criminology

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What Is The White Collar Crime Criminology Essay

White collar criminals are usually “well respected in their communities and take part in national affairs” (Stanislav, 2012). Martha Stewart is known for making people homes more stylish place to live, but she is also known because she was convicted of trying to sell the stocks she had in a company that made drugs, Stewart was told by Dr. Sam, he promised a drug that could cure cancer, that the Food and Drug Administration was not going to approve his company’s experimental cancer drug, Erbitux. After report came saying that the experimental drug was denied the value of the stock dropped dramatically and Stewart sold her shares the day before the prices dropped. This made the FBI look into why she did it and discovered that Dr. Sam told Stewart that the drug was denied by the Food and Drug Administration, this is what made her sell all of her stocks before the price drop. She was convicted because what she did is known as insider trading and it is a type of white collar crime. Martha Stewart may had not known about insider trading was going to land her a spot in jail. The term insider trading refers to:

Transactions in a company’s securities, such as stocks or options, by corporate insiders or their associates based on information originating within the firm that would, once publicly disclosed, affect the prices of such securities Famous examples of insider trading include transacting on the advance knowledge of a company’s discovery of a rich mineral ore (Securities and Exchange Commission v. Texas Gulf Sulphur Co.), on a forthcoming cut in dividends by the board of directors (Cady, Roberts & Co.), and on an unanticipated increase in corporate expenses (Diamond v. Oreamuno). Although insider trading typically yields significant profits, these transactions are still risky. Much trading by insiders, though, is due to their need for cash or to balance their portfolios. The above definition of insider trading excludes transactions in a company’s securities made on nonpublic “outside” information, such as the knowledge of forthcoming market-wide or industry developments or of competitors’ strategies and products. Such trading on information originating outside the company is generally not covered by insider trading regulation. (Stanislav Dolgopolov)

White-collar offenses range from a variety of offences that include: bank fraud, computer and internet fraud, credit card fraud, insurance fraud, mail fraud, tax evasion, bad checks, counterfeiting, forgery scheme, money laundering, racketeering, embezzlement, government fraud, trade secret theft. (Legal Information Institute)This are just a few of the things that white collar crimes covers, according to the estimates that the Federal Bureau of Investigation has investigated during the years white-collar crime costs the United States more than $400 billion yearly. Here is the class A list of things that are classified as white collar crime according to National Incident –Based Reporting System, this is a report that the FBI comes up every year.

Criminal Behavior NIBRS Offense Category

Academic crime Fraud (26A-26E)

Adulterated food, drugs, or cosmetics Fraud (26A-26E)/All Other Offenses (90Z)a

Anti-trust violations All Other Offenses (90Z)

ATM fraud Fraud (26A-26E)

Bad checks Bad Checks (90A)

Bribery Bribery (510)

Check kiting Fraud (26A-26E)/Bad Checks (90A)a

Combinations in restraint in trade All Other Offenses (90Z)

Computer crime Substantive offense

Confidence game Fraud (26A-26E)

Contract fraud Fraud (26A-26E)

Corrupt conduct by juror Bribery (510)a

Counterfeiting Counterfeiting/Forgery (250)

Defense contract fraud Fraud (26A-26E)

Ecology law violations All Other Offenses (90Z)

Election law violations All Other Offenses (90Z)

Embezzlement Embezzlement (270)

Employment agency and education-related scams Fraud (26A-26E)

Environmental law violations All Other Offenses (90Z)

False advertising and misrepresentation of products Fraud (26A-26E)

False and fraudulent actions on loans, debs, and credits Fraud (26A-26E)

False pretenses Fraud (26A-26E)

False report/statement Fraud (26A-26E)/All Other Offenses (90Z)a

Forgery Counterfeiting/Forgery (250)

Fraudulent checks Bad Checks (90A)

Health and safety laws Fraud (26A-26E)/All Other Offenses (90Z)a

Health care providers fraud Fraud (26A-26E)

Home improvement frauds Fraud (26A-26E)

Impersonation Fraud (26A-26E)

Influence peddling Bribery (510)

Insider trading Fraud (26A-26E)

Insufficient funds checks Bad Checks (90A)

Insurance Fraud Fraud (26A-26E)

Investment scams Fraud (26A-26E)

Jury tampering Bribery (510)a

Kickback Bribery (510)

Land sale frauds Fraud (26A-26E)

Mail fraud Fraud (26A-26E)

Managerial fraud Fraud (26A-26E)

Misappropriation Embezzlement (270)

Monopoly in restraint in trade All Other Offenses (90Z)

Ponzi schemes Fraud (26A-26E)

Procurement fraud Fraud (26A-26E)

Racketeering Influenced and Corrupt Organizations (RICO) Substantive offense

Religious fraud Fraud (26A-26E)

Sports bribery Sports Tampering (39D)

Strategic bankruptcy Fraud (26A-26E)

Subornation of perjury Bribery (510)a

Swindle Fraud (26A-26E)

Tax law violations All Other Offenses (90Z)

Telemarketing or boiler room scams Fraud (26A-26E)

Telephone fraud Fraud (26A-26E)

Travel scams Fraud (26A-26E)

Unauthorized use of a motor vehicle [lawful access but the Embezzlement (270)

entrusted vehicle is misappropriated]

Uttering Counterfeiting/Forgery (250)

Uttering bad checks Bad Checks (90A)

Welfare fraud Fraud (26A-26E)

Wire fraud Fraud (26A-26E)

When people hear or think of "white collar crime" it often brings up the image of a company CEO scheming their way to fortune. It’s true that many of the white-collar crimes that have been committed have given people this idea. One of the biggest and infamous scandal involved Enron. In 2001 Enron executives confessed that they had exaggerated in the company's earnings, they had inflated the price of the company stocks and cheated investors out of millions of dollars. Unraveling Enron lies and especially their books took a lot of hard work, which proof how white-collar crime has evolved.

