WHITE COLLAR CRIME

(Crime in suites)

Author
Taimoor Raza Sultan
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 Table of Contents

A - Abstract ……………………………………………………..4
B - Generalized Introduction …………………………………..5
1. Good and Bad philosophical analysis………………………………..5
2. Crimes………………………………………………………………..5
3. White collar crimes…………………………………………………..6
4. Jurisprudence………………………………………………………...7
C - Definitional crises …………………………………………..8
1. Characteristics…………………………………………………....9
2. Organized crime or Individual crime?...........................................9
D - Historical trail (Post-War period) …………………………………11
E – Causes and Effects…………………………………………13
1. Need – Incommensurate remuneration………………………….13
2. Greed – Irreversible human instinct…………………………….14
3. Neutralization view – Rational decisioning…………………….14
4. Cultural View – Corporation’s indolent climate………………..14
5. Self-Control view – Determined undertaking…………………..14
F – Typology …………………………………………………...15
1. Money Laundering……………………………………………...15
2. Ponzi Schemes…………………………………………………..15
3. Extortion and Blackmailing……………………………………..17
4. Peculation………………………………………………………..17
5. Insider Trading…………………………………………………..17
6. Bank frauds……………………………………………………...18
a. Check forgery
b. Check kitting
c. Sale of stole check
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 d. Bank credit card fraud
e. Unauthorized use of Automatic teller machines
f. Car title fraud
g. Mortgage fraud
7. Identity theft…………………………………………………….18
8. Viatical settlement………………………………………………19
9. Tax Evasion……………………………………………………..20
10.Racketeering…………………………………………………….20
11.Price fixing……………………………………………………...20
12.False claims advertisement……………………………………...21
J – Case studies…………………………………………………22
a. Mississippi Schemes 1716-20………………………………….22
b. Black Friday Gold Scandal 1869………………………………22
c. Teapot Dome Scandal 1921-22………………………………...23
d. Bhopal Disaster 1984…………………………………………..24
e. City of London Bonds Theft 1990……………………………..24
f. Spy Eye Malware Data Theft 2009-13………………………...24
g. Volkswagen Emissions Scandal 2015…………………………24
h. Panama Scandal 2015………………………………………….25

K – International and National legal regimes pertaining to White-

collar crimes…………………………………………………….27

I – Conclusion …………………………………………………..30

Bibliography

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 ABSTRACT

Dissertation efforts to holistically and critically examine the financially high-

handed nature of neo-criminal activities, in particular of white-collar crimes.
Shedding ample light on the historical perspective of the upperworld crimes,
involving the climacteric study of contributing factors in their recent emergence.
Investigating the contentious questions associated with white-collar crimes and
carrying out an in dept analytical examination of the possible havocs, it could lead
to in both national and international spheres of action. Another aim is to
extensively explore the theoretical and practical underpinnings of the concept in
the modern age.

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 INTRODUCTION

Since human origination, the parallel existence of good and bad is undeniable and
therefore, existence of crime an irreversible fact. Humans have always befriended
falsity with same intensity and fervor as for goodness. This manichaean
perspective of humanity paves the way to formal exegesis of human propensity to
commit crime. Eons ago, when mankind neither knew how to eat nor how to
defend themselves, they knew well how to best secure their interests. This human
attribute led to a fierce competition among unbridled individual pursuits over
limited social resources. When multiple individual interests were inexorably
intertwined in collective social transactions, it led to conflicts. These differential
individual interests led to earliest dispute. As time receded, criminal involvements
became more matured leading to sophistication in crime-conduction, but to this
day rationale behind criminal tendencies remain the same olden one. As long as,
humanity endures this inhumane characteristic of naked self-seeking and continue
to desecrate collective social solidarity, crime shall prevail.

Religion has significantly contributed to our primal understanding of good and

bad, permissible and impermissible, humane and inhumane. In fact, the purpose of
divine guidance is to ensure human prosperity through the elimination of evil.
Religion has effectively defined the concept of crime as anything which is
unprovoked and reserves the capacity to invoke an unreasonable loss to a person.
This view is not shared by rational thinkers, instead they regard crime as a social
creation. This is the original discrepancy between the two schools of thought i.e
Rationalism relying on laissez-fairer law making, tends to draw up legislation in
accordance with majoritarian social opinions whereas, religiosity in
contradistinction limits social intervention and legislate upon divine intent.
Predominantly, this stark divorce has led traditional religious thinkers advance this
prudent view of good and bad. Holy scriptures have copious statements in this

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respect; where it becomes abundantly clear that where goodness exists, badness
would reinforce its presence,

“If you do good, you do good for your ourselves, and if you do evil (you do it)
against yourselves” – Holy Quran

“Do not be overcome by evil, but overcome evil with good” – Bible

“I form light and create darkness, I make well-being and create calamity, I am
the Lord, who does all these things” - Isaiah

