Trusted Criminals
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Transcript of Trusted Criminals
WHITE COLLAR CRIME IN CONTEMPORARY SOCIETY 4TH ED.
CHAPTER 7ENTERPRISE CRIME,
CONTREPRENEURIAL CRIME, AND TECHNOCRIME
Trusted Criminals
Designed by: Jordan Land, M.S.
Enterprise Crime: Organized Crime and White Collar Crime
Enterprise refers to the interrelated dealings of legitimate businesspeople, political officials, and syndicated racketeers
Organized crime refers to any organized illegal activity, including organized professional theft, business theft, terrorist groups, motorcycle gangs, and “racketeers” who extort money by intimidation and violence
Enterprise Crime: Organized Crime and White Collar Crime
Organized crime is most commonly associated with the Mafia or La Cosa Nostra, an alleged national syndicate of criminals of Italian decent engaged in systematic illegal enterprises involving: The sale and distribution of illicit drugs Gambling Prostitution Loan sharking Labor racketeering
Enterprise Crime: Organized Crime and White Collar Crime
Perhaps the easiest solution is to refer to the popular image of Mafia-type syndicates, as syndicated crime and use the term organized crime more broadly
Several features are commonly associated with syndicated crime: It’s a self perpetuating organizational with a
hierarchy A limited membership Specialized roles Particular obligations
Omerta
Enterprise Crime: Organized Crime and White Collar Crime
Several obligations that are commonly associated with syndicated crime: Omerta- vow of secrecy Conspire to monopolize illegal enterprises by
threat of or actual use of: Force Violence Intimidation
Seek to protect itself from prosecution by corrupting the political and legal system
Enterprise Crime: Organized Crime and White Collar Crime
Legitimate businesses and syndicated crime engage in many of the same activities but in ways that are somewhat arbitrarily defined as legal or illegal
Syndicated crime performs important functions for corporate enterprises and the capitalist political economy Syndicated crime and capitalist institutions
coexist profitably
Enterprise Crime: Organized Crime and White Collar Crime
Perhaps the most accurate assessment of the economic impact of syndicated crime acknowledges that it cuts both ways
It benefits some elements of the capitalist political economy while harming others
The Relation between Governmental Crime
and Syndicated Crime
The survival of syndicated crime may depend on the cooperation or connivance of some governmental officials
Investigations have uncovered evidence linking governors, state legislators, judges, and various other government officials with syndicated crime
On the national level, ties between government agencies and syndicated crime go back at least as far as the early half of the 20th century
The Relation between Governmental Crime
and Syndicated Crime
Lucky Luciano assisted the U.S. Navy Intelligence in preventing sabotage and unrest on the New York docks
CIA enlisted the cooperation of syndicated crime in its attempts to overthrow Fidel Castro
Organized crime must be understood both as a product of a capitalist economy and as the illegal activity of a network of interdependent businesspeople, government officials, and racketeers
Historical Roots of Organized Crime
Piracy might be regarded as the first form of organized crime
John Hancock apparently operated an organized crime cartel that engaged in large-scale smuggling in the pre-Revolutionary colonies
The syndicated form of organized crime is often considered to have its roots in the Mafia, which emerged in southern Italy
Historical Roots of Organized Crime
Italian-American syndicated crime was widely regarded as the dominant form of authentic organized crime in the United States in the 20th century
Prohibition provided an ideal opportunity for the dramatic growth and expansion of syndicated crime because it created enormous demand for a product, alcoholic beverages, in the absence of a legal supply The repeal of Prohibition hardly diminished the
potency of syndicated crime
Historical Roots of Organized Crime
The objective of those involved in syndicated crime thus parallels those of individuals in legitimate occupations, and syndicated crime is simply seen as an unorthodox form of white collar crime
The Relation between Syndicated Crime and White Collar Crime
One thesis concerning the connections between syndicated crime and white collar crime suggests that the methods used to establish the great industrial empires and sprawling Western ranches of the 19th century were fundamentally no different from the methods used by 20th century mafiosi and syndicated crime members The 19th century Robber Barons and cattle
barons were the forerunners of 20th century organized crime
The Relation between Syndicated Crime and White Collar Crime
The general public perception of syndicated crime has in fact been somewhat ambivalent
