CRIME IN THE

BUSINESS WORLD
I. Costs
A. Crime is most often associated with the lower class
(street crime) but crime in the business world is the
most
costly type of crime in the US.

1. Approx. $300 B lost to business crime each year

compared to about $20 B for street crimes (violent
and property).

2. In 2005, nearly 17,000 people were reported

murdered in the US. In contrast, corporate crime
may result in at least 20 million serious injuries
and
30,000 deaths.
3. Consumers often pay in the form of hidden
costs. For example, Insurance fraud (non-
health
insurance) costs the average family
between
$400 and $700 per year, with a total cost
exceeding $40 billion
II. Turning a Blind Eye?
A. Statistics on corporate crime are not collected
on a
regular basis by any official government
agency
B. Prosecution is unreliable and sporadic
C. Since corporations cannot be prosecuted
determining who is responsible can be difficult
III. Corporate Culture Theory
A. Some businesses place high demands on
employees
while simultaneously maintaining a climate that is
tolerant of employee deviance.
1. Differential Associations? (Fill in the blanks)
a.
b.
c.
B. Many corporate employees violate the law with
enough
frequency that they could be considered habitual
criminals
IV. Types of Business Crime
A. Corporate Crime
1. Definition: Illegal acts committed for the
economic
benefit of the company in which the offender
is
employed.
a. Individuals benefit indirectly as the
company prospers.

2. Goals of corporate crime:

a. Rig the "free enterprise" system
B. White Collar Crime
1. Definition: Crimes committed by
employees of a
company for personal gain, in the course of
their work, and without the knowledge of
their
employers.
a. Can be either against the company or
against customers or clients of a
company
2. Occurs in all aspects of the business world:
a. Big business where it may be easier to
cover
b. Small business where only one employee
may
be handling the books
c. Finance industry that deals with “other
people's
money”
d. Service industry where there is no
V. Famous Examples:
1. Enron (2002)--securities fraud, insider trading, obstruction of
justice, conspiracy. Wiped out the savings, pensions and jobs
of thousands of former employees, and cheated California
energy consumers out of millions of dollars. At least 3
executive are serving prison time, including Jeff Skilling, who
began his 24-year sentence in Waseca. CEO Kenneth Lay
died of heart failure before he served any time.
2. ADM (1993)--Price fixing. $100 million fine
This American Life podcast: The Fix is In
3. Martha Stewart (2004)--insider trading. 5 mos. prison, $30,000
fine
4. Michael Milken (1989)--securities fraud. Fined $1 billion, 22
mos. in
prison (Don't worry about him, he's still worth over $2 billion!)
Questions
1. Why do we tend to focus more on street crime than
corporate crime?

2. Should we spend more money on prosecuting white

collar criminals and corporate crooks? Would that be a
good investment of public money?

3. How would you maintain high ethical standards in an

environment where you have the opportunity to take
money or goods you have been entrusted with?