DATE DOWNLOADED: Sat Feb 11 21:10:14 2023

SOURCE: Content Downloaded from HeinOnline

Citations:

Bluebook 21st ed.

Drew Feeley, Personality, Environment, and the Causes of White-Collar Crime, 30 LAW &
Psychol. REV. 201 (2006).

ALWD 7th ed.

Drew Feeley, Personality, Environment, and the Causes of White-Collar Crime, 30 Law &
Psychol. Rev. 201 (2006).

APA 7th ed.

Feeley, D. (2006). Personality, Environment, and the Causes of White-Collar Crime.
Law & Psychology Review, 30, 201-214.

Chicago 17th ed.

Drew Feeley, "Personality, Environment, and the Causes of White-Collar Crime," Law &
Psychology Review 30 (2006): 201-214

McGill Guide 9th ed.

Drew Feeley, "Personality, Environment, and the Causes of White-Collar Crime" (2006)
30 Law & Psychol Rev 201.

AGLC 4th ed.

Drew Feeley, 'Personality, Environment, and the Causes of White-Collar Crime' (2006)
30 Law & Psychology Review 201

MLA 9th ed.

Feeley, Drew. "Personality, Environment, and the Causes of White-Collar Crime." Law &
Psychology Review, 30, 2006, pp. 201-214. HeinOnline.

OSCOLA 4th ed.

Drew Feeley, 'Personality, Environment, and the Causes of White-Collar Crime' (2006)
30 Law & Psychol Rev 201

-- Your use of this HeinOnline PDF indicates your acceptance of HeinOnline's Terms and
Conditions of the license agreement available at
https://heinonline.org/HOL/License
-- The search text of this PDF is generated from uncorrected OCR text.
-- To obtain permission to use this article beyond the scope of your license, please use:
Copyright Information
 PERSONALITY, ENVIRONMENT, AND THE CAUSES OF
WHITE-COLLAR CRIME

I. INTRODUCTION

Since its coining in 1939 by Edwin H. Sutherland, "white-collar

crime" has grown and spread through the expanding worlds of business
and technology. 1 White-collar crime, defined broadly by criminology pro-
fessor Gilbert Geis, involves "the abuse of power by upper-echelon busi-
nessmen in the service of their corporations. " 2 White-collar crime dogged
the nation throughout the twentieth century, reaching new heights after the
colossal savings and loan scandals of the 1980s.3 In the new millennium,
an outbreak of high profile corporate crimes transformed executives like
Bernard Ebbers, Kenneth Lay, and Richard Scrushy into household
names, and tarnished the reputation of Martha Stewart.4 For decades, few
scholars or social scientists studied the motives or personalities behind
corporate crime. 5
The available research falls into two basic categories. The first type,
espoused by Sutherland, shuns psychological explanations of economic
crime and focuses on the influence relationships, "situations, and social
bonds" within a company. 6 The second, lesser-studied field uses biology,
psychology, and the human personality to determine what behaviors and
characteristics link strongest to white-collar offenders. The recent crop of
corporate scandals and white-collar trials sparked a resurgence in white-
collar interest and study over the past five years. It also spurred new
measures by the federal government to curb corporate malfeasance, with
effects yet unknown. 8
This Article examines research and various theories on white-collar
crime to understand why successful men and women undertake corporate
crime. First, it will look at the role that personality and behavioral traits

1. Gilbert Geis, White Collar Cdme: What Is It?, 3 CURRENT ISSUES CRIM. JUST. 9, 11
(1991).
2. Geis, supra note 1, at 13.
3. See generallyDAVID R. SIMON, ELITE DEVIANCE 50 (1996).
4. See generally Daren Fonda & Barbara Kiviat, Alter Bernie, Who's Next?, TIME, Mar. 28,
2005, at 44. (mainly discussing the conviction of Bernard Ebbers, but mentioning the trials of both
Kenneth Lay and Richard Scrushy).
5. John Braithwaite, Whte Collar Crime, 11 ANN. REV. Soc. 1, 1 (1985) ("The number of
scholars who have worked on white collar crime has been modest.").
6. Tage Alalehto, Economic Crime: Does Personality Matter?, 47 INT.'L J. OFFENDER
THERAPY & COMP. CRIM. 335, 335 (2003).
7. Braithwaite, supranote 5, at 3.
8. Jennifer S. Recine, Examination of the White Collar Crime Penalty Enhancements in the
Sarbanes-Oxley Act, 36 AM. CRIM. L. REV. 1535, 1535 (2002).
 Law & Psychology Review [Vol. 30

occupy in compelling executives to commit crime. Next, it will examine

whether American society and the corporate environment fosters white-
collar criminals "made" from their surroundings. Finally, it will discuss
recent theories and legislation implemented to stop white-collar crime and
possible solutions to deter further outbreaks in America.

