

Final Exam Review Flashcards

1
Q

Authur Andersen

A

[Corporate/Securities Fraud]

  • Associated with corporate fraud – Accounting firm who audit Enron
  • Country’s leading accounting firm that was convicted with obstruction of justice. Conviction was eventually overturned in 2005
  • auditors frequently turned a blind eye to large corporations whose books and numbers didn’t make sense. also helped destroy documents for Enron
  • had financial interest in making Enron look good because Enron was paying them $$$$$
    involved with:

ENRON
worldcom
Haliburton
Sunbeam

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2
Q

Bill Black

A

[associated with Charles Keating]

  • a former bank regulator who developed the concept of “control fraud” in which a business or national executive uses the entity he or she controls as a “weapon” to commit fraud
  • uncovered Savings & Loans scandal
  • criminologist, UCI PhD Student
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3
Q

Robert Citron

A

[OC Bankruptcy]

  • longtime Treasurer-Tax Collector of Orange County. California, when it declared Chapter 9 bankruptcy on Dec. 6, 1994 bc of risky investments
  • convinced people to invest in “country investment pool”
  • never owned any stock, too enormous risks with public funds
  • got advice about investment from 900-number psychics and astrolgers, and Merill Lynch
  • invested in DERIVATIVES = high returns if interest stays low
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4
Q

Alan Cranston

A

[associated with Charles Keating]

  • one of the “Keating 5” considered the worst of Keating 5
  • a senator that accepted millions of campaigns contribution from Charles Keating
  • US Senate Democrat for CA
  • he accepted $1 million in campaign contributions from the Lincoln Savings head, Charles Keating
  • Keating had wanted federal regulators to stop “hounding” his savings and loan association. The committee deemed his misconduct the worst among Keating Five
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5
Q

“Duke” Cunningham

A

[Corruption of Public Officials]

  • Cunningham resigned from house after pleading guilty to federal charges of conspiracy to commit bribery tax evasion, mail and wire fraud. He was known as the most corrupt member of congress ever uncovered in the US history. He was getting paid by the defense contractors to… (Page 452)
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6
Q

John Dean

A

[associated with Watergate]

  • He testifies against Nixon as well as other cabinet members in the Watergate (Government crime) hearings. His testimony helped lead to the removal of several White House officials and the resignation of Nixon. Before his testimony he had been a White House lawyer. Mastermind behind Watergate scandal
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7
Q

Ed Gray

A

[associated with Charles Keating]

  • chair of the Federal Home Loan Bank Board feared that the savings industry’s risky investment practices were exposing the government’s insurance funds to huge losses for the Keating 5
  • the top bank regulator
  • Keating tried to bribe Ed Gray, offered a buy-out and refused; one of the good guys
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8
Q

Gilber Geis

A

[Criminologist]

  • research on medical fraud with Henry Pontell and Paul Jesilow
  • concluded that organizational crimes are different from those of individual offenders
  • in contrast to Sutherland’s definition which didn’t distinguish corporations/ occupational crimes and professional illegalities
  • he contended that society will not view corporate crime in the same light as the other crimes until white-collar criminals are punished the same as other criminals
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9
Q

Cecil Jacobson

A

[Medical Crime]

  • American former fertility doctor who used his own sperm to impregnate his patients, without informing them
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10
Q

Paul Jesilow

A

[Criminologist]

  • focused on medical crime with Henry and Gilbert Geis
  • conducted a study about auto repair theft: found that women are targets for auto repair theft
  • both men and women are better off in small auto repair shops compared to big auto shops since big shops usually rip people off
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11
Q

Charles Keating

A

[Fiduciary Fraud]

  • collapse of Lincoln Saving and Loan of Irvine, lost $4 billion
  • American Continental Corporation (real estate) and Lincoln Savings & Loan
  • Phoenician Hotel (financial disaster)
  • many bought junk bonds from him since they were tricked
  • Estrella - residential real estate investment land (high risks) that never happened
  • bribed 5 US Senators to have gov’t off his back, known as the Keating Five
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12
Q