Syndicated crime mobsters do not enjoy the same status of respectability that white collar offenders do They are more vulnerable to:
Suspicion Investigation Conviction
The Relation between Syndicated Crime and White Collar Crime
Legitimate businesses provide both a front and an important tax cover for illegal activities
They provide employment for associates and relatives who are on probation and parole
Altogether, increasing involvement with legitimate business can reduce the exposure of syndicated crime figures to prosecution and may also reflect an aspiration for greater respectability
Hazardous Waste Disposal
The business of disposing of toxic waste has been heavily infiltrated by syndicated crime because of its longstanding domination of the garbage-carting and disposal business
The illegal disposal of hazardous waste costs only a fraction of the cost of safe and legal disposal
Less than 20% of these wastes are disposed of properly
Hazardous Waste Disposal
Illegally disposed of hazardous waste endangers the health of people exposed to it
Corporations that generate hazardous waste strongly lobbied against laws that would impose substantial liability on them for the effects of improper or illegal disposal
This activity is an especially clear example of a hybrid type of white collar/organized crime
The Relations between Syndicated Crime and Finance Crime
The theft and manipulation of stocks and bonds by syndicated crime has been a major problem since the early 1970s
The longstanding practice of laundering the huge sums of money generated by illegal enterprises obviously requires some complicity on the part of banks, which benefit from these large deposits Syndicated crime outfits have had various forms of
suspect dealings with financial institutions and have sometimes infiltrated them
The Relations between Syndicated Crime and Finance Crime
Many connections exist between organized crime and white collar crime and the boundary lines between them have blurred
Donald Cressey speculated that at some point we would no longer be able to tell the difference between white collar crime and organized crime
Contrepreneurial Crime: Professional Criminals and White Collar
Crime
A professional criminal is anyone who engages in criminal activity regularly It has been used interchangeably with the term
career criminal
Professional criminals attempt to minimize the risk of arrest, prosecution, and imprisonment by carefully planning their crimes, avoiding violence, and putting in the “fix” with corruptible law enforcement and political officials
Historical Origins of Professional Crime
Origins of professional crime have been traced back to European feudalism when a certain proportion of the newly disenfranchised turned to: Robbery, poaching, banditry, and other outlaw
practices Jesse James & John Dillinger have been regarded
as one class of professional criminals
The Relation between Professional Crime and White Collar Crime
Several parallels exist between professional criminal and white collar offenders Both are prepared to take risks to make money Both are prepared to violate the law to maximize
profit Both seek to immunize themselves by bribing or
financing the campaigns of politicians or becoming informants for law enforcement officials
The classic professional criminal relies on skill and planning rather than direct force or intimidation to achieve an illegal objective
Both need to convey an aura of respectability and inspire some level of trust to carry out their crimes
The Relation between Professional Crime and White Collar Crime
Professional 1. More accepting of
their outlaw status2. More likely to make
a deliberate decision to become involved in criminal activities
3. Attempts a pure theft of money from a vulnerable victim or mark
White collar1. Regard themselves
as businesspeople 2. May drift into
fraudulent enterprises
3. Defrauds by giving something of little or no real value in return for money
What are the differences between the classical professional criminal and the contrepreneurial white collar criminals?
Fraudulent Businesses: Swindles, Scams, and Rackets
A vast number of enterprises are swindles, scams or rackets that annually cost consumers, investors and other unwitting parties billions of dollars
Are these activities properly classified as white collar crime? In some cases, the activity is more appropriately
described as organized crime or professional crime In other cases, a designation of white collar crime is clearly
justified
Fraud
The two key elements of fraud in legal terms are: Stealing by deception
Reports of fraud appear early in recorded history
Ex. In the 4th century BC in Greece, a ship owner attempting to defraud someone by seeking a cash advance for a ship laden with corn when all along the intent was to scuttle the ship instead of delivering the corn
Fraud
Other contemporary swindles and schemes include: Phony charities, long lost-heir searches, magazine
subscription rackets, referral schemes, travel deceptions, etc.
