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    White Collar Crime

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    Arjun Naidu
    White collar and corporate crime costs society significantly more than traditional street crime. While individuals at failed companies like Enron caused losses of over $100 billion, those involved are rarely prosecuted and if convicted receive light sentences. Such crimes are premeditated, covert, exploit trust, and harm victims through deception. They are difficult for prosecutors due to their complexity, ability to confuse jurors, and because defendants are often respected members of the community. Corporations and their officials can be held criminally and civilly liable for misconduct, but stockholders generally cannot be unless the corporate veil is pierced. White collar crime remains prevalent in modern society due to the alliance between power and money.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    White Collar Crime

    Uploaded by

    Arjun Naidu
    294 views18 pages
    White collar and corporate crime costs society significantly more than traditional street crime. While individuals at failed companies like Enron caused losses of over $100 billion, those involved are rarely prosecuted and if convicted receive light sentences. Such crimes are premeditated, covert, exploit trust, and harm victims through deception. They are difficult for prosecutors due to their complexity, ability to confuse jurors, and because defendants are often respected members of the community. Corporations and their officials can be held criminally and civilly liable for misconduct, but stockholders generally cannot be unless the corporate veil is pierced. White collar crime remains prevalent in modern society due to the alliance between power and money.

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    White collar and corporate crime costs society significantly more than traditional street crime. While individuals at failed companies like Enron caused losses of over $100 billion, those involved are rarely prosecuted and if convicted receive light sentences. Such crimes are premeditated, covert, exploit trust, and harm victims through deception. They are difficult for prosecutors due to their complexity, ability to confuse jurors, and because defendants are often respected members of the community. Corporations and their officials can be held criminally and civilly liable for misconduct, but stockholders generally cannot be unless the corporate veil is pierced. White collar crime remains prevalent in modern society due to the alliance between power and money.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    294 views18 pages

    White Collar Crime

    Uploaded by

    Arjun Naidu
    White collar and corporate crime costs society significantly more than traditional street crime. While individuals at failed companies like Enron caused losses of over $100 billion, those involved are rarely prosecuted and if convicted receive light sentences. Such crimes are premeditated, covert, exploit trust, and harm victims through deception. They are difficult for prosecutors due to their complexity, ability to confuse jurors, and because defendants are often respected members of the community. Corporations and their officials can be held criminally and civilly liable for misconduct, but stockholders generally cannot be unless the corporate veil is pierced. White collar crime remains prevalent in modern society due to the alliance between power and money.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 18