Mafiaboy

A

[Computer Crime]

  • internet alias of Michael Demon Calce who DDOS various sites
  • 15 year old from Canada computer hacker (Amazon, CNN, etc.)
  • caught from posting/bragging on social media, chat rooms
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13
Q

Jose Manaya

A

[Medical Crime/ Fraud]

  • an ophthlmologist who was convicted in 1984 for unnecessary eye surgeries
  • horrible job to people who had medicaid (lower income)
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14
Q

John McCain

A

[associated with Charles Keating]

  • Republican from Arizona; one of the Keating 5
  • same John McCain from 2007 presidential election
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15
Q

Michael Milken

A

[Securities Fraud]

  • junk bond
  • entered into illegal stock parking arrangements with Ivan Boesky
  • had to pay $600 mil find and had 10 year sentence but reduced to 2 years
  • taught business class at UCLA after conviction and release
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16
Q

Oliver North

A

[Crimes by the government]

  • scape goat for Reagan
  • One of the chief figures in the Iran-Contra scandal was Marine Colonel Oliver North, an aide to the NSC. He admitted to covering up their actions, including shredding documents to destroy evidence. IMP. Although Reagan did approve the sale to Iran, he was not aware of the diversion of money to the contras. This will tainted his second term in office. of his second term in office
  • scapegoat for Reagan which was why Reagan did not get impeached unlike Nixon
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17
Q

Henry Pontell

A

[Criminologist]

  • research on medical fraud with Gilbert Geis and Paul Jesilow
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18
Q

Olga Romani

A

[Medical Crime/Fraud]

  • former 2nd largest Medicaid provider in Florida, who was arrested later for billing for services that were never performed
  • she killed her partner so she wouldn’t get caught in court
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19
Q

ABSCAM

A
  • Congressional sting operation
  • FBI sting operation that targeted trafficking in stolen property but was converted to a public corruption investigation
  • ultimately led to the conviction of a United States senator, six members of the House of Representatives, one member of the New Jersey State Senate, members of the Philadelphia City Council, and an inspector for the Imagination and Naturalization Service
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20
Q

Abuse

A
  • the difference between abuse and fraud is the INTENT.
  • there is no intent in abuse
  • abuse: bending the rules, hard to prove intent
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21
Q

American Continental Corporation

A

[associated with Charles Keating’

  • Keating real estate company in Phoenix
  • filed for bankruptcy, Chapter 11
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22
Q

Blue Wall of Silence

A
  • a cultural norm that proscribes officers from informing on corrupt colleages
  • officers don’t tell on each other bc they depend on one another in the line of duty
  • allows for bad behavior and illegal behavior to happen
  • inhibits honest law enforcement officers from weeding out corrupt ones
  • the secrecy of police officers who lie or look the other way to protect other police officers
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23
Q

Colllective embezzlement

A

[fiduciary fraud]

  • entails the siphoning of funds from S&L for personal gain, at the expense of the institution itself and with the implicit or explicit sanction of it’s mangagement
  • the stealing of company funds by top management
  • Constitutes not only deviance in an organization, but deviance by the organization
  • not only are the perpetrators themselves in management positions, but the very goals of the organization are to provide money machine for ownders and
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24
Q

Computer crime

A

[types]

(1) electronic embezzlement and financial fraud
(2) computer hacking
(3) malicious sabotage, including the creation, installation, or dissemination of computer viruses
(4) Internet scams
(5) utilization of computers and computer networks for purposes of personal, commercial, or international espionage

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25
Q

Corporate Fraud Bill of 2002

A
  • Accounting firms are now forbidden from offering consulting services to clients if it poses a conflict of interest, and for the first time an independent oversight board has been established to oversee the industry. Executives also would not be allowed to buy or sell company stock when other employees are barred from doing so.
  • Increased sentencing and punishment for white collar criminals
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26
Q

“The Corporation” (film)

