WHITE COLLAR CRIME (CORPORATE CRIME)- (Article)

                  

The term “white collar crime” means- the full range of cheating and frauds done in business and government profession. It was first coined in 1939 by “Edwin Sutherland”                           ----a sociologist. He defined that ‘any crime committed by any person (who is respective) and high social background (via occupation or business). The motivations of corporate crimes are to obtain money, property, services, personal security and business advantages. Some examples of white collar crimes includes- corporate frauds, falsification of financial information, self-dealing and detailing, detection, laundering of money, security frauds, investment frauds, commodity frauds, financial crime and frauds, deterrence etc. Some entities that used to investigate these crimes include- (SEC) securities and exchange commissions, (NASD) national association of securities dealers, (FBI) federal bureau of investigation, other state authorities. Many types of scams and frauds falls in this list including- Ponzi schemes, security crimes (insider trading), insurance fraud, tax evasion etc.

v  Security frauds- includes ‘insider trading’ where someone inside the company leaks the details about investment trades and violates the duty and obligations. Ex-someone leaks the detail of upcoming contract (stock) to any other company.

v  Insurance frauds- include embarking insurance scheme of any person to improperly collect or smoothly move with insurance policy by lying in many applications.

v  Ponzi schemes- here, they take money from investors in any shape or size leads to white collar crime. Ex- investor Bernie Madoff (serving prison sentence for Ponzi scheme).

v  Tax evasion- here, contractor tries to avoid taxes they had to give. It ranges from filing tax forms with wrong and illegal information about transferring property. But there are infinite ways to commit these crimes.

White collar crimes include a variety of non-violent crimes which are committed in financial situations for financial profit. The list of white collar offenses include- anti-trust violations, bankruptcy fraud, bribery, counter-filing, credit card fraud, computer and internet fraud, economic attack, trade secret theft, environment law violations etc.

v  Whistleblowers- it is very difficult to prosecute because the perpetrators use different ways to conceal their activities through complex transactions. It has been increase in 2015 and exchange commission received 3923 bribes.

v  Penalties and Regulations- According to Federal Bureau of Investigation (FBI), corporate crime is calculated to cost the United States above the $300 billion throughout a year (annually). A number of federal agencies, including the Federal Bureau of Investigation ( FBI), the Internal Revenue Service (IRS), and the Securities and Exchange Commission (SEC), participate in white-collar crime legislation.

v  Responsible Corporate Officer- The “Responsible Corporate Officer” (RCO) doctrine (also referred to as the “responsible relation doctrine”) a high-ranking corporate officer is aware of his corporation's work.  It established two Supreme Court cases- United States vs. Dotterweich, 320 U.S. 277 (1943), and United States v. Park, 421 U.S. 658 (1975).

v  Corporate Fraud- It has the potential to cause immeasurable damage to U.S. economy and investor confidence and attention. As this lead agency investigating corporate fraud, the Bureau focuses on cases that involve accounting schedules, self-dealing done by corporate executives, and obstruction moves to justice.

v  Money Laundering-It is the method by which criminals disguise their proceeds and make them appear to come from legitimate sources. It motivates criminals to hide wealth, avoid necessary taxes, increase profits and reinvestment, and fund out the criminal activity. While it can be defined very simply as turning “dirty” money into “clean” money and money laundering is a significant crime.

Factors that can lead to white-collar crime-

People commit white-collar crimes as employees to whom they known by their hard work, ethic and success. It makes white collar crime so difficult to predict.

 

v  Using ill-considered job incentives-Incentives provides a competitive edge and reward those who excelled. To work in these incentives one must be properly planned and scheduled. Un-understandable and Unreasonable incentives, prioritize short-term achievements can attempt workers to cut corners with the world. An incentive schedule and a proper plan that aims to win a reward immediate successes, can send the wrong messages. A good incentive plan has the ability which will reward both the long-term strategies and the short-term success.

 

v  No emphasis on ethics-If a business is lax (luxurious) on enforcing their ethicise policies, employees are used them more likely to view them as optional (but not necessary so). It creates an office culture of no accountability discussion and verification and Low accountability can lead to wide (sometimes narrow) acceptance of illegal behaviours.

v  And any office that does not practices their ethics code makes it easier for workers to justify illegal or predatory behaviour.

 

v  An industry-wide reputation- If this perception of any entire profession is that which works outside the rules, it makes individuals less likely to resist corrupt behaviour. The wrong conception can make an industry seem implicit in illegal behaviour even if this (any) specific company hasn’t committed any wrongdoing.

 

v  The idea of a victimless crime-When someone commits a white-collar crime, it’s unclear that to whom they are hurting. Many people can justify stealing from a giant (big) company because they don’t attach a face to that company.

 

CONCLUSION

How to Stop White-Collar Crime?

A judge of federal bureau of investigation says that the fear of prison is the best way to detect bad behaviour. Also, huge fines paid by businesses who breaks the law provides none of the incentive for companies to change cultures that lead to these illegal activity. Even though the large fines and bad publicity are nowadays viewed as a cost of doing business (rather than a deterrent for companies that break the law.)Sir George G.C.

The Racketeer Influence and Corrupt Organizations Act (RICO) was originally associated with mafia (the very dangerous person) related organized crime, but was soon applied to white-collar crime. Under the law of racketeering included things like embezzlement from union funds (unknowingly), bribery and mail fraud It also allowed states or people to perpetrators for triple or three times the dollar amount of damages (losses). It was under this act that junk bond financier Michael Milken was when found guilty of various kinds of fraud and bond market manipulations were also punished.

 

 - Adv. Sangita Kumari