    White Collar

    and
    Corporate Crime
    .
    White Collar and Corporate Crime
    • Costs 30 to 40 times as much as traditional
    crime
    • Enron and World.com alone ran up losses in
    excess of $100 Billion
    • Individuals involved are rarely caught, and if
    caught are rarely convicted, and if convicted
    generally receive light sentences (the more
    you steal, the less severe the penalty!)
    • White collar crime is a high returns/low risk
    venture
    Pace and Styles: White Collar and
    Corporate Crime Components
    1. Premeditated intent to commit wrongful acts
    (note - not always a theft)
    2. Premeditated intent to hide the acts from the
    public and legal authorities (covert)
    3. Involves a violation of a relationship of
    trust/trust exploitation
    Pace and Styles, continued:
    4. Involves some measure of creativity
    5. Reliance on victim:
    a. Ignorance
    b. Carelessness
    c. Irresponsibility, and/or
    d. Greed
    Prosecutorial Challenges
    1. Difficult and costly to prosecute, so cases are often not pursued, and if
    pursued hard to win:
    a. often complex; difficult to explain to the jurors
    b. very easy for defense to confuse jurors
    c. defendants are often “upstanding citizens”
    2. To increase probably of prosecutorial success, obtain the cooperation
    of/grant immunity to “the mark,” but pragmatic and ethic issues.
    3. To increase the probably of prosecutorial success, obtain the
    cooperation of/grant immunity to the co-conspirators, but pragmatic
    and ethical issues.
    Ermann and Lundman typology
    Deviance Against Owners
    Deviance Against Employees
    Deviance Against Customers
    Deviance Against the Public
    Deviance Against Owners:
    * Planned bankruptcy:
    - Constitution Foods, Lumber, and Mint
    - Travel Chalet
    * Land-flipping (Commonwealth bank)
    * Slip-sliding/debt hiding (Enron)
    * Sand-bagging:
    - Equity Funding
    - Wells Fargo
    * Bank fraud (owners, employees, customers
    and public all potentially harmed)
    Deviance Against Employees
    * Unsafe working conditions (OSHA)
    – Coal mines
    – Asbestos
    – Meat packing plants
    * Raiding pension funds
    – Enron
    – Hoffa
    – Deposit/loan kickback schemes
    Deviance Against Customers
    *Filing false financial reports (Enron; Equity
    Funding)
    *Sale of defective products (Corvair; Pinto)
    *Dumping defective products
    *Manufacturing & sale of counterfeit products
    Liability – Corporate Entities
    Santa Clara Co. v. Southern Pacific Railroad (1886)
    Indiana v. Ford Motor Company (1980)
    • Corporations can be prosecuted for any crime
    • Corporations are civilly and criminal
    accountable for their actions
    • Corporations can be prosecuted for failing to
    warn user of their products’ dangers (assuming
    that corporate executives are aware of those
    dangers/no internal concealment efforts)
    Liability – Corporate Officials
    U.S. v Park (1975)
    Corporate officials can be held personally liable.
    Criminally and civilly, for their corporations’
    misconduct IF, they were in a position where
    they could have prevented/corrected the matter
    in question and failed to do so. IF, they were
    involved in the operations and/or management
    of the criminal enterprise
    Liability – Stock Holders
    Can the corporate veil be pierced?
    *Stockholders cannot be held criminally liable
    for corporate misdeeds
    * No clear precedent per stockholder civil
    liability for corporate misdeeds
    Liability – Stock Holders…continued
    Corporations fight stockholder civil liability because:
    • Stockholders (the owners) would demand to see
    financial statements, memos, show up at meetings
    and ask questions, review management actions.
    Easier for management to move without this kind
    of oversight
    * It would be harder to get investors if investing
    included civil liability risks due to corporate
    misconduct
    Deviance Against Customers
    *Stock and bond fraud (Ponzi scams; insider
    trading)
    *Bid rigging and price fixing (I-80; TVA scandal)
    Deviance Against the Public
    * Environmental degradation (Bhopal: Love
    Canal; Rocky Flats)
    * Identity theft
    * General financial fraud (land fraud, oil fraud,
    medical fraud, contract fraud)
    * Money laundering
    * Tax fraud/tax evasion (Times Mirror)
    Chandler-Times Mirror Tax Evasion Fraud
    • Chandler Trust buys $220 M of Times Mirror stock
    • Value increases to $380M and they decide to sell
    • To sell means $160 M in profits, minus $75 M in taxes
    • Times Mirror learns of Chandler interest to sell and wants to buy
    • FTC 80% joint venture dissolution asset transfer rule
    • TMCT is created – each puts up $475 M (note that 80% is $380 M)

    * Times Mirror puts up $475 M in cash


    * Chander puts up $475 M in stock
    • TMCT is dissolved and per the 80% rule:
    * $380 M of Times Mirror cash goes to Chandler (and Chandler
    keeps $90 M of the stock it put up but didn’t want to sell)
    * $480 M of Chandler owned Times Mirror stock goes to Times
    Mirror (and Times Mirror keeps $90 M in cash it put up)
    White Collar/Corporate Crime in
    Contemporary Society
    • There is an alliance between power and
    money, and there always have been
    • White collar/corporate crime a normal part of a
    capitalistic society/any society that values wealth
    • Multi-sector, multi-generational cultural changes
    needed
    • Laws and enforcement still needed
    Thank you for coming today
    ceskridge@unl.edu

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