Consumer fraud has been understudied by criminologists despite the fact that it generates staggering annual losses that are estimated to be as high as $100 billion annually
Fraudulent businesses prey upon human vanity, fantasy, loneliness, insecurity and fear
Ponzi and Pyramid Schemes
In 1919, Charles Ponzi began advertising that he could return large profits to investors because he had learned how to take advantage of the international currency and postage markets
The claim was that international postal reply coupons purchased in a poor country such as Italy could be redeemed at a much higher rate in the United States
Ponzi and Pyramid Schemes
Ponzi was not investing the moneyHe was spending it on himself and paying off
early investors with some part of the money pouring in from newer investors
Eventually, the scheme was exposed and Ponzi went to prison High returns are promised Some early investors may receive payoffs, but
most of the invested money is spent on a lavish lifestyle for the perpetrators
Ponzi and Pyramid Schemes
March 12, 2009, Bernard L. Madoff pleaded guilty to 11 criminal counts in relation to a Ponzi scheme which the government claims involved $65 billion
The Madoff Ponzi scheme was surely the largest in history to date
Pyramid scheme is a special variant of a Ponzi scheme
Investment Frauds
Losses due to investments in fraudulent schemes and securities are especially widespread and substantial
By some estimates, Americans lose more than $2 billion annually by investing in low-price penny stocks
In recent years, fraudsters have been convicted in cases involving as many as 10,000 investors, and hundreds of millions of dollars in losses, in frauds involving bonds supposedly backed by a collection agency and the financing of leases on office equipment
Investment Frauds
The losses due to all such schemes are dwarfed by the losses to investors as a consequence of massive accounting fraud at Enron, WorldCom, HealthSouth and other major corporations
Home Improvement and Ownership Frauds
Some contractors are outright con artists
Many others are marginal contactors who mislead customers, do incomplete or shoddy work, and declare bankruptcy or engage in some other subterfuge to avoid settling claims
Builders, appraisers and mortgage brokers have conspired to sell poorly constructed homes at inflated prices with misrepresentation of tax obligations to prospective homeowners
Home Improvement and Ownership Frauds
In October 2008, Emmanuel Constant was accused of murder and torture in Haiti and was sentenced to 27 years in prison in connection with mortgage fraud using straw home buyers, falsified loan information, and inflated appraisals in Queens, NY
The FBI declared mortgage fraud as the fastest growing form of white collar crime in the early 2000s
Land Sale Frauds
In the 1920s, many people who bought “land” in Florida eventually discovered that their land was underwater
The basic scheme in these cases is to entice prospective retirees and other investors with some attractive brochures of beautiful developments complete with landscaping, gold courses, and lakes They use high pressure sales tactics to persuade
people to pay exorbitant prices for arid desert plots that turn out to be virtually worthless when promised development plans never materialize
Travel Scams and Time-Share Vacation Resorts
Millions of Americans receive postcards or e-mails informing them that they’ve won a glamorous vacation
If they respond to the inducements they are persuaded to pay a “travel club” or “service” fee before receiving their “prize”
The free vacation would turn out to have so many restrictions it would be useless to the recipient
Recipients often ended up with no vacation at all or with one for which they paid a substantial amount of money
Payday Loans, Debt Relief, and Credit Repair
Payday lenders operating online or from storefronts target people with modest incomes who need small loans to make it through till payday
Some debt relief companies advise consumers to stop making payments on their debt on the claim that they will negotiate settlements on favorable terms, but by extracting large fees directly from clients’ bank accounts, often put clients in a deeper hole
Some companies that offer to raise credit scores do so by falsifying the customer’s credit history—a form of fraud—and charge a hefty fee to do so
Employment Agency and Education-Related Scams
People have paid fees to “employment agencies” that guarantee them jobs. After sending in their money, many clients never hear from the agency again, or receive sloppily-prepared resumes or outdated lists of jobs or corporate contacts. In most cases, applicants do not obtain jobs
“Educational consultants” collect thousands of dollars in return for the false promise that the consultant will ensure their place in a school
Other scams exist involving diplomas, training, and financial assistance
Telemarketing or “Boiler Room” Scams
The National Consumers League estimated in a recent year that telemarketing frauds extract an average of $845 from each victim.
