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White Collar Crime Theories, Laws and Processes
Explain white collar crime in terms of various theories related to criminology and crime.
A white collar crime is an illegal and unethical act that violates public trust (Friedrichs, 2010). Common examples include misrepresentation, stealing, misappropriation, self-dealing, and corruption (Echols & Richardson, 2011). Most are crimes of opportunity and hold similar characteristics to corporate crime -- fraud, insider trading and other illegal acts of a financial nature. A "white collar" prosecutor or defense attorney, for example, would most likely define "white collar crime" as crime that does not necessarily involve force against a person or property; involve narcotics; relate to organized crime activities; relate to such national policies as immigration, civil rights, and national security; or involve "vice crimes" or the common theft of property (Minkes, 2010). Many white collar criminals are first time offenders.
There are several basic theories in which white collar crime can be explained relating to criminology and crime. There are the sociological, biogenetic, and psychological explanations to white collar criminology and crime (Morley & Hall, 2003). The most basic theory of criminality states that criminals are different in some fundamental way from non-criminals. On a sociological level, criminal tendency is defined by the environmental analysis of various segments of the population or among different powerful organizations. The biogenetic explanation of criminality states that criminals are inherently different from other people -- the "born criminal" (Friedrichs, 2010). Environmental and societal factors are not considered under this theory, which is why most criminologists discredit it, although public imagination of this explanation persists. Biogenetic explanations of criminality focus on factors such as body type, brain chemistry and the biogenetic roots of schizophrenia and depression.
Psychological explanations for criminal behavior focus on the motivations, thoughts and intentions of those who defy the law on a habitual basis. The need to continually deviate from societal norms plays a large role in the psychological make-up of a criminal. Personality traits and disorders are often evident from childhood. Oppositional Defiance Disorder (ODD), Attention Deficit Hyperactivity Disorder (ADHD), and Conduct Disorder (CD) are three of the more prominent disorders that have been shown to have a relationship with criminal behavior later in life (Morley & Hall, 2003).
Describe the sources of laws related to white collar crime and explain the basic provisions of major laws addressing white collar crime.
In 1981, the United States Department of Justice described white collar crime as the use of deception as the criminal means. Its definition states it as a:
"…nonviolent crime for financial gain committed by means of deception by persons whose occupational status is entrepreneurial, professional or semi-professional and utilizing their special occupational skills and opportunities; also, nonviolent crime for financial gain utilizing deception and committed by anyone having special technical and professional knowledge of business and government, irrespective of the person's occupation."
Legal ramifications for white collar crimes date back to Biblical times. There are numerous Biblical prohibitions against deceitful and unfair market practices. Greek lawmakers established laws against embezzling from the state. Roman statesman discussed the obligation of insiders in gain transactions. In the Late Middle Ages, specific laws were enacted in England to protect consumers from re-grating, engrossing, and forestalling. In the United States, Congress enacted laws towards the end of the nineteenth century in particular, regulating and criminalizing a wide range of business practices. This was in response to the country's sudden evolution into an industrial, urbanized, mass society. During this period white collar crime increased (Friedrichs, 2010).
Today, white collar crimes in the U.S. are governed by the general principles of criminal law (Braithwaite, 2010). White collar crime remains widespread because in general it is often very difficult to detect or prove. Unlike conventional crime, white collar crimes are usually committed in the privacy of an office or home; usually there is no eyewitness or obvious red flags (Minkes, 2010). Instead, the government's proof is more likely to depend upon circumstantial evidence and complex paper trails.
Successful prosecution depends upon the proof of several factors. "Purpose" requires a finding that the defendant has as a conscious objective to commit the act or result proscribed by the crime. "Knowledge" requires a finding that the defendant knew the act or result would almost certainly occur. "Recklessness" requires a finding that the defendant was aware of a substantial and unjustifiable risk that the act or result would occur. Each area is subjective, requiring that the fact finder conclude that the defendant personally possessed the required state of mind. "Negligence" is more objective and requires a finding that the defendant should have known that the act or result would occur. In most states, even an attempt to commit a crime is itself rendered a crime, assuming aforementioned factors are present (Echols & Richardson, 2011). Most of the evidence in white collar cases is not obtained by searches and seizures, but rather by voluntary responses to judicial subpoenas (Braithwaite, 2010).
Explain the principle processes and government agencies involved in regulating/policing white collar crime and the various self-regulation approaches used by organizations.
There are some nuances between the processes used to regulate white collar crime vs. those used for conventional crimes, including the use of niche government agencies and units that specialize in white collar criminal activity (Echols & Richardson, 2011). The Federal Bureau of Investigation (FBI) has been principally concerned with highly visible white collar crimes. Other government agencies include the Inspector General, the U.S. Postal Inspection Service, the U.S. Secret Service, the U.S. Customs Service, the U.S. Marshals Service and the Internal Revenue Service's Criminal Division. In addition, some states have independent offices for regulating and policing such crime.
Due to the proliferation of major ethical scandals in corporations (i.e., Enron), in-house policing units have been established in many firms to monitor financial activities and compliance with federal and state law (Braithwaite, 2010). Organizations are now employing more forms of self-regulation such as codes of conduct, ethics committees and third party auditors.
Describe the nature of fraud, its impact on business organizations, and recent trends in fraud prevention.
The nature of fraud often involves dishonesty in the form of falsified information such as accounting entries, trade logs, billing records, asset reports, or earnings, losses and profit data (Minkes, 2010). Self-dealing is another component of fraud. This entails inside trading, kickbacks, the misuse of corporate property for personal gain, and individual tax violations. Fraud takes on other forms as well - witness tampering, obstruction of justice, perjury, and other obstructive behaviors. It is almost always designed to escape regulatory oversight (Echols & Richardson, 2011).
Examples include such scenarios as an employee embezzling funds by wire transfer to a personal bank account or the executive director of a large non-profit opening another bank account to deposit donor contributions for personal use. The impact of fraud to governments, private organizations, and individuals can be catastrophic over time. Fraudulent activity can occur at any time and in any organization. The longer the fraud goes undetected the more severe the associated losses.
The monetary loss associated with fraud can be widespread and substantial. Recent estimates by the FBI and the Association of Certified Fraud Examiners indicate over $300 billion in corporate losses -- and this is thought to be the low end of the spectrum (Friedrichs, 2010). Overall, the economic losses in the U.S. due to white collar crime run as high as $1 trillion annually (Echols & Richardson, 2011). Other impacts include job loss, pilfered retirement accounts, diminished employee and/or public trust, judicial persecution and fines, and at times the ultimate demise of the business.
There has been steady growth in the fraud prevention industry. Today, there is more emphasis on governance measures and management responsibility and accountability. Many organizations are now tasked with developing a comprehensive accounting policies and internal…[continue]
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