Sociology Looking at Crime and Punishment

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One of the core ideas of the Sutherland tradition in white-collar crime is that there is a double standard of justice in our differential handling of conventional and white-collar crime. Besides insisting on the criminality of white-collar offenses, Sutherland (1945: 266ff.) also maintained that the differential application of the law to conventional and white-collar crimes "blurred and concealed" the criminality of the white-collar offenses. By inventing special administrative agencies and commissions to handle white-collar crimes, rather than using the criminal courts, the stigma of crime is minimized. One of the factors to which Sutherland attributed this differential treatment was the status of businessmen in society, which, he argued, made legislators and officials in the criminal justice system reluctant to antagonize them. In effect Sutherland contended that there is a double standard of justice with respect to how society responds to the crimes of the underclass and those of the upper class, with white-collar offenders clearly receiving the more lenient treatment of the two classes of offenders. This would appear to be particularly true if those white-collar offenders happen to be white, male, wealthy, and politically powerful.

Christopher Stone (1975: 64) cited two Georgia cases as a glaring example of the double standard. Those cases involved sentencing in the same court on the same day in 1973: one case for bank embezzlement, the other for bank robbery. In the former case the president of the First National Bank of Cartersville was sentenced to 10 years for embezzling $4.6 million; this amounts to approximately $400 for every resident of Cartersville. In the bank robbery case three men who stole $13,834 from a bank in Balton, less than 1 percent of the embezzlement take, were sentenced to 16 years each. To further explore the complexity of the problem involved in whether we judge the crimes of the wealthy and powerful by a different, and more lenient, standard than those of the poor, let us consider another case. This is one of the classic cases in the white-collar crime literature, occurring a decade after the publication of Sutherland's book. In 1961, 29 corporations and 45 executives in the electric industry were convicted in federal court of violating the antitrust laws. They had been charged with price-fixing conspiracies in contract bidding on heavy electrical equipment, going back to the mid-1940s and involving $7 billion in sales. As a white-collar crime case, it was exceptional because it was dealt with as a criminal matter, and because it marked the first time in the history of the Sherman Antitrust Act of 1890 that business executives were incarcerated. At first glance it appears the industry was handled rather harshly. Not only did seven executives receive 30-day jail sentences, but also criminal fines totaling nearly $2 million were assessed on both the corporations and the individual defendants. Additionally, because the Sherman Antitrust Act provides for treble damages in civil claims, the corporations paid out approximately $500 million in civil settlements. At the sentencing the judge in the case also registered his surprise and dismay at the defendants' behavior:

This is a shocking indictment of a vast section of our economy, for what is really at stake here is the survival of the kind of economy under which America has grown to greatness, the free enterprise system. The conduct of the corporate and individual defendants alike . . .flagrantly rocked the image of [this] economic system . . . and destroyed the model which we offer today as a free world alternative to state control and eventual dictatorship. (Green, Moore, and Wasserstein, 1972: 156)

In spite of the apparent harshness of the judge's words and the criminal sentences, closer examination reveals a lenient side to the case. Although the total of the criminal fines ($2 million) is a considerable sum, this amount was spread over a whole industry, with General Electric (GE) paying the largest fine of $437,500. While this, too, may appear to be a sizeable amount, Gilbert Geis (1977: 120) observed that, considering GE's profits in that year, this would be no more than a $3 parking fine for an individual earning an annual income of $175,000. Clearly the more serious financial costs to the industry were the civil fines, but the threat of these civil settlements to corporate profits was blunted by an Internal Revenue Service ruling that these payments were deductible from corporate income taxes as ordinary and necessary business expenses. Moreover, in spite of the substantial civil and criminal fines, the industry's criminal conspiracy had still turned a profit of approximately $300 million--after the fines. Finally, even though the case was unique for the seven executives who were sent to jail, the top executives (presidents and CEOs) still escaped punishment. The president and board chairman of GE was in fact selected as man of the year for 1960 (the year before the convictions) by the National Association of Manufacturers.

An integral part of the notion of the double standard is a comparison of white-collar and conventional crime, with the implication that those convicted of conventional crimes receive much harsher treatment for comparable, or even lesser, offenses. If we compare the penalties in the electric industry price-fixing case (relatively harsh for a corporate crime) with those for the typical larceny theft, the results seem to confirm the double standard. Larceny-theft is roughly comparable to corporate theft insofar as both involve the taking or stealing of property without the use of force or violence; larcenies of $50 or more were regarded as serious enough to be part of the Federal Bureau of Investigation (FBI) Index of major crime in the United States in 1961. The FBI estimated that the average value of property stolen in larcenies in that year (the same year as the convictions in the electric conspiracy case) was $74, with the total value of all larcenies estimated at $70 million. In 1960, 9,303 convicted larceny offenders were received in state institutions, serving an average of 20 months each. This is substantially more than the 25 days served by the seven industry executives for a crime resulting in total property loss that exceeded the combined value of all the larcenies in a single year.