These operations may offer tempting investments, prizes, vitamins, etc.
Examples include enticements for “cash loans” in which callers are charged for generic information packages on how to apply for bank loans, “one-shot” credit cards, bogus health product promotions, and penny-stock offerings based on misleading information about new companies.
Schemes to Defraud the Wealthy
Middle-class people seeking a high return on their investments can be susceptible to fraud
Ex. About 6,000 people who invested $350 million in Colonial Realty in the 1980s lost much of their money when the operation turned out to be fraudulent
Some victims of investment fraud are quite wealthyEx. A New York college student persuaded 100
well-off individuals to invest millions with the investing entity he established and instead of investing the money, he spent most of it on a lavish lifestyle
Technocrime, Including Computer Crime
Technocrime is any crime facilitated by any sophisticated form of technology
It has been described as a subset of or new form of white collar crime
But not all illegalities committed with technology are white collar crimes. Ex.—technocrime committed by spies or terrorists, the use of computers for disseminating child pornography, or the use of the internet by pedophiles to solicit victims
Computer Crime
Computer crime is an illegal act wherein computers and computer technology are used to commit the offense
A computer may be the tool of a crime or the target of a crime
Categories include internal computer crimes (sabotaging programs), telecommunications crimes (hacking and illegal bulletin boards), computer manipulation crimes (embezzlements and frauds), computers in support of criminal enterprises, and hardware/software thefts
Computer Crime
An increasing proportion of theft today takes the form of stealing information, pirating software and electronic products, and copying intellectual property
An estimated 1/3 of business software is pirated
Business transactions carried out on the internet have generated broad new opportunities for criminal conduct
The relative anonymity of the internet can facilitate crime
Computer Crime
Businesses have become increasingly concerned about “click fraud”
Advertisers must pay for each “click” on their ads, but believe that in some cases competitors are deliberately driving their advertising costs up by fraudulent clicking
The internet has also facilitated identity theft and the theft of confidential information
Computer Crime
A considerable amount of computer crime or cybercrime is carried out by or through businesses or by people within the context of a legitimate occupation, victimizing consumers and individuals
The use of computers greatly increases the potential size and scope of thefts
It also enables people working in certain occupations to use a “salami technique”— that is, to steal small amounts of assets from many sources
The Law and Computer Crime
Despite increasing publicity about computer crimes, prosecutions for such crimes are relatively few in number, constituting a fraction of prosecutors’ caseloads
The single most common charges pertain to child pornography
Traditional criminal laws are not always applicable to crimes committed by manipulation of electronic software
The Law and Computer Crime
Most state and federal laws applicable to computer crime came into being in the 1980s
1986—Congress passed a computer Fraud and Abuse Act, which intended to make the use of computers for fraud and theft a felony
1996—passage of the National Information Infrastructure Protection Act eliminated some of the common defenses in computer crime cases
2000—Internet False Identification Prevention Act2000—USA Patriot Act added amendments to the
1996 law
The Pursuit of Computer Crime Cases
Investigation of computer crime require specially trained personnel and tend to be quite time consuming
Criminal justice agencies on all levels must devote more resources to technocrime
It is often necessary to resolve computer crimes privately and informally, in part because special complications arise if cases are pursued through the criminal justice system
Other Types of Technocrime
ATMs, telecommunications systems, facsimile machines and other forms of technology also provide a range of opportunities for misappropriation or theft
Advances in all forms of copying technology have provided new opportunities for organized and professional crime
Businesses of all sizes are victimized by technocrime, but commit some of it as well