White Collar Crime

     In this paper the exciting criminal phenomenon known as white-collar crime will be
discussed. Corporate Crime and Computer Crime will be discussed in detail. Crime
preventative agencies such as the NCPC (National Crime Prevention Council) will
also be researched. White Collar Crime The late Professor Edwin Sutherland
coined the term white-collar crime about 1941. Sutherland defined white-collar
crime as "a crime committed by a person of respectability and high social
status in the course of his occupation" (Siegel 337) White-collar crime
includes, by way of example, such acts as promulgating false or misleading
advertising, illegal exploitation of employees, mislabeling of goods, violation
of weights and measures statutes, conspiring to fix prices, evading corporate
taxes, computer crimes, and so on. White-collar crime is most distinctively
defined in terms of attitudes toward those who commit it. These crimes are
punishable by law, however it is generally regarded by the courts and by
sections of the general public as much less reprehensible than crimes usually
punished by the courts. The other types of crime are blue-collar offenses, which
are predominately crimes of the under-privileged. White-collar crimes are
punished far less harshly than blue-collar crimes, which shows societies
attitudes towards the two sections of society. White-collar crime is attractive
to criminals because it brings material rewards with little or no loss of
status. (Taft & England 201) For some, white-collar crime is not viewed as a
"crime" at all, because of its non-violent nature. Violent crime has
an immediate and observable impact on its victim which raises the ire of the
public, whereas white-collar crime frequently goes undetected or is viewed as a
bending of the rules. Yet white-collar crime can create the greater havoc. The
victim of an assault will recover; however, the impact of a fraud can last a
lifetime. This is especially true when the elderly are victimized, as they have
little or no hope of re-establishing themselves in financial terms. Contrary to
the popular belief, white-collar criminals are thieves and the methods used to
conceal their offenses are both artful and ingenious. Concealment of the crime
is always an objective of the offender, and it becomes an element of the crime
itself. Because it is an artful form of deceit, which is skillfully disguised,
the investigation itself is often long and laborious as far as proving criminal
intent is concerned. The offence itself may be disguised in a maze of legitimate
transactions, which are quite proper if viewed in isolation; however, the
cumulative effect is the commission of a criminal offence. From the standpoint
of the criminal, the ideal white- collar crime is one that will never be
recognized or detected as a criminal act. (Radzinowicz 325-335) Corporate Crime

Corporate crime is the type of crime that is engaged in by individuals and
groups of individuals who become involved in criminal conspiracies designed to
improve the market share or profitability of their corporations. ( Siegel 338)

Corporations are legal entities, which can be and are subjected to criminal
processes. There is today little restriction on the range of crimes for which
corporations may be held responsible, though a corporation cannot be imprisoned.

The most controversial issue in regard to the study of corporate crime revolves
around the question of whether corporate crime is "really crime."

Corporate officials, politicians, and many criminologists object to the
criminological study of corporate criminality on the strictest sense of the
word. The conventional and strictly legal definition of crime is that it is an
act, which violates the criminal law and is thereby punishable by a criminal
court. From this perspective a criminal is one who has been convicted in a
criminal court. Given these widely accepted notions of crime and criminals, it
is argued that what is called corporate crime is not really crime and should not
be considered as such by either the public or criminologists. (Hochstedler 22)

It does appear that now in recent times society has had a growing concern about
white-collar and corporate crime. Studies have indicated that the public now
judges white-collar criminality to be more serious than it had been in the past,
people now have lost confidence in the people running major companies, and most

American corporate executives are believed to be dishonest. The public's concern
with corporate crime has grown recently, but has been evident for several years.

I will use one of the most memorable corporate crime cases in history; The Ford

Pinto Case to prove my statement. (Cullen/Maakestad/Cavender 43) The product
liability lawsuit and appeal titled Grimshaw v. Ford Motor Company is a case in
point and ought to be read by everyone. Grimshaw is an example of the type of
thing that can happen when an industry insolates itself from competition. The

Pinto affair has very important lessons for us all. Its story can teach us much
about the power of huge corporations and what corporations can do when they face
no real competition. It carries an important lesson about how the minds of those
who run the world's colossal corporations work. In November of 1971 the Grays
purchased a new 1972 Pinto hatchback manufactured by Ford in October of 1971.

The Grays had trouble with the car from the outset. During the first few months
of ownership, they had to return the car to the dealer for repairs a number of
times. Their car problems included excessive gas and oil consumption, down
shifting of the automatic transmission, lack of power, and occasional stalling.