“Turn away from evil and do good; seek peace and pursue it” – Psalm

Taking into consideration the inevitability of evil, religions introduced mechanisms

and encapsulated holy guidelines to reduce its potency and make human
coexistence peaceful possible.
Moreover, Philosophical deliberations amply straightened out on the
interrelationship of crime and human phycology, leading us to Nature vs Nurture
debate. One school of thought, declared it a social construct and hence contingent
upon varied social interpretations. This school of thought adopted the axiomatic
belief that;
It is the society, which makes the criminal not biology.
Others, have contested this claim and traced the existence of crime since the first
creature was brought to life on the face of God’s earth, arguing that crime is
intrinsically internalized in human deportment and so to say has a deep connect
with human biological programming. Since, the world is connected through
humanity, we can reasonably presume the universalized standardization of criminal
activities. This ideology serves as an anathema to liberal positivists but despite

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serious intellectual affront still breathes in our national and international law
regimes. International law declares some crimes as natural and thus inevitable - jus
cogens i.e universal in scope and non-derogatory. Crimes of this sort don’t respect
national boundaries and apply to all, irrespective of distinctions.
White collar crime:
From the above made discussion, it is sufficiently clear that crime is unavoidable
and has a permanent character. Over the period of time, with changing social
realities, fast emerging political technicalities and altered legal nuances, crime also
underwent swift modifications. Not only it became brutal, nasty and modernized
but also unidentifiably suspicious and sophisticated. This differential progression
of crime led us to believe the transition from crime in streets to crime in suites. In
the 20th century globalized world, where the lands we

inhabit are increasingly getting de-territorialized and national conventional control

mechanisms are subsequently weakened, crimes attained a universal character and
rapidly asserting their neo-technical features like insider trading, crypto-dealings,
duplicities, frauds, breach of trust, money laundering and so on. Such kind of
crimes are categorized as White-Collar Crimes – topic of modern-day
criminological debates.

Jurisprudence:
Exploring the legal substance of WWC, it can be safely assumed that these crimes
are different in terms of their nature and methodical mannerisms. Therefore, their
jurisprudential inquiry and purposive focal point is also different. Hence, their
jurisprudence could be understood as;
 Laws concerning white collar crimes are regulatory in nature and are not for
the purpose of imposing physical penalty.
 They serve as the most adequate instruments of futuristic deterrence against
financially motivated crimes.
 Instead of penalization, damages done are recompensed according to the
legal principles of proportionality.

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 Definitional crises

While defining white collar crimes, it is difficult to produce an all-encompassing

definitive explanation. And, so different definitional lacunae can easily be
identified. Edwin Sunderland who is the earliest coiner of this term defines the
concept as,
“a crime committed by a person of high social status and respectability in the
course of his occupation”
Here, the controversy that is said to have sprouted is that whether institutions
should be or could be integrated in this definition. This creates a deliberate immix
of organized crimes and white-collar crimes.
There are two types of legal persons i.e natural and juristic persons, Sunderland
accommodates the earlier personhood but ignores the latter. Nevertheless, critical
controversies dictate that current times have changed needs and now institutions
are hand in glove with people. Therefore, inclusion of organizational setups is

imperative. Another, contention that precludes us to come to a finalized definition

is the magnitude of financial misappropriation involved. Hitherto, no monetary
mark has been suggested. This implies that even an iota of financial defalcation
can be categorized as upperworld crimes. Following the similar trail of arguments,
if expiration follows the criminal activity – who would be compensated for the loss
and how? Death clause has never been mentioned as a definitional eventuality in
this regard. Furthermore, white collar crime is occupational in nature but how
those people would be put to legal consideration who are affluent despite
occupying a formal professional stead. Would they be labelled as white-collar
criminals? In addition to this, “End justifying means” is a primordially ancient
ideology but still we witness certain strides in modern applicability of white-collar

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crimes - involves illegal activities of people and institutions whose acknowledged
purpose is illegal profiteering through legitimate business transactions. This above-
interpreted critical appreciation of possible lacunae can lead us to a compact
definition, however before moving towards ultimate definition it is highly
advisable to consult some all agreed upon characteristics of crimes in suites.

Characteristics:

Some unanimous components are highlighted, as under;

 It must be a financially motivated endeavor – in stark opposition to those
criminal acts committed in response to animosity or other non-financial
allurements.
 It is a non-violent crime. It does not necessarily involve physical harm
during criminal transaction rather it only involves financial damage.
 It is an occupational crime i.e committed in pursuit of a respectable
professional. This property-component segregates white collar crime from
blue collar crime.
 White-collar crimes can either be malum in se or malum prohibitum
depending upon political and legal culture of the society in reference.
Other than these specific characteristics, they are some general ones too – Means
rea, actus rues, damage done and criminal law transgressed in any manner
whatsoever.

Definitive analysis:
After identification of components it is possible to establish an airtight definition
within a theoretical framework by reforming the available shortcomings. Above
discussion contributes to the approach that white collar crimes occur when;
a. One is a part of an occupation
b. One deviates from the legitimate and conventional role of the same
occupation
c. Non-occupational crimes are not white-collar ones
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Researched definition;

“Financially-induced errancy committed by persons and institutions belonging

to elevated social position in pursuit of their occupational duties, and also
inconsistent with special statutory provisions unanimously legislated by
recognized public will. Whereas, in the unpropitious event of expiration of either
the offender or victim, burden of penalty will be falling unto immediate legal
successors, provided that no harm will be struck on the legal hires as no one
shall be responsible for other’s acts”

Are white collar violators; criminals?

