Monday, June 17, 2013

WHITE COLLAR CRIME

1.0 Introduction While the concept of law has been constantly changing, taking different perspectives as the legislature redefines its bounds and courts reinterpret their range, the law relating to white collar crimes continues to differ from other legal areas. For instance, where property and contract law, have a stable framework that makes it easy to understand their fundamentals, white collar crimes is changing and evolving rapidly make it difficult to offer a stable or constant framework for its understanding. There is an increase of breadth in the form of new laws; there are extensions that are provided through case interpretations, there is expansion of the federal authority, currently becoming evident in the realm of local and state laws; and there are international efforts in dealing with the problem as the world is fast becoming globalised and these crimes are also taking an international form(Green, 2006). This paper uses a case on white collar crime to send light into the understanding of the issue in criminology. 2.0 Literature Review The term “white collar crime” has been in use since 1939, after it was coined by Professor Edwin Sutherland in a speech to the American Sociological Society. He suggested that those who committed these kinds of crime revealed different characteristics and motives. This is what makes these kinds of crime different from other conventional crimes such as the typical street crimes. A number of authors have related the idea of Sutherland to the explosion of US business during the period following the Great Depression (Shover & Wright, 2000; Green, 2006).Sutherland also argued that during his time, “less than two percent of the persons committed to prisons in a year belong to the upper-class” (Sutherland, 1949: 3). His aim was to prove that that social status, money and the likelihood of going to prison for committing a white collar crime were related. At the time when this term was coined, these kinds of crimes were relatively new policy issue in criminology. Sutherland was urging criminologists to quit focusing only on the economically and socially disadvantaged, as the rich and those belonging to the upper class were as likely to commit crime. Majority of the authors at the time tried to separate white collar crimes from blue collar crimes. The latter were basically blamed on psychological, structural and associational factors. Sutherland (1949) criticized the idea and theories of crime that suggested that crime was as a result of poverty or sociopathic and psychopathic conditions. Sutherland saw a new aspect of crime, that is, crime perpetrated by the rich and people in powerful positions. In opposition to just being an issue of civil sanction, he expressed the idea that this activity was criminal. Strader (2001, p. 4) claims that the investigative studies conducted on white collar crimes by Edwin Sutherland were stimulated by the presupposition that criminology had developed a tendency to overemphasize the social and financial determinants of criminal behavior for instance the socio-economic and family backgrounds of criminals. Sutherland argued that crime is typical of all social classes as particularly indicated in criminals that engaged in organized crime (Braithwaite, 1993). According to Strader (2001, p. 5) there are several ways in which a prosecutor or attorney involved in a case would define a “white collar crime”. These include: (a) A criminal act that is not related to organized crime. (b) A crime that is not of essence characterized by the criminal’s utilization of violence against a person or property. (c) A criminal act that is not directly associated with “vice crimes” for instance the ordinary theft of property. (d) A white crime may also be defined as a criminal act that is not associated with any form of narcotic possession, sale or dissemination. (e) Finally white collar crimes can also be defined as those crimes that do not directly relate to a country’s national policies such as national security, immigration and civil rights. As a consequence of such definitions, a great number of white collar crimes tend to be those that are committed by individuals or groups in corporate and governmental organizations ((Simpson, 2003, p. 3). In criminology, the concept of white collar crime is defined as “a crime committed by a person of respectability and high social status in the course of his occupation” (Sutherland, 1949: 9). As a symbolic interactionist, he believed that criminal behavior was a learned behavior through interpersonal interactions with others. He provided a definition of the Differential Association Theory in explaining the way deviants learn technical knowledge and motivation for criminal and deviant behavior. He focused on the Interactionist Theory of Deviance, emphasizing on the way individuals learn criminal behavior. He explained the theory that the people surrounded by criminal behavior, are more likely to commit crime. The blue collar workers surrounded by criminal behavior are likely to commit crimes that are of physical and violent nature. On the other hand, white collar workers, such as business executives commit those kinds of crime that are available to their positions because the opportunities make it possible. However, white collar crime is not a typical, clear-cut case of deviance. Some authors posit that it has one foot in deviance and the other in conventionality. White collar crime, therefore, is associated with corporate crime as the opportunity for the crimes that are defined as white collar crimes is more accessible for the persons employed in white collar jobs (Sutherland, 1949). The FBI defines white collar crime basically as “lying, cheating, and stealing” (Green, 2006: 6). The department of justice classifies it as “non violent illegal activities which principally involve traditional notions of