It was later learned that the stalling and excessive fuel consumption were
caused by a heavy carburetor float. On May 28, Mrs. Gray, accompanied by

13-year-old Richard Grimshaw, set out in the Pinto from Anaheim for Barstow to
meet Mr. Gray. The Pinto was then six months old and had been driven
approximately 3,000 miles. Mrs. Gray stopped in San Bernardino for gasoline, got
back onto the freeway (Interstate 15) and proceeded toward her destination at 60
- 65 miles per hour. As she approached the Route 30 off-ramp where traffic was
congested, she moved from the outer fast lane to the middle lane of the freeway.

Shortly after this lane change, the Pinto suddenly stalled and coasted to a halt
in the middle lane. It was later established that the carburetor float had
become so saturated with gasoline that it suddenly sank, opening the float
chamber and causing the engine to flood and stall. A car traveling immediately
behind the Pinto was able to swerve and pass it but the driver of a 1962 Ford

Galaxie was unable to avoid colliding with the Pinto. The Galaxie had been
traveling from 50 to 55 miles per hour but before the impact had been braked to
a speed of 28 to 37 miles per hour. At the moment of impact, the Pinto caught
fire and its interior was engulfed in flames. According to the plaintiff's
expert, the impact of the Galaxie had driven the Pinto's gas tank forward and
caused it to be punctured by the flange or one of the bolts on the differential
housing so that fuel sprayed from the punctured tank and entered the passenger
compartment through gaps resulting from the separation of the rear wheel well
sections from the floor pan. By the time the Pinto came to rest after the
collision, both occupants had sustained serious burns. When they emerged from
the vehicle, their clothing was almost completely burned off. Mrs. Gray died a
few days later of congestive heart failure as a result of the burns. Grimshaw
managed to survive but only through heroic medical measures. He has undergone
numerous and extensive surgeries and skin grafts and was expected to have to
undergo additional surgeries over the next 10 years. He lost portions of several
fingers on his left hand and portions of his left ear, while his face required
many skin grafts from various portions of his body. This graphic account of
these events is needed to grasp the full impact of this tragic situation which
could have been avoided by Ford for very minimal cost. Each Pinto could have
been repaired for $4-$8 a piece. Management knew of these defects but still
decided to produce and release the Pinto to the public. The idea for the Pinto,
as has been noted, was conceived by Mr. Iacocco [sic], the Executive Vice

President of Ford. The feasibility study was conducted under the supervision of

Mr. Robert Alexander, Vice President of Car Engineering. Ford's Product Planning

Committee, whose members included Mr. Iacocca, Mr. Robert Alexander, and Mr.

Harold MacDonald, Ford's Group Vice President of Car Engineering, approved the

Pinto's concept and made the decision to go forward with the project. Harley

Copp, a former Ford engineer and executive in charge of the crash testing
program, testified that the highest level of Ford's management made the decision
to go forward with the production of the Pinto, knowing that the gas tank was
vulnerable to puncture at low rear impact speeds creating a significant risk of
death or injury from fire and knowing that fixes were feasible at nominal cost.

He testified that management's decision was based on the cost savings, which
would inure from omitting the fixes. This was the corporation's outright trade
of human life for profit. The jury in this case brought in a verdict for the
plaintiffs in excess of $128 million of which $125 million were punitive
damages. There is another very important point to be made by this case. Ford
knew that the Pinto was going to kill or burn people because of its design, but,
because of the "cost savings which would inure from omitting the
fixes," Ford decided to let it go. Consider carefully exactly what Ford

Motor Company was doing here. One could argue that Ford was conducting
cost-benefit analysis. To the Ford executives, the benefits were clear,
calculable, and immediately available. Ford would save a few dollars on each

Pinto manufactured. The costs would accrue in the future and would not be paid
by Ford. Unfortunately, the costs were the lives and permanent injuries of
nameless and faceless future consumers. The Pinto would appear to be a prime
example of laying off costs. The suffering, the destroyed lives and families
apparently were of minor consideration in the calculations when Ford performed
the cost-benefit analysis. Corporate crime has also been linked to political
leaders in this country. Corporate crime is a crime of power and profit for the
offenders. Large and powerful corporations who have the support of prominent
political leaders can be difficult to prosecute in corporate crime cases. At the

Progress & Freedom Foundation conference held at the Mayflower Hotel in

Washington, D.C., Speaker of the House Newt Gingrich (R-Georgia) was asked why
he spent so much time addressing the issue of street crime and violence, while
ignoring the issue of corporate crime and violence. Gingrich answered, "If

I went around the country and said, 'Vote for us and there will be no more
white-collar fraud,' the average voter will say, 'I don't think he gets
it.'" But corporate crime is more than just white-collar fraud. And one
reason that Gingrich doesn't address the issue of corporate crime might be
because one of the corporations that has brought him to power is Southwire Co.
of Carrollton, Georgia. Southwire has close ties to Gingrich, it dominates the
political economy of Carroll County, where Gingrich's political career was
launched, and it is a corporation with a criminal record. Individuals affiliated
with Southwire Co., including its chief executive officer, Roy Richards, and its
president, James Richards, have donated more than $18,000 to Gingrich's
campaigns for Congress during the past ten years. According to the Los Angeles

