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CHAPTER-I
WHITE COLLAR CRIMES: CONCEPT AND
DEFINITIONS

A RETROSPECT-HISTORICAL BACKGROUND:

Since World War II, a most significant and recent development in criminology has
been the emergence of the concept “White Collar Crime” as an area of scientific
enquiry. The crime of this nature, of course, is not at all a new one, but the
generalization of such phenomena and the incorporation of facts concerning illegal
behavior of the higher classes into theories of crime causation is an outcome of the
recent research in this field. The literature in the shape of speeches and publication
produced by Edwin Sutherland, not only gave the name “White Collar” to this new
area, but stimulated wide-spread criminology circles concerning the appropriateness
of this concept as a legitimate focus of research and theory.1

Perhaps, the earliest documented case of white-collar crime law dates back to 15th
century England. There has been a case popularly known as the Carrier’s case in
1473. Where the agent was entrusted to transport wool and he attempted to steal some
of it for him. Therefore the Star Chamber and Exchequer Chamber of the English
Court of Law adopted the ‘breaking bulk’ doctrine as it constituted the crime of
larceny.

However, the growth of industrial capitalism in the eighteenth century ushered a new
history of crime and criminality. The very base of industrial capitalism is based on
coercion and robbery. Now, before we discuss the topic let us understand the meaning
of capitalism. In the words of V.L. Lenin, “Capitalism is the name given to the social
system under which the land, factories, implements, etc. belong to a small number of
landed proprietors and capitalists, while the mass of a people possess no property or
very little property and are compelled to hire themselves out as workers. The land
owners and factory owners hire workers and make them produce wires of different
kind which they sell on the market. The factory owners furthermore, pay the workers

!See, Janak Raj Jai, “ White Collar Crimes - Naked Exposures” 1st Edition 1987, Pg no. 6
2 Information available at, http://money.howstuffworks.com/white-collar-crime3.htm

25
only such a wage as provides a bare subsistence for them and their families, while
everything that the worker produces over and above these amount goes to the factory
owner’s pocket as his profit.”

Seen in this context, since there has been nothing to the major mass of the society
except their bare subsistence, they were left with no better option than to sell their
labour-power to survive. Whereas, the exploiting class, generally termed as the
bourgeoisies, took the advantage of the situation and made more and more wealth out
of the labours of the working class. Consequently, the wealth remained concentrated
in the hands of only certain class of people, where most of them formed a part of the
exploited class left with no freedom for work but to sell their labour-power.

The process of emergence of these conditions was termed by Karl Marx as ‘primitive
accumulation’ while in the words of Adam Smith, it was ‘previous accumulation.’
Therefore, the Dutch Marxist, William Bonger contended that criminal attitude
develops among the working class under capitalism due to conditions of misery and at
the same time the criminal attitude develops among the bourgeoisie from the avarice
fostered when capitalism strives.3

Albert Morris refers to a paper entitled ‘Criminal Capitalists’ which was read by
Edwin C. Hill before the International Congress on the Prevention and Repression of
Crime at London in 1872. In this paper the learned writer underlined the growing
incidence of crime as an organized business and its evil effects on society.4

Therefore, it is to be understood that industrial capitalism brought about a grave

change in the mind and attitude of the people. Accumulating money at the cost of
others became the sole goal of the individual who were in a position to dominate over
the will of the others. With this began the eat fight of grabbing money by hook or by
crook.

Britain, among the other European countries were concerned, played the most nasty
game in acquiring wealth giving up all the ethics and morals they ever had. They
made wealth by looting their colonies and adopting the devastating barbaric method in

3 See, G. Nagaijan & Khaja Sheriff, “White Collar Crimes in India”, International Journal
of Social Science and Interdisciplinary Research (IRJC), Vol.l Issue 9, September-2012.
4 See, N.V. Pranjape,“Criminology & Penology with Victimology” 15th Ed. 2011, Pg.
no. 125.

26
doing it. According to the Parliamentary Reports, it has been found that the British
East India Company, only within their first ten years of colonial rule in India extorted
wealth from the Indians in the name of ‘gifts’ which worth round six million pound
sterling. Therefore, there can be no denial of the fact the very structure of the
industrial capitalism is built on crimes and criminality.

Therefore, as being discussed, the birth of white collar crimes took place in the
Industrial Revolution in Western industrial societies which led a vast impact all
throughout the globe. The developing countries, which at that time were the colonies
of the great European Nations, were the worst victims of these crimes so committed
against them. New companies rose into power, they were able to squelch competitors
and then implement monopolistic policies without fear of being outsold by other
companies. The public had to pay outrageously exorbitant prices for the same thing
that was available previously at a much cheaper rate. The reason behind the exorbitant
rise in the price rate was nothing but the corporate greed.

However, it is to be understood that the greed of making money by the people of the
upper class was not confined within the boundaries of Europe. The Industrial
revolution threw a global impact whereby worldwide people indulged in making
money. These gave rise to resentment and political movements rallied for laws so as
to prevent monopolistic practices. It succeeded in United States of America in 1890,
when Congress passed the Sherman Antitrust Act which took the initiative to make
the monopolistic trade illegal. Other industrialized countries like Great Britain had a
history of penalties involving white-collar crime by that time, but it was not as
sweeping as the Sherman Act. Some nations implemented a smattering of these laws,
known as competition or antitrust law, but did not have a strong binding force for a
long time.

But more anti-white-collar crime sentiment rose in the late 19 century and early
20th century in the United States as a result of a group of journalists known as
muckrakers who more often than not started exposing corruption both in the public
and private sectors. They laid much focus on the prevalent stock fraud, insurance
fraud and underhanded practices of monopolistic companies that had grabbed under
the Sherman Act. The muckrakers’ exposes gave rise to public resentment and
thereby called for in some reform. By 1914, Congress attempted to solidify and

27
strengthen the sentiment laid down by the Sherman Act, which was used against
labour unions, with the Clayton Antitrust Act. This Act was much stricter and went
much further than the Sherman Act in making particular monopolistic practices
illegal.5

In 1934, Morris drew attention to the necessity of a change in emphasis regarding

crime. He asserted that anti-social activities of persons of high status committed in
course of their profession must be brought within the category of crime and should be
made punishable. 6 7

In addition to these anti-trust laws, there have been certain other fiscal laws which
were passed prior to Sutherland’s address at the American Sociological Society. After
the economic depression prevailing at that time, people went to great lengths to
rebuild their financial security, and it is theorized that this led many hard workers who
felt they were underpaid to take advantage of their positions. Despite the great
lengths, Sutherland went to describe exactly what he categorized as white-collar
crime. Though he tried to bring about clarity of the subject, it suffered from certain
•7
ambiguities as discussed later.

> Finally, Edwin Hardin Sutherland for the first time coined the term “white
collar crime” in his address to the American sociological society in 1939.

