Unit 5 Discussion: Data

Taking into consideration of your data for your research:

• Did you utilize a spreadsheet or database? 
• What made you choose one over the other?
• How do you plan on organizing the data to be reflected in your project?
• Unit 5.1 DB1: Financing Terror ArticleAfter reading the first article in Unit 5 answer the following question:What actions local and state law enforcement, along with local and state financial institutions do to combat this problem?
• Unit 5 DB2: Hawala ArticleAfter completing the reading assignment for Unit 5 on Hawala, discuss your reaction to the practice and what you believe law enforcement should do to the end the practice, if anything at all.

300 words per discussion

Running

head:

CRIME ANALY

S

I

S

TECHNOLOGY

1

CRIME ANALYSIS TECHNOLOGY 9

Crime Analys

is Technology

Student’s Name

Institutional Affiliation

Crime Analysis Technology

Peer-Reviewed Article Analysis

Technology has evolved over the years in various sectors, with new technological innovations being developed. One of the areas that has witnessed great applications of technological evolution is in the detection and prevention of crime. This article will analyze the various technologies that are used to prevent and detect crime.

Byrne and Marx (2011) in their article reviews the topic in detail and gives insight in the role of technology in combating crime.

The key data that will be used in this research is secondary data from various peer-reviewed sources that review the topic of

Crime Analysis Technology

from various perspectives. Byrne and Marx (2011) presents various data on crime and the use of Information Technology in crime detection and prevention. For instance, it highlights that the percentage of schools in the United States that deploy metal detectors is approximately 2%. The article also approximates that as of 2006, one million CCTV cameras had been deployed in the United States, although the article does not provide current estimates on the same.

The article plays a great role in my final research. It gives a highlight of the various technological applications for crime prevention and detection. This can provide a background for further research, especially the technological innovations that are currently being developed. The article also presents figures about various elements of technology in crime prevention and detection such as the number of CCTV cameras, the crime rates such as the registered sex offenders, among others. Projections can therefore be made to the future.

The article mentions several significant facts. First, it classifies technological innovations in criminal justice as hard technology versus soft technology. Hard technology innovations include hardware and materials while soft technology innovations include information systems and computer software. Examples of hard technology is the CCTV cameras, metal detectors, and security systems at homes and schools. Examples of soft technology include predictive policing technology, crime analysis techniques, software, and data sharing techniques, among others. Both of the two categories of technological innovations are important in criminal justice. Another fact is the new technology of policing. The article identifies hard policing technological tools such as non-lethal weaponry and technologies for officer safety. It highlights soft policing technologies such as data-driven policies in policing and information sharing. Another important fact that the article mentions is the issues that should be considered in technological innovations in criminal justice. Some of the issues mentioned in the article is that policy should be determined by research and evaluation and using evidence-based practice should be used to develop new programs or remodel the existing ones.

Overall, the article provides a good background for further research in technology in criminal justice system. More innovations may be included in further research due to ongoing technological innovations for crime prevention and detection. For example, further research should look at technological innovations to curb cyber-bullying due to the huge impact of social media.

References

Byrne, J. & Marx, G. (2011). Technological Innovations in Crime Prevention and Policing. A

Review of the Research on Implementation and Impact. Retrieved from

https://www.ncjrs.gov/pdffiles1/nij/238011

Running head:

CRIME ANALYSI
S

TECHNOLOGY

1

Crime Analys
is Technology

Student’s Name

Institutional Affiliation

Running head: CRIME ANALYSIS TECHNOLOGY 1

Crime Analysis Technology

Student’s Name

Institutional Affiliation

Unit 3.2: Peer Review Article

With your research, you will be reviewing a total of four (4) peer reviewed articles. For this discussion board, attach 1 of your articles and summarize it briefly for your peers.

· What key data will you be using for your research?

· How do you think this article will play a role in your final research?

· What are the 3 most important facts do you think this article covers?

The key data I will be using in my research is what is most and least common to society in the technology era. Anything from mobile phone technology, social media investigation and safety, to computer analyst software and safety, also how law enforcement uses the same tools and more to prevent, investigate, and catch an offender. The three most important facts this article will provide is information on the devices, tools, and techniques that is most important to the research

O, U. S. D. (2007). Investigative Uses of Technology: Devices, Tools, and Techniques. Retrieved January 30, 2020, from https://www.crime-scene-investigator.net/investigative-uses-of-technology-devices-tools-and-techniques.html

Crime Analysis technology:

This area has become the most important asset in the modern world. This topic interest me because it is the most common denominator between law enforcers and law offenders. What is also interesting is that information technology is literally at the fingertips of everybody. It is more interesting and feasible because it is one of the more effective ways of solving crime whether it is a detective triangulating signal off a cellphone tower to place an alleged killer in the area of a crime or doing a scan of a confiscated computer to detect inappropriate pornography. This is an interesting topic because it addresses developments that can be used to collect enormous amounts of evidence in crimes. However, it might be less feasible than the other topics due to the devastating effects that a mistake caused in this field can have on the universe.

For my Capstone Project I choose Crime Analysis Technology and techniques of fighting crimes. There is so much crime solving, current or cold case based on ever-evolving technology and the access it gives crime fighters. I believe extensive research and knowledge of this topic is researchable as well as presentable. The current technology and social media craze, law enforcement needs to take advantage of it and to society needs to be knowledgeable of how safe or dangerous it can be.