Enron was created in 1985 as an energy company, that sold natural gas to gas companies in 1996 the energy market was changed and this allowed companies to compete with other energy companies.(NPR) With this change Enron started to works as a middle man instead of a normal energy supplier, this means that they were trading energy contracts instead of buying and selling electricity, by doing this Enron grew so fast that its stock value increased at a rapid phase. This made investors really happy and the company gained new investors. (NPR)

As Enron grew its CEO’s decided to expand into other industries like internet services, this was a huge error for them because this caused financial complication. In order for Enron to keep growing at this rate they began to take up money with the purpose of investing it in new projects, but by doing this they would accumulate a debt that would make their earnings less impressive to new investors. The solution that Enron came up with was to create partnerships that allowed them to keep this debt off company books. (NPR)

By the end of 2000 Enron claimed that they had tripled its profit since 1998, they knew that this was a lie because of all they had borrow but since it was off their book it looked like they made a profit, on March 2001 Fortune magazine was the first business magazine that published an article that questioned the way Enron was making its money. By august of that same year Enron vice president sent a letter to the CEO of Enron that contained accounting methods that were going to lead to “implode in a wave of accounting scandals.”(CNN Justice) Also in that month Enron’s CEO sent an e-mail to his employees telling them that he knew that Enron stock prices to go up. After telling his employees this lie he sold off his own stock in Enron. (CNN Justice)

In October Enron announced a loss of more than $630 million, they blamed this to the failure of its Internet investment. That same month the Securities and Exchange Commission (SEC) announced that investigations of Enron were under way. Enron claimed that they overestimated their earnings for the last four years by almost $600 million and that they owned over $6.5 billion in debt by 2001. With this announcement many of Enron employees who had their 401K retirement plans in Enron saw all of their investment go from millions of dollars to almost nothing. (CNN Justice)

On December 2001 Enron filed for bankruptcy under chapter 11 of the U.S Bankruptcy code, (NPR) this has been the largest US corporate bankruptcy with assets of more than $63 billion. During the investigation into Enron many taped conversations that Enron traders did where released to the public. Here are a few of those conversations:

In one transcript a trader asks about

"All the money you guys stole from those poor grandmothers of California."

To which the Enron trader responds,

"Yeah, Grandma Millie, man. But she's the one who couldn't figure out how to (expletive) vote on the butterfly ballot."

In one of those transcripts, a trader says to Richter

"So, uh, somebody's figured out how to set congestion?"

Richter:

"Well, we ... we can set it if we want. I mean, it's not a hard game to do ..."

In another, an Enron trader identified as David discusses shutting down a steamer from a generating unit to increase prices.

"I was wondering, um, the demand out there is er ... there's not much, ah, demand for power at all and we're running kind of fat. Um, if you took down the steamer, how long would it take to get it back up?

"Oh, it's not something you want to just be turning on and off every hour. Let's put it that way," another trader says.

"If we shut it down, could you bring it back up in three — three or four hours, something like that?" David asks.

"Oh, yeah," the other trader says.

"Well, why don't you just go ahead and shut her down, then, if that's OK," David says. (Joel Roberts)

After Enron collapse many of its employees like George Maddox, who lost all of his retirement after Enron collapse Maddox said that he had to spend his golden years mowing lawn and living in a farmhouse. Maddox worked as a plant manager for 30 years, he retired from Enron years before its collapse. Many of Enron’s employees suffer the same fate as Maddox and now are trying to move on as best they can. (CNN Justice)

White collar crime most of the time is associated with the management of companies, but people from different positions in a company can commit white collar crime. In the 1800s the FBI created a unit that its only purpose was to track and solve white collar crime (FBI). Despite these efforts they FBI still not able to convict many of the people that have committed white collar crime because it is complicated to get evidence, another problem with white collar offenders is that their punishment doesn’t fir the crime. It is difficult to even keep up with the all of definitions and terms that are associated with white collar crime. According to the Commerce Clause of the U.S.

The federal government has the authority to regulate white-collar crime, and a number of federal agencies (see sidebar), including the FBI, the Internal Revenue Service, the Secret Service, U.S. Customs, the Environmental Protection Agency, and the Securities and Exchange Commission, participate in the enforcement of federal white-collar crime legislation. In addition, most states employ their own agencies to enforce white-collar crime laws at the state level.(FBI)

Many people fail to understand the legal terms of what is white collar crime and end up committing the crimes. Sometimes when a person is from another country they do not know that they are committing the crime because in their country it is legal to do what we consider white collar crime. This is a great example of a white collar crime that has to do with an accountant.

Imagine that you're an accountant for a successful public company that you own stock in. While you are gathering information, you discover that it suffered massive third-quarter losses that will surely devalue your stock. The news won't be released for another few weeks, however, and you suddenly find yourself in possession of worthless stock -- unless, of course, you choose to unload it before the news gets out. It's difficult, at this point, to consider the poor sucker who will buy the stock from you. (How White-Collar Crime Works)

There have been many definitions to the phrase “white-collar crime” but no one has agreed on what can be classified as white collar crime. Most of the definition that has been given come short, for example one definition explains the white collar crimes are nonviolent but what happens when a company decides to dump toxic waste in rivers and lakes and threatens people that benefit from the rivers or lakes? Even thou white collar crime is often committed by CEOs of companies what happens when a criminal counterfeit money or when a kid with a computer hacks a game. There are many things that we think that is ok to do because we think that we are not harming a person, but anything that we do that is considered wrong can be classified as white collar crime.


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