Sociologist Edwin Sutherland described white-collar crime as a crime committed by a person or people of high social class. The crimes are described as non-violent, and conducted with a high degree of professionalism. White-collar crimes are differentiated from the blue-collar crimes by the fact that they do not involve physical violence, or the threat of violence. In most cases, the crimes are motivated by the need for money and result in illegal monetary gain. One of the most notorious convicts of white-collar crime, Bernard Madoff, was in 2009 sentenced to one hundred and fifty years in prison after he was found guilty of stealing billions of dollars from different investors. The authorities estimated that about seventeen billion dollars was lost in the course of his twenty-year fraud . It is estimated that a total of 4,800 clients were swindled in Madoff’s Ponzi scheme. Although Bernard Madoff’s Ponzi scheme is the biggest corporate swindle ever, other white-collar crimes of similar nature have been committed in history.
Stanford Investment Bank, owned by Allen Stanford, is one of the biggest scams, which turned out to be a hoax. The firm made approximately $ 8 billion from the sale of “certificates of deposit” to investors. Investors were lured (to pour their hard-earned cash) into the firm by the promise of high returns, which never materialized. It turned out that more than $ 1 billion of the investments were diverted into personal loans for Allen. Another white-collar crime which remains etched in the minds of Americans is the Enron scandal.
In 2001, the Enron Company collapsed after reports of accounting irregularities within the company had been revealed. In a span of 15 years, Enron had expanded its operations in more than 40 countries, and employed a support staff of around 21,000 workers. However, behind the false success story lay an elaborate scam involving top executives of the company. Enron’s stock was highly overpriced due to accounting loopholes which did not reveal huge debts accrued by the company. In October 2001, the company reported a massive $ 638 million loss in the third-quarter, translating into a $ 1.2 billion reduction of shareholders equity. WorldCom, a telecommunications company, is another firm which operated fraudulently resulting into the loss of $ 3.8 billion to investors.
Seniors executives at WorldCom used fraudulent accounting means to hide the company’s declining profits. This helped to maintain a false picture of financial growth, and the stock prices were kept high. An inquiry commissioned by Securities Exchange Commission revealed that WorldCom had concealed billions of losses. Moreover, some of the company’s earnings had been fraudulently expended for personal use. Bayou Hedge Fund, a company set up by Samuel Israel III and Daniel Marino, is another firm which defrauded investors millions of dollars. Initially, the company had collected $ 300 million from investors promising returns to the tune of $ 7.1 billion. Israel and Marino set up another sister accounting firm to provide shoddy audited accounts. The company’s woes came to fore when Silver Creek Capital Management, one of the corporate investors, wanted to pull out their $ 53 million investment in 2005. These are some of the thousands of financial losses incurred by individual people and organizations as a result of fraud committed by the professionals and trusted business advisors.
The impact of high-class fraud do not only affect the corporations and the large stakeholders but also have a great impact on the lives of people who make their savings and investments to utilize after they have retired from their work . In some cases, the penalties of the crimes may not be serious enough for the crimes. In the United States, the sentences for white collar crimes involve a combination of fines, community service, probation, restitution, disgorgement, imprisonment or other alternative punishment. However, in countries like China, these crimes may attract a death penalty. With the fast growth of internet nowadays, these crimes have been on the rise and therefore governments should put necessary measures to stop them .
References
Friedrichs, D. O. (2009). Trusted Criminals: White Collar Crime in Contemporary Society.
Washington D.C.: Cengage Learning.
Richard Rosenfield, K. Q. (2011). Contemporary Issues in Criminological Theory and Research:
The Role of Social Institutions. London: Cengage Learning.