deceit, deception, concealment, manipulation, breach of trust, subterfuge or illegal circumvention” (Green, 2006: 6). Regardless the fact that there is lack of a general definition of the term, it can be identified as non-violent crimes that are committed by public officials and business people for personal gains. This sub-set of criminal law encompasses a list of offenses, numerous acts of fraud, which are carried out through intention deception by the perpetrator. The following case example will clearly show what is meant by white collar crimes. This example is a case of Tai Nguyen, a former Primary Global Research consultant/expert. Government prosecutors required the U.S. District Judge Naomi Reice Buchwald to sentence this man to over four years in prison for what can be termed as white collar crime. The defendant who pleaded guilty to the charges accepted that he had access to confidential financial information on Abaxis, Inc. He had gotten this information from an employee in this company, his sister who was working as an assistant comptroller, directly reporting to the CFO of the company. The defendant had used this information for economic benefits, trading on it to earn 147,000 dollars on trades, while a number of hedge fund managers earned 6.2 million dollars. The managers included Noah Freeman and Samir Barai. The two pleaded guilty to their charges (Pavlo, 2013). The article in Forbes, suggests that this is not the first case of a Primary Global consultant to fall due to the cooperation by Freeman/Barai. Another criminal, Winifred Jiau, is presently serving a four-year sentence as a result of use of information for fraud given by the two managers. This is a common use of information to commit fraud in the information technology era (Pavlo, 2013). The use of information to trade and earn illegal money is not the only case of white collar crime committed by Nguyen. One of the two managers, Barai had requested the consultant to perform other services in addition to giving hot stock tip, launder money. This is another good example of a white collar crime. Nguyen ran a one-man research company by the name Insight Research. Every month, this company would invoice the manager’s hedge fund 20,000 dollars for expert consulting services. Once the manager had paid, the check would be cashed and 12,000 dollars put aside to be given to the manager (Pavlo, 2013). From this case, it emerges that the kinds of people who commit white collar crimes are respected by the society and had successful and comfortable lives in the standards of the society. For example, Nguyen had a respectable career from the standards of the society. He had a degree in electrical engineering from Purdue University and had worked in the semiconductor industry for firms such as IBM and Cirrus, before starting his own consultant company to offer services to investors (Pavlo, 2013). This seems to be a person who was doing very well and lived a comfortable life in the standards of the American society. People who committed white collar crimes are opportunists, who have understood the possibility of taking advantage of their positions to accumulate financial benefits. This is evident in the case of Nguyen and the two managers. They tend to be intelligent, educated, affluent, and confident. They are well-qualified to get a job in the position that affords them the opportunity to commit crime. Through their intelligence, they are able to gain trust and confidence from their victims. It is important to note that Majority of the perpetrators do not begin as criminals, and in the beginning do not find themselves as capable of committing crime. From the article, it is clear that Nguyen did not begin his career with the intentions of breaking the law. He had the qualifications required to be in the position he was. However, his position afforded him an attractive point to begin committing crime. The status of the criminals tends to be a problem in advancing justice. Given the fact that they were respected by the society as well as the law enforcement officials, the crimes that they committed were generally given a blind eye (Green, 2006). It is interesting that there have been a number of criticisms that have been directed by legal scholars and social scientists regarding the manner in which Edwin Sutherland described white collar crimes (Ryler, 2009). A great number of these criticisms revolve around main concepts that these scholars mention as points of concern on Sutherland’s use of the term “white collar crime”. One such concern is conceptual ambiguity. In their deliberations of conceptual ambiguity the critics of Sutherland’s definitions argue that Sutherland assessed white collar crimes very vaguely. Such a vague description, they argue, consequently lead to vague interpretations by academicians and legal experts thus leading to inadequacy or ineffectiveness in its application. The second point of concern that Sutherland’s critics raise on the manner in which Sutherland defines and utilizes the term “white collar crime” has to do with methodological ambiguity. Sutherland defined white collar crimes as unlawful behaviors that are depicted be members of the upper class in society. Nevertheless, Sutherland directed his investigative studies on a number of different offences such as deceptions by salespeople, swindling by mechanics and corporate scandals. Despite of the clear definitions provided by criminologists such as Professor Sutherland, there has remained a major problem in prosecuting those perpetrating white collar crimes, possible due to definitional conflicts, lack of adequate legal framework to deal with this category of crimes and also given that the crime has been changing with time (Block et al, 1981). In the modern day criminal justice system, there is still lack of adequate structure to address white collar crimes. Additionally, it seems that the definition