Chapter Thirteen

Chapter Thirteen Enterprise Crime: White-Collar Crime and Organized Crime

Enterprise Crime • Involves illicit entrepreneurship and commerce • People twist the legal rules of commercial enterprise for criminal purposes • Corrupts the free market system • Can be divided into two distinct categories: • White-collar crime • Organized crime • Both forms can involve violence

White-Collar Crime • Any business-related act that uses deceit, deception, or dishonesty to carry out criminal enterprise • Involves illegal activities of people and institutions whose acknowledged purpose is illegal profit through legitimate business transactions • In the past it was considered only corporate crime • Now include middle-income Americans

Extent of White-Collar Crime • Difficult to determine the true extent • According to the White Collar Crime Center: • About half of households have experienced at least one form of white collar victimization each year • About 2/3 of all Americans will experience at least one white collar victimization in their life • Most common white collar victimizations include pricing fraud, credit card fraud, directly affected by corporate fraud • 2/3 of victims report the incident • 30% report to law enforcement agency

Components of White-Collar Crime • Stings and swindles • Chiseling • Individual exploitation of institutional position • Influence peddling and bribery • Embezzlement and employee fraud • Client fraud • Corporate crime

Stings and Swindles • A white-collar crime in which people use their institutional or business position to trick others out of their money

Chiseling • Using illegal means to cheat an organization, its consumers, or both, on a regular basis • Examples: • Professional chiseling • Securities fraud

Influence Peddling and Bribery • Using one’s institutional position to grant favors and sell information to which one’s co-conspirators are not entitled • Occurs in government as well as business

Embezzlement and Employee Fraud • Use of one’s position to embezzle company funds or appropriate company property for themselves • The company or organization is the victim • Committed by both blue-collar workers and management

Client Fraud • Theft by an economic client from an organization that advances credit to its clients or reimburses them for services rendered • Examples: • insurance fraud • credit card fraud • fraud related to welfare or Medicare programs • tax evasion

Corporate Crime • When a powerful institution or its representatives violate the laws that restrain these institutions from doing social harm or require them to do social good • Examples: • price fixing • illegal restraint of trade • false advertising • practices that violate environmental protection statutes

Causes of White-Collar Crime • Rational Choice/Greed • Rational Choice/Need • Rationalization/Neutralization • Cultural • Self-control

Rational Choice • Greed • Greedy people choose to take shortcuts to acquire wealth • Most believe they will not get caught • Need • Some people turn to crime to fulfill a financial or psychological need

Rationalization/Neutralization • Use of rationalizations by offenders to resolve the conflict experienced over engaging in illegal behavior

Corporate Culture • Some business organizations promote white collar criminality • Place excessive demands on employees while maintaining a business climate tolerant of employee deviance • Enron

Self-Control • The motives for white-collar crimes are the same as for other criminal behaviors • Offenders have low self-control and are inclined to follow momentary impulses without considering long-term consequences

White-Collar Law Enforcement Systems • The Federal government has the authority to regulate white-collar crime • State and local agencies are now combating white-collar crime too • Controlling White-Collar Crime • Compliance strategies • methods of controlling white-collar crime that rely on the threat of economic sanctions or civil penalties to control potential violators, creating a marketplace to obey the law • Deterrence • detect criminal violations, determine responsibility, and penalize offenders to deter future violations

Organized Crime • Illegal activities of people and organizations whose acknowledged purpose is profit through illegitimate business enterprise • General characteristics • Conspiratorial activity • Continuous commitment of primary members • Economic gain is the primary goal (also power and status) • Not all activities are illicit • Use predatory tactics • Groups are quick and effective in controlling and disciplining • Not always the “Mafia” • Does not include terrorists dedicated to political change

Activities of Organized Crime • Narcotics distribution • Loan sharking • Prostitution • Gambling • Theft ring • Pornography • Stock market manipulation

The Concept of Organized Crime • Alien Conspiracy Theory • The belief, adhered to by the federal government and many respected criminologists, that organized crime is a direct offshoot of a criminal society that was imported to the U.S. by Europeans who have a policy of restricting membership to people of their own ethnic background • The Mob: Cosa Nostra • Some feel the “real” organized crime is made up of 25 Italian dominated families • Gambino, Lucchese, Bonanno, Genovese families • Made men

Contemporary Organized Crime Groups • Now organized crime groups are more considered a loose confederation of ethnic and regional crime groups • Chicano • Hells Angels Motorcycle Club • Middle Eastern • Chinese • African criminal enterprises • Balkan criminal organizations • Eastern Europe

Controlling Organized Crime • Racketeer Influenced and Corrupt Organization Act (RICO) • Allows prosecutors to bring additional charges against people engaged in 2 or more acts prohibited by 24 existing federal and 8 state laws • Features monetary penalties that allow confiscation of all profits from criminal activities • Intended for use against organized criminals; also used against white-collar offenders

The Future of Organized Crime • Successful arrests and prosecution are an indication that the traditional organized crime syndicates are in decline • The “Mafia” had been hurt by changing values in U.S. society • There are still new groups thriving • Always opportunities for illegal practices and huge profits • Always demand for illegal goods and services • Internet provides for new types of organized crime

Chapter Thirteen