ASPECTS OF CORPORATE CRIMES

DEFINITION
Corporate crime is defined as beeing a type of white-collar crime which includes: tax
evasion, credit card fraud, and bankruptcy fraud. Some white collar criminals use their
positions of trust in business or government to commit these crimes, which may also include
pilfering, soliciting bribes or kickbacks, and embezzlement. Some engage in land swindles,
securities theft, medical or health frauds, etc.
Types of white collar crimes:

Swindles (stealing through deception): financial swindles, religious swindles (Jim

Bakker);
Chiseling, i.e., cheating an organization, its consumers or both on a regular basis,
such as charging for bogus auto repairs, cheating customers on home repairs, short
weighting or fraudulently selling securities at inflated prices;
Securities fraud: insider trading includes employees of financial institutions, law or
banking firms, who misappropriate confidential information on pending corporate
actions to purchase stock or give the information to a third party so that that party
may buy shares in the company. Insider trading: a disclose or abstain rule. It requires
corporate officers or directors, outside counsel and others, to abstain from trading,
provided that only omissions which are made in violation of a duty to disclose are
actionable;
Individual exploitation of institutional positions: government, industry;
Embezzlement and employee fraud;
Client fraud: insurance, credit card and medical insurance frauds. Health care: (i)
ping-ponging (referring clients to other physicians in the same office), (ii) gang visits
(billing for multiple services) and steering (directing patients to particular
pharmacies);
Tax evasion: to underreport or not to report taxable income willfully.

AS A SIDE NOTE !
Unlike lower class street criminals, white-collar criminals are rarely prosecuted and
when convicted receive relatively light sentences.
Compliance strategies aim for law conformity without the necessity of detecting,
processing or penalizing individual violators. They seek cooperation and self policing within
the business community and attempt to create conformity by providing economic incentives
to companies to obey the law. Another method of compliance is to set up administrative
agencies to oversee business activities, with legislation spelling out penalties for violating
regulatory standards.
State-corporate crime is illegal or socially injurious actions resulting from
cooperation between governmental and corporate institutions. Space Shuttle Challenger was
the result of a state-corporate crime involving the cooperative and criminally negligent
actions of NASA and Morton Thiokol, the shuttle builder.

Edwin Shutherland introduced the latter concept to describe criminal activity by

persons of high social status and repectability who use their ocupational position as a means
to violate the law. As a subcategory of o white-collar crime, corporate crime has been
defined in many ways. Perhaps the simplest definition is that offered by Braithwaite:
corporate crime is the "conduct of o corporation, or of employees acting on behalf of a
corporation, which is proscribed and punishable by law.
Three key ideas are captured in this definition. First, by not specifiyng the kind of
law that proscribes and punishes, Braithwaite accepts Shutherland's argument that illegality
by corpotations and their agents "differ from the criminal behavior of the lower socioeconomic class principally in the administrative procedures which are used in dealing with
the offenders. Thus corporate crime not only includes acts in violation of criminal law, but
civil and administrative ciolations as well. Second, both corporations (as "legal persons") and
their representatives are recognized as illegal actors. Which or whether each is selected as
a sanction target will depend on the king of act committed, rules and quality of evidence,
prosecutory preference, and offending history, among other factors.

UNDERLYING REASONS
Finally, Braithwaite's definition specifies the underlying motivation for corporate
offending: on the whole, illegality in not pursued for individual benefits but rather for
oraganizational ends. Thus, in order to maintain profits, manage an uncertain market, lower
company costs, or put a rival out of business, corporations, fix prices, create and maintain
hazardous work conditions, knowingly produce unsafe products, and so forth. Managers's
decisions to commit such acts (or to order or tacitly support others doing so) may be
supported by operational norms and organizational subcultures.
SOME OF THE MOST IMPORTANT ASPECTS OF CORPORATE CRIME PORTAITED IN
FACTS
16. Corporate crime inflicts far more damage on society than all street crime
combined.

Whether in bodies or injuries or dollars lost, corporate crime and violence wins by a
landslide. The FBI estimates, for example, that burglary and robbery -- street crimes -- costs
the nation $3.8 billion a year.
The losses from a handful of major corporate frauds -- Tyco, Adelphia, Worldcom, Enron -swamp the losses from all street robberies and burglaries combined.
Health care fraud alone costs Americans $100 billion to $400 billion a year. The savings and
loan fraud -- which former Attorney General Dick Thornburgh called "the biggest white collar
swindle in history" -- cost us anywhere from $300 billion to $500 billion.
And then you have your lesser frauds: auto repair fraud, $40 billion a year, securities fraud,
$15 billion a year -- and on down the list.
15. Corporate crime is often violent crime.

