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Punishment Evasion and White Collar Crime

Jeffrey Pearson
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Definition and Categorization

The current definition of White Collar Crime is: “financially motivated nonviolent crime

committed by business and government professionals.” After researching more about White

Collar Crime there seems to be two general categories of white Collar Crime: Crime committed

by a single person or small group of people and crime committed by a large corporation or

business. Most cases of white collar crime come from the first category, while crimes committed

by large businesses and the executives who make the decisions tend to face more lenient

punishment if they are convicted at all. Crimes that can be committed by Large corporations

include, False Financial Reporting, deception of investors (Corporation Fraud), Insider Trading,

and Late trading. On the other hand While collar crimes that a single person or a small group or

business can commit are, Computer and Identity fraud, Securities and Commodities Fraud,

Money Laundering, and many other types of generic Fraud.

History

Regulation.

White collar crime first gained attention during the industrial revolution. With huge

companies ruling all aspects of the economy and parts of the government, in one case bailing

out the United States government when it almost went bankrupt, congress realized that law

needed to be passed to restrict the power of these industry giants. The Sherman Antitrust Act of

1890 began government restriction of corporate power and control. Soon after the enormous

steel, oil, and railway corporations were split into many different, smaller, business, never to

regain the same level of influence and power. The Sherman Act main purpose was to dissuade

large corporations from completely owning a market, it accomplished this goal by Since The

Sherman Antitrust Act more regulation has been passed, broadening the definition of white

collar crime. Several important acts passed since the turn of the century include, the Computer
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Fraud and Abuse Act, originally passed in 1986 but amended in 2001, and the Identity Theft

Enforcement and Restitution Act.

The Computer Fraud and Abuse Act encompasses and incriminates all attempts to gain

access to a protected computer in any way, and any attempts to extort anything of value from

the user of a computer. As computers began to become more commonplace in a majority of

americans’ lives the government recognized the need to protect valuable data and exploitations

available to hackers and con artists. After several cases, this act’s jurisdiction expanded to

include interactions of cell phones, shrinking the area’s that con artists can legally operate.

The Identity Theft Enforcement and Restitution Act(ITER) changed the requirements for

convicting someone of Identity Theft, and created a more unforgiving punishment. Under the

Identity Theft Assumption Deterrence Act in 1988 the prosecution was required to prove that a

minimum of five thousand dollars in damages occured. Several specific actions were given the

status of a felony and required restitution for damages. ITER also expanded the jurisdictions of

interstate and foreign prosecution.

Cases

Enron Energy Collapse.

Enron Energy was a prominent energy provider during the 1990’s and early 2000’s. It

was collection billions is revenues, and was named by Fortune “America’s Most Innovative

Company”, several years later it was facing bankruptcy and investigation. Enron’s CEO, Jeffrey

Skilling had hid billions of dollars of debt through bad accounting and loopholes, and

subsidiaries. Andrew Fastow, COO of Enron, convinced both the board of directors and Enron’s

accounting firm, Arthur Anderson, to go along with the scheme. While some White Collar Crime

cases have trouble finding fault in a single person, in this particular case, the blame was

obvious, Skilling implemented the fraud, and pushed other executives to build the fascaude.

Katrina Fraud.
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After Hurricane Katrina hit the southern United States of America millions of people

jumped to join relief efforts, some decided to create their own, but the money they received to

help the millions displaced by the storm would never reach its advertised destination, instead it

landed square in these especially cruel con artists’ bank accounts. Right after Hurricane Katrina

dispersed websites advertising a way to donate to relief efforts began to appear, while many

were legitimate, others were well timed frauds, aimed at compassionate americans hoping to do

what they could to help.

Operation Senior Sentinel.

Throughout the 1990’s telemarketing fraud had exploded and was focusing on elderly

citizens. These scams were cost americans over forty billion dollars. Often these telemarketers

posed as charities, others sold products that would never arrive, and then when they got the

money others would tell their victim that they had been scammed, and explained that if they

paid a fee they could get their money back, and again steal their money. Three operations were

developed by the FBI to stop the extraordinary amount of telephone fraud, the first, Operation

Disconnect was based in Salt lake City, the second, in Miami, and the third in San Diego. These

operations used former FBI agents and informants posing as victims to lure telemarketers.

Operation Stolen Dreams.

Operation Stolen Dreams was another FBI investigation focusing on fraud, but this time

it was focusing on mortgage fraud. In hundreds of cities around the country groups were using a

variety of tactics that involved mortgages. Two people in Miami targeted Haitian-Americans,

using their personal information to obtain mortgages for themselves, leaving the new immigrants

with the debt. In California a home builder used straw buyers to inflate the prices of homes in

the area, increasing his revenues. Om detroit the local biker gang also used straw buyers to

obtain five hundred mortgages on two hundred properties. While these are only a few examples,

the FBI was pursuing over three thousand accounts of mortgage fraud.

Problems Current Regulation and Government Action

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White collar crime is a very broad category of crime, and while many sections are clearly

regulated, many obscure crimes are not defined, and many others are not investigated. In many

cases the punishments for white collar crimes are much less than violent crimes.

Volkswagen.

Last year a group of students at a west virginia college discovered that Volkswagen had

lied about their “clean diesel” engine, and had almost gotten away with it. Usually the FBI is the

one to actively look for and discover crime, but this one slipped under their radar, along with the

entire European Union’s combined intelligence agencies. While the fraud was eventually

uncovered, it was by accident, if it wasn’t for a group project, Volkswagen would still be polluting

the environment without anyone ever knowing.

Lack of Punishment.

In gang controlled neighborhoods throughout america, people live in constant fear of

being killed, robbed, or kidnapped; with local law enforcement unable to effectively administer

punishment of the law. For the unlucky gangsters that do get caught, they face steep

punishment, but the businessman who lies to his investors, and skyrockets stock prices off of

fake profits will be out much sooner than a mugger who shoot his victim for something worth a

few hundred dollars. White Collar crimes have underwhelming punishments for the magnitude

of their effect on people's lives. Fraud can cause as much damage or even more as a robbery,

yet the perpetrator faces years less than the common burglar. Because of the lack of

punishment of white collar crime gangs have begun to turn to white collar crime as their major

source of income, a new york gang made 1.5 million dollars off a money order scheme, much

more profitable that trying to rob everyone they see, and comes much easier and undetected by

local law enforcement.

Solutions to Problems with White Collar Crime

First of all, the punishment of white collar crime must be brought up to par with the

extent of the damage it causes its victims. Life savings disappearing in a moment doesn’t call
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for several years in prison, it calls for up to life. It took the victim their entire life to save enough

money to retire, so the fraudulent person should be required to spend the rest of their life paying

back that debt, through prison time.

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References

Federal Bureau of Investigation. (2006). Hurricane Katrina Fraud. Retrieved from:

https://archives.fbi.gov/archives/news/stories/2006/february/katrina_fraud020306

Federal Bureau of Investigation. (2000). Operation Senior Sentinel. Retrieved from:

https://www.fbi.gov/history/famous-cases/operation-senior-sentinel

Federal Bureau of Investigation. (2010). Operation Stolen Dreams. Retrieved from:

https://www.fbi.gov/history/famous-cases/operation-stolen-dreams

Ephrat Livni. (2016). Street Gangs are Getting Involved in White Collar Crimes. Findlaw.

Retrieved from: http://blogs.findlaw.com/blotter/2016/01/street-gangs-getting-involved-in-

white-collar-crimes-financial-fraud.html

P. Houston, M Floyd, S. Carnicero. (2012). Spy The Lie. St. Martin Griffin Books