Illustration by Taylor Callery: https://www.theispot.com/artist/tcallery
Much of the focus of our class and the field of Criminology itself is dedicated to the topic of overincareceration and the harshly punitive nature of our current justice system, but what about a category of crime wherein many feel there is a serious under-reaction from the system, namely, the category of white collar crime? Cornell University’s law department estimates that white collar crime costs the United States around 300 billion dollars a year (Cornell Law, 2021) and in the 1980s it was found there was a 10:1 ratio of money stolen in white collar crime to street-level robberies and break-ins (NewsWatch Canada, 1994), a number that rose to nearly 47:1 in 2014 (Burke et al., 2019). Other investigations found a far higher rate of death from unsafe and illegal working conditions as there was for street-level homicide (Michel, 2016), and yet only 304 new white collar crime prosecutions occured in the United States in August of 2020, a net decrease of 59.8% from 2015 (TracReports, 2020). In Canada it is reported that anywhere between a third to half of all Canadian organizations have been the victims of white collar crime (McKenna, 2014) and yet white collar crime only makes up for about 3% of the USA’s annual prosecutions (Bajoka Law, 2020). So what can account for this blindspot in the current system’s application of justice? If financial crimes are more costly to the state and cause a higher loss of life than street-crime, why are they not taken more seriously? And if the rate of financial crime seems to be increasing, why do we seem to be prosecuting less? Over the course of this paper I will examine the realities of white collar crimes, their public perceptions, their intersection with both race and gender, and finally how punishment fits into white collar crime from both a practical and philosophical point of view.
Part One: White Collar Offending
Before getting into the current punishment model for white collar crime, we need to first examine and define it to create a common framework for discussion. White collar crime has a number of conflicting descriptions that overlap largely, but differ in key points. The term white collar crime was first used by Edwin Sutherland, who defined it as “a crime committed by a person of respectability and high social status in the course of his occupation.” (Benson et al., 2020). This is what is known as an offender-based definition, in which the descriptive factor of the crime comes from the profile of the offender, not the offence (Benson et al., 2020). I have an issue with this definition because as we will see later on, many of those who are punished for so called white collar offences are not high-status individuals, and in fact many of those charged with low-level white collar crime often lack employment and have similar histories of instability and drug problems as those who commit street crime (Cassidy & Gibbs, 2019).
For the purposes of this paper, the definition of white collar crime I will be using is “an illegal act or series of illegal acts committed by non-physical means and by concealment or guile to obtain money or property, to avoid the payment or loss of money or property, or to obtain business or personal advantage.” (Benson et al., 2020). While a little wordy, I feel this definition most effectively covers the wide range of offences and offence types that fall under that category of white collar crime.
Broadly speaking, white collar crime can also be broken down into categories based on severity and complexity of the case in question, and this categorization is important when examining how the system responds to offenders (Albonetti, 1999). Low-level white collar offences included things like mail and credit fraud as well as making false claims (Cassidy & Gibbs, 2019). As mentioned earlier, the profile of the average low-level white collar offender is remarkably similar to that of the average street crime offender in that they are overwhelmingly young, male and financially unstable (Cassidy & Gibbs, 2019). In the mid-level category, we find offenses like bribery and tax fraud, which are mostly relegated to middle-class offenders (Benson et al., 2020). These offences tend to be committed by those with stable jobs and very little history of criminal activity, but often involve large amounts of personal debt accrued by the offender and some threat of financial or social loss of status (Benson et al., 2020). High-level offences are things like antitrust violations and securities fraud (Benson et al., 2020). High level offenders are far more likely to be wealthy and hold a position of power in either business, finance or government that wields financial or social capital and assists them in the commission of their crimes (Benson et al., 2020). These three distinct categories are of crucial importance when discussing white collar crime, as each comes with a near-entirely different profile of offender, meaning the conflation of these three as one category of offence should be avoided as much as possible (Benson et al., 2020).
