Chapter Twelve - PowerPoint

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					   Chapter Twelve:

     Enterprise Crime:
 White-Collar Crime, Cyber
Crime, and Organized Crime
                Enterprise Crime

• Involves illicit entrepreneurship and commerce
• Includes:
  • white-collar crime
  • cyber crime
  • organized crime
              White-Collar Crime

• Any business-related act that uses deceit,
  deception, or dishonesty to carry out criminal
      Components of White-Collar Crime

•   Stings and swindles
•   Chiseling
•   Individual exploitation of institutional position
•   Influence peddling and bribery
•   Embezzlement and employee fraud
•   Client fraud
•   Corporate crime
              Stings and Swindles

• A white-collar crime in which people use their
  institutional or business position to trick others
  out of their money

• Using illegal means to cheat an organization, its consumers, or both,
  on a regular basis
• Can involve charging for bogus auto repairs, cheating customers on
  home repairs, or short-weighting (intentionally tampering with the
  accuracy of scales used to weigh products) in supermarkets or
    – Ex: NYC cab drivers routinely tapped dashboards
• Examples:
    • Professional chiseling
        • Ex: pharmacists to alter prescriptions or substitute generics
    • Securities fraud
        • Front running brokers place personal orders ahead of large customer’s
          order to profit from the market effects of the trade
        • Bucketing skimming customer trading profits by falsifying trade information
        • Insider trading using one’s position of trust to profit from insider business
      Influence Peddling and Bribery

• Using one’s institutional position to grant favors
  and sell information to which one’s co-
  conspirators are not entitled
• Occurs in government as well as business
   Embezzlement and Employee Fraud

• Use of one’s position to embezzle company
  funds or appropriate company property for
• The company or organization is the victim
• Committed by both blue-collar workers and
                                  Client Fraud

•   Theft by an economic client from an organization that advances credit to its
    clients or reimburses them for services rendered
•   Examples:
     •   insurance fraud
     •   credit card fraud
     •   fraud related to welfare or Medicare programs
     •   tax evasion
          • The victim here is the government that is cheated by one of its clients, the errant
            taxpayer whom it extended credit to by allowing the taxpayer to delay paying taxes on
            money he or she had already earned
          • Misdemeanor if passive neglect (simply not paying taxes, not reporting income, or not
            paying taxes when due)
          • Felony if affirmative tax evasion (keeping double books, making false entries,
            destroying books or records, concealing assets or covering up other sources of income)
          • Problem for IRS to enforce, limited budget in which 41 cents per tax return (10% less
            after inflation than in 1997) and most is spent on processing tax returns not enforcing
            the law
          • Interest earned on offshore bank accounts is not reported and costs $70 billion
                          Corporate Crime

• When a powerful institution or its representatives violate the laws
  that restrain these institutions from doing social harm or require
  them to do social good
• Examples:
    • price fixing
        • a conspiracy to set and control the price of a necessary commodity is
          considered an absolute violation of the act
    • illegal restraint of trade
        • Involves a contract or conspiracy designed to stifle competition, create a
          monopoly, artificially maintain prices, or otherwise interfere with a free
          market competition
    • false advertising
        • Making claims about a product that cannot be justified by actual
          performance; fantasy is ok, but it is illegal to knowingly and purposely
          advertise a product as possessing qualities that the manufacturer realizes it
          does not have, such as the ability to cure the common cold, grow hair, etc.
    • practices that violate environmental protection statutes
        • Ex: Illegal disposal of hazardous waste
      Theories of White-Collar Crime

• Rationalization/neutralization
• Corporate culture
• Self-control

• Use of rationalizations by offenders to resolve
  the conflict experienced over engaging in illegal
             Corporate Culture

• Some business organizations promote white
  collar criminality
• Place excessive demands on employees while
  maintaining a business climate tolerant of
  employee deviance
• Example ~ Enron

• The motives for white-collar crimes are the same
  as for other criminal behaviors
• Offenders have low self-control and are inclined
  to follow momentary impulses without
  considering long-term consequences
   Strategies to Control Organizational
• Compliance strategies ~ methods of controlling
  white-collar crime that rely on the threat of
  economic sanctions or civil penalties to control
  potential violators, creating a marketplace to
  obey the law
• Deterrence ~ detect criminal violations,
  determine responsibility, and penalize offenders
  to deter future violations
                 Cyber Crime

• Use of the instruments of modern technology for
  criminal purposes
                 Cyber Vandalism

•   Computer fraud
•   Distributing illegal sexual material
•   Denial-of-service attack
•   Illegal copyright infringement
•   Internet securities fraud
•   E-tailing fraud
•   Identity theft
              Organized Crime

• Illegal activities of people and organizations
  whose acknowledged purpose is profit through
  illegitimate business enterprise
         Activities of Organized Crime

•   Narcotics distribution
•   Loan sharking
•   Prostitution
•   Gambling
•   Theft ring
•   Pornography
•   Stock market manipulation
          Alien Conspiracy Theory

• The belief, adhered to by the federal
  government and many respected criminologists,
  that organized crime is a direct offshoot of a
  criminal society that was imported to the U.S. by
  Europeans who have a policy of restricting
  membership to people of their own ethnic

• Racketeer Influenced and Corrupt Organization
• Allows prosecutors to bring additional charges
  against people engaged in 2 or more acts
  prohibited by 24 existing federal and 8 state
• Features monetary penalties that allow
  confiscation of all profits from criminal activities
• Intended for use against organized criminals;
  also used against white-collar offenders

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