Enron White Collar Crime Essay

White Collar crime is not a crime unto it self, but instead a criteria that has to be met in order for a crime to be considered as White- Collar Crime; (Blount, 2002) hence the reason why Corporate Crime is also considered as White- Collar Crime. At the same time, White Collar Crime and Corporate Crime can be seen as distinct criminological categories, however, in order to reveal this, this essay will firstly be exploring Sutherland's definition of white collar crime and the perplexity with this definition of white-collar crime. It will then be looking at the modification which had to take place with Sutherland's definition of white-collar crime in order to established a distinction between white-collar and corporate crime.

When I say white collar crime a few ideas usually will fill the average persons head. Many will immediately think of Bernie Madoff. This scumbag ran a ponzie scheme spanning multiple decades and made over 60 billion dollars in the process. He was eventually caught and thankfully is spending the rest of his natural born life in prison. Someone might also think of Martha Stewart. Martha, to the surprise of her fans, was much more than that loveable women on the home shopping network or the cooking channel. Martha was caught committing an act called insider trading. According to (The U.S. Securities and Exchange Commission), insider trading is when an individual has knowledge not known to the public about what is going to occur within a company

Most people, when they hear the word “crime,” think about street crime or violent crime such as murder, rape, theft, or drugs. However, there is another type of crime that has cost people their life savings, investors’ billions of dollars, and has had significant impacts of multiple lives; it is called white collar crime. The Federal Bureau of Investigation defines white collar crime as

Corporations in the United States have been at the forefront of the discussion on the sanctions that should be assessed to them following criminal activity since the 2008 stock market crash. The question has become what would happen if white-collar crime goes unpunished. In a 2014 article in the Duke Law Journal Stephen Buell stated, “If law and legal institutions do not respond seriously to wrongdoing in business firms, they will fail to protect the public and may produce or harden inequities in the administration of justice” (p. 823). Failing to protect society from corporations committing crime not only impacts the present, but also the future.

In 1939, American sociologist Edwin Sutherland introduced the phrase “white-collar crime”. White-collar crime is a nonviolent crime committed by a business or large corporations. They are usually scams or frauds to gain wealth in society. The people who are guilty of this crime lie, cheat and steal from investors of their company or business. Even though these crimes are non-violent, they have major impacts on the society. Their companies become non existent and families get destroyed. All of their life savings and savings for their children get taken away, and they become bankrupt. Not only does it affect their families, the investors who believed in their business lose millions or even billions of dollars.

White collar and corporate crimes are crimes that many people do not associate with criminal activity. Yet the cost to the country due to corporate and white collar crime far exceeds that of “street” crime and benefit fraud. White collar and corporate crimes refer to crimes that take place within a business or institution and include everything from Tax fraud to health and safety breaches.

… The New York Times in 1931 reported four cases of embezzlement in the United States with a loss of more than $1 million each and a combined loss of $9 million. Although a million dollar burglar or robber is practically unheard of, the million dollar embezzler is a small-fry among white collar criminals. The estimated loss to investors in one investment trust from 1929 to 1935 was $580 million… 2. This financial loss from white collar crime, great as it is, is less important than the damage to social relations. White collar crimes violate trust and therefore create distrust, and this lowers social morale and produces social disorganization on a large scale. * White Collar Crime: The Uncut Version, 1983

White-Collar Crime consists of occupational crime and corporate crime. Occupational crime refers to offences committed against legitimate institutions businesses or government by those with "respectable" social status. It includes the embezzlement of corporate funds, tax evasion, computer crime and expense-account fraud. It is not every day that we hear about white-collar crimes but these non-violent crimes are on the rise to the top. Federal Bureau of Investigation states that USA, for example recorded white collar crimes amounting $300 billion every year (Cornell University, 2010). White-collar crime is relatively a new idea. It has many aspects that are practical for study and further interpretation to clear some of its dark areas. White-Collar Crime was once introduced by Edwin Sutherland in 1939 during his speech in American Sociological Society. The following crimes actually performed are Bribery, Extortion, Insurance, Fraud, Embezzlement, Cybercrime etc. People who participate in these criminal activities are highly powerful and respectful among the society. The following activities include description about White-collar Crime, Investigation of White Collar Crime and The Consequences of committing a White-collar Crime.