II. PERSONALITY AND CORPORATE CRIME

Edwin H. Sutherland's work discarded any notions that personality

factored into economic crime. 9 This early belief grew with time and be-
came so widely accepted that by the twenty-first century, barely any re-
search existed on the subject before psychologists and sociologists began
reexamining possible links.10 Personality, simply defined, is a person's
"tendency to act or react in a certain way" to different stimuli."1 Personal-
ity traits manifest themselves in various forms expressed through social
acts easily categorized and measured in science."

A. The Competitive Personality

Although referred to in research by different names, "interpersonal

competitiveness" stands as a distinct personality link to white-collar
criminals. 13 Beyond an average corporate competitor, these individuals
cannot bear any form of loss and thrive on defeating their rivals and as-
cending to the top echelons of the corporate world. 14 Positive extroverts
so engross themselves in corporate competition that their drive to win, at
all costs, overcomes any ethical principles. 15 An ultra-competitive per-
sonality, placed in a competitive corporate setting, transforms into a reck-
less, ambitious, and egocentric achiever who holds no regard for anything
except victory.16
Sociologist David Simon linked American society's value and pursuit
of money to tempting overly competitive, deviant-prone personalities to
enter corporate life and seek success. 17 Once in a white-collar environ-
ment, these individuals display a lack of respect for their colleagues and
for their work and look to money, power, and other symbols of status for

9. EDWIN H. SUTHERLAND, THE SUTHERLAND PAPERS 96 (A. Cohen et al. eds., 1956)
("The assumption that an offender must have some such pathological distortion of the intellect or the
emotions seems to be absurd.").
10. JAMES W. COLEMAN, THE CRIMINAL ELITE 185 (2002).
11. Alalehto, supra note 6, at 337.
12. Id.
13. David E. Terpstra et al., The Influence of Personalityand Demographic Variables on Ethical
Decisions Related to Insider Trading, 127 J. PSYCHOL. 375, 384 (1993).
14. Alalehto, supra note 6, at 339.
15. Terpstra et al., supranote 13, at 384. (describing "positive extroverts").
16. COLEMAN, supra note 10, at 186; J. C. Spencer, White Collar Crime, in CRIMINOLOGY IN
TRANSITION 233, 259 (E. Glover et al. eds., 1965).
17. SIMON, supra note 3, at 288.
20061 White-Collar Crime

gratification. 8 Competitive, ego-driven personalities exhibit cunning and

deception and mask their criminal compulsions behind a facade of hard
work and dedication.' 9 Finally, the fact that male white-collar offenders
report a higher rate of aggressiveness and competitiveness than women,
results less from biology and more from traditional societal norms and
sexual stereotypes.2 ° While academics and criminologists seem to accept
these various studies, the research concerning why competitive personali-
ties lead to economic corruption remains largely underdeveloped. 2 '

B. Dominant Traits

Recent studies on personality and corporate crime reveal three distinct

personality traits associated with economic crime. 22 The first type, re-
ferred to as a "positive extrovert," is described as talkative, spontaneous,
alert, and also manipulative and egocentric. 23 This person uses friendli-
ness and superior social skills to gain attention and will often resort to lies
and spiteful gossip to reach goals.24 Individuals with a combination of
high degrees of extroversion and low degrees of self-control are aggres-
sive, difficult to work with, and more likely to commit corporate crime
than extroverts with some level of self-control.2 5 Positive extroverts pur-
sue extracurricular activities such as clubs, sports, and charities where
they develop connections and skills that lead to higher-level jobs and open
the door to corporate crime.2 6
The second trait, the "disagreeable businessman," poses a polar oppo-
site resemblance to the "positive extrovert." 27 Although bitter, aggres-
sive, and contemptuous towards colleagues, this person prefers order,
rules, and stability and grows frustrated or easily angered when people fail
to observe corporate customs. 28 Stubborn in nature, the disagreeable busi-
nessman lacks the charisma for good leadership and is prone to fits of an-
ger when things do not go as planned.29 This person cannot act as