> Prior to Sutherland, scholars like W.A. Bonger (1916) EA Ross (1907)
Sinclair (1906) and Steffens (1903), laid emphasis on the misdeeds of by
businessmen and elites.

> The concept of “white collar crime” found its place in criminology for the first
time in 1941 when Sutherland published his research on “white collar
criminality” in the American Sociological Review. E.H. Sutherland through
his pioneering work emphasized that these ‘upper world’ crimes which are
committed by the persons of upper socio-economic group in course of their
occupation violating the trust, should be termed “white collar crime” so as to

5Information available at, http://www.jurisonline.in/?page_id=9115, “White Collar Crime in

India” February 1, 2011.
6 See, N.V. Paranjape, “Criminology & Penology with Vicitmology” 15th Ed. 2011, Pg.
no. 125
7Infonnation available at, http://www.jurisonline.in/?page_id=9115, “White Collar Crime in
India” February 1, 2011.

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 be distinguish from traditional crimes which he called, Blue-collar crime.”

> Much of Sutherland’s work was focused at separating and defining the

differences in blue collar street crimes such as murder, burglary, theft, assault,

rape, arson, vandalism, so on and so forth which are often blamed on

psychological, associational, and structural factors. Instead, he evaluated that

white-collar criminals are opportunists, who overtime look for the opportunity

to take advantage of their circumstances to accumulate financial gain. They

are educated, intelligent, affluent, confident individuals, who were qualified

enough to get a job which allows them the unmonitored access to often large

sums of money. Many also use their intelligence to convince their victims into
believing and trusting in their credentials.8

IN THE 2000s, white-collar crime has become a topic of almost daily news. The

white-collar crime that caused the bankruptcy of Enron Corporation resulted in

financial losses exceeding $66 billion to stockholders, and likely helped lead to the

recall of the governor of California. Massive violations of laws pertaining to improper

investments in mutual funds and large banking firms in the United States have

resulted in major losses to legitimate investors, whose losses are still being calculated.

The use of share holders’ assets to fund the lavish private lifestyles of corporate chief

executive officers, presidents, and chairs of the board of large corporations are

becoming the fodder of scandal and media.

For example, television viewers were treated to an edited version of a videotape of

Tyco International Limited head Dennis Kozlowski and friends in a $2-million

bacchanal celebrating his wife’s birthday at the expense of the corporation. The

WorldCom bankruptcy that resulted from white collar crime caused billions of dollars

in lost investments. The costs to ordinary stockholders are massive, but costs to
employees, collateral business, communities, and society are incalculable.

Human lives have been altered forever by the unlawful actions of a few whose need

for power and profit resulted in illegal, unethical, and immoral acts. While one can

8See, N.V. Paranjape, “Criminology & Penology with Vicitmalogy” 15th Ed. 2011, Pg.
no. 125

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conceive of the plausibility that the offenders did not define their behaviors as

criminal, that in part could be because there is no clear definition of what is meant by
the term white-collar crime.

The concept of white-collar crime was first conceived by Edward Alsworth Ross

(1907), and approximately30 years later white-collar crime was bom in the ideas of

Edwin H. Sutherland (1939-40). Sutherland, in coining the term, defined white-

collar crime as a crime committed by a person of respectability and high social

status in the course of his occupation.” For Sutherland, the white-collar category

included “business managers and executives,” although, in research, he included

corporations as offenders as well. He believed that a white-collar offense was a crime

if it proved to be socially injurious and punishable. Therefore, an act of white-collar

crime could be dealt with in a criminal, civil, or administrative manner. Paul Tappan

(1947), a lawyer and sociologist, disagreed with Sutherland’s argument. Tappan

believed that a behavior could only be considered a white-collar crime if the act was

legally defined as a crime and if the offender had been convicted for the offense. That

is, he rejected Sutherland’s belief that a white-collar crime could be a violation of

civil or administrative law without being condemned by criminal law. Frank

Hartung (1950) argued that while legal definitions were important in the general

scheme the general scheme of things, white-collar crimes represented a special case.

Whereas, in most instances, it is possible to distinguish between criminal and civil

violations, in the case of white-collar crime the artificial distinction between civil and

criminal laws was blurred and lacked importance. In response to Hartung’s

statement, Ernest Burgess (1950) rejected a totally legal definition of crime, arguing

for a labeling-perspective definition that required that persons could only be criminals

if they perceived of themselves as such. From the white collar offender’s perspective,

Gilbert Geis’s (1967) findings would support Burgess’s definition of crime. Geis

found that white-collar criminals often do not perceive their acts as crime, and

therefore do not perceive of themselves as criminals.

Marshall Clinard and Richard Quinney (1973) replaced the term white-collar

crime with two other classifications/ categories: Corporate Crime and Occupational

Crime. Corporate Crime referred to the criminal behaviors of corporate entities, while

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Occupational Crime referred to the criminal behaviors of persons within their
occupational status.

Laura Schrager and James Short (1978) proposed the term organizational crime.
They considered such crime in the context of the operative goals of the organization,
the actual unstated goals of the organization, which often differ from its official goals.
Clinard and Peter Yeager (1980) defined corporate crime as “... any act committed
by corporations that is punishable by the state, regardless of whether it is punished
under administrative, civil, Or criminal law.”Albert Biderman and Albert Reiss
(1980) withdrew the idea of status from the definition of white collar crime. They
argued that individuals, other than those of an upper-class, were capable of
committing crimes in their occupational roles. As a result, they emphasized the
importance of defining white-collar crime as a violation of a position of trust. For
example, if a waitress inflates a customer’s bill, the customer is likely to pay both the
inflated amount as well as a larger tip without realizing that she has been victimized.
The waitress, for her part, not only profits personally, but also violates the trust placed
in her by her employer.

James Coleman (1989) suggested that many of the attempts to redefine white-collar
crime in other terms have undermined Sutherland’s 1949 position since they “do not
include many of the offenses covered in Sutherland’s original definition,” and/or “are
best seen as varieties of white-collar crime.”

Clinard (1990) suggested replacing white-collar crime with the terms corporate
corruption and abuse of corporate power. These terms included both corporate and
occupational crimes, regardless of whether they violate criminal, civil, or
administrative laws. In addition, Clinard included behaviors that may not be explicitly
defined as violations of law, but that may be unethical and/or immoral in the
corporate or occupational context. For example, a scientist who. cheats on her research
by altering the findings of a study may not have violated a law or regulation, but
instead has violated an ethical rule or norm of the scientific community. Under
Clinard’s hypothesis, that person may have committed a white-collar offense, since
she engaged in an unethical and/or immoral behavior in her occupational context.

Broadly understood the phrase “white collar crime” can be defined as:

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 Any behavior that occurs in a corporate and/or individual occupational
context; and, that is committed for personal and/or corporate gain; and/or,
violates the trust associated with that individual’s and/or corporation’s
position and/or status; and that is a violation of any criminal law, civil law,
administrative law, rule, ruling, norm, or regulation condemning the behavior.

