White Collar Crime Analysis Essay

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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 Wrzburg, 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.

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