Sociological opinions have converged on a singular analytical vantage point that
whether, white collar transgressors should be regarded as criminals in traditional
sense of term or not? And eminent scholarship has responded to the question in
negative for diversity of reasons. Commonly, it is seen that people apprehended for
such high-handed crimes are not treated like normal lawbreakers. Hence, it is
difficult to intellectually categorize them under a singular umbrella of criminality,
making them special criminals. Other arguments are displayed hereunder;
a. The offenders do not conceive of themselves as criminals
b. These administrative laws are suddenly imposed on businessmen making
acts which were previously non-criminal, criminal overnight.
c. There is no organized effort on the part of civil leaders, churches, schools,
the press and even governmental agencies to apply social condemnation to
these violations.
d. If all such persons violating traffic regulations, health ordinances, and other
administrative acts, are to be considered criminal, then the number of
criminals in the population would greatly outweigh those who have never
committed such offenses.
Criminals of this sort, thus can’t be suggested as traditional criminals and therefore
can be considered as “low-keyed transgressors’’.

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Generally, declaring them non-criminal does not affect legal action in any way or
form. Sunderland also shed light on this stream of thought,
White-collar crime is real crime. It is not ordinarily called crime, and calling it by this name does not
make it worse, just as refraining from calling it crime does not make it better than it otherwise would be.
It is called crime here in order to bring it within the scope of criminology, which is justified because it is
in violation of the criminal law. The crucial question in this analysis is the criterion of violation of the
criminal law. Conviction in the criminal court, which is sometimes suggested as the criterion, is not
adequate because a large proportion of those who commit crimes are not convicted in criminal courts.

Thus, breaking down the concept in two significant components i.e,

Partial penalization + Civil and Administrative actions = Conventional

Sanction & Remedial intent of regulatory legislation

Historical trail

Emergence of white-collar crime, well within the realm of criminology can be

traced back to post world war political and social landscape. Post-war construction
was in full swing and western experiences had a hard impact on their subsequent
struggle for extricating servile world. The rationale behind this relative recency is
that in the post-modern climate, where industrial economy was rapidly being
replaced with information economy - social and political systems were becoming
gigantic and complicated, with corporate juggernauts covering every segment of
society and monstrous firms actively engaging in country’s political and economic
transactions. Urbanization is another thread in the wampum, bigger cities left the
village space redundant and agricultural techniques increasingly obsolete.
Furthermore, entrepreneurship was outlandishly dominated by corporatism with
labor organizations turning the tables. This magnitude and multitude of change
germinated a society which was a victim of organizational take-over. Overhauling
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became the trademark of the changing times. In addition to this, knowledge
became more sophisticated and available with immense alacrity. Illegality existed
as a latent concomitant out of these regimes. This generated a pressing need to
have a vigilant legal regime equipped with adequate technical sophistication and
technocratic

competence. Regulation and deft-handling were the crying need of the time and so
White-Collar regulations served the purpose.
Venality and breach of trust was the new normal. Blinded with insatiable desire to
amass wealth, people at socially privileged positions exploited unprofessional and
unsystematically modernized system of regulation. This explicit increase in white-
collar crimes is predicated upon some reasons;
 Complex administrative and legislative structures were adopted for
efficiency but became the tools of usurpation.
 Deep-interconnection and extensive interdependence among institutions
created hurdles to identify technical crimes.
 White-collar crimes are characterized by unwitting criminality.
 Special intellectual pull and technical ability is required to commit such
crimes.
 Maximum profiteering is relatively easy and secured in these criminal
activities.
 Plea bargain only involve financial compensation thus, criminals don’t fear
physical rotting.

Since 1940’s white-collar crimes have evolved into more sophisticated and
intellectually nuanced crimes, difficult to identify and cease. Therefore, it is a
challenging agenda for criminal theorists to come up with a hunky-dory solution –
in association with other stakeholders. Furthermore, involvement of elevated
personalities discards the proclivity of them getting easily caught with legal claws.
Nevertheless, white-collar regulations up till now proved to be highly ineffective
and vindictive. So, apprehension of lofty names remains a distant dream.

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 Causes and Effects

Not a single cause is to be blamed for the constitution of a criminal act and so
plethora of causes accumulated together instigate such criminal acts. Causes are
primarily varied and sheerly diverse depending upon the personal encounters but
still some common features can be visibly identified. Some common theoretical
underpinnings are briefly explained, hereunder;

1. Greed
Greed is an ever-present feature of human psychology. It has always been a
significant motivational force behind any criminal intention. Likewise, white-collar
crimes are mostly pursued by similar impetus. According to psychology, greed is
never associated with dearth of resources but it is an instinct that pushes for an
amassing of wealth in large quantum despite having profusion of material
resources.
For example: Greed was rampant in the 1980s. Ivan Boesky was a famous Wall Street trader who had
amassed a fortune of about $200 million by betting on corporate takeovers, a practice called arbitrage. In
1986, he was investigated by the Securities and Exchange Commission for insider trading. To escape
serious punishment, he informed on several associates. In exchange for cooperation, Boesky received a
sentence of three and a half years in prison and a $100 million fine. Released after serving two years,
Boesky was barred from working in the securities business for the remainder of his life.