This definition is necessarily both sociological and legalistic in nature, and therefore
includes any behavior that may be socially defined as unethical or immoral, as well as
behavior that is not legally defined as an offense. In addition, the definition does not
include Sutherland’s requisite that the violation be “committed by a person of
respectability and high social status.” This description was not included because
white-collar crimes can be committed by persons who do not necessarily hold “high
social status.”

Bank tellers do not usually enjoy high social status in our society however; they are in
a position of trust where they can engage in white-collar crime. Furthermore, John
Hagan and Patricia Parker (1985) have suggested that those persons convicted for
white-collar offenses are more likely to be in middle- management than in the high
prestige and social status group of the top managers in criminal corporations. Finally,
punish ability for an act is not an important issue. However, it may be assumed that if
an act is a violation of some law, then it must be punishable as well. This broad
definition of white- collar crime may bother some scholars in the field. However,
given the diversity of the behaviors that have come to be described as white-collar and
corporate crime, it is difficult to create a succinct definition without necessarily
excluding some of the tangential behaviors.

George Robb (1993) described the cyclical development and repeal of white-collar
crime laws in response to specific acts of fraud and immorality in business that
brought fortunes to some and ruin to many. Many of these laws were developed to
deal with “stock touting,” a practice that has existed as long as there have been stock
markets, and that continues to occur to this day. Stock touting involves creating
companies, and issuing stock in those companies based on false and/or misleading
assets, information, or promise.

For example, Robb wrote about persons who created companies to build railroads in
far parts of Great Britain, claiming that they possessed government guarantees that

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when the railroad was built, stock holders would be instantly wealthy. The stock sold
quickly to speculators interested in making money, and the touters quickly
disappeared, money in hand, with no railroad ever built. Such frauds aimed at
unsuspecting speculators can be found in modern days as well. For example, the
high-technology “bubble” of the 1990s resulted in the sale of stock in companies
with much promise, but little if any underlying market value. When the bubble burst,
stockholders were left holding shares in companies that lacked any tangible assets.
Compounding the problem, many stockholders had borrowed money using their
stockholdings as collateral, leaving those unable to repay their debts bankrupt and
their lenders taking losses as well. Robb noted that touting laws were enacted in
reaction to such losses, and would be repeatedly repealed once the British Parliament
decided that there was no longer a risk of such behaviors. Unfortunately, as soon as
the laws were repealed, stock touts reappeared, new laws were created in response to
their behaviors, and the cycle would continue over and over.

The Interstate Commerce Commission (ICC) Act of 1887 was enacted in the
United States in response to the behaviors of the robber barons in the rail road
industry. The robber barons, who included so-called reputable business leaders and
politicians such as Leland Stanford, Sr., and Jay Gould, built railroads connecting the
East and West Coasts of the United States, often without investing a cent of their own,
and used their transportation monopoly to their own benefit. Before the passage of the
ICC act, the railroad owners were free to set their own prices for transporting goods,
often raising prices to the point that western farmers and ranchers could not make a
profit on their goods. The ICC act created a commission that was meant to regulate
the cost of interstate transportation of goods to guarantee that railroads would receive
a fair income for their services, while farmers and ranchers would still be able to
profit from their labours and goods.

The Sherman Antitrust Act of 1890 was enacted as a response to the growth of
monopolies that threatened to destroy competition in the marketplace. A monopoly
occurs when a producer controls an entire market for a product to the exclusion of
others who would produce the product for a lesser cost. A monopoly allows the
controlling producer to set any price for a product. A monopoly producer can set that
price as high as she wants, with no fear of losing business due to competition from
other producers. The Sherman Act was officially enacted because companies in

33
various industry groups were attempting to eliminate their competition in the
marketplace, thus hurting the economy.

It is noteworthy, however, that for the first decade of its existence, the Sherman Act
was used almost exclusively as a tool to harass and criminalize the labour unions in
their attempts to organize employees of those corporations which the act was enacted
to regulate. Other acts, such as the Clayton Antitrust Act of 1914, the Federal
Trade Commission Act of 1914, the Robinson-Patman Act of 1936, the Cellar-
Kefauver Act of 1950, and the Hart-Scott-Rodino Act of 1976, furthered attempts
to shape and regulate unethical behaviors of business.

The Pure Food, Drug, and Cosmetic Act of 1906 served to rein-in industries that
produced products that might endanger the welfare of Americans. Prior to this act,
there were no enforceable regulations over food production in the United States.
Authors, such as Upton Sinclair, in his novel The Jungle, exposed the abuses in the
meatpacking industry. Also, prior to the passage of the act, potions sold as drugs and
cosmetics often had little or no positive effect; more likely having a significant
negative effect on the health safety of consumers. The Sarbanes-Oxley Act of 2002
is a more recent attempt to respond to corporate criminal wrongdoing, requiring
greater disclosure and accountability for corporate boards-of-trustees for the unethical
and illegal behaviors of their executives and corporations. The academic study of
white-collar crime did not begin until Sutherland used the term white-collar
crime in his presidential address before the American Sociological Society in
1939. In his 1949 book, White-Collar Crime, Sutherland presented the results of a
study of white-collar crimes/ offenses.

During the next decade, a very limited amount of research on white-collar crime
existed, primarily involving the definitional issues discussed previously. It was not
until the publication of studies of the descriptions of behaviors defined as white-collar
or corporate crimes, or Modus Operandi Studies as John Braithwaite (1985) has
called them, that academic researchers renewed their interest in the topic.

These included studies such as Geis’s research on the heavy electrical equipment
scandal of the late 1950s and early 1960s; Quinney’s (1963) study of prescription
violations among pharmacists, and Diane Vaughan’s (1983) investigation of the

34
Revco prescription fraud scandal. These and similar research probes have given us a
basic description of diverse white-collar and corporate crimes. 9

CONCEPT AND DEFINITIONS

Concern about traditional and conventional criminality has received the attention of
the criminologists, sociologists, members of the law enforcement agencies and others
right from the earlier times. Most of the research that has taken place in the area of
crimes has placed its thrust on the causation, extent and impact of traditional crimes
and very little attention seems to have been paid to the class of criminality which is
mostly undertaken by the members of middle and upper strata of the society for the
purposes of economic gain. These criminal activities which are undertaken just for
economic gain are more costly and more dangerous and can have highly deleterious
and disastrous effect on the economic development of the state. Such criminogenic
behavior indulged in by the rich and powerful members of society has been termed by
Prof. Sutherland as white-collar crime.50

There are certain anti-social activities which the persons of upper strata carry on in
course of their occupation or business. These anti-social activities are called white-
collar crime. These activities for a long time were accepted as a part of usual business
tactics necessary for a shrewd professional man for his success in profession or
business. E. H. Sutherland defined a white-collar criminal as a person of the upper
socio-economic class who violates the criminal law in the course of his occupational
or professional activities. White-collar crime was more dangerous to society than
ordinary crimes because of greater financial losses and because of the damage
inflicted on public morals.