The disparity in punishment for corporate price-fixing and larceny seems quite apparent, especially if we take into account the value of the property loss in both kinds of cases relative to the penal sanction. Is this disparity the result of criminal justice officials blatantly favoring elite defendants over poor defendants? Or is it due to more subtle processes relating to how we perceive and define crime? In other words, is there still a sense in which we feel that white-collar offenses, such as price-fixing, are not "real" crimes and therefore should not be punished as such?

This brings us back to the question raised in the historic Sutherland-Tappan debate: Is white-collar crime "really" crime? This is more fundamentally a question about the nature of crime, not just white-collar crime. Why are some behaviors labeled "crime" and others not? Are some acts, such as murder and robbery, intrinsically criminal? Who has the authority to make these judgments? Why do we respond to conventional crimes through a different set of administrative agencies and procedures than white-collar crimes? The traditional answer to this series of questions is to rely upon the legal definition, which is the state's definition of crime. What is crime in this view is simply what violates the criminal law and is punishable as such through the criminal courts. Furthermore, what makes some of these crimes "white-collar" depends upon the school of thought to which one subscribes, the legal or the Sutherland tradition.

The issue of the double standard remains a source of controversy among Students of white-collar crime. It should be pointed out that the fact of differential treatment does not in itself constitute evidence of a kind of class or race discrimination in the justice system. There may be sound legal and policy reasons for this differential handling, rather than it reflecting a discriminatory attitude that systematically favors one class of offenders over another.

Since the late nineteenth century an administrative and regulatory apparatus has developed to deal with offenses that involve the activities of business and professional groups. This administrative law serves as the legal basis for most white-collar crimes. There are, of course, certain white-collar crimes that are violations of the criminal law and are typically processed through the criminal justice system: Examples are embezzlement, forgery, criminal fraud, and bribery. There are also offenses that fall under the jurisdiction of these regulatory agencies and, if regarded as serious enough, may be referred to the Justice Department for criminal prosecution. In the domain of white-collar crime these strictly criminal violations are in the minority. In assessing the differential treatment of conventional and white-collar crime, it is important to understand the different underlying assumptions of the administrative and the criminal laws, and the official rationale for handling offenses under one or the other of these public laws.

Donald J. Newman (1958: 53) provided one of the best analyses of how the administrative and the criminal laws differ. He identified five major differences: "1) in origin, 2) in determination of responsibility, or intent, 3) in philosophy, 4) in enforcement and trial procedure, and 5) in sanctions used to punish violators."

Let us consider each of these differences in more detail. The first difference rests on the common law distinction between crimes that are mala prohibita and those that are mala en se. Behaviors that are proscribed by the criminal law are regarded as mala en se (bad in themselves). This implies that such acts are inherently wrong ("natural" crimes), and the criminal law simply reflects the widespread moral outrage over crimes such as robbery, rape, and murder. Offenses that are mala prohibita are not so self-evidently wrong. They are unlawful because certain rules are necessary for the maintenance of social order. Traffic laws are a good example. It is not inherently right or wrong to drive on a certain side of the road, but in order to maintain some semblance of orderly traffic flow, some convention must be established. In this sense it is arbitrary which convention is adopted (driving on the right or on the left side). These kinds of regulatory matters are the subject of the administrative law, whether it regards the emission of toxic gases into the atmosphere, the labeling of food and drug products, or the advertising of various commodities.

The second difference pertains to the intentionality of the law violation. The criminal law is based on the principle that all crimes should consist of an act (actus reus) and a given state of mind or criminal intent (mens rea) that accompanies that act. Both of these elements must be present in order for a crime to be committed, and in order to hold a particular individual responsible. The punishment of criminal behavior requires this concurrence of act and intent. In contrast, the administrative law is simply concerned with whether a particular law or regulation was violated and not the state of mind of the offenders. If an automobile manufacturer does not meet the Environmental Protection Agency (EPA) pollution standards on auto emissions, it does not matter to the EPA whether this was a deliberate violation, what the state of mind of top executives was, or even whether responsibility can be individually pinpointed. In enforcing the administrative law the main concern is with the overt act--the violation of pollution standards in this case. If, however, there was also some intentionality (mens rea) on the part of top officials to violate pollution laws, then this might also be a criminal matter.