2. Need
Government recruits are paid less and commanded more. This resultant
disproportionate compensation defines his/her desire to engage in white collar
violations. In comparison to private sector, where jobs security is far more
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improved and compensation is commensurate to the work of the employee, white
collar crimes are committed at a relatively lesser rate. Crimes pursued by the
rational need apparatus, is a result of living life beyond required mean. Donald
Cressey one of the famous Manhattan street embezzler, once asserted that the
cause of embezzlement is “non-shareable financial problem”. Therefore, people
commit white collar crimes out of sheer need to sustain their lifestyle or possibly
because of earlier scars of need which they want to get healed by amassing
exorbitant amounts of wealth.
3. Neutralization view
People undertake such heinous financial crimes by rationalizing the effect and
process of misappropriation. The tend to establish a version of these crimes as not
crimes in general and therefore, only a negative use of their intellectual faculties.
Crimes are merely utilization of their special skills and thereby rational. There are
three pretexts in order paint an unacceptable financial crime into a rationalized
activity;
1. Everyone else does it
2. It’s not my fault or responsibility
3. No one is hurt.

4. Cultural view
Cultural view suggests that by placing excessive demands on employees, while at
the same time maintaining a business climate tolerant of employee deviance, white
collar crimes are undertaken. Cultural view consider crime as learnt and so,
involve social factors therein.
Enron collapse - Business culture may have been responsible for the collapse of Enron. A new CEO
had been brought in to revitalize the company, and he wanted to become part of the “new economy”
based on the Internet. Layers of management were wiped out, and hundreds of outsiders were recruited.
Huge cash bonuses and stock options were granted to top performers. Young managers were given
authority to make $5 million decisions without higher approval. It became common for executives to
change jobs two or three times in an effort to maximize bonuses and pay. Seminars were conducted
showing executives how to hide profits and avoid taxes.

5. Self-control view

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White collar crimes are generally committed by people who have weakened self-
control and so are more prone to becoming criminals. They are lured by quick
benefits through minimal effort. Companies try to hire such people who are
morally strong and accept a robust normative coda.

Effects
Corporate crimes can be highly disadvantageous if not identified and caught in the
beginning. Furthermore, these crimes are highly paying and difficult to be ceased –
this adds up to the debris. Delayed identification leads to a delayed action which
brings irreversible damage as a secondary result. Some major effects of white-
collar violations are;
1. People lose faith in corporate dealings.
2. Massive financial loss to an enterprise.
3. Fait accompli – sometimes loss is highly difficult to retrieve.
4. During the investigation term, company ceases to exist.
5. When a company suffers from any fraud, it causes inflation.
6. Consumers are the first-hand sufferers.
7. Employees are paid less.
8. Employability net is reduced.

Typology

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There are many types of white-collar crimes. It is difficult to touch upon
every type. Therefore, a broad-based categorization is defined
hereunder,

1. Money laundering
It is a process by which money earned from illegitimate sources is made to appear
to be earned from legitimate and clean means. It generally involves three
techniques;
1. Placement – Process to flush illegal money into legitimate financial
institutions
2. Layering – Confounding the sources of earned money through series of
transactions and bookkeeping tricks.
3. Integration – After the illegal sources have been concealed, dirty money is
withdrawn as legitimate or laundered money.
There are many commonly employed methods to launder money; like,
1. Cash smuggling – Transporting wealth to unknown foreign accounts
2. Cash smurfing – Deposition of money through multiple individual accounts
3. Over-invoicing – Producing counterfeit invoices in a legitimate cash-based
business.
4. Wire transfers - Cash transfers from one entity to another.
5. Shell companies – Non-existent companies i.e fake enterprises, only existing
on paper.
6. Crypto transfers – Money conversion to relatively anonymous
cryptocurrency.
Legislation: The United States passed the Banking Secrecy Act in 1970,
requiring financial institutions to report certain transactions to the Department of
the Treasury, such as cash transactions above $10,000 or any others they deem
suspicious.

2. Ponzi Scheme
Ponzi scheme is a strategy of pyramid scheme which is a fraudulent investment
scheme based on hierarchical business networking. Continuous flow of investment

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is the bedrock criteria to run a successful Ponzi scheme, in which investors are
assured of the reliability of investment and rapid returns with little or no risk. Older
investors are paid through the incoming flood of investment by new investors. In
this way, only an uninterrupted flow of investment can make the running
otherwise, as soon as the finances dry up – fraud unravels.
Instance - In 2008, Bernard Madoff was convicted of running a Ponzi scheme that
falsified trading reports to show a client was earning a profit on investments that
didn't have virtual existence.

3. Extortion and Blackmailing

The process in which a person’s money or property is taken away through force,
threat or intimidation. Extortion may also include a person’s reputational harm or
threat to incite an unfavorable governmental action. Most common place extortion
techniques are blackmailing. There is usually
1. One-off extortion
2. Widespread one -Transnational in scope
3. Ransomware – rendering computer files as unusable until the ransom is paid
in bitcoins.
Legislation:
a. Pakistan Penal Code: Section 383 prohibits extortion by declaring it
criminal, and section 384 strikes penalty up to 3 years with fine or both.
b. Hobbs Act of 1946: (American Legislation) Prohibits actual or attempted
robbery or extortion affecting interstate or foreign commerce.

4. Peculation

Peculation is the misappropriation of entrusted funds. In other words, it is

the breach of fiduciary responsibilities placed upon a person. When a person
is given access to funds for formal company usage but instead, he/she uses
the funds for unintended purposes. The criminal involved can either by a
company official or a public official misapplying state exchequer.