Times, James Richards has also donated 80,200 to GOPAC, the political action
committee spearhearded by Gingrich. Computer Crime Computer technology has
introduced new factors concerning the types of perpetrators, the forms of assets
threatened, and embezzlement methods. ( Radzinowicz 357) Computer crimes
generally fall into five categories: 1) theft of services 2) use of computer
data for personal gain 3) unauthorized use of computers employed for various
types of financial processing 4) property theft by computer 5) placing viruses
to destroy data. (Siegel 353) The terms "computer misuse" and
"computer abuse" are also used frequently, but they have significantly
different implications. Criminal law recognizes the concepts of unlawful or
fraudulent intent and of claim of right; thus, any criminal laws that relate to
computer crime would need to distinguish between accidental misuse of a computer
system, negligent misuse of a computer system and intended, unauthorized access
to or misuse of a computer system, amounting to computer abuse. Annoying
behavior must be distinguished from criminal behavior in law. History has shown
that a broad range of persons commits computer crime: students, amateurs,
terrorists and members of organized crime groups. What distinguishes them is the
nature of the crime committed. The individual who accesses a computer system
without further criminal intent is much different from the employee of a
financial institution who skims funds from customer accounts. The typical skill
level of the computer criminal is a topic of controversy. Some claim that skill
level is not an indicator of a computer criminal, while others claim that
potential computer criminals are bright, eager, highly motivated subjects
willing to accept a technological challenge, characteristics that are also
highly desirable in an employee in the data-processing field. According to a
number of studies, however, employees represent the largest threat, and indeed
computer crime has often been referred to as an insider crime. One study
estimated that 90 per cent of economic computer crimes were committed by
employees of the victimized companies. A recent survey in North America and

Europe indicated that 73 per cent of the risk to computer security was
attributable to internal sources and only 23 per cent to external criminal
activity. The American Bar Association conducted a survey in 1987: of 300
corporations and government agencies, 72 claimed to have been the victim of
computer-related crime in the 12-month period prior to the survey, sustaining
losses estimated to range from $ 145 million to $ 730 million. In 1991, a survey
of security incidents involving computer-related crime was conducted at 3,000

Virtual Address Extension (VAX) sites in Canada, Europe and the United States of

America. Seventy-two per cent of the respondents said that a security incident
had occurred within the previous 12-month period; 43 per cent indicated that the
security incident they had sustained had been a criminal offence. A further 8
per cent were uncertain whether they had sustained a security incident. Similar
surveys conducted around the world report significant and widespread abuse and
loss. Computer criminals have gained notoriety in the media and appear to have
gained more social acceptability than traditional criminals. The suggestion that
the computer criminal is a less harmful individual, however, ignores the
obvious. The current threat is real. The future threat will be directly
determined by the advances made in computer technology. Although it is difficult
to quantify the scope of the computer crime problem, public reports have
estimated that computer crime costs us between five hundred million and ten
billion dollars per year. The Computer Security Institute has surveyed 428
information security specialists in Fortune 500 companies; 42% of the
respondents indicated that there was an unauthorized use of their computer
systems in the last year. Only a small portion of computer crimes come to the
attention of the law enforcement authorities. While it is possible to give an
accurate description of the various types of computer offences committed, it has
proved difficult to give an accurate, reliable overview of the extent of losses
and the actual number of criminal offences. At its Colloquium on Computer Crimes
and Other Crimes against Information Technology, held at Würzburg, Germany,
from 5 to 8 October 1992, AIDP released a report on computer crime based on
reports of its member countries that estimated that only 5 per cent of computer
crime was reported to law enforcement authorities. Law enforcement officials
indicate from their experience that recorded computer crime statistics do not
represent the actual number of offences; the term "dark figure", used
by criminologists to refer to unreported crime, has been applied to undiscovered
computer crimes. The invisibility of computer crimes is based on several
factors. First, sophisticated technology, that is, the immense, compact storage
capacity of the computer and the speed with which computers function, ensures
that computer crime is very difficult to detect. In contrast to most traditional
areas of crime, unknowing victims are often informed after the fact by law
enforcement officials that they have sustained a computer crime. Secondly,
investigating officials often do not have sufficient training to deal with
problems in the complex environment of data processing. Thirdly, many victims do
not have a contingency plan for responding to incidents of computer crime, and
they may even fail to acknowledge that a security problem exists. The dynamic
nature of computer technology, compounded by specific considerations and
complications in applying traditional laws to this new technology, dictate that
the law enforcement, legal and judicial communities must develop new skills to
be able to respond adequately to the challenge presented by computer crime. The
growing sophistication of telecommunications systems and the high level of
expertise of many system operators complicate significantly the task of
regulatory and legal intervention by law enforcement agencies. If the law
enforcement community is expected to deal with the problem of computer crime,
adequate training sessions must be implemented. To address computer crime, most
police departments are allocating a greater proportion of resources to their
economic or fraud investigation divisions, since many types of computer crime
occur in the course of business transactions or affect financial assets.

