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What is a white-collar crime

April 26, 2019 0 Comment

What is a white-collar crime? Although there is no specific definition for it just yet, a white-collar crime is (CHAPTER 1******a non-violent crime committed by businesses or government professionals for financial gain. Another definition for white collar crimes was introduced by Edwin Sutherland. Sutherland stated that a white-collar crime is a “crime committed by a person of respectability and high social status in course of his occupation” (Sutherland 1949). White collar crime is fraud and it is an opportunistic type of crime. There are 3 major components, called the fraud triangle, that tend to lead to white-collar crimes being committed. The fraud triangle includes, rationalization, opportunity, and pressure. If you meet those 3 criteria, then chances of a white-collar crime being committed are pretty high.
Opportunity means you are in a position to commit a white-collar crime. Whether you hold a position in a bank where you manage certain accounts/funds or if you are a bookkeeper, you have that easy access and opportunity to commit a crime. Pressure is just that, any sort of pressure for example debt, bills, or problems at home that are putting you in a tight spot where you need to make money now to make your life better. The third is how you rationalize/justify the crime being committed. It can be as simple as saying ‘I have worked at this company for several years and deserve more’, or assuming that a few thousand dollars is nothing compared to millions the owner of the company is making.
Once these white-collar crimes are committed, who is all affected? The answer is that everybody is affected in one way or another. There is a greater chance of falling victim to a white-collar crime than being a victim to violent crime. On top of that the losses for white-collar crimes are greater when you compare the losses to any other crime. So how is everybody affected? Let’s go back to saying you work for a bank and commit a white-collar crime. You open several fake accounts and start putting other people’s money in those fake accounts. You do it for a while and make a decent amount of money just by ripping the average day citizen off a few cents per transaction. Those would be the initial victims, everybody that is losing out on 3 cents per transaction. As an individual that seems like it isn’t a big deal. Sometimes people give homeless people more than that or they just don’t go to the bank that frequently in order to have lost out on a bunch of money. Those citizens are victims nonetheless.
Now multiply 3 cents times the millions of customers/transactions that will be made. The 3 cents add up fast and whoever is actually committing the crime gains a lot of money. The misappropriation of funds can mess with the way the bank would normally invest that money and therefore it could mess with the economy. Now what about when the person committing the crime finally gets caught? Once an investigation is underway and the wrongdoing has been caught, not only will the person committing the crime get punished but the company itself can also face repercussions. Now the company can possibly be out millions of dollars just on fines. Granted fines, although they are in the millions, might not impact the company itself too much it is still a loss for the company. On top of fines there may be several lawsuits against the company in which they have to make it up to the victims that were directly impacted by the crime. The company itself might hurry and pay it all out or even extra in order to show people who weren’t impacted directly that they are still a good company and care about their customers. With the company having to give out all that money, what is the company to do? Raise prices all around in order to make up for their losses. That means higher interest rates, more fees, higher prices for all consumers. It can also mean cutting pay for employees or even firing them to save money. Loans become harder to pay off, and it can be harder to get credit. All of this amounts to a drastic change in the economy which ultimately affects everyone whether you were initially involved with the company or not.
That is a huge social cost and possibly one of the biggest ones out there. Money is a huge factor when it comes to white-collar crimes. These types of crimes cost the United States between 300 and 600 billion dollars per year. A lot of things you don’t hear about when it comes to white collar crime is about the individual and emotional losses. When a company or person commits a huge crime and it is shown it was simple for this one person to take so much from people it results in reduced faith in business leaders, businesses, and even in the stock market. Once people start losing faith they stop investing their money into places which again could hurt the economy.
A type of individual loss would be associated with physical harm. One scam can wipe out the complete life savings of many people causing them to go bankrupt. For example, the ENRON scandal or the Bernard Madoff ponzi scheme. Both were claiming to be successful and ran a very profitable business. The only problem was that both companies were involved in white collar crimes. People ended up losing out on jobs, retirements, and their life savings. Because these people suffered major losses some ended up becoming really depressed and even started committing suicide and that includes people involved with the crimes. That is a huge impact to society. These criminals might not have committed murder by pointing a gun at these victims and pulling the trigger but the victims did in fact die because of the actions of people committing white collar crimes.
In conclusion a white-collar crime being committed has a major impact on society. The effects include, the economy taking a hit, businesses losing money, millions of victims suffering a wide variety of consequences, and can be as extreme as people losing their lives. Due to these severe effects every part of the criminal justice system has been tough on these types of crimes. From giving big fines to sentencing criminals to over one hundred years in prison, it is all being done in hopes of deterring any future white-collar crimes.