A
  • corporations are the same type as psychopaths

- psychopath, they lack empathy, no problem hurting others to get what they want

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27
Q

“Capitalism: A Love Story” film

A
  • Michael Moore’s movie
  • Wall Street’s “casino mentality”, for profit prisons, Goldman Sach’s influence in Washington, D.C., the poverty-level wages of many workers, the large wave of home foreclosures. corporate-owned life insurance, and the consequences of “runaway greed”
  • economic crisis of 2008, caused by deregulation of banks
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28
Q

Crimes by the Governements

A

[types]

  • Use of Human Guniea Pigs (abusive power, 375):
The Tuskegee Syphilis Experiment
Radiation Experiments
Prison Experiments
Prison Experiments
FBI, IRS, CIA
  • Iran-Contra (violation of soverignty)
  • Watergate (abusive power)
29
Q

Daisy chain

A
  • an indictment was returned by a federal grand jury in New Jersey, charging Misulovin and 24 other individuals, 15 of whom were emigres from Eastern Europe, with conspiring to defraud the United States and the state of New Jersey of appoximately $138 million in motor fuel excise taxes, and to commit the substantive offenses of wire fraud, money laundering and tax evaion
  • creating a stock to appear more active than they are buying securities at low prices
30
Q

Enron

A
  • In November 2001
  • US’s 7th largest corporation
  • issued a statement drastically revising in stated profits over the past three year
  • Withing a month, the company was forced to declare bankruptcy
  • power company, made false paperwork (deceitful accounting)
31
Q

Estrella

A

[associated with Charles Keating]

  • Keating’s 200 acre dream community, the single largest real estate venture of Lincoln
32
Q

Extortion (Pacheco lecture)

A
  • extortion is the obtaining of property from another, with his consent, or the obtaining of an official act of public officer, induced by a wrongful use of force or fear, or under color of official right
  • not a clearly defined term/concept (e.g. tangible property, blackmail
  • extortion is illegal
33
Q

Fiduciary fraud

A
  • is a legal fiction used in the law to describe a situation where a person or entity gained an unfair advantage over another by deceitful, or unfair, methods
  • you give your money for someone else to handle and invest, but yet they break the trust
  • Savings & Loan was a fiduciary fraud
  • Fiduciary fraud can occur in various financial institutions including: pension funds, insurance companies, financial service companies and mortgage companies
34
Q

First Pension Corporation

A
  • William E. Cooper: First pension= pension
  • charged in 1994 with stealing or misappropriating up to $120 millions from its investors, $100 million dollars was never invested, but used in Ponzi Scheme
  • Pension plan = retirement plan
35
Q

Fraud

A
  • wrongful or criminal deception intended to result in personal or financial gain
  • fraud is associated with intent whereas abuse is not
36
Q

Hadacol

A
  • medicine made by Louisiana politician Dudley Le Blanc
  • claimed to be able to cure just about anything
  • busted by FDA for being fake
  • quackering, selling products that claim to make people better
37
Q

Halcion

A
  • company withheld some side effects to meet regulation, which led to physical problems for thousands
  • sleeping pill that caused people to rage
38
Q

Health Maintenance Organization (HMO)

A

[Medical Crime/Fraud]

  • are only one of managed care arrangements
  • one of the oldest forms of managed care
  • more emphasis is placed on prevention and quality of care and more opportunity to control health care costs in HMOs than in indemnity plans
  • Ex: Kaiser Permanente (integrated health care provider) prepaid, so less services are provided
39
Q

Hemlock

A
  • involved Dow chemicals which caused strange deformities to some living things in the area in Michigan
  • environmental crime – chemical plant dumping site
  • Hunters were finding green deer and three-legged dogs
40
Q

