Shanna R. Van Slyke and Leslie A. Corbo
Consumer fraud is the intentional deception of one or more individuals with the promise of goods, services, or other financial benefits that either never existed, were never going to be provided, or were grossly misrepresented. In contrast to ancient times when consumer fraud and other white-collar crimes were considered to be at least as serious as violence and other street crimes, today’s consumer fraudster tends to be viewed as less dangerous and deserving of harsh sanctioning. Despite several social movements against consumer fraud and a proliferation of popular and scholarly literature on the topic, contemporary U.S. society has maintained a relatively lenient stance toward white-collar crime—a “soft on crime” position that is inconsistent with conservative “tough on crime” approaches that have dominated U.S. penal policy since the 1960s.
State-corporate crime is defined as criminal acts that occur when one or more institutions of political governance pursue a goal in direct cooperation with one or more institutions of economic production and distribution. This concept has been advanced to examine how corporations and governments intersect to produce social harm. The complexity of state-corporate crime arises from the nature of the offenses; unlike traditional “street crime,” state-corporate crime is not characterized by the intent of a single actor to violate the law for personal pleasure or gain. Criminal actions by the state often lack an obvious victim, and diffusion of responsibility arising from corporate structure and involvement of multiple actors makes the task of attributing criminal responsibility difficult. Sufficient understanding of state-corporate crime cannot be gained through studying individual actors; one must also consider broader organizational and societal factors.
Further subclassification illuminates the different types of state-corporate crime: State-initiated corporate crime (such as the 1986 Space Shuttle Challenger explosion) occurs when corporations, employed by the government, engage in organizational deviance at the direction of, or with the tacit approval of, the government. State-facilitated state-corporate crime (such as the 1991 Imperial Food Products fire in Hamlet, North Carolina) occurs when government regulatory institutions fail to restrain deviant activities either because of direct collusion between business and government or because they adhere to shared goals whose attainment would be hampered by aggressive regulation.
Paul Jesilow and Bryan Burton
Healthcare fraud involves wide-ranging illegal behaviors. It includes such activities as individual physicians who bill insurance companies or the government for services that were never provided, as well as corporate behavior, such as pharmaceutical companies that falsify clinical tests in order to get unsafe drugs approved for use. Thousands die each year in the United States due to these behaviors, including deaths from incorrectly prescribed medications or from tainted drugs that were approved by the U.S. Food and Drug Administration based upon fraudulent testing and reporting. Thousands of additional patients likely are injured and killed by unnecessary surgeries performed by physicians who want to maximize their reimbursements. The illegal activities also add billions of dollars each year to the total healthcare cost in the U.S. Despite these costs, there is relatively little outrage as a result of the behaviors, largely because they remain hidden from public view.
Healthcare fraud, as with almost all white-collar crime, is rarely detected and that prevents the frauds from becoming known to victims, law enforcement, and policy makers, which in turn prevents analysts from compiling a complete picture of the behaviors and prevents policymakers and law enforcement from developing efficient enforcement strategies. Moreover, the lack of detection assures perpetrators that they will get away with their crimes and limits the potential preventative effects of punishment. Lack of detection and reporting has been a particularly strong problem for those trying to control healthcare fraud and abuse in the United States and elsewhere. The enforcement mechanisms that have evolved have been strongly influenced by the difficulties of detecting the illegal behaviors.
Carole Gibbs and Rachel Boratto
Environmental crime is a complex and ambiguous term for several reasons. It is sometimes used as an umbrella term for crimes related to biodiversity, wildlife, animals, natural resources, hazardous waste, banned substances, and environmental quality, but scholars have also developed typologies to capture the unique dimensions of each form of environmental crime. Disagreements regarding whether to distinguish violations of environmental laws (addressed via civil prosecution or administrative actions) from environmental crimes (criminally prosecuted), and whether to also consider environmental harms (legal activities that harm the environment) or environmental risks produce further confusion. The range of offenders also complicates this concept, as individuals, groups/networks, and powerful organizations commit environmental crimes. The degree of harm created by each actor may, or may not, be equivalent.
Given the complexities of this area of study, scholars have developed and/or tested a wide range of theoretical perspectives on and interventions to address environmental crime. Consistent with conceptual disagreements, these theoretical frameworks and corresponding interventions vary (arguably the most) based on whether the dependent variable is environmental crime (as defined by law), or environmental harm or risk defined using other criteria. However, multiple theoretical perspectives/interventions are also examined within research on these broad categories of environmental crime, harm, and risk. In order to capture the breadth of research on environmental crime, we narrow the focus of this article to pollution related crimes (e.g., hazardous waste, banned substances, environmental quality). In the following article, we offer further detail regarding conceptual discussions, legal complexities, types of offenders, types of crime, and research on this subset of environmental crimes.