Recite this list of corporate frauds and people will immediately say to you: but you can't
compare street crime and corporate crime -- corporate crime is not violent crime. Not true.
Corporate crime is often violent crime.
The FBI estimates that, 16,000 Americans are murdered every year.
Compare this to the 56,000 Americans who die every year on the job or from occupational
diseases such as black lung and asbestosis and the tens of thousands of other Americans
who fall victim to the silent violence of pollution, contaminated foods, hazardous consumer
products, and hospital malpractice.
These deaths are often the result of criminal recklessness. Yet, they are rarely prosecuted
as homicides or as criminal violations of federal laws.
14. Corporate criminals are the only criminal class in the United States that have the
power to define the laws under which they live.
The mafia, no.
The gangstas, no.
The street thugs, no.
But the corporate criminal lobby, yes. They have marinated Washington -- from the White
House to the Congress to K Street -- with their largesse. And out the other end come the
laws they can live with. They still violate their own rules with impunity. But they make sure
the laws are kept within reasonable bounds.
Exhibit A -- the automobile industry.
Over the past 30 years, the industry has worked its will on Congress to block legislation that
would impose criminal sanctions on knowing and willful violations of the federal auto safety
laws. Today, with very narrow exceptions, if an auto company is caught violating the law,
only a civil fine is imposed.
13. Corporate crime is underprosecuted by a factor of say -- 100. And the flip side of
that -- corporate crime prosecutors are underfunded by a factor of say -- 100.
Big companies that are criminally prosecuted represent only the tip of a very large iceberg of
corporate wrongdoing.
For every company convicted of health care fraud, there are hundreds of others who get
away with ripping off Medicare and Medicaid, or face only mild slap-on-the-wrist fines and
civil penalties when caught.
For every company convicted of polluting the nation's waterways, there are many others who

are not prosecuted because their corporate defense lawyers are able to offer up a low-level
employee to go to jail in exchange for a promise from prosecutors not to touch the company
or high-level executives.
For every corporation convicted of bribery or of giving money directly to a public official in
violation of federal law, there are thousands who give money legally through political action
committees to candidates and political parties. They profit from a system that effectively has
legalized bribery.
For every corporation convicted of selling illegal pesticides, there are hundreds more who
are not prosecuted because their lobbyists have worked their way in Washington to ensure
that dangerous pesticides remain legal.
For every corporation convicted of reckless homicide in the death of a worker, there are
hundreds of others that don't even get investigated for reckless homicide when a worker is
killed on the job. Only a few district attorneys across the country have historically
investigated workplace deaths as homicides.
White collar crime defense attorneys regularly admit that if more prosecutors had more
resources, the number of corporate crime prosecutions would increase dramatically. A large
number of serious corporate and white collar crime cases are now left on the table for lack of
resources.
12. Beware of consumer groups or other public interest groups who make nice with
corporations.
There are now probably more fake public interest groups than actual ones in America today.
And many formerly legitimate public interest groups have been taken over or compromised
by big corporations. Our favorite example is the National Consumer League. It's the oldest
consumer group in the country. It was created to eradicate child labor.
But in the last ten years or so, it has been taken over by large corporations. It now gets the
majority of its budget from big corporations such as Pfizer, Bank of America, Pharmacia &
Upjohn, Kaiser Permanente, Wyeth-Ayerst, and Verizon.
11. It used to be when a corporation committed a crime, they pled guilty to a crime.
So, for example, so many large corporations were pleading guilty to crimes in the 1990s, that
in 2000, we put out a report titled The Top 100 Corporate Criminals of the 1990s. We went
back through all of the Corporate Crime Reporters for that decade, pulled out all of the big
corporations that had been convicted, ranked the corporate criminals by the amount of their
criminal fines, and cut it off at 100.
So, you have your Fortune 500, your Forbes 400, and your Corporate Crime Reporter 100.
10. Now, corporate criminals don't have to worry about pleading guilty to crimes.
Three new loopholes have developed over the past five years -- the deferred prosecution

agreement, the non prosecution agreement, and pleading guilty a closet entity or a defunct
entity that has nothing to lose.
9. Corporate criminals don't like to be put on probation.
Very rarely, a corporation convicted of a crime will be placed on probation. Many years ago,
Consolidated Edison in New York was convicted of an environmental crime. A probation
official was assigned. Employees would call him with wrongdoing. He would write reports for
the judge. The company changed its ways. There was actual change within the corporation.
Corporations hate this. They hate being under the supervision of some public official, like a
judge.
We need more corporate probation.