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 5. Insider Trading
Insider trading is a process of selling and buying company’s stocks by an
unauthorized entity based upon the non-public material information released
illegally. This can cause a huge unexpected financial loss to the company. As far as
the legality of the trick is concerned, it is illegal merely because of disclosure of
confidential information with a criminal intent.
Instance: In September 2017, former Amazon’s financial analyst Brett Kennedy
was charged with insider trading. Authorities said Kennedy gave fellow University
of Washington alumni Maziar Rezakhani information on Amazon's 2015 first
quarter earnings before the release. Rezakhani paid Kennedy $10,000 for the
information. In a related case, the SEC said Rezakhani made $115,997 trading
Amazon shares based on the tip from Kennedy.

6. Viatical settlement
When a person is terminally ill or in a dire need of hot cash, one can sell one’s
insurance policy before death to someone at a reduced rate. The buyer then waits
for the person’s death and after expiration harvest the profit by selling the
insurance policy of the deceased at the original rate. Although viatical settlements
are not prohibited but still it signals moral decadence. Furthermore, life settlements
may lead to possible crimes as the buyer’s monetary return is only possible after
the original owner’s death and if the owner recovers, buyer would have to wait
longer than foreseen. These unexpected events can conjure up the buyer to readily
get his money even at the expense of person’s death.

7. Tax evasion
It is a willful act of both nonpayment and underpayment of the original tax
liability. Identifying tax evasion can lead to other offenses as well. If a person is
caught evading tax, there must be reason to do that – either he is committing fraud
or concealing reportable income. Those who are identified as tax evaders, strict
criminal action is taken against those people.

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Tax avoidance: In contrast to tax evasion, it is a purely legal way to reduce one’s
tax obligations by closing possible loopholes in income-value or by deliberate
readjustment of income spending.

Tax haven: A place where administrative authorities require little or no tax

payment from investors. Also, these geographical territories don’t share investor’s
assets or transactional information to any international financial authority. It is dual
exchange of benefits in which the investor gets his/her taxes lowered or eliminated
and the tax havens getting adequate economic flow. Popular tax havens are as
follow; Andorra, the Bahamas, Belize, Bermuda, the British Virgin Islands, the
Cayman Islands, the Channel Islands, the Cook Islands, The Island of Jersey, Hong
Kong, The Isle of Man, Mauritius, Lichtenstein, Monaco, Panama, St. Kitts, and
Nevis.

8. Identity theft
Illegally obtaining someone’s personal or financial information in order to assume
his/her personality for unauthorized transactions and financial purchases. Identity
theft can unwittingly tarnish a person’s social position. Especially, in this age of
rapid information revolution – electronic devices are the most significant tools to
extract confidential information with prior permission. There are typically four
kinds of identity thefts;
a. Criminal identity theft: Misrepresentation to avoid court summons,
apprehension and subsequent penal proceedings.
b. Medical identity theft: To benefit from someone else’s free medical care.
c. Financial identity theft: Obtaining goods, services, benefits and credit by
attaining someone’s financial personality.
d. Child identity theft: Legal systems around the world usually don’t exact
harsh penalties on juveniles. Therefore, their identity, social security number
is exploited to get loans, employment, residence and above all avoiding
police seizures.
e. Synthetic identity theft: Counterfeit and real identity is synthesized to
fulfill fraudulent ambitions.
f.
9. Price fixing

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Crimes involving misrepresentation, less-representation, unjust representation and
opaque representation of price on products for sale – usually with a motive to lure
more customers, brassy advertisement and increase product sale. There are a few
strategies of price-maneuvering;

a. Deceptive pricing: When original price is not clearly mentioned or there are
dual prices (market and online) causing misunderstanding to customers.
b. Bait and switch tactics: Attracting customers by specific claims about
product quality and low pricing in order to augment sale of particular
product at higher prices.
c. Free claim and rebate offer: When one product (free) are offered for sale
along with another one (original item), whereas the price of the combined
product is higher than the product originally intended for sale. Rebate offers
are those in which products lack pre-rebated price, nor the amount of
specific rebate is clearly mentioned.
d. New claims: When the product tag mentioning ‘New’ is in actual contain re-
modified, re-manufactured, rebuild and reconditioned parts.
e. Dry testing a product: If you are advertising a product not up for sale and
only for testing purposes. But you still try to conceal the nonexistent status
of the market product.

10. Racketeering
It includes a criminal act in alliance with organized groups at state level. It is
pursued on a national or maybe transnational level for illegal profits and extracted
benefits. It may include extortion, gambling and trafficking etc. Specialized
individuals are needed to carry out racket activities. There are three forms of
racketeering;
a. Strike insurance
b. Sweetheart deal
c. Siphoning of union funds

11. False claim advertisement

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Use of false, misleading and unproven information to advertise a product.
Consumers because of their lack of intellectual capacity and out of exultation, buy
the product. Producers and marketers play with consumer’s psychology.
Examples:
a. Writing free on the product, when it is up for sale in exchange of fiscal
value.
b. Comparing the product with only those competitors it can beat.

