QUES 1. What are White collar crime ?

HOW ARE WHITE COLLAR CRIME DIFFERENT FROM

CONVETIONAL CRIMES ? Discuss the different theories propound by criminologist with respect to
the said crime ?

White collar crime is a crime committed by the people who belongs to the higher class of society and
are from the reputable group of society. This crime is committed during the course of their occupation.
The people who are committing this crime have usually a better understanding of technology, their
respective field, disciplines etc. White collar crimes are largely evolved from few years. And they are
seen to be committed in large organizations that cover a large number of activities. So we can say
that these crimes are common to trade, commerce, education, health etc. As the criminal profile has
changed a lot in few years the traditional crimes have partially switched by the white collar crimes in
the country. The primary difference between the white and the blue crime is that the ordinary i.e. the
criminals of blue crime are people of under-privileged section and upper class is involved in white
collar crime and they commit the crime in a very organized manner. They maintain their respect in the
society until the crime is discovered.

Historical Background:

Edwin Sutherland an American sociologist who first defined the white collar crimes in the global. He
described this crime to be committed by the person of high social status as compared to those who
commit ordinary crimes during the course of his employment.

In 1934, Again Morris drew attention to the necessity of a change in emphasis regarding crime. He
arrested that anti-Social activities of persons of high status committed in course of their profession
must be brought with the category of crime and should be made punishable.

Finally, E.H. Sutherland through his pioneering Work emphasised that these ‘ Upper Worked1
crimes which are committed by the persons of upper Socio-economic groups in course of their
occupation - violating the trust , Should be termed as “ White Collar Crime “ So as to be
distinguished from traditional crime which he called “ Blue Collar Crime “

And the concept of White Collar Crimes found its place in criminology for the first time in 1941

Major Variables And Concept

1. Bank Fraud -To engage in an act or pattern of activity where the purpose is to defraud a bank of
funds.

2. Blackmail - A demand for money under threat to do bodily harm, to injure property or to expose
secrets

3.Bribery and Corruption -When money, goods, services or any information is offered with intent to
influence the actions, opinions and decisions of the taker, constitutes bribery.

4. Cellular Phone Fraud - Unauthorized use or tampering or manipulating cellular phone services.

5.Hoarding, Profiteering and Black Marketing- The white collar crime which are common to Indian
trade and business world are hoarding, profiteering, and black marketing

6.Professional crime - Crimes committed by medical practitioners, lawyers and engineers in course of
their Occupation

7.Forgery - When a person passes false or worthless instruments such as cheque orcounterfeit
security with intent to defraud.

8. Tax-Evasion and Avoidance -Frequently used by the middle class to have extra-unaccounted
money.
Some cases related to white collar crime :

Enron Case

In this famous white collar crime case, a company that was once successful resorted to schemes to
hide losses and fabricate profits. Though ENRON SHARES WERE WORTH $90.75 AT ITS PEAK,
they fell to just $0.67 after the company filed for bankruptcy in 2002. Some of the criminal practices
involved in the Enron case included using off-balance-sheet special purpose vehicles (SPVs) in order
to hide mounting debt and “toxic assets” from both investors and creditors. Chief Financial Officer
(CFO) Andrew Fastow was held largely responsible for orchestrating these false business tactics.

WorldCom Case

As one of the “BIGGEST ACCOUNTING SCANDALS IN U.S. HISTORY,” according to CBS News,
the WorldCom investigation began when internal audits found “improper accounting of more than $3.8
billion in expenses over five quarters.” These accounting irregularities did not conform to
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES and resulted in the resignation of senior vice
president and controller David Myers, as well as layoffs for more than 17,000 WorldCom employees.

HealthSouth Case

In 2004, auditors discovered “HUNDREDS OF MILLIONS OF DOLLARS IN PREVIOUSLY

UNREPORTED ACCOUNTING FRAUD AT HEALTHSOUTH,” according to The New York Times.
The chain of hospitals and clinics was found to have “$2.5 billion in fraudulent accounting entries from
1996 to 2002, $500 million in incorrect accounting äó_ and other items involved in acquisitions from
1994 to 1999, and $800 million to $1.6 billion in ‘aggressive accounting’ from 1992 to March 2003,”
the same article reports. This brought the total range of fraudulent entries to a staggering $3.8 billion
to $4.6 billion. Founder Richard M. Scrushy was indicted on 84 counts of fraud, and at least five
former CFOs pleaded guilty to charges.

White Collar Crime Versus “Conventional” Crime

White collar crime

• Usually involves deceit and concealment (rather than direct violence).

• Typically for the purpose of financial gain.

• Occurs in a business setting.

• Less chance of being caught and punished.

• Can be characterized as involving a violation of trust.

• More leniency from the justice system (“status shield” protects from harsh penalties of
“common” criminal offenders.

• Able to secure the best legal counsel.

Conventional crime

 Usually involves force or violence.

 Varying reasons for the commission of offenses.
 Usually occurs in non-business settings.
 More focused justice system response.
 Some crimes can involve violations of trust, but most lack a relationship between the victim
and perpetrator.
 Generally receive less leniency (victims engender more sympathy than those harmed by
white collar criminal activity).
 Generally not able to secure expensive legal counsel.

Theories pronounced
Strain theory, anomie and relative deprivation

While it is hard to see successful middle-class people as having the means to achieving social goals
blocked, it maybe that, despite their success, they still have a sense of relative deprivation, of still
lacking things they see others having, so they innovate, and turn to crime. This may be fuelled by
personal economic difficulties, like large debts generated by living a lifestyle above their means, or
quite simply greed.

Control theory

 The moral controls on offending may be weakened as there is often no personal, individual victim of
white-collar crime, and this may weaken the perception that offenders are doing anything very wrong
or harmful.  Socialisation into self-seeking company business practices encouraging aggressive and
ruthless competition with other companies may encourage this, and this may be adapted to bring
some personal rewards to employees as well.

Theory of Differential Association

The Theory of Differential Association was put forth in 1924 when Edwin H. Sutherland summarized
his theory of crime in one of the first books on criminology. He veered from European theories
focused on biology to more of a sociological focus. In other words, Danny and Richard are victims of
socialization. They learned their behaviors through their association and interaction with others who
are involved in similar white collar crimes.

General Theory of Crime

The General Theory of Crime is also known as the Self-Control Theory of Crime. It was put forth by
Travis Hirschi and Michael Gottfredson in 1990. This theory says that crimes are due to a lack of self-
control from poor parenting as a child. So, Danny and Richard were not parented in a way that helps
them manage their self-control, leading to a life of white collar crime.

Rational Choice Theory

Rational Choice Theory, created by Cesare Beccaria in 1764, explains white collar crime as a life of
balancing choices and choosing the one with the most reward. Although Beccaria is best known for
his work on the death penalty, he contended that crimes are committed through making rational
choices. The more significant the punishment, the more likely a certain crime is to be controlled. So,
Danny and Richard are motivated by the benefits of their crimes outweighing the costs.

Routine Activity Theory

The Routine Activity Theory was developed by Marcus Felson and Lawrence E. Cohen in 1979 and is
a theory that says crimes are one of convenience. The work of Danny and Richard gives them the
access to easily commit white collar crimes. They are vulnerable to criminal activities because of their
situation and have the opportunity to commit the crimes because of their access.