Part Two: Convenience Theory
The last thing I’ll discuss before getting into the current system of punishment and incarceration for white collar crime is a critically important criminological theory called convenience theory. Coined by Norweigan criminologist Petter Gottschalk, convenience theory suggests that white collar crime at all levels, but particularly the middle- and high-level offences, are driven by convenience in three distinct dimensions: an economic dimension, a organizational dimension and a behavioral dimension (Gottschalk, 2017). The economic dimension is a strong motivational factor in the convenience triangle and it can often come in entirely inverse directions, as the want for financial gain and the need to protect and consolidate losses are equally influential in the commission of white collar crime (Gottschalk, 2017). Middle-class workers or business owners often commit financial crime as a way to keep from losing what they have (Benson et al., 2020), whereas higher-status offenders more often committed their crimes for greed and status (Gottschalk, 2019). In this dimension, the easy ability to gain large amounts of money is the primary motivator for the commission of crime (Gottschalk, 2017).
The organizational dimension of white collar crime refers to the fact that most financial crimes at the mid to high level are done from an organizational role (Gottschalk, 2017). Social and economic capital gained from a role within an organization or company allows for the opportunity to commit white collar crime, and a lack of supervision from others that comes with higher positions of influence strengthens the convenience element of this dimension. (Gottschalk, 2017). Positions wherein people have great amounts of autonomy, very little supervision and access to other people’s money are particularly ripe for tempting white collar crime (Gottschalk, 2019).
Finally, the behavioral dimension notes that an individual’s tendency to use shortcuts or conveniences to accomplish one’s goals with the least amount of effort, coupled with a strong tendency to neutralize the impacts of one’s own actions is a strong predictor of white collar offending (Gottschalk, 2017). It also appears there is a higher prevalence of psychopathological traits (as measured by the PCL-R) among high-level white collar offenders than in the general prison population (Gottschalk, 2017).
Take these three factors together and you have the framework for understanding much of white collar crime. Those individuals with favorable conditions and financial motivations to commit white collar crimes (economic), positions in organizations with an air of legitimacy and status (organizational) and a tendency to neutralize the harms of their own actions (behavioral) will tend to take the convenient if illegitimate opportunities presented to them (Gottschalk, 2017).
Part Three: The System’s Response
But what about punishment? How does the current system treat these types of offenders and how does the severity of the crime and the status of the offender influence the types of sentences? To explore this I began with a study from Micheal Cassidy and Carol Gibbs (2019) wherein they directly compared sentencing between low-level white collar offences and nonviolent property crimes with similar sentencing guidelines. They suggest that sentencing is influenced by factors such as the offender’s perceived blameworthiness, the protection of their community and the practical concerns and consequences of sentencing itself (Cassidy & Gibbs, 2019). Other significant factors for sentencing include crime amount, meaning a larger sum of money, and the number of persons convicted in the case (Gottschalk, 2017).
Among the low level offenders of both types they found very consistent sentencing based on the amount of money involved in the crime itself, although there were some notable differences between the two groups (Cassidy & Gibbs, 2019). For one, Black Americans were far more likely to be incarcerated for property crimes than were white Americans, but those convicted of white collar crimes were far less likely to serve time in prison compared to those convicted of nonviolent street crimes (Cassidy & Gibbs, 2019). In both types of crime, white Americans received slightly longer prison sentences than did Black Americans, and women of both groups were significantly less likely to receive a custodial sentence than men were (Cassidy & Gibbs, 2019).
In an analysis of 408 convicted white-collar criminals in Norway, the mean offender was about 49 years old, male, had a salary of 450,000 krone (66k dollars) and a net worth of 2.7 million krone (400k Canadian) (Gottschalk, 2019). The average white collar conviction involved 44 million krone (6.6 million dollars), between three to four individuals and it carried an average sentence of 2.3 years in prison (Gottschalk, 2019).
Cassidy and Gibbs also found some interesting data when comparing white collar crimes across levels of severity. They found that among white collar crimes themselves, high-severity crimes were punished more harshly than low-severity crimes, but several factors complicate this finding (Cassidy & Gibbs, 2019). The first factor is that the higher-severity the crime, the higher the complexity of the crime tends to be as well, making it harder for prosecutors to build a case that will confidently result in a conviction (Albonetti, 1999). This leads to plea-bargaining, which is the main tool for the avoidance of punishment at the higher levels of white collar crime, since it places all the negotiating power in the hands of the wealthy elite who are capable of paying for expensive representation (Albonetti, 1999).