12. Bank frauds

Bank frauds include those fraudulent activities which are deliberately materialized
to steal money from financial institutions. Such crimes are not only caused by
weaknesses in the banking legal framework but also because of indolence on the
part of account owners. There are some types of banking frauds;

a. Cheque forgery: When signatures on the check is either forged or

unauthorized, without the knowledge of actual withdrawer.
b. Cheque kitting: Illegal use of bank drafts or cheques for unauthorized
attainment of additional credit. It can be either through altering a cheque
having insufficient funds or by misrepresentation the financial value of the
instrument.
c. Sale of stolen cheques: Being in intentional possession of a stolen cheque is
considered misdemeanor or felony depending upon the value of the stolen
item.
d. Credit/debit card theft: Illegal use of someone’s credit/debit card
information for unauthorized transactions and large monetary withdrawals.
e. Unauthorized use of ATM: When automatic teller machines are used to
undertake a criminal activity either using a compromised card information or
using ATM itself in a vile manner.
f. Car title fraud: Car title is a legal document involving legal information of
vehicles including both car specifications and owner details. When the
document is altered or mis-represented in order to harvest illicit benefits.

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 g. Mortgage fraud: Material omission during the execution of a mortgage
deed either by the mortgager or the mortgagee. Mortgage frauds, may
include;
1. Inflating an appraisal: In order to obtain a mortgage for more
than a property is worth.
2. Claiming income: Assets that borrower does not have.
3. Posing as a borrower: On behalf of another who's actually
making the purchase.
4. Pretending to provide financial help: To an economically
stressed homeowner in order to skim off equity from the home.

Case Studies

Few case studies regarding white-collar crimes are hereunder mentioned;

1. Mississippi Scheme (1716-20)
In 1705 John Law, a Scottish economist, introduced his famous economic formulae
to curb recession. His theory posited that by formalizing fiat currency instead of
commodity currency like gold or silver, we can manage financial disability. His
idea was rejected in England but on the royal invitation of French monarch – he
was given a golden opportunity to have his theorization implemented. John Law
founded a national bank in France, responsible for exchanging gold for paper
currency. Also, he was to administer country’s colonial trade to the French
controlled territories of Mississippi. He advertised a scheme called “Mississippi

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Scheme” with the economic instruments i.e shares purchasable. He artificially
maneuvered the price per share and it went well above normal reach. The price
went as high as 2000 Euros for today. This led the stock market to wild speculation
raising concerns about investment security. Suddenly, as people withdrew their
financial contribution due to disbelief – shares’ price plunged. France responded
by printing more money but it couldn’t make pace with the development. France
faced another recession, meanwhile the architect of the criminal enterprise fled to
Venice where he died years later in utter poverty.

2. Black Friday Gold Scandal (1869)

In 19th century US, robber barons started shady practices to glean huge fortunes. In
1869, financiers James Fisk and Jay Gould secretly stockpiled vast amounts of
gold in a bid to corner the market. They suffered an obstacle as during civil war,
Union government issued banknotes without gold reserves backing them up.
However, Grant’s government pegged dollar with gold reserves – resultantly
increasing the price of gold. Fisk and Gould managed to get off the national gold to
marketplace and suddenly opening the floodgates, thrown the entire quantum of
gold to marketplace – resultantly raising the price to unimaginable mark. Grant
aware of the devil’s plot invested 4 million US dollar worth of gold in the market,
artificially plunging the price to the lowest levels. Market ran into recession.
Meanwhile, Fisk and Gould sold their gold reserves before recession.

3. Teapot-Dome Scandal (1921-22)

In 20th century USA, navy converted from coal to fuel oil. To cover this massive
need of fuel, President Taft immediately placed all oil fields under naval control
including a field at Wyoming named teapot dome. Taft was succeeded by Harding,
who filled cabinet with his cronies and closest people. Albert Bacon Fall was given
the headship of interior ministry – Fall convinced Harding to place Teapot dome
under the supervision of interior ministry. Fall then covertly granted exclusive
rights of Teapot Dome to Harry F. Sinclair of the Mammoth Oil Company. A
similar deal was made with Edward Doheny of Pan American Petroleum and
Transport Company for the Elk Hills reserve in California’s San Joaquin Valley. In
return, Fall received hundreds of thousands of dollars in interest-free loans from
the companies. Fall’s rapid financial growth put others in suspicious and it led to

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an inquiry against those land-leases – in the aftermath he was convicted of
embezzlement and was fined 100,000 dollars. After nine months, he was released.
He died in famish.
4. Bhopal Disaster (1984)
In 1960’s an American multinational company (Union Carbide Corporation)
opened its subsidiary factory plant in Bhopal to produce Sevin (pesticide). Bhopal
was the city with ideal characteristics of pesticide production i.e geographical
contiguity to markets, efficient transportation network and least polluted industrial
potential. However, since beginning company had a many flaw like it was erected
for light commercial use and the second disaster which was pursued out of sheer
corporate negligence for profit-motive – producing raw materials along with
industrial manufacturing alarmed environment safety concerns and industrial
accidents preparedness. In 1984, because of mixing of 1-ton water, which was
meant for the cleaning of internal pipes, with 49 tons of methyl isocyanate –
precipitated in a chemical reaction and choking thousands of people to death. Later
on, investigations held and parent company at USA was made liable to pay 470
million dollars as damages along with 7 million dollars compensation to the
effecters.

