White Collar Crime
In this paper the exciting criminal phenomenon
known as white-collar crime will be
discussed. Corporate Crime and Computer
Crime will be discussed in detail. Crime
preventative agencies such as the
NCPC (National Crime Prevention Council) will
also be researched. White
Collar Crime The late Professor Edwin Sutherland
coined the term white-collar
crime about 1941. Sutherland defined white-collar
crime as "a crime committed
by a person of respectability and high social
status in the course of his
occupation" (Siegel 337) White-collar crime
includes, by way of example, such
acts as promulgating false or misleading
advertising, illegal exploitation of
employees, mislabeling of goods, violation
of weights and measures statutes,
conspiring to fix prices, evading corporate
taxes, computer crimes, and so
on. White-collar crime is most distinctively
defined in terms of attitudes
toward those who commit it. These crimes are
punishable by law, however it is
generally regarded by the courts and by
sections of the general public as
much less reprehensible than crimes usually
punished by the courts. The other
types of crime are blue-collar offenses, which
are predominately crimes of
the under-privileged. White-collar crimes are
punished far less harshly than
blue-collar crimes, which shows societies
attitudes towards the two sections
of society. White-collar crime is attractive
to criminals because it brings
material rewards with little or no loss of
status. (Taft & England 201)
For some, white-collar crime is not viewed as a
"crime" at all, because of
its non-violent nature. Violent crime has
an immediate and observable impact
on its victim which raises the ire of the
public, whereas white-collar crime
frequently goes undetected or is viewed as a
bending of the rules. Yet
white-collar crime can create the greater havoc. The
victim of an assault
will recover; however, the impact of a fraud can last a
lifetime. This is
especially true when the elderly are victimized, as they have
little or no
hope of re-establishing themselves in financial terms. Contrary to
the
popular belief, white-collar criminals are thieves and the methods used
to
conceal their offenses are both artful and ingenious. Concealment of the
crime
is always an objective of the offender, and it becomes an element of
the crime
itself. Because it is an artful form of deceit, which is skillfully
disguised,
the investigation itself is often long and laborious as far as
proving criminal
intent is concerned. The offence itself may be disguised in
a maze of legitimate
transactions, which are quite proper if viewed in
isolation; however, the
cumulative effect is the commission of a criminal
offence. From the standpoint
of the criminal, the ideal white- collar crime
is one that will never be
recognized or detected as a criminal act.
(Radzinowicz 325-335) Corporate Crime
Corporate crime is the type of
crime that is engaged in by individuals and
groups of individuals who become
involved in criminal conspiracies designed to
improve the market share or
profitability of their corporations. ( Siegel 338)
Corporations are legal
entities, which can be and are subjected to criminal
processes. There is
today little restriction on the range of crimes for which
corporations may be
held responsible, though a corporation cannot be imprisoned.
The most
controversial issue in regard to the study of corporate crime revolves
around
the question of whether corporate crime is "really crime."
Corporate
officials, politicians, and many criminologists object to the
criminological
study of corporate criminality on the strictest sense of the
word. The
conventional and strictly legal definition of crime is that it is an
act,
which violates the criminal law and is thereby punishable by a
criminal
court. From this perspective a criminal is one who has been
convicted in a
criminal court. Given these widely accepted notions of crime
and criminals, it
is argued that what is called corporate crime is not really
crime and should not
be considered as such by either the public or
criminologists. (Hochstedler 22)
It does appear that now in recent times
society has had a growing concern about
white-collar and corporate crime.
Studies have indicated that the public now
judges white-collar criminality to
be more serious than it had been in the past,
people now have lost confidence
in the people running major companies, and most
American corporate
executives are believed to be dishonest. The public's concern
with corporate
crime has grown recently, but has been evident for several years.