In addition, here in Canada we have the R v. Jordan decision of 2016 which sets a limit on how much time can pass between the laying of charges and trial, making complex financial cases far more difficult to try and gather evidence for (Moubayed & Gorguos, 2020). It was further suggested in the decision on a case brought by the Quebec Revenue Agency in 2017 that prosecutors looking to try complex financial tax and bribery cases should have all their evidence prior to the laying to charges at all, putting a very large burden of responsibility on the prosecutors to gather evidence on an offence that may have involved dozen of people and several separate organizations (Moubayed & Gorguos, 2020).
Taking all of this into account, we can see that while higher level white collar crimes may result in generally longer and more carceral sentencing, many factors protect those accused of more severe and complex crimes from prosecution altogether (Albonetti, 1999). These findings are in line with the conflict theory of crime and punishment, wherein the enforcement of punishment serves to maintain the status quo more than it seeks objective justice, and where the rich and powerful wield wealth and social capital to avoid punishment altogether (Albonetti, 1999). We also see a more than 2:1 ratio for prosecution of low and mid level financial crimes compared with high-level crimes, which may be evidence of there being less high-level than low-level white collar crime, but it may also indicate a lack of willingness to prosecute for the reasons highlighted above (Benson et al., 2020).
Part Four: Race and Gender in White Collar Offending
With regards to race and sentencing, white collar crime has always been, and to a certain extent still is, the domain of white people (Benson et al., 2020). In a sample collected by Yale University in the 70s, it was found that nearly 80% of white collar offenders were white, and among antitrust and securities offences (high-level) that number increased to 95% (Benson et al., 2020). Over the past five decades however, the share of non-white participation in white collar crime has risen steadily, though not across the board (Benson et al., 2020). From the year 2000 to the year 2015, Asian and Latino American participation in white collar crime increased alongside their economical advances into the ranks of the middle class (Benson et al., 2020). High-severity and complexity cases however, are still overwhelmingly dominated by white offenders, as white people make up for most of the high-ranking positions such as CEO or CFO in large organizations. (Benson et al., 2020). This finding is consistent with opportunity theory, as it indicates that as nonwhite participation in the middle class and access to mid to upper- tier positions within companies has allowed for a greater organizational opportunity to commit white collar crime, while white dominance of higher-level positions kept their share of high-severity crime consistent (Benson et al., 2020).
Interestingly enough, this effect is not observed among Black Americans despite their own advancements into the middle and upper classes (Benson et al., 2020). This may be for a number of reasons, since as Benson points out Black Americans tend not to be hired for high ranking management or finance positions as opposed to personnel or public relations roles, but perhaps more relevantly, Black men are critically aware of the criminalization of their identity (Benson et al., 2020). This awareness can manifest in two ways, both of which reduce the amount of organizational convenience allotted to the convenience triangle. The first is that Black men in management positions may be cognizant of the fact that there is more scrutiny on their work than others, meaning there is not the perceived autonomy and lack of supervision present for their peers, leading them to self-police (Benson et al., 2020). The second factor is that Black men may in fact be given less autonomy than their non-Black peers in similar positions, meaning they wouldn’t be given the opportunity to commit an offence in the first place (Benson et al., 2020).
In terms of gender and sentencing, women were less likely to face jail time and when they did, they received lesser sentences than did their male counterparts (Albonetti, 1999). It was also found that there was a very noticeable difference with regards to target selection when comparing men and women in the commission of white collar crime (Dearden & Gottschalk, 2020). Women were far more likely to target their employers, insurance companies and random strangers, whereas men were more likely to target clients, business partners, investors and friends (Dearden & Gottschalk, 2020). At least part of this is thought to be due to women’s tendency to value and protect their social circles more than men do, and their unwillingness to damage their social circle for financial gain (Dearden & Gottschalk, 2020).