5. London bond theft (1990)

On one fine morning, John Goddard was a precious briefcase containing 301
bearer bonds – 170 Treasury bills and 131 certificates of deposit from banks and
building societies – mostly worth £1 million each. The mugger’s total haul was
worth an eye-watering £292 million. A young boy threatened the 59-years old man
and make off with the prized case. It was the biggest mugging ever in history.
London policy in cooperation with FBI launched a sting operation to catch the
mugger. After 2 months, Mark Lee Osborne, a Texas businessman, had tried to
peddle £10 million of the stolen bonds to a narcotics dealer in New York.
Unfortunately for him, the potential buyer was undercover FBI Agent David
Maniquis. Osborne became an informant and told police about the secret hideout of
his accomplice Keith Cheeseman – Osborne was fatally shot by this group-mates
for becoming an approver. Later, the 28 years old Patrick shot himself. Bearer

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bonds were fenced globally. At Heathrow airport, a bag full of bonds was
discovered and another discovery was made at Cyprus.
6. Volkswagen Emission Scandal (2015)
In 2015, US environment protection agency accused Volkswagen of installing
“defeat device” software in diesel-powered vehicles to easily get thorough the
emission test without being caught. Once on the road, cars can emit 40 times
higher nitrogen oxide. Federal investigation was structured against the car-
manufacturing company and through the investigation trail, Robert Liang
(mastermind of defeat device), he confessed in front of legal authorities and was
fined up to 250,000 US dollars. As far as the company was concerned, it was
charged with 15 billion US dollars to settle the claim.

7. Spy-eye Malware Data Theft (2009-13)

There are two types webs for internet-surfing; surface web and deep web. Deep
web is an unindexed database behind firewalls, intranets, archives, password-
protected sites, and so on. Some of these sites are illicit marketplaces for guns and
drugs, or the release of computer viruses invented by criminal coders. In the same
line, Spy-eye a malicious software was created by a young Russian man called
Aleksander Panin, along with Hamza, an Algerian computer-science graduate, who
marketed the tool kit online. They both created the malware which allegedly
infected 50 million PC’s of individual as well as financial institutions globally. The
pair acquired a unique set of robin-hood techniques to invest the robbed money.
Alexander invested in technology research which had the potential to transform
human life in varied ways, while his co-hacker made generous donation by his
share of profit to Palestinian charities. FBI started inquiry to find out the
cybercrook but instead they hired a software company “Trend Micro” because of
their technocratic competence was highly valuable to sought out a reasonable
solution. They found the persons involved and executive agencies released a high-
alert to apprehend the criminals. FBI had to wait two more years for Alexander to
leave Russia – which has no extradition treaty with the US – before it could act.
Panin was finally arrested in July 2013, when he incautiously took a vacation in the
Dominican Republic. He was jailed for 9½ years. Hamza was captured six months
earlier in Thailand, received a 15-year sentence.

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 8. Panama Paper Scandal
In 2015, Panama-based law firm Mossack Fonseca retrieved highly safeguarded
and multi-encrypted confidential information of Tax havens around the globe.
Afterwards, this information was delivered to a German newsletter SZ which in
concerted efforts with International Consortium of Investigative Journalists ICIJ,
verified the data details of 2.76 terabytes – the biggest tech. revelation ever – and
released it to public. Secret information included business transactional details of
public office holders, celebrities and many eminent personalities. Document
incorporated the information from 1970’s till 2016. Primarily, data was regarding
tax havens created for both legal and illegal purposes. Generally, owning a shell
corporation in a tax-havened zone is not illegal. However, using such zones to
commit white-collar crimes is inherently criminal e.g owning a shell company to
undertake fraud, tax evasion and for evading international sanctions. It is a severe
breach of fiduciary responsibilities emanating from the sacred book of constitution,
placed on a public official of respective countries. Therefore, revelation of the
document was cacophonic and a piousness tablet for all those who had been caught
for concealing and embezzling their dirty money abroad. Few months later, on
April 4, 2016, resignation of Iceland's Prime Minister Sigmundur David
Gunnlaugsson, reinforced the seriousness of the leaks along with issuing the pink
slip to the cartels of corrupt mafia.
Pakistan: In Pakistan, panama proceedings led to severe accusations against Sharif
family predominantly by Imran Ahmad Khan Niazi, Sheikh Rasheed, Tahir ul
Qadri

and Siraj-ul-Haq. It seemed that the climate of opinion had vitiated against former
PM and his fate touched a Rubicon. Grave concerns of the panama case
proceedings gravitated around, below mentioned fundamentals;
1. Assets beyond means
2. Insufficient explanation of money trail
3. Question of beneficiary ownership
4. Tainted benami transactions
5. 62(1) f as Nightmare of interpretations and feast of obscurities.