I will
use one of the most memorable corporate crime cases in history; The
Ford
Pinto Case to prove my statement. (Cullen/Maakestad/Cavender 43) The
product
liability lawsuit and appeal titled Grimshaw v. Ford Motor Company is
a case in
point and ought to be read by everyone. Grimshaw is an example of
the type of
thing that can happen when an industry insolates itself from
competition. The
Pinto affair has very important lessons for us all. Its
story can teach us much
about the power of huge corporations and what
corporations can do when they face
no real competition. It carries an
important lesson about how the minds of those
who run the world's colossal
corporations work. In November of 1971 the Grays
purchased a new 1972 Pinto
hatchback manufactured by Ford in October of 1971.
The Grays had trouble
with the car from the outset. During the first few months
of ownership, they
had to return the car to the dealer for repairs a number of
times. Their car
problems included excessive gas and oil consumption, down
shifting of the
automatic transmission, lack of power, and occasional stalling.
It was
later learned that the stalling and excessive fuel consumption were
caused by
a heavy carburetor float. On May 28, Mrs. Gray, accompanied
by
13-year-old Richard Grimshaw, set out in the Pinto from Anaheim for
Barstow to
meet Mr. Gray. The Pinto was then six months old and had been
driven
approximately 3,000 miles. Mrs. Gray stopped in San Bernardino for
gasoline, got
back onto the freeway (Interstate 15) and proceeded toward her
destination at 60
- 65 miles per hour. As she approached the Route 30
off-ramp where traffic was
congested, she moved from the outer fast lane to
the middle lane of the freeway.
Shortly after this lane change, the Pinto
suddenly stalled and coasted to a halt
in the middle lane. It was later
established that the carburetor float had
become so saturated with gasoline
that it suddenly sank, opening the float
chamber and causing the engine to
flood and stall. A car traveling immediately
behind the Pinto was able to
swerve and pass it but the driver of a 1962 Ford
Galaxie was unable to
avoid colliding with the Pinto. The Galaxie had been
traveling from 50 to 55
miles per hour but before the impact had been braked to
a speed of 28 to 37
miles per hour. At the moment of impact, the Pinto caught
fire and its
interior was engulfed in flames. According to the plaintiff's
expert, the
impact of the Galaxie had driven the Pinto's gas tank forward and
caused it
to be punctured by the flange or one of the bolts on the differential
housing
so that fuel sprayed from the punctured tank and entered the
passenger
compartment through gaps resulting from the separation of the rear
wheel well
sections from the floor pan. By the time the Pinto came to rest
after the
collision, both occupants had sustained serious burns. When they
emerged from
the vehicle, their clothing was almost completely burned off.
Mrs. Gray died a
few days later of congestive heart failure as a result of
the burns. Grimshaw
managed to survive but only through heroic medical
measures. He has undergone
numerous and extensive surgeries and skin grafts
and was expected to have to
undergo additional surgeries over the next 10
years. He lost portions of several
fingers on his left hand and portions of
his left ear, while his face required
many skin grafts from various portions
of his body. This graphic account of
these events is needed to grasp the full
impact of this tragic situation which
could have been avoided by Ford for
very minimal cost. Each Pinto could have
been repaired for $4-$8 a piece.
Management knew of these defects but still
decided to produce and release the
Pinto to the public. The idea for the Pinto,
as has been noted, was conceived
by Mr. Iacocco [sic], the Executive Vice
President of Ford. The
feasibility study was conducted under the supervision of
Mr. Robert
Alexander, Vice President of Car Engineering. Ford's Product
Planning
Committee, whose members included Mr. Iacocca, Mr. Robert
Alexander, and Mr.
Harold MacDonald, Ford's Group Vice President of Car
Engineering, approved the
Pinto's concept and made the decision to go
forward with the project. Harley
Copp, a former Ford engineer and
executive in charge of the crash testing
program, testified that the highest
level of Ford's management made the decision
to go forward with the
production of the Pinto, knowing that the gas tank was
vulnerable to puncture
at low rear impact speeds creating a significant risk of
death or injury from
fire and knowing that fixes were feasible at nominal cost.