Part Five: Erroneous Perceptions of White Collar Crime
Many of the issues of white collar crime and our response to it as a society stem from the ways in which we perceive it when compared with other types of crimes. A conservative estimate for the number of deaths caused by white collar offences including workplace injuries, ingestion of toxic chemicals, exposure to deadly pollutants and consumer victims of faulty products places the number somewhere around 300,000 people a year (Michel, 2016). This is much higher than the 14,000 people killed by street homicides annually, and yet the public perception of white collar crime treats street crime as a far more prevalent and important issue (Michel, 2016).
The media also chooses to report almost exclusively on non-violent cases of white collar crimes such as the Martha Stewart insider trading scandal and more recently the Lori Laughlin admissions scandal that make these offenses seem less serious categorically (Michel, 2016). Compare these offenses to the Ford Pinto crashes that killed over a hundred people, the Love Canal Tragedy which caused over ten thousand birth defects, the Bhopal gas leak disaster that killed nearly thirty thousand people and the BP oil spill which killed eleven workers and spilled 130 million gallons of oil into the Gulf of Mexico (Michel, 2016). The death tolls for all of these events are far higher than any street crime event and yet the lack of seriousness with which they are reported contributes to the public’s low perception of harm (Michel, 2016).
To test this perception, criminologist Cedric Michel (2016) created a series of hypothetical scenarios to see people’s perceptions of violent street crime versus harmful white collar crime and how they would recommend sentencing. He used two scenarios to represent violent street crime, one involving a forcible rape, the other involving a premediated homicide, and four scenarios of varrying severity to represent harmful white collar crime (Michel, 2016). All four white collar scenarios implied direct harm, but the last of them specifically indicated mass loss of life due to their intentional negligence regarding use of asbestos (Michel, 2016). In no scenario were the white-collar crimes considered more severe than the street violence crimes, and in fact none of the hypothetical juries even recommended the highest possible fine for any of the white collar scenarios, even at the worst possible effect size (Michel, 2016).
Part Seven: The Purpose of Punishment & The Elimination of Convenience
So, with all that said, do we need more punishment in the system? It seems as though the rate of financial crime has increased exponentially with the advent of the internet (Dearden & Gottschalk, 2020). It also appears that at least in the United States, prosecutions of white collar crime have declined dramatically over the past half-decade (TracReports, 2020), creating a far larger window of organizational convenience for those who know their activities are not being monitored closely by relevant regulatory bodies. It seems almost self-evident that enforcement needs to be increased and attitudes must change with regards to white collar crime, but before we recommend more punishment as a form of reconciliation, we should consider some fundamental truths about punishment, and what exactly is meant by justice itself.
First, if we look at the purposive goals of sentencing set out by the Criminal Code of Canada, we punish “(1) to denounce unlawful conduct, (2) to deter the offender and other persons from committing offenses, (3) to separate offenders from society, where necessary; (4) to assist in rehabilitating offenders; (5) to provide reparations for harm done to victims or the community; (6) and to promote a sense of responsibility in offenders, and acknowledgement of the harm done to victims and to the community.” (Elliot, 2011).
The first goal of denouncing conduct can be said to work in theory when it comes to white collar crime, but if higher-level white collar crime seems to avoid prosecution and conviction, then we are really only denouncing the behavior we are able to build a coherent case against. The second involves deterrence, which we have seen time and time again to be ineffective, particularly when it is used inconsistently and after a long delay period between the commission of the crime and the administration of punishment (Elliot, 2011). Due to the nature of white collar crime, the harm done by the act and the subsequent punishment for it are both dramatically delayed, meaning that even in the best case scenario punishment as deterrence may not be effective with white collar crime (Michel, 2016). White collar offences, while potentially harmful to others, are by definition non violent as well, meaning that locking up offenders for the utilitarian goal of segregation is a moot point. It’s also been shown that white collar offenders more than most are capable of neutralizing the harms of their crimes due to their distance from the victims and often their organizational identity, meaning they are far less likely to take accountability for their actions and seek rehabilitation, effectively removing two more goals of sentencing (Gottschalk, 2019). That just leaves providing reparations for harm done to victims and the community, something that the Canadian government makes very little effort to do and largely leaves to the civil court circuit (Kempa, 2009). This demonstrates how ineffective the current system of punishment for white collar crime is even by its own operational definitions, and suggests that just applying more of the same would do little to fix the problem. This brings me to the crux of my argument, and my suggestion for the future: a systemic and organizational approach to white collar crime enforcement that focuses more on the environments that produce white collar crime than the offenders themselves.