White-collar crimes account for enough violations of law. By comparison, the

instances of white-collar crimes are more than the conventional type of crimes such as
theft, burglary, and arson. The loss incurred through white-collar crimes is far higher
than that of the conventional type. In the American Context, it has been estimated that
losses from such crime may be as high as 200 billion dollars every year. In India also,
such type of crimes are increasing day by day in view of rampant corruption.

’Information available at, LAWRENCE M. SALINGER, ARKANSAS STATE

UNIVERSITY GENERAL EDITOR JUNE 2004(pdf format)
10See, Abdul Latif Wani, “White Collar Crime : Its Concept” Kashmir University Law
Review, Vol.6,1999, Pg. 31

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This crime and its consequences are recognized from centuries which categorize
number of crimes. Mostly business and government professionals are involved in
series of frauds termed as white-collar crime because these are lucrative,
comparatively risk-free, and nearly socially up to standard. These activities for a long
time were accepted as a part of usual business tactics necessary for a shrewd
professional man for his success in profession or business. Due to high occurrence of
these crimes, security officials plan modem technique to fight back through
prevention, investigation, and prosecution. When the term white-collar crime is
conversed, people are encouraged to think decisively about the nature of crime, law,
and criminal justice. In the criminal justice system, the focal point of the investigative
efforts on the crimes of the poor. If it is viewed from same legal eye of the state, the
crimes of the powerful are hidden. White-collar crime is defined as "those illegal acts
which are characterized by deceit, concealment, or violation of trust and which are not
dependent upon the application or threat of physical force or violence.

Individuals and organizations commit these acts to obtain money, property, or

services; to avoid the payment or loss of money or services; or to secure personal or
business advantage. Generally the white collar criminals commit range of frauds to
get personal financial gain. White collar crimes do not show any vicious activity, but
the extent of these crimes are intense and it can bring about great economic loss for
companies, investors. This crime is pervasive in almost all the professions and occu­
pations in our society. The problem is quite acute, both in terms of variety and the
extent of white-collar criminality. The report of Santhanam Committee in its findings
gave a vivid picture of white-collar crimes committed by persons of respectability
such as businessmen, industrialist, contractors and suppliers as also the corrupt public
officials11.

Necessity is not always the motive behind the commission of a crime. This idea
evolved with the Criminologist and Sociologist Edwin H. Sutherland, in the year
1939, who popularized the term ‘white collar crimes’ by defining such a crime as one
“committed by a person of respectability and high social status in the course of
his occupation.” Sutherland also included crimes committed by corporations and
other legal entities within his definition.

11 See, Santhanam Committee Report, pp 251-53.

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Sutherland’s study of white collar crime was prompted by the view that criminology
had incorrectly focused on social and economic determinants of crime, such as family
background and level of wealth. Sutherland was of a view that, crime is committed at
every level of society and by persons of widely divergent socio-economic
backgrounds. In particular, according to Sutherland, crime is often committed by
persons operating through large and powerful organizations. White collar crime, as
Sutherland concluded, have a greatly underestimated impact upon our society .

It is true to the common knowledge that there are certain professions which offer
lucrative opportunities for criminal acts and unethical practices which is very often
overlooked by the general mass of the society. There have been crooks and unethical
persons in business, various other professions, who tend to become unscrupulous
because of no reason apart from the thirst of gaining more and more for themselves.
These deviants have least regard for ethical and moral human values. Therefore, they
carry on their illegal activities with impunity without the fear of loss of respect and
prestige. These crimes are of the nature of ‘white collar crimes’ which is the essential
outcome of the development of the competent economy of the twenty-first century13.

White-collar crime is pervasive in almost all the professions and occupations in our
society. The problem is quite acute, both in terms of variety and the extent of white-
collar criminality. The report of Santhanam Committee in its findings gave a vivid
picture of white-collar crimes committed by persons of respectability such as
businessmen, industrialist, contractors and suppliers as also the corrupt public
officials.

The white-collar crimes which are common to-Indian trade and business world are
hoardings profiteering and black marketing. Violation of foreign exchange regulations
(i e. FERA) and import and export laws are frequently resorted to for the sake of huge
profits. Further, adulteration of foodstuffs, edibles and drugs which causes irreparable
damage to public health is yet another white-collar crime common in India.

The complexity of tax-laws in India has provided sufficient scope for the tax-payers
to evade taxes. It is to be noted that tax-evasion is illegal, but tax-avoidance not. Tax-

12 See, Edwin Sutherland- “Is White Collar Crime a Crime?” (American Sociological
Review April 1945), pp. 132-137
13See, N.V. Paranjape, “Criminology and Penology”, 14th ed., central law publication.

37
evasion implies non-payment of tax due to be paid, the tax-avoidance signifies
arranging the spread over of one’s income in such a way that it does not incur tax-
liability legally and lawfully. In the profession of medicine, most common instances
of white-collar criminality are illegal abortions, false medical certificates and
unnecessary prolonged treatment in many cases. The usual legal and professional
violations committed by lawyers are: advising organized criminals, aiding in
performing false claims, engaging professional witness, fabricating false evidence etc.
In the engineering profession, understand dealing with contractors and suppliers,
passing of sub-standard works and materials and maintenance of bogus records of
work. Charged labour are some of the common examples of white-collar crime.

Corruption is also a well known white-collar crime. It is not limited to the concept of
bribes of illegal gratification taken by public servants.

In its wider sense, corruption includes all forms of dishonest gains in cash, kind or
position by persons in government and those associated with public and political
affairs. The two government departments which have been traditionally notorious for
corruptions in the country are those of police and public works.14

12 Steps Path to White Collar Crime

Viewed circumstantially appears to be, there is a 12 Step path to white collar crime
that involves:

• Step 1 occurs when the individual is given a position of power.

• Step 2 happens when the person realizes he has power that he can use for their
own financial benefit.

• Step 3 occurs when other powerful people in the organization (referred to as

drivers) turn a blind eye or condone the abuse of power.

• In step 4 other passive observers become caught up in the activity because

they realize that it offers them an opportunity.

• Other more reluctant participants are drawn in by their superior at step 5.

14 Information available at, http://www.publishyourarticles.net/ “ Essay on White Collar

Crime in India,”.

38
 • Step 6 is when distrust of those involved in the activity starts to arise,

• The perpetrator recognizes his ability to exploit those in a vulnerable position

within the company - this is step 7.

• The group uses bullying tactics in step 8 in order to protect their illegal
activities.

• By step 9 the perpetrator is addicted to the illegality of his activities. He starts

taking bigger and bigger risks.

• At step 10 participants in the illegal activity begin to have ethical doubts about
their behavior.

