White-Collar and Organized Crime Overview

White-Collar Crime and Organized Crime

• White-collar crime involves illegal activities by individuals or institutions, aiming for profit through legal business transactions.
• Organized crime involves illegal activities by individuals or organizations, aiming for profit through illegal business transactions.
• Both crimes share the common goal of making money through criminal means.

White-Collar Crimes

• Embezzlement
• Price fixing
• Bribery
• False advertising
• Theft
• Fraud

Organized Crime

• Threats
• Smuggling
• Drugs
• Sex trade
• Gambling
• Loan sharking
• Extortion

Similarities Between White-Collar Crime and Organized Crime

• Both involve illegal enterprise crimes.
• The Mafia and business chambers of commerce can be considered associations of business people coming together for business purposes.
• Both corrupt and taint the free market system.
• Both may involve violence.
• Some criminal enterprises involve both white-collar crime and organized crime.

Edwin Sutherland (1930s)

• Focused on corporate criminality.
• White-collar crime involved wealthy individuals using their position to gain personal profit without considering the law.
• The cost of white-collar crime is likely several times greater than all considered "crime problems."
• White-collar crime offences breed distrust in economic and social institutions.

White-Collar Crime (Expanded)

• Now also includes middle-income earners and corporate executives.
• Examples include: income tax evasion, credit card fraud, soliciting bribes, and embezzlement.
• Some white-collar criminals engage in conspiracies to improve market share and profitability of their corporations.
• Such criminal activity is sometimes called "corporate crimes." which include antitrust violations, price fixing, and false advertising.

Extent of White-Collar Crime

• Difficult to estimate the extent and influence of white-collar crime on victims.
• In 2009, 30% of companies worldwide reported being victims of economic crime in the previous year.
• Losses for Canadian companies exceeding 50% and in more than 50% of cases, losses were greater than $500,000.
• White-collar crime can damage property, and even cause death in addition to financial losses.

Types of White-Collar Crime (Mark Moore's Typology, 1980)

• Stings and swindles
• Chiselling
• Individual exploitation of institutional position
• Influence peddling and bribery
• Theft and employee fraud
• Client fraud
• Corporate crime
• High-tech crime (new addition)

Stings and Swindles

• Involves stealing through deception by individuals using their position to defraud people out of money.
• Examples include door-to-door sales of faulty merchandise and passing counterfeit stock certificates.
• Offenders are usually charged with theft or fraud.

Chiselling

• Regularly cheating an organization, customers, or both.
• Involves people looking to make quick profits in their own businesses, or employees who cheat on the organization's obligations and policies.
• Professional chiselling involves professionals taking advantage of their position to cheat clients.

Securities Fraud (Chiselling)

• Deceptive and illegal activities in commodity and stock markets.
• Churning: excessive buying and selling of stock.
• Front running: placing personal orders ahead of a large customer's order to profit from the market effects of the trade.
• Bucketing: improperly skimming customer trading profits.
• Insider trading: using confidential business information to buy or sell securities.

Individual Exploitation of Institutional Position

• Individuals exploit their power in an organization to extort money from clients by threatening to withhold services.
• Fire inspectors threatening to find nonexistent fire code violations to force businesses to pay is an example.

Influence Peddling and Bribery

• Individuals who hold important positions in organizations sell their influence, information, or power to outsiders with no legitimate interest in the organization or who want to gain a position of influence within the institution.
• Government officials selling information about future government activities is an example.

Influence Peddling and Bribery (Government Cases)

• Influence peddling in government: investigation of Bruce Carson initiated by Prime Minister Stephen Harper.
• Corruption in criminal justice: agents of criminal justice systems can also be caught in corruption. Police officers are particularly vulnerable to charges.

Theft and Employee Fraud

• Individuals using their positions to embezzle or steal company funds or take company property.
• Company is a victim.
• Can occur at all levels of the organizational structure.
• Pilferage - employee theft of company property. Workers say they steal because of strain, conflict, etc.

Management Level Fraud

• Converting company assets for personal benefit.
• Receiving fraudulent increases in compensation (bonuses).
• Fraudulently increasing personal shareholdings of company stock.
• Retaining position in the company by manipulating accounts to present the company as successful.
• Concealing poor company performance from stockholders.