He testified
that management's decision was based on the cost savings, which
would inure
from omitting the fixes. This was the corporation's outright trade
of human
life for profit. The jury in this case brought in a verdict for
the
plaintiffs in excess of $128 million of which $125 million were
punitive
damages. There is another very important point to be made by this
case. Ford
knew that the Pinto was going to kill or burn people because of
its design, but,
because of the "cost savings which would inure from omitting
the
fixes," Ford decided to let it go. Consider carefully exactly what
Ford
Motor Company was doing here. One could argue that Ford was
conducting
cost-benefit analysis. To the Ford executives, the benefits were
clear,
calculable, and immediately available. Ford would save a few dollars
on each
Pinto manufactured. The costs would accrue in the future and
would not be paid
by Ford. Unfortunately, the costs were the lives and
permanent injuries of
nameless and faceless future consumers. The Pinto would
appear to be a prime
example of laying off costs. The suffering, the
destroyed lives and families
apparently were of minor consideration in the
calculations when Ford performed
the cost-benefit analysis. Corporate crime
has also been linked to political
leaders in this country. Corporate crime is
a crime of power and profit for the
offenders. Large and powerful
corporations who have the support of prominent
political leaders can be
difficult to prosecute in corporate crime cases. At the
Progress &
Freedom Foundation conference held at the Mayflower Hotel in
Washington,
D.C., Speaker of the House Newt Gingrich (R-Georgia) was asked why
he spent
so much time addressing the issue of street crime and violence,
while
ignoring the issue of corporate crime and violence. Gingrich answered,
"If
I went around the country and said, 'Vote for us and there will be no
more
white-collar fraud,' the average voter will say, 'I don't think he
gets
it.'" But corporate crime is more than just white-collar fraud. And
one
reason that Gingrich doesn't address the issue of corporate crime might
be
because one of the corporations that has brought him to power is Southwire
Co.
of Carrollton, Georgia. Southwire has close ties to Gingrich, it
dominates the
political economy of Carroll County, where Gingrich's political
career was
launched, and it is a corporation with a criminal record.
Individuals affiliated
with Southwire Co., including its chief executive
officer, Roy Richards, and its
president, James Richards, have donated more
than $18,000 to Gingrich's
campaigns for Congress during the past ten years.
According to the Los Angeles
Times, James Richards has also donated
80,200 to GOPAC, the political action
committee spearhearded by Gingrich.
Computer Crime Computer technology has
introduced new factors concerning the
types of perpetrators, the forms of assets
threatened, and embezzlement
methods. ( Radzinowicz 357) Computer crimes
generally fall into five
categories: 1) theft of services 2) use of computer
data for personal gain 3)
unauthorized use of computers employed for various
types of financial
processing 4) property theft by computer 5) placing viruses
to destroy data.
(Siegel 353) The terms "computer misuse" and
"computer abuse" are also used
frequently, but they have significantly
different implications. Criminal law
recognizes the concepts of unlawful or
fraudulent intent and of claim of
right; thus, any criminal laws that relate to
computer crime would need to
distinguish between accidental misuse of a computer
system, negligent misuse
of a computer system and intended, unauthorized access
to or misuse of a
computer system, amounting to computer abuse. Annoying
behavior must be
distinguished from criminal behavior in law. History has shown
that a broad
range of persons commits computer crime: students, amateurs,
terrorists and
members of organized crime groups. What distinguishes them is the
nature of
the crime committed. The individual who accesses a computer system
without
further criminal intent is much different from the employee of a
financial
institution who skims funds from customer accounts. The typical skill
level
of the computer criminal is a topic of controversy. Some claim that
skill
level is not an indicator of a computer criminal, while others claim
that
potential computer criminals are bright, eager, highly motivated
subjects
willing to accept a technological challenge, characteristics that
are also
highly desirable in an employee in the data-processing field.