• Step 11 is reached when a whistleblower has the courage to reveal what has
been going on. The perpetrator loses his control over the situation.

• The final step is reached with the perpetrator either admitting to his illegal
actions, and asking for forgiveness, or trying to deny his involvement despite
mounting evidence.

Not only can participants of white collar crime become addicted to the excitement of
their illegal activity, but it can also be addiction to alcohol or drugs that drives them to
such crime in the first place. 15

There are plethoras of opinions and findings vis-a-vis the definition of white-collar
crimes, which is not only an intricate task but also an evolving and non-static concept.
The definitions which are offered by legal scholars vary both across and within
disciplines and linguistic practices.

Right from 1939 when Sutherland introduced the concept of white-collar crime into
the field of criminology, a great debate and controversy with regard to the meaning
and the nature of white- collar crime has been generated amongst the writers in this
field. Sutherland’s definition of white-collar crime has been vehemently criticized and
some writers have even entertained a doubt as to the whether white-collar crime is a
crime in real sense of the term. By analyzing Sutherland’s definition of white-collar

^Information available at, http://www.alcoholrehab.com/(“Addiction and White Collar

Crime”)

39
crime in the light of criticism leveled against the same and to see whether the same
and to see whether the same holds good in the face of present day challenges or needs
to be modified or expanded to meet these challenges and to make it clear that white-
collar crime is a crime which is more dangerous than traditional crime.16

Professor Sutherland names such violations of law in upper socio-economic class as

“white-collar crime” and broadly defined a white-collar crime as:

“A Crime committed by a person of responsibility and high social status in the course
of his occupation.” The term white collar is in reference to the dress shirts that are
commonly worn by office workers. It is used as a contrast to blue collar/workers who
are involved in manual labour and will usually come from the working classes. The
above definition of ‘white-collar crime has five attributes, namely:

a) It is a crime;

b) Committed by a person of respectability;

c) Of high social status;

d) In the course of his profession or occupation, and

e) It is usually a violation of trusts.17

i) Restrictive Nature of Sutherland’s Definition:

The definition of white-collar crime as propounded by Sutherland has been

vehemently criticized on the ground that the same is restrictive. This definition
includes within its boundaries such behaviors only which are indulged in during the
course of one’s occupational activities and it fails to recognize that there are many
such behaviors (which, no doubt, can be placed within the category of white-collar
crimes) but they bear no relation to the offender’s occupations. Edelhertz, for example
strongly objected to Sutherland’s stipulation that white-collar crime must occur in the
course of offender’s occupation. He argued that such a definition excludes crimes
such as filing false income tax returns, making false claims for social security

16See, Abdul Latif Wani Kashmir University Law Review, “White Collar Crime - His
concept” Vol.6, 1999
17 See, K.D. Gaur, “White-Collar Crime and its Impact on Society”, Criminal Law and
Criminology, 2002 Pg.No.281

40
benefits, buying on credit with no intention or capability of paying and variety of
other offences that he felt should be included under the white-collar crime. These and
similar criminal behaviors are now studied under the white-collar crimes although
these are not committed during the course of occupational activities. Therefore,
Sutherland’s requirement that the crime must occur in the course of one’s occupation
limits the boundaries of white-collar criminality and the definition as given by
Sutherland needs to be expanded to bring all similar activities with the scope of
concept.

ii) Respectability and High Social Status:

The two important components of Sutherland’s definitions are that white-collar

criminal must be a person of respectability and at the same time he must be enjoying
high social status. These elements seem to be more doubtful. What does
‘respectability’ mean for the purpose of definition? Is it that the person to be called as
a white-collar criminal must be enjoying respect from other members of the society or
that he shall be treated as respectable because he has money and power? Mannheim
says that probably it means the absence of previous conviction or only absence of
convictions for offences of the traditional type such as stealing. The ‘high social
status’ and the element of ‘respectability’ taken together also has led to more
confusion. It has been argued that it is entirely possible to be highly respectable and
illiterate on the one hand, or a member of the upper-class, yet held in contempt by the
general society on the other. There can, indeed, be person of a high social status
indulging in white-collar criminality who are not respectable or vice-versa.

The element of ‘high social status’ has also been questioned by Susan Shapiro in the
following words:

Does one want to definitionally discriminate, for example, between Medicaid

fraud by doctors and that engaged in by patients; between the business
executive who does not disclose perks in his tax returns and the waitress who
fails to disclose tips on her return? Does one take a single illegal activity
reflecting the conspiracy of assorted individuals and label the activities of the
wealthier participants white-collar crime and those of the less wealthy
traditional crime?.... ”

41
These queries which have been raised regarding the element of high social status
definitely lead to situations which may provide a biased methodology for examining
criminal behavior if the definition of white-collar crime is premised upon the class or
social status is quite misleading. As such, Sutherland’s concept of ‘high social status’
is far too vague to be of much use within a social system as complicated as that of the
modem society. If very legitimately, we wish to relate crime to the various social
classes we have to give a clear account of how we intend to draw the lines between
them. This having been done, we should try to show how the characteristics of certain
types of crimes differ according to social class. Sutherland, by indiscriminately
lumping together offenders of very different social classes, failed to reach this
objective.

iii) Redefining White-Collar Crime From Offender to Offence:

The restrictive nature of Sutherland’s definition of white-collar crime and the inherent
ambiguities has necessitated the modification and expansion of that definition in order
to bring within its ambit and scope the behaviors which fall within the concept but
which stand excluded if Sutherland’s definition is accepted. Today some
disagreement exists over the precise definition of white-collar crime. Modem
criminologists have broadened their definition of white collar crime so that is
embraces a wide variety of situations. Sutherland’s approach to the definition of
white-collar crime was offender-related. He had paid so much attention on the nature
of the offender that actual criminal behavior had gone unexamined. So, Sutherland’s
offender-related approach had to make way for offence-related approach and the first
important shift away from the legacy of Sutherland was accomplished when Herbert
Edelhertz made the offence itself as the principal object of inquiry. Edelhertz
proposed to define white-collar crime as:

"an illegal act or series of illegal acts committed by non-physical means and
by concealment or guile, to obtain money or property, to avoid payment or
loss of money or property or to obtain business or personal advantage. ’’

The offence-related approach taken by Edelhertz seems to have taken care of the
inadequacies that were present in Sutherland’s approach. Edelhertz has concentrated
on the crime itself and the means that are employed to commit that crime e.g.,
concealment and deceit. The basic purpose and objective in the commission of the

42
crime, no doubt, remains the same i.e., economic gain. This approach has excluded
the elements that the crime must be committed during the course of one’s
occupational activities and by respectable person who also enjoys a high social status.
The offence related approach taken by Edelhertz seems to be comprehensive and
concentrates on the modus-operandi and the objectives of the crimes.