Client Fraud

• Theft from an organization that advances or reimburses credit to its clients or customers.
• Health-care fraud: Some physicians cheat the government by billing for unnecessary or more expensive services.
• Bank fraud: obtaining money from financial institutions through fraudulent activities like cheque forgery, credit card fraud, or offshore transactions.
• Tax evasion: taxpayers delaying taxes they already owe the government.

Corporate Crime

• Institutions intentionally violate laws to restrain them from wrongdoing or those requiring them to act in good faith.
• Done to further business interests.
• Targets of these crimes can include the public, the environment, and company workers.
• The offender is the corporation itself, not just the individuals who work there and benefit from the crime.

Corporate Crime Examples

• Price-fixing: Conspiracy by large companies to set or control the price of a product below fair market value so that smaller companies can no longer compete.
• Illegal restraint of trade/monopoly: Contracts or conspiracies designed to stifle competition, create a monopoly, or otherwise interfere with the free market.
• Deceptive pricing: Contractors offering incomplete or misleading price estimates for contracts.
• False claims and advertising: Fraudulently making claims about a product that are not based on its actual performance.
• Environmental crimes: Using company practices to violate environmental protection laws, such as maintaining unsafe conditions in plants and mines, endangering workers.

High-Tech Crimes

• Recently added to Moore’s typology.
• Computer crime (cybercrime):
  • Traditional crimes committed using a computer (money laundering, illegal gambling).
  • "Pure" high-tech crimes against computer systems (hacking, spreading viruses).
  • Theft styles and methods: Trojan horse, salami slice, super-zapping, logic bomb, impersonation, data leakage.

Controlling White-Collar Crime

• Enforcement usually involves two types of strategies

  • Compliance strategies: Foster law conformity, cooperation, and self-policing within the business community through incentives and agencies. These strategies rely on threats of economic sanctions and penalties.
  • Deterrence strategies: Detect, determine responsibility, and penalize offenders to deter future violations.

• Bill C-13 introduced harsher penalties, including those for insider trading, tipping, and whistle-blower retaliation..

Organized Crime

• Ongoing criminal enterprises aimed at earning money through illegal activities.
• The organizations often resemble legitimate businesses.
• Common characteristics include secrecy, power, and wealth.
• Many believe that organized crime families exist and pose a threat. Illicit enterprises include pornography, gambling, narcotics, and prostitution.

Organized Crime: Characteristics

• Conspiratorial activity is typically hierarchical.
• The primary goal is economic gain.
• Often involved in more than just the provision of illicit services.
• Employs predatory tactics like intimidation, violence, and corruption.

Major Organized Crime Groups in Canada

• Approximately 18 organized crime groups operating within Canada.
• Predominantly involved in smuggling cigarettes, alcohol, drugs, luxury car theft, credit card fraud, extortion, and immigrant smuggling.
• Criminal Intelligence Service of Canada (CISC) issues annual reports on organized crime in Canada.
• Among the main Italian-based organizations are the Sicilian Mafia, 'Ndrangheta, and La Cosa Nostra.

Outlaw Motorcycle Gangs

• These gangs are engaged in various illicit activities; including prostitution, fraud, extortion, drug trafficking, telemarketing, illegal arms, stolen goods, and contraband.

Concept of Organized Crime

• Some view organized crime as a direct offshoot of a criminal society (e.g., the Mafia).
• Other perspectives see organized crime as a loose confederation of ethnic or regional crime groups with common economic or political purposes, not solely connected to a central committee.

Causes of White-Collar Crime

• Many potential explanations, including offender motivations that, unlike street crimes, offenders may not consider committing true crimes.
• Belief that government regulators don't understand the business world and competition.
• Feeling the crime is less bad due to frequency. Greed.
• Need to maintain or improve one's job, ego satisfaction, support of family, debts, etc.
• Corporate culture promoting white-collar crime through a profit-over-fair-play climate and employee toleration.
• Individuals with low self-control, impulsivity, lack of long-term concern.

This quiz explores the concepts of white-collar crime and organized crime, highlighting their definitions and key characteristics. It examines specific types of crimes, their similarities, and the impact they have on the market system. Test your knowledge on these fascinating yet concerning subjects.