Insider trading

A
  • criminalized under the Securities Exchange Act of 1934
  • insider traders are stockholders, directors, officers, or any recipients of information not publicly available who take advantage of such limited disclose for their own benefit
  • The SEC has determined that insiders have a “fiduciary duty” not only to refrain from trading on their private information but disclose it as well
  • when an insider knows something the stock market doesn’t and acts on the strength of that knowledge, he moves share prices closer to where they will be when the news eventually gets out
  • they taint the free enterprise system by subverting the very essence of capitalism – the notion that there ought to be a positive correlation between risk and potential return to investors. But insider traders collect the highest returns with very little risk
  • Buffet’s cure for insider trading is to impose a tax of 100% on all profits earned from the sale of any stocks owned for less than one year
  • Martta Steward
41
Q

Iran-Contra Affair

A

[Crimes by the Government - Violation of Sovereignty]

  • was a political scandal in the US which came to light in Nov. 1986, during the Reagan administration, in which senior US figures agreed to facilitate the sale of arms to Iran, the subject of an arms embargo, to secure the release of hostages and to fund Nicaraguan contras
  • Reagan senior administration secretly facilitated the same of arms to Iran and some US officials hoped that they would secure the release of US hostages in Iran and funds would go to Nicaragua
42
Q

Keating Five

A

[associated with Charles Keating]

  • five US senators who received generous contributions and employment by Charles Keating (total of $1.4 million contributed to campaigns and causes of the five senators)

They were:

  • Alan Cranston; democrat for CA
  • Dennis DeConcini; Democrat from Michigan and chair of the Senate Banking Committee
  • John McCain; Republican from Arizona
  • John Glenn; Democrat from Ohio and former Astronaut
  • The Keating Five called a meeting with Ed Gray, Chief S&L regulator and Bank Board Chairman, to try and get him and his team to ease up the direct investment rule and leave Lincoln alone. Ed Gray refused.
43
Q

Legion of Doom

A
  • hacker group rivalry masters of destruction/deception
  • Computer crime
  • stole passwords and identities
44
Q

Land flips

A
  • a minimum of two corrupt borrowers (often affiliated with a lending thrift) and a corrupt appraiser
  • in a land flip, a piece of property- usually commercial real estate- is sold back and forth between two or more partners, inflating the sales price each time and refinancing the property with each sale until the value has increased several times,
  • it requires an organized network of participants
45
Q

Linked financing

A

[S&L]

  • Arrangement between a depositor and a bank (or other financial institution) under which the bank extends loan(s) to a certain borrower. The extent of the loan amount depends on the amount of credit balance maintained in the depositor’s account.
46
Q

Masters of Destruction

A

[Computer Crimes]

  • allegedly stole passwords and technical data from major companies and universities
  • rivals were legion of doom
47
Q

Medicaid

A
  • Government insurance for low income individuals
  • violations constitute a threat to the health of Americans and to the financial resources of the nation
  • some doctors may do sloppy work on Medicaid patients b/c receive less money than privately paid person
48
Q

Medical abuse vs. medical fraud

A
  • abuse: not intentionally

- fraud: intentional, unproven or fraudulent medical practices, unnecessary procedures/billing

49
Q

Money Laundering

A
  • is the practice of engaging in financial transaction in order to conceal the identity, source, and/or destination of money, and is main operation of the underground economy
  • putting dirty money in to a legit business to make it look clean
50
Q

Multiple Employer Welfare Arrangements (MEWAs)

A
  • described as “multiple employer trusts” or “METs,” as vehicles for marketing health and welfare benefits to employers for their employees.
  • lacked regulation, resulted in a lot of fraud
51
Q

Nominee loans

A

[S&L]

  • is a loan in the name of one party that is intended for use by another. A misapplication occurs when a financial institution insider uses his position to secure a nominee loan, either for himself or for another person, and the insider conceals his own interest in the loan from the financial institution.
52
Q

Organizational crime

A
  • crimes committed by organization to advance interests of the organization
53
Q

Orange County bankruptcy

A

[associated with Robert Citron]

  • event though Orange County was very wealthy, still went bankrupt
  • Robert Citron was the treasurer for the county that took enormous risks with public funds
  • when a book was written on the OC bankruptcy, never mentioned the word “crime” or “fraud”
54
Q

Payola

A
  • trade jargon for bribes to promote certain records over the air
  • Ex: Dick Clark
55
Q