However, the approach adopted by Edelhertz has been criticized on the ground that it
does not include offences such as forgery that entails a physical act. Also, by
expanding the concept of white-collar crime, Edelhertz would include so many crimes
of the poor that his approach misses the whole point behind the concern
criminologists have expressed about the problem of white-collar crime and the abuse
of privilege that it entails.

An important feature of Edelhertz definition of white-collar crime is that the illegal

act is committed non-physical means and by concealment and deceit. This position of
Edelhertz has come under attack form sociologist who regretted his slighting of the
idea of abuse of power as the key aspect of white-collar offences and his expansive
extension of the term to such a variegated range of behaviors. They were puzzled by
the excision of violence from the realm of white-collar crime, noting that crimes such
as unnecessary surgical operations, the manufacture of unsafe automobiles, and the
failure to label poisonous substances at the work place could be regarded as white-
collar crimes with a strong component of violence.

If we make a comparative study of Sutherland’s and Edelhertz’s approach, we

observe that Sutherland’s definition is fundamentally altered by bringing within the

scope of white-collar crime the criminal acts of the non-elite persons. The present

approach makes a departure from the traditional view held by many sociologists who

have in the past stressed the social characteristics of the offender or the relationship

between offenders and their occupations. Experience has demonstrated that white-

collar offences are regularly committed by members of all social classes and are not

exclusively the domain of rich and powerful. This approach if adopted fully seems to
deflect attention away from the destructive crimes of the wealthy and powerful.18

18 See, Abdul Latif Wani Kashmir University Law Review, “White Collar Crime - Its
concept” Vol 6, 1999

43
As Caldwell has pointed out:

1) White collar crime is a non legal term which refers to certain criminal acts, such
as embezzlement and bribery, but does not specifically name the criminal acts to
which it has reference;

2) It refers to a certain type of person, namely, a member of the upper socioeconomic

class, but does not provide us with specific criteria by which to determine the
social class of the person involved; and

3) The criminal law in defining acts that are usually referred to by the term “white-
collar crime,” with a few exceptions, does not make any distinction regarding the
social class of offenders.

It should be clear, therefore, why there are no official sources of criminal statistics
by which to estimate the amount of white collar crime.19

> Black’s Law Dictionary defines white-collar crime as “a non-violent crime

usually involving cheating or dishonesty in commercial matters.

> The Oxford English Dictionary defines the white-collar criminal as "a person
who takes advantage of the special knowledge or responsibility of his position to
commit non-violent, often financial, crimes."

> The American Dictionary of Criminal Justice more specifically defines white-
collar crime as "nonviolent crime for financial gain committed by means of
deception by persons whose occupational status is entrepreneurial, professional or
semi-professional and utilizing their special occupational skills and
opportunities."20

Sir Walter Reckless, an eminent American criminologist suggests that white collar
crime represents the offences of businessmen who are in a position to determine the
policies and activities of business. Some authorities suggest that white collar crimes
are committed by persons of status not for need but for greed. Referring to this variety
of the upper world of crime, Barnes and Teaters quoted Lord Acton who said,

19See, E.H. Sutherland, “White Collar Crime”, 1961

“information available at, http://www.publishyourarticles.org/knowlege-hub/essay-on-white-
collar-crimes-in-india.html

44
“Power tends to corrupt and absolute power tends to corrupt absolutely”. Wherever
citizens of a particular community become apathetic to the working of their
Government, grafts, corruption and alliances between public servants and the criminal
world are common phenomenon’s resulting into breach of trust, fraud and other
malpractices.

During the Truman administration in U.S.A. the well known “Fine presenters” and
“Friendship Racket” operated between the high ups close to President and contractors
who procured war contracts. Bruce Catton’s “The War Lords of Washington”, best
reveals the story of the callousness of some businessmen during World War II. It
indicates the indifference, greed, inaptness and arrogance of many of those
responsible for conducting a war and how they shelved of the democratic ideals for
their personal gain while performing their official duties. The reasons for such deals
remaining undetected as pointed out by Sutherland was that “the fine fine between
criminal activity and immorality either in business or in government is often difficult
to discern”. In the Administration Improvement Act (AIA) of 1979 the U.S.
Congress defined white collar crime as “an illegal act or series of illegal acts
committed by non-physical means and by concealment or guile, to obtain money or
property or to obtain business or personal advantage.”21

Hartung defines a white-collar offense as a violation of law regulating business,

which is committed for a firm by the firm or its agents in the conduct of its business.”
Cressey seems implicitly to be using a wider concept in accordance with Sutherland’s
explicit definition-a concept broad enough to include also embezzlement. Moreover
there are some who argue that differentials of power and influence are the keys to
identify, satisfactorily frame, and unravel fundamental questions about crime and
crime control. For example, investigations of sexual harassment have shown there the
offender has always been of a superior status than that of the victim. Therefore the
principle reason propounded behind the commission of a white collar crime is that of
greed and arrogance and not of necessity or any compulsion. White collar crimes
throw light on the diverse criminal behavior generally. The status-based definition of

21 This definition focuses on characteristics of the offence as opposed to Sutherland’s focus on

the offender as a high-status person. Although avoiding the problem of social status, the AIA
definition fails to differentiate between persons who commit for personal gain and those who
do so primarily on behalf of an employer.

45
white collar crime draws on and reaffirms criminological ties to macro level analyses
of social and political processes. However, there are others who refuse to give much
emphasis on offender’s social position and repute as the only basis of classifying

white collar crimes. They advocate that collaring should be done not of the criminals
but of the crimes. The concept of abuse of trust, for example, can be considered to be
a white collar crime. Abuse of trust means exploitation of fiduciary position of the

agent responsible for the safe custody, discretion, information or for property rights.

Here since the trust crime is being committed by citizens wearing both blue collars
and white collars. Similar instance can be done as that of adulteration of food, where
this type of offence is committed not only by the upper class people but also by

middle class businessmen involved in the food business. Therefore we should not
always peep into the offender’s wardrobe and his official position but consider the

modus operandi of his misdeeds and the ways he exploit. Whatever the merits of the
position, they hold strong that in white collar crimes the offenders are not always
powerful and the victims are ordinary citizens. 22

Therefore, By above all elaborations, we can say that White-collar crime is a broad

term that encompasses many types of nonviolent criminal offenses involving

fraud and illegal financial transactions. White-collar crimes include bank fraud,

bribery, blackmail, counterfeiting, embezzlement, forgery, insider trading,

money laundering, tax evasion, and antitrust violations. Though white-collar

crime is a major problem, it is difficult to document the extent of these crimes because

the Federal Bureau of Investigation's (FBI) crime statistics collect information on only

three categories: fraud, counterfeiting and forgery, and embezzlement. All other

white-collar crimes are listed in an "other" category. Nevertheless, law enforcement

ryi

officials agree that white-collar crime is a major problem.