18. Id.
19. J.M. Collins & R.W. Griffin, The Psychology of Counterproductive Performance, in
DYSFUNCTIONAL BEHAVIOR IN ORGANIZATIONS: NON-VIOLENT DYSFUNCTIONAL BEHAVIOR. 219,
226 (R.W. Griffin et al. eds., 1998).
20. Terpstra et al., supranote 13, at 385. See generally NEAL SHOVER, CRIMES OF PRIVILEGE
255 (2001) ("Patriarchal notions of masculinity probably contribute in some way to explaining this
gender imbalance.").
21. Alalehto, supra note 6, at 335.
22. Id. at 346.
23. Id. See also COLEMAN, supra note 10, at 186 (linking egocentric personalities with a higher
chance of committing white-collar crime).
24. Alalehto, supra note 6, at 347.
25. Collins & Griffin, supra note 19, at 233.
26. J.M. Collins & F.L. Schmidt, Personality,Integrity, and Wffte-Collar Cime: A Construct
Vafidit Study, 46 PERS. PSYCHOL. 295, 308 (1993).
27. Alalehto, supra note 6, at 347.
28. Id.
29. Id.
 Law & Psychology Review [Vol. 30

manipulatively as the positive extrovert can, and his ambition and greed
override his preference for formal rules and order.3 °
The final character, the neurotic, exhibits insecurity, sloppiness, and
high levels of anxiety.3 1 Some studies classify neurotics as harboring an
"external locus of control," characterized by low self-esteem and a high
susceptibility to outside influences. 32 This low self-esteem, or low "ego
strength," adds to the tendencies of a person to commit unethical acts.33
Neurotics show a greater need for employee feedback and acceptance and 34
commonly engage in crimes such as vandalism and physical violence.
Although linked to personality, younger individuals often exhibit greater
neurotic tendencies, indicating that this characteristic may subside, or even
disappear, with age. 3' Research linking age with white-collar crime sug-
gests that people with neurotic personalities are more likely to have multi-
ple white-collar and non-white-collar arrests on their criminal records.3 6
The two traits most often linked to economic crime are the neurotic
and the positive extrovert.37 Although representing pervasive traits, these
three characteristics do not represent the only personality indicia of eco-
nomic crime. 38 Many people in the corporate community exhibit these
characteristics and never commit a white-collar offense. 39 The psychol-
ogy of corporate crime and personality effectively link various characteris-
tics, such as ambition, greed, and low self-control, to economic crime,
but the human mind and the corporate world are too "complex and multi-
dimensional" to produce definite results linking white-collar malfeasance
with personality.4 °

III. ENVIRONMENTAL INFLUENCES

From the outset, white-collar crime feeds into the structure and influ-
ence of American culture through its association with society's upper

30. Id.
31. Id.
32. Terpstra et al., supra note 13, at 378-384. See generally Linda Klebe Trevino, EthicalDeci-
sion Making in Organizations:A Person-SituationInteractionistModel, 11 ACAD. MGMT. REV. 601,
609-610 (1986) (describing locus of control as a person's belief, or lack of belief, in their ability to
influence and dictate the events in their life which is significantly influenced by self-esteem).
33. Terpstra et al., supra note 13, at 378.
34. Collins & Griffin, supra note 19, at 234.
35. Id.
36. Glenn D. Walters & Matthew D. Geyer, Criminal Thinking and Identity in Male Wite-
Collar Offenders, 31 CRIM. JUST. & BEHAV. 263, 271 (2004); see also DAVID WEISBARD & ELIN
WARING, WHITE-COLLAR CRIME AND CRIMINAL CAREERS 31-36 (2001) (discussing data of the
frequency and types of white-collar and non-white-collar crimes committed).
37. Alalehto, supra note 6, at 351.
38. Id.
39. Collins & Griffin, supra note 19, at 234.
40. Id.
2006] White-Collar Crime 205

class. 41 Scholars have long held that corporate crime is a "learned" be-
havior rather than instinctual in corporate criminals.42 Over the years,
academics have examined cultural norms such as gender, 43 religion, 44 and
ethnicity45 and whether culture causes certain groups to engage more in
corporate crime. Nevertheless, common themes exist concerning societal
influences that compel individuals to commit white-collar offenses.

A. Competition and OrganizationalStructures

As a capitalist country, America highly encourages corporate competi-

tion as "a positive, rather than a negative or selfish, activity." 4 6 Incen-
tives for white-collar crime increase when foreign competition enters a
field and profits begin to tumble.47 The belief in American society that
"winners" possess drive and ambition to top the opponent instills a fear of
failure in executives and compels them to cover a loss using crime rather
than face an embarrassing defeat.48 Insecurity and materialism shroud
corporate society and lead corporate heads towards committing white-
collar crime .49 This culture of competition is further fueled by money,
which serves as an "impersonal standard" of gain and success in American
economic society and creates pressure towards attaining wealth and ac-
complishment. 50
To achieve economic success among highly competitive industries,
corporations must seek profits and can resort to unlawfulness as a "sur-
vival strategy" when the company falls short of expectations. 51 Unlawful-
ness often occurs when a company attains rapid success under an inexperi-
enced and "unsocialized" new leader driven by the belief that "new or-