Extortion as a crime has long attracted the interest of scholars, and much effort has been put into coining a precise definition that would allow distinguishing it from other similar predatory practices such as blackmail, bribery, coercion, and robbery. Academic literature classifies extortive practices according to their degree of complexity and involvement of organized crime. In this sense, the simplest form of extortion displays one offender who receives a one-time benefit from one victim, while the most sophisticated form is illustrated by racketeering, whereby an organized crime group systematically extorts money from multiple victims. Extortion as an organized crime activity can involve both episodic extortion practices and well-rooted systemic practices over a certain territory, where the latter is usually regarded as perpetrated by Mafia-type criminal organizations. Some scholars argue that extortion racketeering as a Mafia crime should be defined as sale and provision of extralegal protection services—protection of property rights, dispute resolution, and enforcement of contracts. However, others contend that extortion by Mafia-type organizations should not be counted as an economic activity but rather be considered as an illegal form of taxation imposed by quasi-political groups. In economic terms, it is a transfer of value and creates no economic output.
In contrast with the traditional understanding of extortion racketeering as “defining activity of organized crime,” some scholars have also focused on “extortion under the color of office,” or, in other words, extortion perpetrated by public servants or politicians in their official capacity. Extortion has often been compared with bribery, since both crimes can be defined as an unlawful conversion of properties and goods belonging to someone else for one’s own personal use and benefit. The debate on the differences between bribery and extortion, however, is a contested one, and has followed two lines of argument: respectively, the degree of coercion involved in the crime and the role (or modus operandi) of public officials in the bribery and extortive scheme. The common element for both crimes is the fact that representatives of the state abuse their power and official position for their own benefit.
Finance crime, that is, white-collar crime that occurs in the markets for financial goods and services, appears to be pervasive in 21st-century capitalism. Since the outbreak of the global financial crisis of 2007–2008, virtually all established financial institutions have been implicated in finance crime scandals, ranging from the mis-selling of financial products to money laundering and from insider dealing to the rigging of financial benchmarks. The financial stakes involved in such scandals are often significant, and at times have the potential to destabilize entire economies. This makes the phenomenon of finance crime a highly relevant topic for white-collar crime researchers. A major challenge, however, for those studying the phenomenon of finance crime is to engage with the complex mechanics of finance crime schemes. These often involve esoteric financial instruments and are embedded in arcane market practices, making them seem impenetrable for those unfamiliar with the intricacies of financial market practices. A helpful way to make the empirical universe of finance crimes intelligible is to construct a typology. This can be meaningfully done by distinguishing finance crimes by the different rationales that underlie the laws and regulations they violate. Doing so renders five main types of finance crime. These are (i) financial fraud, (ii) misuse of informational advantages, (iii) financial mis-selling, (iv) market price and benchmark manipulation, and (v) the facilitation of illicit financial flows.
White-collar crime scholars have taken various theoretical and analytical approaches to the study of finance crime. Some scholars have studied finance crimes in the light of their macro-institutional contexts. Such approaches are based on the premise that actors find meaning—motivations and rationalizations—and opportunities for their actions in the cultural and institutional environments in which they are situated and that such environments can be criminogenic in the sense that they structurally facilitate or even promote illegal behaviors. Others have studied the organizational dimensions of finance crime, looking at both the social networks through which finance crimes are perpetrated as well as the ways in which these networks are embedded in broader organizational and industry structures. Still others have studied the costs, consequences, and victims of finance crimes. Finally, some white-collar crime scholars have studied the ways in which societies create legal regimes that prohibit certain financial market practices as well as how these prohibitions are subsequently enforced by regulatory agencies, public prosecutors, and the courts.
American responses to white-collar crime, especially corporate wrongdoing, passed a turning point in 1991 with the enactment of the U.S. Sentencing Guidelines for Organizations, which adopted a “carrot and stick” approach to sentencing corporate offenders, including big incentives for companies introducing compliance programs. In the 2000s, this approach was enhanced by the enactment of the Sarbanes–Oxley Act of 2002 and the Thompson memo of 2003. In addition to the effects of the Thompson memo, federal prosecutors, learning from the fate of Arthur Andersen, came increasingly to rely on deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs) after 2005. However, the Yates memo issued in September 2015 may change Department of Justice policy on corporate wrongdoing dramatically, particularly regarding investigation and prosecution of individuals.