White collar crimes advert to that category of crime that tends to be committed by
professionals. Securities Fraud, Insider Trading, Bank Fraud, Tax Fraud, and Money
Laundering are all examples of white-collar crime.24

22 “Schmalleger Frank, “Criminology Today”, Prentice Hall, Englewood Cliffs, New Jersy.
23 http://www.lawbrain.com/ Find Law Resources .
24Information available at, http://www.drt.co.in /, DRT, SARFAESI Act, “White Collar
Crime and its changing dimensions”, Dec 30th ,2011

46
 “White collar violations are those violations of law to which penalties are
attached that involve the use of significant power, influence or trust in the
legitimate economic or political institutional order for the purpose of illegal
gain or to commit an illegal act for personal or organizational gain —

Albert Reiss and Albert Biderman...

White Collar Crime falls under the purview of Criminal law. White collar crime
began to capture the attention of the prosecutors and the public in the mid-1970’s.[l]
The FBI defines it very simply as “lying, cheating, and stealing” and it is classified

by the Department of Justice as “non violent illegal activities which principally

involve traditional notions of deceit, deception, concealment, manipulation, breach

of trust, subterfuge or illegal circumvention.” Commercial fraud, consumer/intemet
scams, E-scams & warnings, identity theft, credit card fraud, phone/telemarketing

fraud, adoption scams, work at home scams, jury duty scams, healthcare fraud,
insurance fraud, Medicare fraud, bankruptcy fraud, mail fraud, stages auto accidents,
government fraud, pump and dump stock scams and securities fraud are all examples
of fraud-based white collar crime. There are many other crimes, however, that are

predominantly identified as white collar crime as well, including the following:

public corruption, tax evasion, bribery, counterfeiting, money laundering,
embezzlement, kickbacks, environmental law violations, economic espionage, trade
secret theft, insider trading on the stock market, illegal pharmaceuticals, antitrust
violations, and other forms of dishonest business schemes.25

As an alternative to the socio-economic definition, many define “white-collar crime”

based instead upon the manner in which the crime is committed. In 1981, the
United States Department of Justice described white-collar crime as:

Non-violent crime for financial gain committed by means of deception by

persons whose occupational status is entrepreneurial, professional or semi-
professional and utilizing their special occupational skills and opportunities;
also, nonviolent crime for financial gain utilizing deception and committed
by anyone having special technical and professional knowledge of business
and government, irrespective of the person’s occupation.

25 See,ibid

47
This definition focuses on the use of deception as the criminal means. The defendant,
however, still must be at least “semi-professional” or have “special technical and
professional knowledge. “Thus, in some ways, this definition is still too narrow. Not
all defendants in white collar cases have professional or semi-professional status, nor
do they necessarily possess special skills. A defendant in a tax fraud or false claims
case, for example, might have neither of these characteristics.

Perhaps a better way to look at white collar crime is to focus on the ways that
practitioners and judges distinguish white collar crime from common or street crime.
A “white collar” prosecutor or defense attorney, for example, would more likely
define “white collar crime” as crime that does not:

a) Necessarily involve force against a person or property;

b) directly relate to the possession, sale, or distribution of narcotics;

c) directly relate to organized activities;

d) directly relate to such national policies as immigration, civil rights, and national
security; or

e) directly involve “vice crimes” or the common theft of property.

Sometimes the criminal statute itself will render almost all crimes charged under that
statue “white collar” by definition. For example, charges brought under the securities
fraud and antitrust criminal statutes are generally “white collar” crimes under the
above definition. On the other hand, under some criminal statutes charges can be
brought for both white collar and non-white collar offences depending on the nature
of the defendant’s conduct. For example, conspiracy, extortion, and obstruction of
justice are charges often brought in both white collar and non-white collar cases.

The most common and notable white collar crimes include crimes committed both in
the corporate and governmental; settings, and crimes committed by individuals.26

26See, J. Kelly Strader, “ Understanding White Collar Crime” LexisNexis, Southwestern

University School of Law, 2Q02 (www.lexis.com)

48
That white collar crime is essentially connected with social status has been brought
out in the following description given by a writer on Criminology.

“White-collar crime is most distinctively defined in terms of attitudes toward

those who commit it. White-collar crime is definitely made punishable by
law. It is convictable behavior. However, it is generally regarded by courts
and by sections of the general public as much as less reprehensible than
crimes usually punished by our courts, which may be designated “blue-collar
crime Blue-Collar crime is the crime of the under-privileged; white-collar
crime is upper or middle-class crime ”. Just what proportion or section of the
population must condone this type of behavior to constitute it as white-collar
is not, and perhaps cannot be clear. Many courts and other authorities
clearly distinguish between a man who illegally misrepresents the qualities of
his products and a burglar or robber. Yet the very existence of the law
penalizing the former type of act indicates an adverse attitude toward it,
though ordinarily not of the same degree. The fact that white-collar crime is
punished in less degrading ways than “ordinary crime ” does not imply that
the former is petty. Actually the society loses huge sums through white-collar
crime. Some of the rackets we described in an earlier chapter are white-
collar crimes; some are not. As Sutherland defines the term, most
racketeering by officers of a labour union would not be white-collar crime;
nor, apparently would the vice racket be so defined. Thus neither in terms of
class status, business activity, attitudes, nor degree of seriousness can white-
collar crime be wholly separated from other crime. Nevertheless, it is the
somewhat distinctive attitudes and polices towards the offender in such cases
which have been given significance in discussions of white-collar crime. It
appears that even outside of business of circles, white-collar crime is less
reprehensible than ordinary crime, because low-class people often aspire to
be white-collar criminals. Or if not, they at least accept the same
individualism and the same value of materialism which the middle and upper
classes accept. White-collar crime is attrqgfif^$<§^ntge it brings material
rewards with little or no loss ofstatus.

27See, 29th Law Commission Report 1966, Page-7, ollar Crime.

49
Santhanam Committee report on the Prevention of Corruption, to show the
magnitude of white collar crimes prevalent in India. The report says:

“The advance of technological and scientific development is contributing to

the emergence of “mass society” with a large rank and file and small
controlling elite, encouraging the growth of monopolies, the rise of a
managerial class and intricate institutional mechanisms. Strict adherence to
high standard' of ethical behavior is necessary for the even honest
functioning of the new social, political and economic processes. The inability
of all sections of Society to appreciate in full this need results in the
emergence and growth of white collar and economic crimes, renders
enforcement of the laws, themselves not sufficiently deterrent, more difficult.
Tax evasion and avoidance, share-pushing, malpractices in the share market
and administration of companies, monopolistic controls, usury, under­
invoicing or over-invoicing, hoarding, profiteering, sub-standard
performance of contracts of constructions and supply, evasion of economic
laws, bribery and corruptions, election offences and malpractices are some
fJO

examples of white collar crime.

This approach highlights several facts about white-collar crime:

■ It can be committed by an individual or by an organization or group of

individuals.

■ Deception, trickery, or fraud lies at the heart of white-collar crime.

