Running head: WHITE COLLAR CRIME: A DECEPTIVE CRIME

White Collar Crime: A Deceptive Crime

Marisa Packer
Salt Lake Community College

WHITE COLLAR CRIME: A DECEPTIVE CRIME

Greed, it has been the chief motivator in white collar crimes for as long as there have
been white collar crimes. The gluttonous need to want more and more has been duplicated time
and again. The need to get as much wealth as possible so one can live the lifestyle of the 1
percent at whatever the moral or ethical cost of achieving that goal. A moral crime is how some
would categorize white collar crimes others would categorize it as a criminal crime. White collar
crime is a blanket term for illegal acts involving lying, cheating, and stealing according to the
FBIs Web site. The more technical definition is financial activities characterized by deceit and
concealment that do not involve physical force or violence (Gaines, & Miller, 2013). But even
though white collar crimes do have victims, often hundreds, they may not necessarily be covered
under criminal statutes.
Often white collar crimes are covered under administrative laws which is the body of law
created by administrative agencies (in the form of rules, regulations, orders, and decisions) in
order to carry out their duties and responsibilities. In white collar crime there is a question of
intent which is so prominent in the criminal code, is irrelevant for conviction under many
regulatory laws, although intentional violations may increase the punishment. In these respects,
white-collar violations are legally much more like traffic laws and municipal ordinances than
statutes of criminal code (Newman, 1958). Society takes violent crimes against a person or
persons a lot more seriously than crimes that do not cause any physical harm. Even though, for
example, in 2008 when the subprime mortgage market caused millions of individuals and their
families to lose their homes, which caused many out on the streets or produced a significant
burden to their lives did cause harm on a personal and social level.
Since white collar crimes are treated as little more than a civil matter, it is not surprise
that the individuals perpetrating them serve no time in prison. White-collar criminals are rarely

WHITE COLLAR CRIME: A DECEPTIVE CRIME

jailed, said Jason D. Bartolacci, a Carlow University professor whose research focuses on fraud
and nonviolent crimes. Prosecutors really only look at white-collar crime as a property crime, so
it gives the perception that there's not as much damage, when in fact the damages are often
greater than a common street crime ... but the punishment is usually less (Brandolph, 2014). The
financial destruction that comes after a fraud where hundreds of hard working people have
invested their money, sometimes their life savings, into something that they trusted then
implodes the victims generally do want the perpetrator to serve time in jail. One crime that is
considered white collar by the lying, cheating, and stealing standard is the 2008 housing crash.
The housing bubble had early signs of bursting long before 2008 but was ignored.
The Financial Crisis Inquiry Commission found the signs of fraud were everywhere with the
number of reports of suspected mortgage fraud rising twenty-fold between 1996 and 2005 and
then doubling again in the next four years. Even if the signs were there and they were
communicated to the federal government, nothing was done. After 2008, the commission came
out with its final report, which used variants of the word fraud no fewer than 157 times in
describing what led to the crisis, concluding that there was a systemic breakdown, not just in
accountability, but also in ethical behavior. But the stated opinion of those government entities
asked to examine the financial crisis, overall found no fraud was committed (Rakoff, 2014). The
proof that mortgage lending banks were committing, what amounts to white collar crimes, were
also there but were not prosecuted and no one has been prosecuted since. Some think that
imprisonment is not the place for those who commit white collar crimes but some of the victims
of these types of crimes may have a different opinion.
The harm done to victims of white collar crimes are compared to victims of violent
crimes when it comes to the damage done. It would be unjust to compare the two because it is

WHITE COLLAR CRIME: A DECEPTIVE CRIME

akin to comparing a victim of sexual assault to an individual whose residence has been robbed.
Both victims will feel a loss of security and a sense of being violated. But when these two crimes
are prosecuted the punishments for the perpetrators are vastly different. Take, for example, this
quote from a retiree and Madoff fraud victim, I had no desire to live, no prospect of earning a
living, no way to pay the bills. This quote exemplifies the voice of thousands recounting the
personal and financial losses suffered when a trusted business advisor, professional, employee,
business owner or other individual defrauds them (Perri, 2011). Victims of Bernie Madoff and
other high profile frauds generally due serve more severe sentences but mostly due to the
publicity and the high profile individuals involved. Bernie Madoff received a sentence of 150
years in federal prison which was three times as long as the federal probation office suggested
and more than ten times as long as defense lawyers had requested (Henriques, 2009). This was
justice being done but the other hundreds or even thousands of white collar cases that are
prosecuted either end in plea deals with restitution or probation or short prison sentences. Some
observers argue that it is better that the individuals who commit these crimes pay restitution by
working, not being incarcerated where they cannot make any money. But even if the perpetrators
are sentenced to pay restitution, they may not pay the full amount or even a large portion of it.
The Modesto Bee, which is a local newspaper in Modesto, California, tracked six white
collar criminals to assess their level of restitution. They found the six combined owed $32.8
million and $22,899 is what has been repaid as of July, 11, 2015 (Stapley, 2015). This is a small
sample but is representative of a larger problem. It may be true that individual victims who
receive a judgement of restitution expect a check right away but that is not the case. If the
offender does not pay the restitution then the victim(s) do not receive the money. It is a