41. EDwIN H. SUTHERLAND, WHITE COLLAR CRIME: FORMULATING THE CONCEPT AND
PROVIDING CORPORATE CRIME BASELINE DATA IN CORPORATE AND GOVERNMENTAL
DEVIANCE 67 (M.D. Erman ed., 2002) ("White-collar crime may be defined, approximately, as a
crime committed by a person of respectability and high social status.").
42. SIMON, supra note 3, at 76 ("[C]orporate criminal behavior-like any other type of behav-
ior-is learned.").
43. Kathleen Daly, Gender and Varieties of White-Collar Crime, 27 CRIMINOLOGY 769, 776-
779 (1989).
44. Terpstra et al., supra note 13, at 385.
45. Hazel Croall, Who is the Whire-CollarCrimnaal?, in CRIMES OF PRIVILEGE 257, 263 (Neal
Shover ed., 2001) (examining the link between English, Chinese, Italian, and Irish individuals and
white-collar crime.).
46. COLEMAN, supra note 10, at 189.
47. Sally S.Simpson, Low-Self Control, Organizadonal Theory, and Corporate Crime, 36 LAW
& SOC'Y REV. 509, 536 (2002).
48. COLEMAN, supra note 10, at 190.
49. James W. Coleman, Toward an Integrated Theory of White-Collar Cime, 93 AM. J.
SOCIOL. 406, 435 (1987).
50. COLEMAN, supra note 10, at 193.
51. Diane Vaughan, Toward Understanding Unlawful OrganizationalBehavior, 80 MICH. L.
REV. 1377, 1382 (1982) ("Unlawful conduct is most likely to be chosen as a survival strategy when
support diminishes for legitimate procedures for reaching desired goals.").
 Law & Psychology Review [Vol. 30

ganizations only rise rapidly if they have some disrespect for traditional
standards" of business 52
.
The "size and complexity" of large corporations produces numerous
opportunities for unlawful conduct to appear.5 3 The mere opportunity to
commit a crime where the chances of detection are slim creates a strong
incentive for normal individuals to engage in crime. 54 Because of their
positions, executives possess valuable nonpublic information, which cre-
ates the temptation to use it improperly." Centralization of power can
assure conformity from "nonelite" corporate members whom executives
can intimidate into engaging in corporate malfeasance.56 A centralized
base may also prevent outsiders from gaining knowledge of corporate
wrongdoing.5 7 Former Tyco CEO Dennis Kozlowski, for example, used
his power to build a strong, "highly centralized structure" to limit what
employees and stockholders knew about his alleged mismanagement of
corporate funds.5 8

B. Morality andFeelings of Wrongness

Although white-collar crimes, like traditional crimes, leave a string of

victims and devastation, studies reveal that the public, and even corporate
criminals, overlook or underestimate the wrong in the crimes committed.5 9
Until recently, lax governmental regulation and weak penalties allowed
corporate crime to grow and sent a message that the government did not
consider these crimes important problems. 6°
White-collar criminals fail to understand how fraud, tax evasion, or 61
perjury fit into the same criminal mold as assault, rape, and murder.
White-collar offenders sometimes find it difficult to understand the differ-
ence between aggressive business tactics and illegal activity. 62 As a "re-
current pattern," white-collar criminals admit their actions, but deny any

52. Vaughan, supra note 51, at 1383.

53. Id.at 1388. See also Nicole Piquero & Alex Piquero, Characteristicsand Sources of White-
CollarCrime, inCRIMES OF PRIVILEGE 329, 334-335 (Neal Shover ed., 2001) ("Given the size of
large corporations, decision-making has to be delegated to various points throughout the organization,
thereby creating the opportunity that many decisions go unchecked.").
54. WEISBURD & WARING, supra note 36, at 147 (discussing the link between opportunities to
commit crime and committing crime).
55. Elizabeth Szockyj & Gilbert Geis, Insider Trading PatternsandAnalysis, 30 J. CRIM. JUST.
273, 276 (2002).
56. SIMON, supra note 3, at 280-281.
57. Id.
58. A. Bianco et al., The Rise and FallofDennis Kozowski, 3813 BUS. WK. 64, 75 (2002).
59. See Elizabeth Moore & Michael Mills, The Neglected Victims and Unexamined Costs of
White-CollarCrime, 36 CRIME & DELINQ. 408, 411 (1990) ('Neglect of white-collar crime victims
seems particularly unfortunate in light of its enormous physical, economic, and social toll.").
60. SIMON, supra note 3, at 76.
61. Stuart P. Green, Moral Ambiguity in White Collar Criminal Law, 18 NOTRE DAME J.L.
ETHICS & PUB. POL'Y 501, 502 (2004).
62. Id. at 506.
2006] White-Collar Crime