Many high-level white collar crimes occur on a corporate level and often they involve more than one person or the entire action of the corporation itself (Gottschalk, 2019). In addition, while corporations can commit crimes, they cannot be imprisoned, meaning our system fundamentally lacks the ability to effectively punish corporate bodies the way it does individuals (Gottschalk, 2019). Furthermore, corporate environments involve a dogged pursuit of profit that creates a culture where failing to meet your financial goals has dire consequences (Monahan & Quinn, 2006). This creates pressure that acts on individuals within a company to always perform to a perhaps improbable degree, making white collar crime a more attractive option for those failing to meet the expectations placed on them (Monahan & Quinn, 2006). This phenomenon is better known as strain theory, wherein the pressure put on an individual leads them to the commission of a crime (Gottschalk, 2017).
But if the environment and culture in many of these places is what is leading to the commission of crime in the first place, then how do we change this? Simply removing one bad actor from an environment will only replace them with another individual who has the exact same opportunity to commit a white collar crime (Gottschalk, 2019). Since the economic factor of the convenience triangle cannot be removed (we can’t remove people’s need or want for money) and the behavioral factors can only ever possibly be rehabilitated after the commission of a crime, our best opportunity for reducing white collar crime is to remove the organizational opportunity through regulation and oversight (Gotschalk, 2019). Furthermore, when companies act as though they are the victims of these financial malfeasances, they decouple themselves from the bad actor in question, when in reality it was the organizational environment, including a lack of oversight, overly ambitious financial goals and a culture of “the ends justify the means” that allowed for the crime in the first place (Monahan & Quinn, 2006). This allows them to avoid scrutiny and regulation of their own, and obscures the fact these companies often profit wildley from the malfeasance of their employees (Monahan & Quinn, 2006). As Punch puts it, “The metaphor of ‘rotten orchards’ indicate(s) that it is sometimes not the apple, or even the barrel that is rotten but the system (or significant parts of the system) (Gottschalk, 2019).
In summary, the category of white collar crime is a complex and multifaceted one in terms of the profile of offenders, the crimes themselves and their varying levels of severity. The commission of white collar crime is most effectively modeled using Gottschalk’s convenience theory, which uses the economic, organizational and behavioral dimensions of financial crimes to create a framework for how they occur (Gottschalk, 2017). Using the convenience triangle, we are able to demonstrate how the most effective way to reduce the total amount of white collar crime in society is not in increasing the punishments for the commission of these crimes, but rather in the removal and regulation of the organizational opportunities that allow for the commission of the crime in the first place (Gottschalk, 2019). Removal of one apple from the rotten orchard does little when the poison is in the soil itself. Goal-oriented objectives passed down from the higher levels of corporate power put strain on employees to get results regardless of their methods, as opposed to more rule and ethics-oriented objectives with more focus on procedure than raw results (Gottschalk, 2019). If this type of corporate culture never changes, the economic pressures that lead to white collar crime will persist in bad faith, knowing they create the environment for crime but doing nothing to stop it (Monahan & Quinn, 2006). Likewise, if public opinion with regards to the human toll of white collar crime does not change to reflect the reality of how much larger its impact is than that of street crime, then the public will never fully support the kinds of regulatory enforcements that we need applied on a Federal level (Michel, 2016).
As Cedric Michel puts it, “A collective action is needed to inform the populace about the myriad ways in which elite crime can harm them, regardless of the aura of prestige that seems to enshrine its perpetrators. Hypothetically, sensitizing the masses about the incalculable harmfulness of state-corporate crime (e.g., unlawful warfare, environmental damage, etc) could heighten public concern and influence significant penal reform against these offenses.” (2006). In my eyes, any course of action that does not involve systemic reform, regulation and reframing of the issue in the eyes of the public is woefully insufficient and almost certainly bound to fail from the start.
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