WHITE COLLAR CRIME: A DECEPTIVE CRIME

heartbreaking narrative of victims of fraud and other white collar crimes who not only do not
recover the money they lost but they may die waiting for it.
Tony Daniloos business was selling homes to cash-strapped American dreamers and they
entrusted Daniloo with their homes and life savings while he forged documents and stole
millions (Milbourn, 2013). Subsequently his victims suffered greatly and are still to this day,
eleven years after his arrest. Theresa Lund, committed suicide after losing nearly $1 million of a
family trust in Daniloos scheme and another victim is 85 years old and fading with Alzheimers
disease is owed $74,000. The womans daughter and full-time caregiver, Linda Malone, says
they lost everything in Daniloos scam, are too poor to buy a car, are hounded by creditors and
have no hope of returning to a normal life (Stapley, 2015). But most of Daniloos victims have
seen little to no payment of the restitution he was ordered to pay at his sentencing in 2007. This
story is not unusual considering the white collar criminal prosecuted and ordered to pay
restitution. They are ordered to pay restitution but they are not made to do so. There is little
regulation when it comes to paying, although it cannot be dismissed in bankruptcy court which is
one advantage. But if restitution is not ordered or ordered along with imprisonment, there are
options that some observers think the prison sentences are too harsh.
In 1984, Congress passed the Sentencing Reform Act which essentially produced longer
and harsher prison sentences for a variety of crimes, but more specifically white collar crimes. A
sentence for a misdemeanor of, say, fraud which would have been a sentence of a fine, probation,
or community service was now replaced with a minimum a one year sentence. To further punish
white collar criminal, Congress pass the Sarbanes-Oxley Act in 2002 this basically ordered the
Sentencing Commission to change its guidelines to deter corporatizations from committing fraud
and obstructing justice (Gaines, & Miller, 2013). What the Commission did was doubled or even

WHITE COLLAR CRIME: A DECEPTIVE CRIME

tripled sentences for white collar crimes such as fraud. The result of this revision was swift and
harsh. Jamie Olis of Dynegy Corporation was originally sentenced in 2004 to 25 years in prison
in a fraud case that he did not even benefit from financially. But on appeal the Fifth Circuit
lessoned his sentence to six years mostly because the Guidelines were no longer mandatory due
to the Supreme Courts ruling in United States v. Booker in 2005 (Gustafson, 2006). In the eyes
of some observers the punishments for white collar criminals is too harsh but in the eyes of the
victims it is justified. A good number of white collar victims do not get paid back what the
perpetrator ultimately stole from them, and then the solution should be prevention and better
techniques to uncover the crime before additional damage is committed.
The irruption of the financial giants such as Lehman Brothers and Washington Mutual
may lead to the conclusion that it would be prudent for companies the hire forensic accountants
or the equivalent of to make sure there are not future problems. In addition to the problems
accrued by the financial sector there are also the additional risk of individual employees
committing fraud. At the University of Southern Floridas Muma College of Business they have
a new course that students can receive a certificate in called Compliance, Risk and Anti-Money
Laundering (Collier, 2015). Director of the Pippenger School of Accountancy at USF, Uday
Murthy said roughly 600 new positions will be opening up in the Tampa Bay area from Citibank
alone in the area of business risk assessment, including in the growing anti-money laundering
field (Collier, 2015). This type of certification can open many doors for accounting and business
students with this certification but in general, forensic accounting is a growing field and because
of the economic downturn there is more of a risk that employee fraud will be on the raise.
The Federal Bureau of Investigation has had forensic accountants since its creation in the
summer of 1908, when a dozen bank examiners were included among the original force of 34

WHITE COLLAR CRIME: A DECEPTIVE CRIME

investigators. Today, around 15 percent of agents employed by the Bureau qualify as special
agent accountants (Following the Money, 2012). Local law enforcement agencies do not
normally employ forensic accountants but can rely on the FBIs accountants or even certified
public accountants for investigating fraud and money laundering. It is important to catch a
fraudulent situation before it become so large as to proceed into the billions of dollars and the
victims begin to be in the hundreds if not thousands.
White collar crime is the type of crime that does not receive a lot of attention from the
media unless it is on a large scale. In addition the manner in which law enforcement officials
treat white collar crime which is akin to a property crime in which the perpetrator, prior to
sentencing reform, would spend no prison time and instead serve probation, community service,
or just pay restitution. Now federal laws are in place to impose harsher punishment of offenders
of white collar crime. Whether it is fair or not is an ongoing debate among academics and
government alike. The crime itself is one of greed and great deception with a trail of damage
longer than the average street crime. Until society starts looking at white collar crime on the
same level as street crime, the seriousness of it may not be realized until there is a worldwide
financial catastrophe.

WHITE COLLAR CRIME: A DECEPTIVE CRIME

Brandolph, A. (2014, January 19). White-collar criminals often avoid prison terms.
Retrieved July 27, 2015.
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Rakoff, J. (2014, January 9). The Financial Crisis: Why Have No High-Level Executives
Been Prosecuted? by Jed S. Rakoff. Retrieved July 27, 2015, from
http://www.nybooks.com/articles/archives/2014/jan/09/financial-crisis-why-no-executiveprosecutions/
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http://www.modbee.com/news/local/article27057817.html