According to a
number of studies, however, employees represent the largest
threat, and indeed
computer crime has often been referred to as an insider
crime. One study
estimated that 90 per cent of economic computer crimes were
committed by
employees of the victimized companies. A recent survey in North
America and
Europe indicated that 73 per cent of the risk to computer
security was
attributable to internal sources and only 23 per cent to
external criminal
activity. The American Bar Association conducted a survey
in 1987: of 300
corporations and government agencies, 72 claimed to have been
the victim of
computer-related crime in the 12-month period prior to the
survey, sustaining
losses estimated to range from $ 145 million to $ 730
million. In 1991, a survey
of security incidents involving computer-related
crime was conducted at 3,000
Virtual Address Extension (VAX) sites in
Canada, Europe and the United States of
America. Seventy-two per cent of
the respondents said that a security incident
had occurred within the
previous 12-month period; 43 per cent indicated that the
security incident
they had sustained had been a criminal offence. A further 8
per cent were
uncertain whether they had sustained a security incident. Similar
surveys
conducted around the world report significant and widespread abuse and
loss.
Computer criminals have gained notoriety in the media and appear to
have
gained more social acceptability than traditional criminals. The
suggestion that
the computer criminal is a less harmful individual, however,
ignores the
obvious. The current threat is real. The future threat will be
directly
determined by the advances made in computer technology. Although it
is difficult
to quantify the scope of the computer crime problem, public
reports have
estimated that computer crime costs us between five hundred
million and ten
billion dollars per year. The Computer Security Institute has
surveyed 428
information security specialists in Fortune 500 companies; 42%
of the
respondents indicated that there was an unauthorized use of their
computer
systems in the last year. Only a small portion of computer crimes
come to the
attention of the law enforcement authorities. While it is
possible to give an
accurate description of the various types of computer
offences committed, it has
proved difficult to give an accurate, reliable
overview of the extent of losses
and the actual number of criminal offences.
At its Colloquium on Computer Crimes
and Other Crimes against Information
Technology, held at Würzburg, Germany,
from 5 to 8 October 1992, AIDP
released a report on computer crime based on
reports of its member countries
that estimated that only 5 per cent of computer
crime was reported to law
enforcement authorities. Law enforcement officials
indicate from their
experience that recorded computer crime statistics do not
represent the
actual number of offences; the term "dark figure", used
by criminologists to
refer to unreported crime, has been applied to undiscovered
computer crimes.
The invisibility of computer crimes is based on several
factors. First,
sophisticated technology, that is, the immense, compact storage
capacity of
the computer and the speed with which computers function, ensures
that
computer crime is very difficult to detect. In contrast to most
traditional
areas of crime, unknowing victims are often informed after the
fact by law
enforcement officials that they have sustained a computer crime.
Secondly,
investigating officials often do not have sufficient training to
deal with
problems in the complex environment of data processing. Thirdly,
many victims do
not have a contingency plan for responding to incidents of
computer crime, and
they may even fail to acknowledge that a security problem
exists. The dynamic
nature of computer technology, compounded by specific
considerations and
complications in applying traditional laws to this new
technology, dictate that
the law enforcement, legal and judicial communities
must develop new skills to
be able to respond adequately to the challenge
presented by computer crime. The
growing sophistication of telecommunications
systems and the high level of
expertise of many system operators complicate
significantly the task of
regulatory and legal intervention by law
enforcement agencies. If the law
enforcement community is expected to deal
with the problem of computer crime,
adequate training sessions must be
implemented. To address computer crime, most
police departments are
allocating a greater proportion of resources to their
economic or fraud
investigation divisions, since many types of computer crime
occur in the
course of business transactions or affect financial assets.
