White Collar Crime and Organized Crime Lecture Outline

White-Collar crime (definition) (Barkan Ch. 13)

2 types: (Barkan Ch. 13)

1. Occupational Crime

2. Organizational / Corporate Crime

Occupational crime example-- Healthcare fraud cost in $ and lives (unnecessary surgery) (Barkan Ch. 13).

Example—Local Salisbury Hospital (PRMC) heart surgeon fraud case

Importance of Inside Whistle-Blowers – in revealing white-collar crime, especially due to complexity and otherwise not well monitored.

Civil Prosecution & fines most common, not criminal prosecution & poss jail time

Frequency of White-Collar crime by Corporations (Corporate Crime) & typical penalties (in general) (Barkan Ch. 13, Keefe web rdg.)

2 Important types of Corporate / Organizational Crime ---Financial & Violent

Corporate Financial Crime

Fraud, Cheating, & Corruption –Fraud key to 2008 financial crisis and economic recession (Barkan Ch. 13, Keefe web rdg.)

Price Fixing & Restraint of Trade (Barkan Ch 13, McLauiglin web rdg.)

False Advertising (esp. Pharma.) (Barkan Ch. 13)

Violent Corporate Crime

Unsafe Work Places – Estimated # of deaths nationwide per year (Barkan Ch. 13), Massey energy coal mine disaster & West, Texas fertilizer plant explosion case (Blinder et al. web rdg.)

Unsafe Products -- Estimated # of deaths nationwide per year; Ford Pinto car case example & use of cost-benefit analysis to justify not fixing (Barkan Ch. 13).

Extremely Unsafe Marketing & Distribution of Opioid prescription drugs -- Power of drug / pharmaceutical industry to stop or greatly reduce DEA enforcement against illegal & suspicious distribution, despite many thousands of opioid-related deaths and rapidly growing (Berstein and Higham web rdg.)

Pollution -- Estimated # of deaths nationwide per year (Barkan Ch. 13),

White-Collar Crime is more rational than other crimes—offenders often weigh cost & benefits carefully

Showed portion of Video “Inside Job” on Wall Street / High Finance deviance and crimes leading to 2008 economic crisis.. Fraud & Government Deregulation of Banking / finance industry over prior 3 decades (enabled more fraud) as key causes of 2008-2009 financial crisis and economic recession—Key part of much White-Collar Crime. In lead up to 2008 Economic crisis, much related to home aggressive risk-taking in home mortgages/loans, securitization (bundling)of loans by Wall St. Banks & ratings agencies, then selling bundles of home mortgages as securities (many high-risk sub-prime type) to investors as low-risk safe investments, but lots of fraud involved and risks hidden… Lots of profits made in doing this, but ultimately the bubble burst and collapsed… & Banks bailed out by taxpayers, and economy is just now sort of fully recovered… And no criminal prosecutions of banks or top officials, though lots of fines (less than profits made generally).

Banks – too big to fail and too big to jail -- Prosecutorial “Chicken shit” on why big banks doing illegal acts (fraud, etc.) not prosecuted criminally, whole more minor street criminals are prosecuted aggressively… Big banks involved in drug cartel money laundering & even terrorist finances… (Keefe web rdg)

Cost (human and economic) of White-collar crime Vs. Cost of Street Crime (Barkan ch. 13)

Leniency of WC crime enforcement (some fines and little jail time, etc.) compared to punishments for Street Crime– (Barkan ch. 13, Keefe web erdg.)

Explanations for White-Collar Crime-- Why is white Collar crime so common & so hard to prosecute -- Power of offenders + Corporate Culture of Greed + Lenient treatment & Weak Punishment + Weak Regulations + Lack of Media Coverage + Hard to Prosecute & prove due to complexity – Big Pharmaceutical Industry role in opioid crisis perfect example of many of these reasons (Bernstein and Higham web rdg.)

& How to reduce White-Collar Crime (increase press attention, more govt. monitoring & penalties, etc.) (Barkan ch. 13)

Other Things to be aware of but not covered in class (or not much):

Other Fraud-- Costs of check fraud, credit card fraud, and ID theft, Tax Fraud, Insurance Fraud (how big a problem?) Cost? (Barkan, pp 254-258)