criminal intent to commit crime.63 Citing "creative accounting," Cisco

executives in 2000 refused to admit accounting fraud when they reported
as revenue unsold materials loaded onto trucks but not shipped. 64 One
reason for the difficulty viewing white-collar crime as crime arises be-
cause unlike murder or rape, white-collar offenses occur over a long pe-
riod and can involve detailed, "elaborate activities." 65 Corporate leaders
guilty of white-collar crimes often rationalize their activities as the only
feasible method of generating business and profits to keep their companies
out of financial troubles. 66 Even so, corporate heads who envisioned ille-
gal activity hurting their company's name stood "significantly less" dis-
posed to break the law.67
Society, too, regards white-collar crime with less alarm and trepida-
tion compared to other crimes. For one, white-collar offenses usually re-
sult in "hidden crimes or quiet violence" in contrast to the physical nature
of street crimes. 68 Oftentimes, white-collar crimes are difficult for the
public to identify and victims of frauds such as price fixing are not always
directly aware of the injuries inflicted by the crime. 69 A recent study by
Professor Sean Rosenmerkel found that people viewed white-collar crime, 70
in terms of seriousness, as falling between property and violent crimes.
Crimes such as embezzlement, price gouging, or false advertising ranked
among the lowest in terms of the seriousness .71 The results indicate that
respondents focused more on the harmfulness of the crimes than on the
wrongfulness.72 One explanation for why the subjects viewed property
crimes as more serious than other white-collar offenses comes from a
"further awakening" of the public to white-collar crime following the nu-
merous scandals of the 1980s. 7 3 The study concludes by stating that the
"primary problem" with white-collar crime and the public perception
stems from a lack of understanding the nature of the crimes when commit-
ted.74

63. Michael L. Benson, Denying the Guilty Mind: Accounting for Involvement in a White-Collar
Cime, 23 CRIMINOLOGY 583, 589 (1985).
64. Julie Kosterlitz & Neil Monroe, Full Disclosures, 34 NAT'L J. 524, 531 (2002).
65. Green, supra note 61, at 508.
66. SIMON, supra note 3, at 276.
67. Simpson, supra note 47, at 536 ("Managers who believed that their illegal act would nega-
tively affect the firm's reputation were significantly less willing to offend.").
68. N. FRANK & M. J. LYNCH, CORPORATE CRIME, CORPORATE VIOLENCE 1-4 (Harrow &
Heston 1992).
69. Green, stpra note 61, at 509.
70. Sean Rosenmerkel, Wrongfulness and Harmfulness as Components of Seriousness of Wite-
CollarOffenses, 17 J. CONTEMP. CRIM. JuST. 308, 323 (2001).
71. Id.at 319.
72. Id. at 324.
73. Id.at 323.
74. Id.at 325.
 Law & Psychology Review [Vol. 30

White-collar crime may also seem less serious because of the way the
legislative, judicial, and penal systems treat offenders.75 Executives who
approach their crimes in a deliberative, "calculating fashion," realize that
the majority of white-collar criminals serve relatively short prison sen-
tences. 76 In a sample of white-collar offenders taken from 1976 to 1978,
49.6% did not receive prison time, and only 2.4% received sentences of
sixty-one months or more.77 According to the 2003 U.S. Sentencing
Commission statistics, white-collar crime sentences still fell well below
the average prison term.78
In addition, some government statutes allow white-collar crime prose-
cutions to fall under either civil or criminal penalties, creating a "blurred"
line between white-collar crime and non-crime. 9 Under these statutes,
criminal or civil penalties arise for the same conduct with complete discre-
tion given to prosecutors to decide which course to pursue.8° This practice
results in an "ambiguity" between white-collar crime and non-white-
collar crime that distorts the moral and criminal characteristics of corpo-
rate crimes. 8'

IV. REFORMS

No single answer exists to the question of predicting and preventing

the growth of white-collar crimes in America. 82 The recent spurt of cor-
porate crime prompted academics and elected officials to revise and
strengthen their ideas on punishment for white-collar offenders. The ar-