Phoenician

A

[associated with Charles Keating]

  • a hotel,Oct. 1, 1988, Within five months the Federal Government found itself the unproud owner, keating, taking it over after Mr. Keating’s Lincoln Savings and Loan and the parent company, the American Continental Corporation, declared bankruptcy.
56
Q

Ponzi scheme

A
  • investment operation that pays returns to investors out of the money paid by subsequent investors, rather than profit.
57
Q

Reciprocal lending agreements

A
  • reciprocal lending arrangements are similarly designed to evade restrictions on insider loans. this was used by thrift officers and directors who instead of making loans directly to themselves-agreed to make loans to each other, with each loan contingent on receiving a comparable loan in return. (page 346)
  • Savings & Loans Crime(land flips, nominee loans, reciprocal lending agreements, linked financing)
58
Q

Rely Tampons

A
  • a brand of superabsorbent tampons made by Procter & Gamble starting in 1975. It was recalled from the market in September 1980 because it was linked to Toxic Shock Syndrome (TSS) The recall cost Procter and Gamble over $75 million.
  • Women died from TSS. P&G knew about TSS being associated with the tampons but did not make that information public.
59
Q

Sarbanes-Oxley Act

A
  • resulted from Enron scandal
  • federal law enacted on July 30, 2002, as a reaction to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These scandals, which cost investors billions of dollars when the share prices of affected companies collapsed, shook public confidence in the nation’s securities markets.
  • set new or enhanced standards for all U.S. public company boards, management and public accounting firms
  • Makes top management responsible/liable for anything that happens in the company.
60
Q

Techniques of neutralization

A
  • explanations given by people as a way of rationalizing their deviant/criminal behavior
  1. denial of responsibility: “it wasnt me”
  2. denial of injury: “no one was hurt”
  3. denial of victim: “they deserved what they got”
  4. appeal to higher loyalties: “god made me do it”
  5. condemn the condemners: “i’m the real victim”
61
Q

“The Smartest Guys in the Room” film

A
  • collapse of the Enron corporation, its faulty and corrupt business practices, and how they led to its fall.
  • criminal trials for top executives
  • california energy policies allowed for energy losses
  • deregulation (not enough regulation) = bad
  • pump & dump
62
Q

Thrift enforcement

A

[Medical Crime/Fraud]

  • dealing with medical fraud.
  • Medical and medicaid are voluntary programs, doctors don’t have to treat these patients. Government cannot be too hard on these doctors because associations will leave the program and not support medical fraud enforcements.
  • show wrongdoing without affecting the industry as a whole
63
Q

Thrift (savings and loan) fruad

A

[associated with Charles Keating]

  • Charles Keating lincoln savings and loan
  • thrift = provided home mortgage loans
64
Q

Tightrope enforcement

A

[Medical Crime/Fraud]

  • dealing with medical fraud.
  • Medical and medicaid are voluntary programs, doctors don’t have to treat these patients. Government cannot be too hard on these doctors because associations will leave the program and not support medical fraud enforcements.
  • show wrongdoing without effecting the industry as a whole
65
Q

UCI Fertility Clinic Care

A

[Medical Crime/Fraud]

  • fertility doctors at UCI Medical Center had stolen eggs and embryos from patients and illegally gave them to other women without their consent
66
Q

Watergate

A
  • 1972; Nixon feared loss so he approved the Commission to Re-Elect the President to spy on and espionage the Democrats. Placed bugs at the Democrat HQ. Bug stopped working, so people were sent in to fix them and collect documents. They were caught. A security guard foiled an attempt, exposing the scandal. Seemingly contained, after the election Nixon was facing impeachment and stepped down
67
Q

White-collar crime

A
  • defined by Edwin Sutherland as “a crime committed by a person of respectability and high social status in the course of his occupation” 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.
68
Q

characteristics/victims of WCC

A
  • victims usually don’t know they are being victimized.
  • can happen to anyone
  • the elderly, the poor

White Collar Crime (2 decks)

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