A third area of difference relates to the underlying philosophy and objectives of these two kinds of public law. The main aim of sanctions in the criminal law is to punish offenders. Although there are various reasons for using criminal sanctions, retribution, deterrence, and incapacitation have always been central; reforming the offender has been much more secondary. Clearly we wish to catch bank robbers and rapists in order to punish them for their criminal behavior. If they are rehabilitated in the process, this is an added bonus. On the other hand, the main purpose of the administrative law is much more remedial and corrective in nature. The range of sanctions available to regulatory agencies includes warnings, recalls, cease and desist orders, consent decrees, injunctions, fines, and referrals to the courts for civil or criminal action. In one study of corporate crime, 44.2 percent of all the sanctions imposed by 25 federal agencies in a two-year period consisted of warnings or recalls. The main purpose of such administrative actions is to stop some ongoing illegal practice--the marketing of an unsafe drug, false advertising, and so on-and not to "get even" with the offending firm. It is difficult to find a comparable sanction for violators of the criminal law, where they would be enjoined from committing future crimes, but not punished for past misdeeds.

In the fourth difference between the criminal and the administrative laws, different organizational mechanisms operate to handle violators. The criminal law has the personnel and resources of the criminal justice system--the police, the criminal courts, and the jails and prisons at various levels of government-at its disposal. The administrative law, as we noted above, has regulatory agencies at the state and federal levels to enforce its provisions. Unlike the agencies of the criminal justice system, regulatory agencies, such as the EPA, the Occupational Safety and Health Administration (OSHA), and the Food and Drug Administration (FDA), not only have responsibilities for enforcing the law, but also have the power to make rules that have the effect of law. Administrative law judges may also be called upon to settle matters that fall under the jurisdiction of each of these agencies.

The final difference pertains to the kinds of sanctions available to each type of public law. This difference is really a corollary of the third. Because the criminal law is more punitive in its philosophy, its sanctions emphasize various forms of punishment of the offender--probation, imprisonment, and even the death penalty. The administrative law, in contrast, focuses on remedial actions to prevent future violations--injunctions, cease and desist orders, and product recalls. Criminal sanctions would be measures of last resort for the administrative law and are not within the enforcement powers of regulatory agencies. Such sanctions must be carried out through the courts.

Even if it is conceded that there are different public laws and organizational structures for handling conventional and white-collar crime, as we pointed out, this in itself does not establish that our justice system is discriminatory toward these two classes of offenses/offenders. Again, as we observed, there may be some very sound legal and policy reasons for this differential treatment. Let us consider what these are.

Sue Titus Reid (1976: 225ff.) offered one of the more cogent rationales for the official handling of white-collar crime under the administrative law. She pointed out that there are various advantages to using the administrative law. These include the speed with which matters can be handled. In using the example of a restaurant that is serving spoiled food and operates a kitchen that does not meet cleanliness standards, Reid pointed out that a health inspector may act quickly to close such an establishment. Under the criminal law the resolution of this problem might take months, and the outcome would be uncertain. In this case, she argued, public safety is much more effectively ensured through the mechanisms of the administrative law.

Another advantage of using regulatory agencies to handle white-collar violations is the expertise possessed by the staff of such agencies in the particular area they are charged with regulating. The FDA, for example, has the knowledge and skills to determine the effectiveness and safety of prescription and over-the counter drugs that a criminal court would not have. In addition, the informality and flexibility of the regulatory process might develop a spirit of voluntary compliance and cooperation, rather than the adversary system fostered in the criminal courts.

Reid also cautioned against the tendency to over criminalize behavior in our society, and against the wisdom of labeling individuals criminal when their conduct can be controlled by less severe and more effective methods. She pointed out that ultimately if there is not a political will to pursue white-collar crime through the administrative law, it will still not be pursued simply because criminal sanctions are made available.

Each of the advantages that Reid mentioned has its disadvantages as well. The informality of the regulatory process also offers opportunities for bribery and corruption. The expertise possessed by given regulatory agencies may also be based on conflict of interest insofar as much of this expertise stems from staff or officials who are drawn from (or destined to be part of) the very industry being regulated. Similarly, the observation about the lack of political will to pursue white-collar crime, whether it be in terms of the administrative or the criminal law, could also be taken as a reflection of the double standard that Sutherland talked about. Before picking up on this debate in more detail, we shall explore the differential handling of the drug problem in our society, with careful attention to understanding why some aspects are defined as a "criminal" problem and others as a "regulatory" matter. This should give us additional insight into the social, political, and cultural dynamics of this process.

In closing, let us consider the relevance of the distinction between individual and institutional discrimination for this issue. We need to distinguish between blatant acts of discrimination by individual officials in the justice system and more systemic forms of favoring or disadvantaging certain kinds of defendants. Studies that focus on the decision-making of justice officials (judges' sentencing decisions, etc.) are looking for the former kind of discrimination. The more subtle form of discrimination is the institutional variety, which is much more ingrained in the justice system's day-to-day operations. It is reflected in our attitudes regarding the seriousness of different crime categories. These differential organizational procedures we have devised clearly represent institutionalized mechanisms by which we routinely respond to different kinds of problems. It is this systemic, taken-for-granted quality of our official handling of white-collar crime that makes the double-standard issue so difficult to come to terms with and that causes it to remain a point of controversy.