8. Corporate criminals don't like to be charged with homicide.

Street murders occur every day in America. And they are prosecuted every day in America.
Corporate homicides occur every day in America. But they are rarely prosecuted.
The last homicide prosecution brought against a major American corporation was in 1980,
when a Republican Indiana prosecutor charged Ford Motor Co. with homicide for the deaths
of three teenaged girls who died when their Ford Pinto caught on fire after being rear-ended
in northern Indiana.
The prosecutor alleged that Ford knew that it was marketing a defective product, with a gas
tank that crushed when rear ended, spilling fuel.
In the Indiana case, the girls were incinerated to death.
But Ford brought in a hot shot criminal defense lawyer who in turn hired the best friend of the
judge as local counsel, and who, as a result, secured a not guilty verdict after persuading the
judge to keep key evidence out of the jury room.
It's time to crank up the corporate homicide prosecutions.
6. There are very few career prosecutors of corporate crime.
Patrick Fitzgerald is one that comes to mind. He's the U.S. Attorney in Chicago. He put away
Scooter Libby. And he's now prosecuting the Canadian media baron Conrad Black.
5. Most corporate crime prosecutors see their jobs as a stepping stone to greater
things.
Spitzer and Giuliani prosecuted corporate crime as a way to move up the political ladder. But

most young prosecutors prosecute corporate crime to move into the lucrative corporate
crime defense bar.
4. Most corporate criminals turn themselves into the authorities.
The vast majority of corporate criminal prosecutions are now driven by the corporations
themselves. If they find something wrong, they know they can trust the prosecutor to do the
right thing. They will be forced to pay a fine, maybe agree to make some internal changes.
But in this day and age, in all likelihood, they will not be forced to plead guilty.
So, better to be up front with the prosecutor and put the matter behind them. To save the
hide of the corporation, they will cooperate with federal prosecutors against individual
executives within the company. Individuals will be charged, the corporation will not.
3. The market doesn't take most modern corporate criminal prosecutions seriously.
Almost universally, when a corporate crime case is settled, the stock of the company
involved goes up.
Why? Because a cloud has been cleared and there is no serious consequence to the
company. No structural changes in how the company does business. No monitor. No
probation. Preserving corporate reputation is the name of the game.
2. We must start asking -- which side are you on -- with the corporate criminals or
against?
Most professionals in Washington work for, are paid by, or are under the control of the
corporate crime lobby. Young lawyers come to town, fresh out of law school, 25 years old,
and their starting salary is $160,000 a year. And they're working for the corporate criminals.
Young lawyers graduating from the top law schools have all kinds of excuses for working for
the corporate criminals -- huge debt, just going to stay a couple of years for the experience.
But the reality is, they are working for the corporate criminals.
What kind of respect should we give them? Especially since they have many options other
than working for the corporate criminals.
Time to dust off that age-old question -- which side are you on? (For young lawyers out there
considering other options, check out Alan Morrison's new book, Beyond the Big Firm:
Profiles of Lawyers Who Want Something More.)
1. And the number one thing you should know about corporate crime?
Everyone is deserving of justice. So, question, debate, strategize, yes.
But if God-forbid you too are victimized by a corporate criminal, you too will demand justice.

We need a more beefed up, more effective justice system to deal with the corporate
criminals in our midst.

"The following is text from a speech

delivered by Russell Mokhiber, editor of
Corporate Crime Reporter to the Taming
the Giant Corporation conference in
Washington, D.C., June 9, 2007".

CONCLUSION
It is clear that, although legal and criminological research on this topic has benn
relatively limited, this is an area rich in research potential. It is important however to be
mindful of the different types of corporate crime and different enforcement strategies witch
need to be devised for dealing with each type. At the end of the day everyone is entitled to
honest and ethical public service and everyone should be aqual in front of the law, no matter
who you are.