Accordingly, it is important for investigators to know about business
transactions and about the use of computer in business. The ideal situation is
to have investigators with not only solid criminal investigation backgrounds but
also supplementary technical knowledge. This is similar to the traditional
approach, where many police forces ensure that their fraud investigators,
although not necessarily accountants, possess a thorough understanding of
financial and business record keeping. Preventative Agencies In the late 1970s,
the prevailing public attitude was "you can't do anything about
crime." A varied group of individuals - government policy makers, law
enforcement, business, labor leaders - disagreed. This group founded the

National Citizens' Crime Prevention Campaign featuring McGruff the Crime Dog,
our nation's symbol for crime prevention. In 1977, FBI Director Clarence Kelley
and his assistant, John Coleman, went to The Advertising Council with a proposal
for a crime prevention public service advertising campaign. The Ad Council
tabled the plan, but it sparked the interest of Leo Perlis, Director of the

AFL-CIO's Community Services Division and a member of The Ad Council's public
policy committee. Contact was made with the officials in the U.S. Department of

Justice's Law Enforcement Assistance Administration (LEAA), and with Carl M.

Loeb, Jr. - a businessman and activist with a longstanding interest in reforming
the criminal justice system and a board member of the National Council on Crime
and Delinquency. In late 1977, LEAA, the FBI, and the AFL-CIO formed a small
planning group and included the National Sheriffs' Association and the

International Association of Chiefs of Police. Subsequently, two advisory bodies
from 19 national agencies were formed that would become the nucleus of the Crime

Prevention Coalition, now 136 member organizations strong. By 1982, the McGruff

Public Service Advertising Campaign was an acknowledged success - in just two
years McGruff's "Take A Bite Out Of Crime," slogan was known by over
half the population and his advice heeded by a substantial portion of that
audience. To help build a focus on prevention, the original partners in the

Campaign decided to create a new home for McGruff in an agency whose sole
mission was the prevention of crime. With seed funding from the federal
government and supported by the leadership and financial contribution of Carl M.

Loeb, Jr., the National Crime Prevention Council was created as a nonprofit
organization to manage the McGruff Campaign and coordinate activities of the

Crime Prevention Coalition. Mr. Loeb served as Chairman of the Board until his
death in 1985. John A. Calhoun, formerly U.S. Commissioner of the Administration
for Children, Youth, and Families, was selected as NCPC's first executive
director. Individuals who had been working on the Campaign became the core staff
of the newly formed NCPC. Through the hard work and dedication of people around
the country, NCPC has evolved into the nation's resource for crime prevention.

Aside from coordinating the efforts of the McGruff Campaign, NCPC provides
comprehensive crime prevention technical assistance and training to communities
throughout the United States; develops and implements highly-acclaimed and
innovative youth development programs; runs pathbreaking demonstration programs
such as the 10-city Community Responses to Drug Abuse and the seven-city Texas

City Action Plan To Prevent Crime; disseminates information on effective crime
prevention practices to thousands of individuals and organizations every year;
and, publishes materials that reach millions, young and old. NCPC partners with
socially responsible corporations to create mutually beneficial relationships.

These corporate citizens enhance national and local crime prevention efforts and
invest in NCPC, the national resource center for crime prevention. Not only do
these companies provide financial resources, they provide management skills,
marketing expertise, and creative synergy to all of NCPC's programs. In October
of 1994, RadioShack joined forces with NCPC and the National Sheriffs'

Association to form United Against Crime, a public-private alliance which offers
a multi-year, free education program on crime prevention. The partnership is one
of the largest public-private sector crime prevention initiatives ever
undertaken and was formed to empower people to take action that will result in
less crime, stronger families, and more active communities. RadioShack has
underwritten the cost of the alliance's program and is devoting space in each of
its 7,200 electronic retail stores to showcase crime prevention information
centers. Since August 1995, RadioShack has provided resources and introduced
quarterly satellite crime prevention trainings for law enforcement, community
leaders, and the public in over 150 sites. United Against Crime has been
recognized by the Public Relations Society of New York with the Big Apple Award
for Community Relations and by the International Association of Business

Communications with the ACE Award for Community Relations.