of white collar crime has changed to take a new stance, especially with the development in technology (Shover & Wright, 2000). The original definition of the concept white collar crime defined the kind of criminal who had the opportunity to commit white collar crimes. On the other hand, the definition of the concept has over time expanded and is currently focused on the sort of crime involved, which is perpetrated by the normal and legal business operations, where the major components are cheating and dishonesty. This has led to a debate on who qualities as a white collar criminal as well as on what qualifies as a white collar crime (Vollrath, 2010). In the modern justice system, the concept white collar crime normally entails various non-violent crimes which are committed are perpetrated in commercial settings, especially for financial gains (Ryler, 2009). The concept in the minds of many people in the current criminal justice setting reflects an evaluation of both the individual and the crime itself. In some other cases, the concept is only defined from the perspective of the crime and not the offender. Most of such crimes are difficult to prosecute given that the offenders use sophisticated ways to conceal their tracks through a set of complex processes (Green, 2006).These challenges still make prosecution of white collar criminals very challenging as is seen in the case of Nguyen. Despite the Government prosecutors asking the judge to give Nguyen four years, he only got one year and a day. The sentence would allow him to earn “good time” off of his sentence. This means that he would only end up serving about 85 percent of his term. This is clear evidence of the fact that the law has not been well developed such that white collar criminals get the kind of punishment they deserve (Pavlo, 2013). Green (2006) argues that regardless the fact that there are higher rates of white collar crimes in the modern age, especially with the development in information technology, statistics still reveal that the majority of those incarcerated are the poor convicted for blue collar crimes. 3.0 Conclusion The phenomenon of “law” has been constantly changing, taking different perspectives as the legislature redefines its bounds and courts reinterpret their range; In spite of this, the law relating to white collar crimes continues to differ from other legal areas. For instance, where property and contract law, have a stable framework that makes it easy to understand their fundamentals, white collar crimes is changing and evolving rapidly make it difficult to offer a stable or constant framework for its understanding. White collar crime is a serious policy issue not only in the US but in other nations around the world. It has emerged from the discussion and the case example that the concept originated in a speech by Professor Sutherland in 1939. This does not mean that such crimes were not being committed prior to this time, but the definition of the crimes was not clear. This paper has also discussed a number of criticisms that have been directed towards Sutherland’s description of white collar crime. One such concern is conceptual ambiguity. In their deliberations of conceptual ambiguity the critics of Sutherland’s definitions argue that Sutherland assessed white collar crimes very vaguely. Such a vague description, they argue, consequently lead to vague interpretations by academicians and legal experts thus leading to inadequacy or ineffectiveness in its application. The second point of concern that Sutherland’s critics raise on the manner in which Sutherland defines and utilizes the term “white collar crime” has to do with methodological ambiguity. Sutherland defined white collar crimes as unlawful behaviors that are depicted be members of the upper class in society. Nevertheless, Sutherland directed his investigative studies on a number of different offences such as deceptions by salespeople, swindling by mechanics and corporate scandals. While Sutherland came up with a definition of white collar crime as at that time, it has also emerged that this crime has evolved to become more and more complex in the modern era. It is no longer enough to define white collar crime from the perspective of the perpetrator, but important also is to look at the kind of crime. There are very many crimes that fall under this category of crime. Federal and state laws are there in the United States to deal with white collar crime. There is also evidence from the research that these laws are being enacted in addressing the issue. However, as long as there are definitional issues, the laws cannot be effectively enforced. 4.0 References Block, K. M., Nold, F. C. and Sidak, J. G., (1981), The Deterrent Effect of Antitrust Enforcement, 89 Journal of Police Economy, No. 429, pp. 443-44 Brathwaitte, J., (1993),. Crime and the Average American, Law and Society Review, Vol. 27, No. 27, pp. 215-224 Green, S. P. (2006).Lying, Cheating, and Stealing: A Moral Theory of White Collar Crime. Oxford: Oxford University Press. Pavlo, W. (2013). Another Primary Global Expert Sentenced to Prison for Insider Trading, Forbes Ryler, T. R., (2009) Self Regulatory Approaches to White Collar Crime: The Importance of Legitimacy and Procedural Justice, in The Criminology of White Collar Crime (S. Simpson and David, Weisburd eds) Shover, N. & Wright, J. P. (eds.) (2000).Crimes of Privilege: Readings in White-Collar Crime. Oxford: Oxford University Press Simpson, S. S., (2003), The Criminology Enterprise and Corporate Crime, Criminologist, Vol. 1, pp. 3-5 Strader, J. K., (2001), Understanding White Collar Crime, Southwestern University School of Law, Matthew Bender & Company, pp. 1-16 Sutherland, E. H.(1949). White Collar Crime.(New York: Dryden Press, Vollrath D. R. (2010). Losing the Loss Calculation: Toward a More Just Sentencing Regime in White-Collar Criminal Cases, Duke Law Journal 59(5)