■ Most white-collar crimes emanate from otherwise legitimate occupational

activity in which access to money or information makes possible the misuse of
one or both of these resources.

■ White-collar offenses sometimes lie on the border between illegal and

unethical behavior, where what a company does may cause harm or even
death without actually violating the criminal law. Many unethical offenses are
adjudicated in civil proceedings that determine compensation, rather than in
criminal court, which determines guilt.

28 See, K.D. Gaur, Criminal Law and Criminology “WCC and Its Impact on Society” 2002,
Pg.no.283
29 See, Jay S.Albanese, “Criminal Justice,3/e,” 2005, chapter-5, pg.105, Pearson

50
In the words of Ramsay Clark, one time Attorney General of India:

“White collar crime is the most corrosive of all crimes. The trusted prove
untrustworthy, the advantaged dishonest. It shows the capability of the people with
better opportunities for creating a decent life for themselves to take property
belonging to others. As no other crime, it requisition our more fibre.”30

CHARACTERISTICS/ FEATURES

> Edelhertz31 finds a great many common elements in the panoply of economic

crimes. Among these he identifies:

1. The intent to commit a wrongful act (mens rea), or to achieve a purpose

inconsistent with law or public policy.

2. Disguise of purpose or intent.

3. Reliance by violator on ignorance or carelessness of victim. (The same

proviso, incidentally, might be applied to conventional criminality as well.)

4. Acquiescence by victim in what he or she believes to be the true nature and

content of the transaction.

5. Concealment of the crime by:

a. Preventing realization of victimization.

b. Making provision for restitution for small number of complaints.

c. Creation of some type of dummy facade to disguise the real nature of

the illegal activity.

> Ahmad siddique32 describes features of WCC in his own way as under:

• These crime are committed by people of high status in society such as doctors,
advocates, chartered accountants, governments officials and not by hardcore
criminals for e.g. Thieves robbers, dacoits, murders, rapists, etc

30 See, Giriraj Shah, “White Collar Crimes” 2002, 1st edition,vol. 1, pg. 17.
31 For details,see, Herbert Edelhertz, Thomas D.Overcast, “White -Collar Crime: An
Agenda for Research, “1992 Chapter-6, Pg.No. 141-142.
32See, Siddiquie Ahmad, “Criminology”, 5th Edition-2005, Eastern Book Company,
Lucknow

51
 • Means of crimes differ from the traditional crimes as fraud, misrepresentation,
adulteration, malpractices, irregularities etc.

• These crimes are committed by means of deliberate and planned conspiracies

without any feeling and sentiments.

• When socio-economic crimes are committed people tend to tolerate them

because they themselves indulge in them and they themselves often identified
with those who do so.

• Originally white-collar crimes meant to describe middle and upper class

businesspersons who committed crimes in normal course of their work. But
now it refers to a wide variety occupationally oriented violations committed
by persons in any class.

• The victims of socio economic offences are normally the entire community,
society or even the entire nation besides the individuals.

• These crimes do not involve or carry with them any stigma while the
traditional crimes carry a stigma with them involving disgrace and immorality.

• These crimes constitute a separate category because the control of such crime
‘involves the protection and preservation of the general health and economic
system of the entire society against the exploitation and waste.

> However, white collar crimes have generally been regarded by criminologists
as a class apart because the administrative, investigative and judicial
procedures for many of them been different from the procedures for other
violations of criminal law. Four characteristics in relation to illegal behavior in
the commission of white collar crimes can be discerned. All four need not,
however, occur in each white collar crime.33

First, the crime that is committed is not against a specific individual or firm. It is
against government and society at large. There is, therefore, no specific victim who is
likely to complain. Some illustrative examples are: import of goods by
misdeclaration, misutilization of value-based or quantity-based duty-free advance

33 See, Giriraj Shah, White Collar Crimes, Vol.l, 1st Edition 2002, Chapter-4, Pg.No.21-22.

52
import license, over-invoicing and under-invoicing, tax and duty evasion and foreign
exchange violations, including Hawala transactions.

Secondly, the corporation or the white collar criminal selects crimes which involve
high stakes hut only a small danger of detection and identification and against which
the victims are least likely to fight. Consumers are scattered, unorganized and lacking
in objective information on the qualities of commodities. Most important, often no
single consumer suffers a loss in particular transaction which will motivate him to
take recourse to legal action. The trouble and expenses of such legal action will be far
too great in relation to the injury suffered. The majority of shareholders who are
scattered tend to have no say in the running of the corporation they own. They cannot
attend annual general meetings and they receive little information on the policies or
the correct financial status of the corporation. Balance sheets are easily fudged. Even
if shareholders suspect illegal behaviour by the management, they are unorganized
and frequently cannot even secure access to the name of other shareholders.

A third characteristic in relation to white collar crime is the selection of crimes in

which proof tends to be difficult to obtain. An example is false advertising; since a

little puffing is regarded as justifiable; the proof of unreasonable puffing is difficult.

False gift schemes are another example.

Fourthly, white collar criminals also tend to adopt a policy of fixing cases. The

attempt is not only to fix particular accusations but also to develop general goodwill

before and after accusations are made and even to prevent the implementation f the

law. Frequent cocktail parties, generous gifts during festivals and developing personal

friendships with the people to be fixed are only a few of the methods adopted. Of

course, in spite of this, sometimes a heavy bribe may also be paid, if the stakes are

high.

> Major six features of White-Collar Crime in India

The white-collar/occupational-economic crimes/criminals in our country have

some important features:34

34 Information available at, K.Madhavan, “6 Features of White Collar Crimes in India”,

Frontline, July 30,1993:123-124 (http://www.presertvearticles.com/)

53
1. The crimes result in social injuries far greater than conventional crimes where
only individuals are affected. However, these crimes/criminals have generally
been regarded by criminologists as a class apart because the administrative,
investigative and judicial procedures for many of them have been different from
the procedures for other violations of criminal laws.

2. A large number of these offenders are recidivists, though repetition is not

necessarily of the same type of crime.

3. The illegal activities (or white-collar crimes) follow more or less the same modus
operand!.

4. A white-collar criminal does not lose his status among associates because it is not
considered a violation of the 'business code'. In fact, many successful criminals of
this category are hailed as dynamic and innovative leaders of industry/society.

5. White-collar criminals feel and express contempt for law, for government, and!
for government officials. In this respect, they are similar to many professional
criminals.

6. While ordinary criminals are afraid of enforcement agencies, white-collar

criminals are rarely so, because they think that on being detected, they may only
be transferred or fined or given a short-term simple imprisonment.

In spite of the fact that a large number of occupational scams/economic offences

have been unearthed in our country in the last few years-like securities scam,
hawala scam, sugar scam, banking scam, telecommunication scam, fodder scam,
urea scam, etc.-in which thousands of crores of rupees were involved, surprisingly
no offenders have been convicted so far.

54