Accordingly,
it is important for investigators to know about business
transactions and
about the use of computer in business. The ideal situation is
to have
investigators with not only solid criminal investigation backgrounds but
also
supplementary technical knowledge. This is similar to the
traditional
approach, where many police forces ensure that their fraud
investigators,
although not necessarily accountants, possess a thorough
understanding of
financial and business record keeping. Preventative Agencies
In the late 1970s,
the prevailing public attitude was "you can't do anything
about
crime." A varied group of individuals - government policy makers,
law
enforcement, business, labor leaders - disagreed. This group founded
the
National Citizens' Crime Prevention Campaign featuring McGruff the
Crime Dog,
our nation's symbol for crime prevention. In 1977, FBI Director
Clarence Kelley
and his assistant, John Coleman, went to The Advertising
Council with a proposal
for a crime prevention public service advertising
campaign. The Ad Council
tabled the plan, but it sparked the interest of Leo
Perlis, Director of the
AFL-CIO's Community Services Division and a
member of The Ad Council's public
policy committee. Contact was made with the
officials in the U.S. Department of
Justice's Law Enforcement Assistance
Administration (LEAA), and with Carl M.
Loeb, Jr. - a businessman and
activist with a longstanding interest in reforming
the criminal justice
system and a board member of the National Council on Crime
and Delinquency.
In late 1977, LEAA, the FBI, and the AFL-CIO formed a small
planning group
and included the National Sheriffs' Association and the
International
Association of Chiefs of Police. Subsequently, two advisory bodies
from 19
national agencies were formed that would become the nucleus of the
Crime
Prevention Coalition, now 136 member organizations strong. By 1982,
the McGruff
Public Service Advertising Campaign was an acknowledged
success - in just two
years McGruff's "Take A Bite Out Of Crime," slogan was
known by over
half the population and his advice heeded by a substantial
portion of that
audience. To help build a focus on prevention, the original
partners in the
Campaign decided to create a new home for McGruff in an
agency whose sole
mission was the prevention of crime. With seed funding from
the federal
government and supported by the leadership and financial
contribution of Carl M.
Loeb, Jr., the National Crime Prevention Council
was created as a nonprofit
organization to manage the McGruff Campaign and
coordinate activities of the
Crime Prevention Coalition. Mr. Loeb served
as Chairman of the Board until his
death in 1985. John A. Calhoun, formerly
U.S. Commissioner of the Administration
for Children, Youth, and Families,
was selected as NCPC's first executive
director. Individuals who had been
working on the Campaign became the core staff
of the newly formed NCPC.
Through the hard work and dedication of people around
the country, NCPC has
evolved into the nation's resource for crime prevention.
Aside from
coordinating the efforts of the McGruff Campaign, NCPC provides
comprehensive
crime prevention technical assistance and training to communities
throughout
the United States; develops and implements highly-acclaimed and
innovative
youth development programs; runs pathbreaking demonstration programs
such as
the 10-city Community Responses to Drug Abuse and the seven-city
Texas
City Action Plan To Prevent Crime; disseminates information on
effective crime
prevention practices to thousands of individuals and
organizations every year;
and, publishes materials that reach millions, young
and old. NCPC partners with
socially responsible corporations to create
mutually beneficial relationships.
These corporate citizens enhance
national and local crime prevention efforts and
invest in NCPC, the national
resource center for crime prevention. Not only do
these companies provide
financial resources, they provide management skills,
marketing expertise, and
creative synergy to all of NCPC's programs. In October
of 1994, RadioShack
joined forces with NCPC and the National Sheriffs'
Association to form
United Against Crime, a public-private alliance which offers
a multi-year,
free education program on crime prevention. The partnership is one
of the
largest public-private sector crime prevention initiatives ever
undertaken
and was formed to empower people to take action that will result in
less
crime, stronger families, and more active communities. RadioShack
has
underwritten the cost of the alliance's program and is devoting space in
each of
its 7,200 electronic retail stores to showcase crime prevention
information
centers. Since August 1995, RadioShack has provided resources and
introduced
quarterly satellite crime prevention trainings for law
enforcement, community
leaders, and the public in over 150 sites. United
Against Crime has been
recognized by the Public Relations Society of New York
with the Big Apple Award
for Community Relations and by the International
Association of Business
Communications with the ACE Award for Community
Relations.