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 Furthermore, court room arguments released against Mr. Sharif are;
1. Maryam is a beneficiary owner of Neilson and Nescoll whereas, she has
maintained her dependency on father along with her untaxable income
shown.
2. Hussain Nawaz had given his father 810 million rupees, without any of it
being taxed.
3. Previously, during 1990’s predicated upon Ishaq dar’s court confession,
Sharif family was implicated. Dar stated in front of judges that he had
laundered 14 million dollars for Sharif family.
4. Nawaz Shareef found to be an original owner of FZE Capital until 2014.
Later on, supreme court disqualified the incumbent PM due to inadequacy of
argumentation and reasonability. In Sami Ullah Baloch case, apex court also held
that the disqualification under 62(1)f will continue in perpetuity. After
proceedings, criminal reference was filed against Shareef family concerning the
properties;
1. Avenfield flats
2. Flagship investment company
3. Al-Azizia steel mill

National and international legal regimes pertaining to W.C crime

To counter the reckless repercussions of transborder white-collar crimes, national

and international legal regimes have been established to arrest the possibility of
monetary mal-handling and fiscal disequilibrium within the concept of robust
cooperative mechanism. National as well as international regulations has greatly
contributed to the mitigation of socially elevated crimes but still a considerable
effort is needed to be put it.
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 1. FATF
At international scale, Financial Action Task Force, an inter-governmental
organization, is duty-bound to combat money laundering, terror financing and
human trafficking, saving the integrity of international financial system. FATF
duly endeavors to protect the global financial system from misuse by terrorists and
other miscreants. Objectives of this organization is to reform international system
through legal, regulatory and operative techniques. In addition to this, FATF
monitors the progress of the member countries on matters related to money
laundering and terrorist financing techniques and counter-measures.
Recommendations of the FATF:
The FATF has developed a series of recommendations that are recognized as the
international standard for combating terror funding, money laundering and the
proliferation of weapons of mass destruction. These recommendations are always
up to date and relevant, also they are intended to be fit for universal application.
Organizational structure:
There are currently 38 members of the FATF; 36 jurisdictions and 2 regional
organizations i.e. the European Commission and the Gulf Cooperation Council.
These 37 Members are at the core of global efforts to combat money laundering
and terrorist financing. There are also 31 international and regional organizations
which are Associate Members or Observers of the FATF and participate in its
work.
FATF Observers are; Saudi Arabia and Indonesia
FATF President; is a senior official appointed by the FATF board from among its
members for a term of one year. He convenes and heads the meetings of the FATF
Plenary and the Steering Group.

2. NAB Ordinance, 1999

As far as national legislation to abridge white-collar crimes is concerned, NAB
ordinance is the only legal instrument created in 1999. The jurisdiction of the
ordinance extends countrywide (All provincial and federal government officers and
officials) and accommodates certain mal-practices, as;

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 1. Corruption
2. Corrupt practices
3. Misuse/abuse of power
4. Misappropriation of property
5. Kickbacks
The ordinance aims to recover the state money and other assets from those persons
who have committed default in the repayment of amounts to banks, financial
institutions, government and other agencies.
Punishment: People committing corrupt practices may be imprisoned up to 14
years along with fine (proportionate to the benefit harvested by the accused from
the property in question) or both.
Disqualification of Public office holder: After the charges are proved and a
person is declared a convict by the court of relevant jurisdiction, he will stand
disqualified to participate in any political enterprise for 21 long years. Nor, he shall
be availed any financial benefit i.e loan from any financial institution for 10 years.
NAB Trial: According to NAB ordinance, the court of original jurisdiction is a
special accountability court created in pursuance of this ordinance. Courts are
strictly directed to complete judicial proceedings within 30 days. If there is a
danger that accused may tinker with the course of justice, with the orders of chief
justice of province – cases can be transferred to another division within the same
court.
Cognizance of Offence: Accountability courts can take the matter into judicial
consideration in three different ways;
1. Reference received from the chief executive of an appropriate government.

2. Receipt of a complaint
3. On chairman NAB’s accord
Appeal: Appeal will be preferred against the decision made by the accountability
court within 10 days to the high court of the province. High court must decide
upon the appeal within the time period of 30 days.

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Plea-bargain: It is a common practice of monetary compensation used for
criminal wrongdoers, especially in corruption-related matters. Article 25 of NAB
ordinance deals with a dual phased plea bargain process;
1. Uninfluenced confession of charges and unruffled disclosure of particulars.
2. Voluntary return of mis-appropriated money to state authorities.
Over the years, plea bargain has attracted vigorous criticism because of its
unconventional legal character;
1. It differentiates among offenders by precluding physical punishment to
white-collar transgressors. Thus, fails to prove the famous legal adage
“Justice is blind”.
2. It doesn’t deter the offender – doesn’t affect the criminal tendencies of
offenders at large.
3. It removes the right to have a trial by jury.
4. Plea bargains eliminate the chance of an appeal. Therefore, violates the due
process of law under Article 10A of our constitution.
5. There are greater chances of criminal recidivism among those who are
acquitted out of plea-bargain.

Conclusion

By the above-made discussion it becomes abundantly clear that White collar

crimes is a non-traditional threat to global financial order. The sneaky operability
and unwitting hampering dissolve the international resolve to rectify or manage the
existing deteriorated setup. Rich people because of their naturally prized position
in society finds no hurdle in swindling exorbitant amount of money, whereas blue
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collar criminals can never have the required ability and technical competence or
natural stead to make benefits of this magnitude. Similarly, pink-collar crimes
cannot do that quantity of harm because of women’s perpetually downtrodden
personhood. Only biggest threat that reverberates is that of white-collar crime.
Determined, concerted and faithful efforts are needed to be infused in to produce
desirable results, otherwise a significantly delayed response could be fatal.

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