According to our textbook, white collar crimes are "crimes that people of respectable and high social status commit in the course of their occupations" (211). This differs from other crimes in that the criminal uses their occupation or position to commit the crime out of greed, whereas street crime is committed by the poor to gain the goods and services society says the need. Sometimes the victim can be limited to the company in which the employee works for, such as with embezzling, or on a broad scale, the text gave an example of 124 people dying, all because General Motors failed to report faulty ignition switches (212-213). Unfortunately, these crimes are usually taken less seriously because of the high social status which the criminal holds.

However, the definition of white collar crime by this criminologist has become relatively obsolete for many students of criminal law. This is largely because the activities are not only conducted by people of high social status but also those from divergent backgrounds. The other theory behind this type of criminal activities is that deception is used as the means for conducting the activities. For the purposes of legal theory, white collar crime appears to be better approached as a family resemblance instead of type category (Green, 2005). This is mainly because this type of crime primarily refers to

Criminologists often attempt to categorize crimes so as to more easily analyze and compare trends and patterns; this categorization has led to a distinction between street crimes and white collar crimes (Friedrichs, 2010). Looking back to the origins of the term white collar crime, it was originally conceived of as “crime in the upper or white-collar class, composed of respectable or at least respected business and professional men” (Friedrichs, 2010, p. 4). This description holds true in the case of Enron, as the firm was a very respected and lauded business that was often featured in the press as an innovative and enviable company (Enron, 2005). Enron as a company, and those who worked there, were very respected in the business sphere, and

When looking at whether or not white collar criminals usually operate as one man army or collude with other individuals to commit fraud. In recent statistics the number is two-thirds of all fraud is committed by a lone perpetrator. However, the one third of cases that involved a form of collusion of white collar criminals of at least two or more parties led to four times higher median loss for the victim organization. Collusion allows for management and executives to work together to better circumvent internal controls that allow for a bigger schemes to go unnoticed. A fraudster working alone will not be able to get around as many controls without being detected by another employee. Another general trait is the correlation of education and

A once massive communications company was brought to ruin by the mishandling of DIRECTORS, OFFICERS, and the CEO. Between 1999 and 2002 the CEO Bernie Ebbers orchestrated over $9 billion worth of fraudulent accounting transactions. Surely all of this was not accomplished by just one man, this took teams of people who were unwilling to question authority or stand up during times of corporate wrong doing. Therefore, the information to follow will contain explanation of how this fraud was committed and by whom, the reasoning behind the fraud, the consequences of their actions for them and the corporation, and the final outcome for the corporation and those directors and officers held accountable.

In 1985 Houston Natural Gas and InterNorth merged to become Enron which started specializing in natural gas production. It moved from a $10 billion company in 1990 to a $101 billion in ten years. Kenneth Lay is the founder, Chairman and CEO who was challenged by the board of directors to diversify the company portfolio, grow faster, increase investor’s confidence, attract more investments and increase their credit rating. This is a great vision that has to come through legitimate means and sustainable growth. Unfortunately Enron managements’ greediness justified to themselves a lot of unethical actions to achieve their self-interest. They took advantage of loop holes in deregulated markets, influenced

The fall of Enron could have been redirected, but if they didn’t use unethical practices their vast growth would have never prevailed and their bankruptcy wouldn’t have been one for the books. Arthur Andersen was the auditors firm in charge of Enron’s finances. They generated a ridiculous amount of fees for consultation on Enron’s finances and therefore they were accused of having conflicts of interest in the corporation. Andersen also shredded relevant documents and deleted any form of evidence when news arrived that the (SEC) was investigating Enron. This also caused accusations of cover-up. All the negative publicity of Enron as well as its ill eagle practices led to a complete downfall in their stocks and worth. They were stuck in a kitchen filled with debt and not even their extravagant recipe for success could have saved them. (Paul, M; Krishna, G “The Fall of Enron” Journal of economic perspectives) The auditors understated its liabilities and its earnings were overstated. Enron told its Shareholders it had hedged downside risk in its own illiquid investments through using special purpose entities. What investors didn’t know was the fact that the special purpose entities actually used the company’s own stock and financial guarantees to finance the hedges. Thus Enron was not protected form downside risk. The fact that Enron used unethical practices actually caused them