In thinking about and conceptualizing legal and political responses to white-collar crime, two main actors are meaningful: the corporation and the individual. Today, a corporation is criminally liable under the respondeat superior doctrine in federal criminal law, and corporate offenders are sentenced under the Organizational Sentencing Guidelines, which provide for fines, restitution, and probation as possible criminal penalties. In recent years, around 150–200 organizations have been sentenced under the Sentencing Guidelines annually.
An individual white-collar criminal may be personally liable for their unlawful acts even if the corporation itself is convicted too. Individuals may be convicted absent any showing of mens rea in rare cases (strict liability crime and “willful blindness”). In the last decade, more than 8,000 individuals were prosecuted and convicted, for around a 90% conviction rate. One effect of the Yates memo may be to shift the main target of legal and political response to white-collar crime from the corporation to the individual. New policies under the Yates memo also come with new problems, for instance, that companies may lose incentive to introduce a compliance program or may look for scapegoats to escape prosecution themselves.
Clayton Peoples and James E. Sutton
The state is responsible for maintaining law and order in society and protecting the people. Sometimes it fails to fulfill these responsibilities; in other cases, it actively harms people. There have been many instances of political corruption and state crime throughout history, with impacts that range from economic damage to physical injury to death—sometimes on a massive scale (e.g., economic recession, pollution/poisoning, genocide). The challenge for criminologists, however, is that defining political corruption and state crime can be thorny, as can identifying their perpetrators—who can often be collectives of individuals such as organizations and governments—and their victims. In turn, pinpointing appropriate avenues of controlling these crimes can be difficult. These challenges are exacerbated by power issues and the associated reality that the state is in a position to write or change laws and, in essence, regulate itself. One possible solution is to define political corruption and state crime—as well as their perpetrators and victims—as broadly as possible to include a variety of scenarios that may or may not exhibit violations of criminal law. Likewise, a resolution to the issue of social control would be to move beyond strictly institutional mechanisms of control. Criminological research should further elucidate these issues; it should also, however, move beyond conceptual dilemmas toward (a) better understanding the processes underlying political corruption/state crime and (b) illustrating the broader ramifications of these crimes.
A considerable body of research on societal response to white-collar and corporate crime has evidenced a hardening of public attitudes, including increased perceived seriousness of upper-class criminality and punitiveness toward its perpetrators. These findings suggest that, over time, the public has gained a better understanding of white-collar crime and its deleterious social impact. However, none of the opinion surveys included a direct measure of public knowledge. As a result, it is difficult to determine to which extent U.S. citizens are objectively informed about crimes of the powerful. In fact, only a few studies have focused exclusively on the intersection between knowledge about white-collar crime and sentiment toward it. These scholarly efforts have concluded that the American people continue to underestimate the actual financial and physical consequences of white-collar crime, which may be the result of selective reporting by the mass media and biased research foci by scholars. By choosing to focus on traditional criminal law violations, such as homicide and theft, and relegating white-collar offenses to the rank of victimless crimes, journalists and criminologists have contributed to the construction and propagation of myths about upper-world criminality. In turn, continuous adherence to these myths might lead to polarized opinions about which type of penal policy to adopt against white-collar crime.
Gerald Cliff and April Wall-Parker
As far back as the 19th century, statistics on reported crime have been relied upon as a means to understand and explain the nature and prevalence of crime (Friedrichs, 2007). Measurements of crime help us understand how much of it occurs on a yearly basis, where it occurs, and the costs to our society as a whole. Studying crime statistics also helps us understand the effectiveness of efforts to control it by tracking arrests and convictions. Analysts can tell whether it is increasing or decreasing relative to other possible mitigating factors such as the economy or unemployment rates in a community. Politicians can point to crime statistics to define a problem or indicate a success. Sociologists can study the ups and downs of crime rates and any number of other variables in the society such as education, employment rates, ethnic demographics, and a long list of other factors thought to affect the rate at which crime is committed. Property value is affected by the crime rates in a given neighborhood, and insurance rates are said to fluctuate with the ups and downs of crime.
Analyzing any criminal act’s prevalence, cost to society, impact on victims, potential preventive measures, correction strategies, and even the characteristics of perpetrators and victims has provided valuable insights and a wealth of useful information in society’s efforts to combat violent/index crimes. This information has only been possible because there is little disagreement as to exactly what constitutes a criminal act when discussing violent or property crimes or what has come to be grouped under the catch-all heading of “street crime”; this is decidedly not the case with crimes included under the white-collar crime umbrella.