Fraud Examiners in White-Collar Crime Investigations

Petter Gottschalk

• Publisher: Routledge
• Year: 2015
• Print ISBN: 9781498725163
• eBook ISBN: 9781498760447
• Topic: Law
• Subtopic: Criminal Law
• Index: Law

In Fraud Examiners in White-Collar Crime Investigations, Petter Gottschalk examines and evaluates the investigative processes used to combat white-collar crime. He also presents a general theory regarding the economic, organizational, and behavioral dimensions of its perpetrators.Pool Your Resources for a Successful InvestigationGottschalk emphasiz

Chapter 1

White-Collar Criminals

Who are the perpetrators of white-collar crime? According to a survey conducted by KPMG (2009), it has become extremely difficult to profile a typical fraudster. They argue that the individual can be of any age group, income level, or tenure of employment. However, they found that most fraudsters are in the age group of 26–40 years, earn a substantial annual income, and have been employed for between 2 and 5 years. Furthermore, they found that men are more typical perpetrators of financial crime than women.

The most economically disadvantaged members of society are not the only ones committing crime. Members of the privileged socioeconomic class are also engaged in criminal behavior (Brightman, 2009). The types of crime may differ from those of the lower classes, such as business executives bribing public officials to achieve contracts, chief accountants manipulating balance sheets to avoid taxes, and procurement managers approving fake invoices for personal gain.

Criminal behavior by members of the privileged socioeconomic class is labeled white-collar crime (Benson and Simpson, 2009). It is often argued that women commit less white-collar crime than men (Haantz, 2002; Holtfreter et al., 2010; Huffman et al., 2010). Suggested reasons for possible gender differences in white-collar crime include lack of opportunity and risk aversion.

Characteristics of White-Collar Criminals

According to Brightman (2009), Sutherland’s theory of white-collar crime from 1939 was controversial, particularly since many of the academics in the audience perceived themselves to be members of the upper echelon of American society. Despite his critics, Sutherland’s theory of white-collar criminality served as the catalyst for an area of research that continues today. In particular, differential association theory proposes that a person associating with individuals who have deviant or unlawful mores, values, and norms learns criminal behavior. Certain characteristics play a key role in placing individuals in a position to behave illegally, including the proposition that criminal behavior is learned through interaction with other persons in the upper echelon, as well as the interaction that occurs in small intimate groups (Hansen, 2009).

In contrast to Sutherland, Brightman (2009) differs slightly regarding the definition of white-collar crime. While societal status may still determine access to wealth and property, he argues that the term white-collar crime should be broader in scope and include virtually any nonviolent act committed for financial gain, regardless of one’s social status. For example, access to technology, such as personal computers and the Internet, now allows individuals from all social classes to buy and sell stocks or engage in similar activities that were once the bastion of the financial elite.

In Sutherland’s definition of white-collar crime, a white-collar criminal is a person of respectability and high social status who commits crime in the course of his occupation. This excludes many crimes of the upper class, such as most cases of murder, adultery, and intoxication, since these are not customarily a part of their job-related procedures (Benson and Simpson, 2009). It also excludes lower-class criminals committing financial crime, as pointed out by Brightman (2009).

What Sutherland meant by respectable and high social status individuals is not quite clear, but in today’s business world we can assume he intended to refer to business managers and executives. They are, for the most part, individuals with power and influence that is associated with respectability and high social status. Part of the standard view of white-collar offenders is that they are mainstream, law-abiding individuals. They are assumed to be irregular offenders, rather than people who engage in crime on a regular basis (Benson and Simpson, 2009: 39):

Unlike the run-of-the-mill common street criminal who usually has had repeated contacts with the criminal justice system, white-collar offenders are thought not to have prior criminal records.

When white-collar criminals appear before their sentencing judges, they can correctly claim to be first-time offenders. They are wealthy, highly educated, and socially connected. They are elite individuals, according to the description and attitudes of white-collar criminals as suggested by Sutherland.

Therefore, very few white-collar criminals are put on trial, and even fewer upper-class criminals are sentenced to imprisonment. This is in contrast to most financial crime sentences, where financial criminals appear in the justice system when typically not without being wealthy, highly educated, or socially connected. White-collar criminals are not entrenched in criminal lifestyles as common street criminals.

What Podgor (2007) found to be the most interesting aspect of Sutherland’s work is that a scholar needed to proclaim that crimes of the “upper socioeconomic class” were in fact crimes that should be prosecuted. It is apparent that prior to the coining of the term white-collar crime, wealth and power allowed some persons to escape criminal liability.

Pickett and Pickett (2002) use the terms financial crime, white-collar crime, and fraud interchangeably. They define white-collar crime as the use of deception for illegal gain, normally involving breach of trust, and some concealment of the true nature of the activities. White-collar crime is often defined as crime against property, involving the unlawful conversion of property belonging to another to one’s own personal use and benefit. Financial crime is profit-driven crime to gain access to, and control over, property that belongs to someone else.

Bucy et al. (2008) argue that white-collar crime refers to nonviolent, business-related violations of state or federal criminal statues, and they make a distinction between “leaders” and “followers” in white-collar crime.

White-collar crime can be defined in terms of the offense, the offender, or both. If white-collar crime is defined in terms of the offense, it means crime against property for personal or organizational gain. It is a property crime committed by nonphysical means and by concealment or deception (Benson and Simpson, 2009). If white-collar crime is defined in terms of the offender, it means crime committed by upper-class members of society for personal or organizational gain. It is individuals who are wealthy, highly educated, and socially connected, and they are typically employed by, and in, legitimate organizations (Hansen, 2009).

One of the most famous white-collar criminals was Bernhard Ebbers, chief executive officer of WorldCom (Wagner, 2011: 978):

To answer why Bernard Ebbers did this, one must take a look at his perso...

Table of contents

• About the Author
• Introduction
• Chapter 1 - White-Collar Criminals
• Chapter 2 - Empirical Study of Criminals
• Chapter 3 - General Theory of Crime
• Chapter 4 - Private Investigations
• Chapter 5 - Investigation Characteristics
• Chapter 6 - Information Management
• Chapter 7 - Knowledge Management
• Chapter 8 - Configuration Management
• Chapter 9 - Systems Management
• Chapter 10 - Evaluation of Investigations
• Chapter 11 - Stage Model for Investigations
• Chapter 12 - Sample Investigation Evaluations
• Chapter 13 - Investigation Perspectives
• Conclusion