What are White Collar Crimes?
“Nothing could be more erroneous than to continue to regard criminals as products of slums, broken homes, and of lower classes.”[1]
White collar crimes are those committed for financial gain by the perpetrator, they are non-violent in nature. According to the Federal Bureau of Investigation (FBI), white-collar crimes are “characterized by deceit, concealment, or violation of trust and are not dependent on the application or threat of physical force or violence.”[2] It is mostly executed by people with high social status and in respectable positions, like business or government professionals. “With a financial motive to obtain or avoid losing money, property, or services or to secure a personal or business advantage.” [3]Examples of such crimes can be money laundering, fraud and embezzlement. Such crimes do not involve physical violence but it could ruin millions of lives.
When a company goes through huge money loss they need to recover it in some way. They do this by terminating employees, cost-cutting, increase the price of the product, lower the salary and working conditions of the employees. In short there is a ripple effect from top board directors to daily wage workers in the company are effected. Some of the most well known white-collar cases are- Enron (fabricated their profits to increase the met worth of the company), Worldcom (biggest accounting scandal), HealthSouth (fraudulent accounts), Bernard Madoff (fraud) and Wells Fargo(creation of fake bank accounts and unauthorized credit cards).
Since white-collar crimes were not violent in nature as compared to conventional or traditional street crimes, the concept of white collar crimes did not fit into the description of crimes to society. So these crimes were widely accepted and considered as part of business tactics by shrewd professionals or businessmen. Hence complaints against such crimes very unheard and unpunished. It was Edwin H. Sutherland a 20th-century professor and sociologist, who developed the concept of white collar crimes in 1939 through the article “American Sociology Review”. He pointed out that crimes were not just restricted to inner-city but also could be committed by those who are well educated and in the higher status of the society.[4] He also goes on to compare such high-status offenders to lower class offenders. This theory was the result of studying 70 major American corporations and 15 utilities for decades.[5]
Sutherland offered a formal definition of white collar crimes as “a crime committed by a person of high social status and respectability in the course of his occupation.”[6] This definition also includes crimes committed by corporations and other legal entities.[7] He wanted to make sure justice was served no matter what your social status is because earlier these elite criminals could get away with anything using their power. This gave a wider scope to existing theories about crime and challenged many conventional theories. Some scholars agreed like Edwin C. Hill who called out high-end criminals as merciless criminal capitalists[8], Edward Ross who called these criminals shameful[9] etc. While some disagreed like Paul Tappan[10] and Hermann Mannheim[11].
Due to urbanization and industrialization in the late 19th century, lead to becoming huge breeding grounds for corruption. Suthereland’s found it hard to give a clear and consistent interpretation of his definition, which is limited to a person of a particular social status. He emphasized on the position and trust of the offender of such crimes in occupational settings.[12] He maintained that political graft, embezzlements, fee-splitting, illegal abortions were all slices of white-collar crime.[13] Such crimes have been exposed various times in different forms as economic, political, commercial and financial activities.
One of the drawbacks of his definition is that it does not include the crimes outside an individual’s occupation like concealment of facts related to personal assets, large-scale purchase on credit cards, false income tax returns filed, deceitful claims to acquire benefits and social security etc.[14] One of the confusion related to his research was that white collar crime according to Sutherland is a crime committed by a specific person and a specific type of crime. Later it was verified that white-collar crimes are not of a specific type rather it is crime committed by a specific type of person.[15]
Sutherland contributed by challenging both the legal and criminal aspects in his works. In his research he found that out of 980 decisions made against mercantile and industrial corporations for unlawful actions. Only 158-161 of these were criminal courts and could be considered as criminal acts. Even tho most of the white collar crimes are in violation of penal laws they are mostly handled by commissions or administrative tribunals. In the legal sense when such crimes are handled by administrative tribunals there is no conviction of the offender and he cannot be classified as a criminal.[16]
Sutherland’s agrees that an act cannot be seen as a crime until n unless it is punishable by the State. He came up with the definition of white collar crime to draw the attention of the public, which was earlier excluded from the ambit of criminology, rather than making it a definitive one.
[1] Harry Elmer Barnes & Negley K. Teeters, “New Horizons in Criminology”, vol 2, Issue 2, (1945).
[2] Federal Bureau of Investigation official site of the U.S. government, U.S. Department of Justice, “White-Collar Crime”, (2019), [https://www.fbi.gov/investigate/white-collar-crime] Accessed on Jun 24th 2020.
[3] “The Most Common Business Crimes to Avoid”, Business Partner Magazine, ( Jun 23rd 2020), [https://busin esspartnermagazine.com/most-common-business-crimes-avoid/] Accessed on Jun 24th 2020.
[4] Sutherland, Edwin H., “White-Collar Criminality.” American Sociological Review, vol. 5, no. 1 (Feb. 1940), page 1-12 [www.jstor.org/stable/2083937], Accessed on Jun 24th 2020.
[5] Emerson, Thomas I., The Yale Law Journal, vol. 59, no. 3, (Feb. 1950), page 581–585,[ www.jstor. org/stable/793062], Accessed on Jun 23rd 2020.
[6] Sutherland, Edwin H., ”White collar crime”, New York: Dryden., vol. 266, Issue 1 (Nov. 1st 1949), 10815.
[7] Sutherland, Edwin H., Gilbert Geis &Colin Goff., “White Collar Crime: The Uncut Version”. New Haven; London: Yale University Press., (1983), [www.jstor.org/stable/j.ctt1cc2khv], Accessed on 23rd Jun 2020
[8] Edwin C. Hill, before the International Congress on the “Prevention And Repression of Crime’16” at London (1872); as mentioned in Harry Elmer Barnes & Negley K. Teeters, “New Horizons in Criminology”, vol 2, Issue 2, (1945).
[9] Edward A. Ross, “The Atlantic Monthly”, page 44-55 (1907).
[10] Tappan, Paul W., “ Who is the criminal?”, American Sociological Review vol 12, issue 10, page 96–102, (1947).
[11] Herman Manheim, “Comparative Criminology” vol 2, page 470, (London: Routledge & Kegan Paul 1965).
[12] Stewart b. Shapiro, “The Instructional Values of Humanistic Educators: An Expanded, Empirical Analysis”, The Journal of Humanistic Education and Development June 1987, vol. 25, issue 4, page 155-170, (1987).
[13] Edwin H. Sutherland’s view of White Collar Crime”, page 1-12, (1949).
[14] Herbert Edelhertz, Nature, Impact and Prosecution of White Collar Crime 12 (1970).
[15] Petter Gottschalk & Lars Gunnesdal, “White-Collar Crime Research, White-Collar Crime in the Shadow Economy”, page 1-14, (Mar 23rd 2018).
[16] Edwin H. Sutherland, White Collar Crime, page 1-12, (1949).
This article is authored by Sharon Ann Babu, student of LLB at Symbiosis Law School, Pune.