75. See Tom Tyler & John Darley, Building a Law-Abiding Society: Taking Public Views About
Morality and the Legitimacy of Legal Authorities into Account When Formulating Substantive Law,
28 HOFSTRA L. REV. 707, 712 ("Some research supports the suggestion that variations in the per-
ceived certainty and severity of punishment do shape people's compliance with the law.").
76. David Weisburd et al., Specific Deterrence in a Sample of Offenders Convicted of White-
Collar Crimes, 33 CRIMINOLOGY 587, 600 (1995). See also lene Nagel & John Hagan, The Sen-
tencing of White-Collar Criminals in Federal Courts: A Sociological Exploration of Disparity, 80
MICH. L. REV. 1421, 1427 (1982) (finding that white-collar criminals generally receive lesser prison
sentencing than other criminals).
77. Weisburd et al., supra note 76, at 593.
78. U.S.S.C., AVERAGE SENTENCE LENGTH IN EACH PRIMARY OFFENSE CATEGORY (2003)
(fraud, tax evasion, bribery, counterfeiting, and embezzlement all carried prison sentences of 14.4
months or less compared to the average national sentence of 47.9 months), available at
http://www.ussc.gov./ANNRPT/2003/tablel3.pdf.
79. Green, supra note 61, at 514. See also Margaret Sachs, Harmonizing Civil and Criminal
Enforcement of FederalRegulatory Statutes: The Case of the Securities Exchange Act of 1934, 2001
U. ILL. L. REV. 1025, 1026-1027 (2001) (listing Sherman Antitrust Act, the Clean Water Act, The
Federal Food, Drug, and Cosmetic Act, Truth and Lending Act, and False Claims Act, as "hybrid"
statutes).
80. Id. at 514.
81. Id.
82. WEISBARD & WARING, supra note 36, at 143.
2006] White-Collar Crime

eas of deterrence and incarceration are the two most common strategies
for combating corporate crime.83

A. Sentencing

The issue of lengthening prison sentences for white-collar offenders

gained momentum after the corporate scams of the 1980s devastated Wall
Street.84 By early 2002, following the collapse of "corporate behemoths"
Enron, World-Com, Global Crossing, and Tyco, Congress responded to
corporate fears with the most sweeping prison reforms to date .85 The Sar-
banes-Oxley Bill, which contains the White Collar Crime Penalty En-
hancement Act, sets new maximum sentences for federal economic crimes
such as fraud and wire-tapping. 6 More specifically, the bill elevates
prison terms on common corporate crime, increasing mail and wire fraud
from five to twenty-five years, income security fraud from one to ten
years, and conspiracy to commit corporate crime to five years behind
bars. 7 The act creates provisions sentencing CEOs and CFOs to ten years
in prison for knowingly certifying incorrect company records, and up to
twenty years for "willfully" certifying incorrect records.8 8 Finally, the
provision directs the United States Sentencing Commission to "amend the
Federal Sentencing Guidelines . . .to implement" the longer prison time
stipulated in the Act.89
Advocates of increased sentencing hope that corporate wrong-doers
"respond to what they see" in cases like Bernard Ebbers-sentenced to
twenty-five years in prison for accounting fraud-and refrain from
crime. 9° Imprisonment also creates "significantly" more shame and em-
barrassment for a perpetrator that other possible deterrents do not im-
pose. 9' Further, white-collar criminals finally receive sentences reflective
of the tremendous financial losses accrued in corporate crime that will

83. John Braithwaite & Gilbert Geis, On Theory and Action for Corporate Crime Control,
CRIME & DELINQ. 292, 292 (1989) (discussing the methods studied for white-collar crime preven-
tion).
84. Frank 0. Bowman, Pour Encourager Les Autres?: The Cuious History and Distressing
Implications of the Criminal Provisions of the Sarbanes-Oxley Act and Sentencing Guidelines
Amendments That Followed, 1 OHIO ST. J. CRIM. L. 373, 387 (2004) (discussing the history of
Congressional Action leading up to the Sarbanes-Oxley bill).
85. Id. at 392.
86. Id. at 404-405; Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 765, 903-904
(2002).
87. Sarbanes-Oxley Act § 902-905.
88. Id. at § 906(a). See also Kathleen F. Brickey, From Enron to World-Corn andBeyond: Life
After Sarbanes-Oxey, 81 WASH. U.L.Q. 357, 376-382 (2003) (providing a table of the maximum
sentencing, under the Sarbanes-Oxley Act, for various white-collar crimes).
89. Sarbanes-Oxley Act § 905(a).
90. Greg Farrell, Sentence's Message: Cime Doesn"t Pay, USA TODAY, July 14, 2005, at B1.
91. Recine, supranote 8, at 1548.
 Law & Psychology Review [Vol. 30

closely mirror other non-violent crimes, such as drug dealing, which in-
volve "disproportionately heavier" prison terms .92
On the downside, longer sentencing clutters already swollen prisons
with "soft criminals," corresponding with a rise in prison costs for the
government and either higher taxes or a shift in funding from other needy
programs. 93 Moreover, the deterrent effect of longer sentencing repre-
sents a mere hypothesis, and no data exist proving that longer sentencing
will ensure a significant drop in corporate crime.9 4 Criminals willing to
risk their reputations, fortunes, and livelihoods to commit serious eco-
nomic crimes may care little about serving extra time for their crimes. 9'

