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