B. Monetary Penalties

The three main methods of fining corporate employees are through

criminal fines, civil fines, and civil judgments. 96 An effective fine ac-
counts for the severity of the economic harm, the costs of investigation
and prosecution, and the likelihood of capture.97 For securities fraud,
corporate executives who commit insider trading can face fines exceeding
$1 million or three times their earnings, as well as criminal fines.98 RICO,
one of the strongest early statutes fighting racketeering and fraud, imposed
"treble damages," including costs of litigation, on white-collar criminals
as incentives for victims to go to court. 99 The Sarbanes-Oxley Act fines
CEOs and CFOs from $1 million up to $5 million for falsifying company
records.l°°
Imposing monetary fines on the perpetrator carries the advantage of
conserving governmental resources because the burden falls wholly on the
offender.' 0 ' There is a limit, even for the wealthiest offenders, where the

92. Barry Boss, Do We Need to Increase the Sentences in White-Collar Cases?: A View from the
Trenches, 10 FED. SENTENCING REP. 124, 126-127 (1997).
93. Rachel Barkow, Sentencing. What's at Stake for the State, 105 COLUM. L. REV. 1276,
1289-1290 (2005) (discussing the added costs and burdens to state prisons with the introduction of
longer sentences).
94. Geraldine S. Moohr, An Enron Lesson: The Modest Role of CriminalLaw in Preventing
Corporate Crime, 55 FLA. L. REv. 937, 955 (2003) ("Raising prison terms by 400% is unlikely to
result in a 400% increase in deterrence.").
95. Id. at 956.
96. Phillip S. Berg, Unfit to Serve: Permanently Barring People from Serving as Officers or
Directors of Publicly Traded Companies after the Sarbanes-Oxley Act, 56 VAND. L. REv. 1871,
1896 (2003) (discussing the effectiveness of criminal deterrents to white-collar criminals).
97. Recine, supra note 8, at 1545.
98. Berg, supra note 96, at 1896.
99. Michael Goldsmith, Resurrecting RICO: Removing Immunity for White-Collar Crime, 41
HARV. J. ON LEGIS. 281, 285 (2004) ("The antitrust experience demonstrates that treble damages are
required both to deter potential violators and provide sufficient incentive for fraud victims to assume
the costs and risks of litigation."). See Racketeer Influenced and Corrupt Organization Act, Pub. L.
No. 91-452, 84 Stat. 941 (1970).
100. Sarbanes-Oxley Act § 906(a).
101. Recine, supra note 8, at 1545-1546.
2006] White-Collar Crime

fine will offset the value of committing the crime.' 0 2 Maximizing the
benefit of imposing fines demands no monetary ceilings 10 3
to ensure that
even the wealthiest criminals cannot escape unpunished.
On the negative side, large corporate salaries, bonuses, and stock op-
tions paid to corporate heads can make fines seem trivial and ineffec-
tive.' 04 Contractual loopholes may also allow corporate executives 0to5
avoid paying their fines by shifting the burden to company stockholders.'
Moreover, in legislation such as the Sarbanes-Oxley Act, where criminal
fines cap off at $5 million with no increases for inflation, the value and
sting of the fine loses potency as the value of the dollar decreases with
time. 106

C. Shaming

In the past decade, criminal shaming gained momentum as a viable al-

ternative to incarceration or fining as white-collar deterrents.10 7 With
shaming, "citizens publicly and self-consciously draw attention to the bad
dispositions or actions of an offender" to create embarrassment for the
crime committed. 0 8 Common shaming techniques imposed by judges
include requiring offenders to purchase newspaper advertisements, put
signposts on their property or bumper stickers on their car, or wear dis-
tinctive clothing proclaiming their crimes. °9 Shaming "destroys" an of-
fender's good reputation, causing people not to trust the person and pre-
venting the perpetrator from reaping "future gains" in that business." 0 In
United States v. Ritter "' the defendant pled guilty to embezzling $6,000
from the federal bank that employed him." 2 The judge ruled that the de-
fendant must notify all future employers of the embezzlement convic-
tion." 3 The Sixth Circuit Court of Appeals upheld the sentence over the
defendant's argument that the requirement would both ruin his reputation
and infringe on his First Amendment rights." 4

102. Id.
103. Id.
104. Berg, supam note 96, at 1896-97.
105. Id. at 1896 ("However, indemnification contracts, corporate by-laws, and insurance contracts
can shift the responsibility for payment of these fines from executives to shareholders.").
106. Michael D Silberfarb, Justifying Pu'slunent for Wite-Collar Crime: A Udlitarian and
Retributive Analysis of the Sarbanes-OxleyAct, 13 B.U. PUB. INT. L.J. 95, 100 (2003). See gener-
ally Pub. L. No. 107-204, 116 Stat. 745.
107. Dan M. Kahan & Eric A. Posner, Shaming Whte-Collar Crminals:A Proposalfor Refonn
of the FederalSentencing Guidelines, 42 J.L. & ECON. 365, 367 (1999) (-[Sjhame is making a much
heralded comeback as a criminal punishment in American law.").
108. Id. at 368.
109. Id. at 367.
110. Id.at 370.
111. 118 F.3d 502 (6th Cir. 1997).
112. Id.at 503.
113. Id.at 506.
114. Id.
212 Law & Psychology Review [Vol. 30

As a positive, shaming provides a cheaper means of sanctioning crimi-

nals than imprisonment."'5 This lower cost stems from the fact that sham-
ing often involves a private cost, which is usually borne by the person
shamed. 1 6 The primary force in shaming involves the gossip, disap-
proval, and negative judgments of the members of the community, which
costs the state virtually nothing. 1 7 Further, the stigma of shame hangs
over the offender much longer than the burden of paying a fine.' 18 The
drastic effects of loss of reputation and good standing in the community
could keep the perpetrator from engaging in that business ever again and
provide a powerful deterrent for potential white-collar offenders.' 19
As a potential drawback to shaming, some white-collar crimes, such
as money laundering, do not require a relationship with the victim, mean-
ing no reputation develops to destroy. 2 ° Moreover, shaming potentially
adds nothing to the humiliation of the criminal process, which offers pub-
lic searches, "perp-walks," and trials that leave no extra need for shaming
to embarrass the accused. 21 Moreover, shaming brings different results
depending on the size of the community,1 The deterrent effect of sham-
ing strengthens in smaller, tight-knit communities where individuals are
more familiar with each other. 123 However, shaming might also create
hidden costs as the price of monitoring the criminal to ensure the penalty
persists could use up money and resources.124 Finally, no evidence exists
that shaming actually deters criminal behavior. 25 The possibility exists
that the offender will not feel embarrassed by the penalty, or that the
criminal's
26
skills will allow him or her to find a way around the punish-
ment. 1

V. CONCLUSION

The root of white-collar crime among the corporate elite does not
trace back to any single, concrete explanation. There are many potential
reasons why corporate crime occurs, which depend on the individual and
the situation. Yet research provides common links and recurring themes

115. Kahan & Posner, supra note 107, at 366 ("Shaming ... may offer a cost-effective and politi-
cally acceptable alternative to the short terms of imprisonment.").
116. David J. Skeel, Shaming in CorporateLaw, 149 U. PA. L. REv. 1811, 1816 (1999).
117. Id. at 1816.
118. Kahan & Posner, supra note 107, at 371.
119. Id.
120. John B. Owens, Have We No Shame?: Thoughts on Shaming, "White Collar" Criminals, and
the Federal Sentencing Guidelines, 49 AM. U. L. REV. 1047, 1051-52 (2000).
121. Id. at 1053.
122. Skeel, supranote 116, at 1811.
123. Id.
124. Kahan & Posner, supra note 107, at 372.
125. Id. ("IThere is no reason to believe that a government-imposed shaming penalty will pro-
duce the optimal level of deterrence.").
126. Id.
2006] White-Collar Crime

that offer valuable insight into why white-collar crime exists in America.
Although there exists a much smaller collection of research surrounding
personality traits, arguments persist linking both personality, and the envi-
ronment, to the causes of corporate malfeasance. The growth of American
business and the creation of more large corporations in fierce competition
with each other spurred a rise in corporate crime and a focus on the rea-
sons, costs, and controls needed to combat its spread.
Through the Sarbanes-Oxley Act, the American government appears
more focused on incarceration as the most effective means of curbing
white-collar crime. Caps imposed on fines, contractual loopholes, and the
lack of long-term consequences indicate that changes must still be made in
the issuance of fines. Criminal shaming offers encouraging, but untested,
solutions. While more stringent laws provide a step towards tempering
white-collar crime, it is too soon to accurately assess the results of the
latest measures to stop corporate crime.

Drew Feelej

* I would like to dedicate this Article to Bob and Dorothy Feeley.