Running head: CRIME ANALYSIS 1

CRIME ANALYSIS TECHNOLOGY 5

Crime Analysis Technology

Crime analysis is a function that usually involves the systemic analysis in identifying as well as analyzing the crime patterns and trends. Crime analysis is very important for law enforcement agencies as it helps law enforcers effectively deploy the available resources in a better and effective manner, which enables them to identify and apprehend suspects. Crime analysis is also very significant when it comes to arriving at solutions devised to come up with the right solution to solve the current crime problem and issues as well as coming up with the right prevention strategies. Since the year 2014, crime rates in the USA have increased steadily as per a study done by USAFacts, which is a non-partisan initiative (Osborne & Wernicke, 2013). With this increase in crime rates, which has majorly resulted in massive growth in technology, it is essential to come up with better means and ways of dealing with the increased crime rates. With the current advancement in technology, better law enforcement tools developed, which has enabled better crime deterrence in better and efficient ways. All this has been facilitated by the efforts of crime analysts who have come up with better tools and thus enabling the law enforcers to better deal with the crimes (Osborne & Wernicke, 2013). In this paper, I will consider the application of crime analysis technology and techniques in fighting crimes. Application of crime analysis technology and techniques used to make crime analysis more accurate and efficient.

Currently, the two technological tools that are used in predictive policing software have enabled security agencies to effectively use predictive policing (“Crime Analysis: Fighting Crime with Data,” 2017). Application of this software has enabled better crime prevention as with data obtained in the previous crimes have been used to predict possible future severe crimes in a specific area.

Through the adoption and use of crime analysis, law enforcement agencies have been able to fight against crimes as when compared with the past effectively. The use of crime analysis comes at the right time, where there has been an increase in crime rates in the current digital error. In a survey done by Wynyard group in 2015, the study revealed that for every 10 law enforcement officials 9 of them believe that the use of current technology in crime analysis has had positive effects in helping the agencies in solving crimes as they can identify essential links and trends in crimes (“Crime Analysis: Fighting Crime with Data,” 2017). In the same way, other sectors have benefited from data analysis with spreadsheets, databases, and mapping, law enforcers have been able to use data analysis to come up with a better decision. Crime analysis has had many positive impacts in different areas, which includes robberies and arsons with pattern examining as well as reviewing events sequence (Santos, 2012).

Use crime analysis technology is very useful in fighting terrorism activities through analysis of previous crimes and thus predicting any intended cyber-attacks. One of the most important federal agency mandated to deal with terrorist activity is the FBI. Therefore, be essential to implementing the initiative to the FBI agent. FBI is a U.S. domestic security and intelligence service. The FBI operates under the United States department of justice jurisdiction and usually reports to the director of national intelligence and attorney general. FBI is the United States leading organization when it comes to matters aimed at countering terrorist activities as well as investigation of criminal activities. The FBI formed in 1908, the organization currently has about 35,204 employees and its headquarters are in Washington, D.C. Having being involved in both law enforcing responsibilities as well as intelligence, the FBI is unique as it has dual responsibilities and thus significant agency in the U.S. Some of the vital roles includes ensuring the United States has protection from terrorist activities as well as foreign threat activities. In addition, it mandates upholding and enforcing criminal laws of the U.S. as well as providing criminal justice services and leadership to both federal, state, international agencies as well as municipal. Implementing a better law enforcement initiative in the FBI is therefore very important, as it will strengthen the ability of the FBI when it comes to dealing with the terrorist as well as ensuring the nation has protection from other foreign threats. To ensure the success of the initiative, most of the stakeholders will be technological companies. Technological companies will ensure the success of the action reaches achievement. The target audience will be the leaders of the FBI agents, as this will ensure that the information reaches the rest of the FBI fraternity.

References

Crime Analysis and Patterns. (n.d.). The International Crime Drop. doi:10.1057/9781137291462.0014

Crime Analysis: Fighting Crime with Data. (2017, June 12). Retrieved from https://www.floridatechonline.com/blog/criminal-justice/crime-analysis-fighting-crime-with-data/

Crime Analysts Fight Crime From Behind a Keyboard. (2019, July 29). Retrieved from https://online.campbellsville.edu/criminal-justice/crime-analysts/

Federal Bureau of Investigation (FBI): History, Role & Purpose. (n.d.). Retrieved from https://study.com/academy/lesson/federal-bureau-of-investigation-fbi-history-role-purpose.html

Osborne, D., & Wernicke, S. (2013). Introduction to Crime Analysis: Basic Resources for Criminal Justice Practice. London, England: Routledge.

Santos, R. B. (2012). Crime Analysis With Crime Mapping. SAGE.

The United States. Federal Bureau of Investigation. (n.d.). The FBI Story.

Financing Terror
By DEAN T. OLSON, M.A.

 

‘The frequency and seriousness of international terrorist acts are often proportionate to the financing that terrorist groups might get.”1 Terrorist organizations must develop and maintain robust and low-key funding sources to survive. Domestic and international terrorist groups raise money in the United States to exploit the nation’s market-based economy and democratic freedoms for profits that they send overseas or use locally to finance sleeper cells. Raising funds on American soil fulfills complementary goals by undermining the economy, introducing counterfeit and often unsafe or adulterated products and pharmaceuticals into the consumer market, and increasing the social costs of substance abuse by feeding the demand for illicit drugs.

The terrorists who attacked the World Trade Center in New York City in 1993 originally planned to use a larger bomb to bring down both towers by toppling one into the other.2 They also wanted to amplify the carnage by augmenting their vehicle-borne improvised explosive device with a chemical or biological weapon to increase casualties and hamper rescue efforts. Their goal, however, went awry because they ran out of money.

Similarly, lack of funds limited the plans of another group that conspired in 2003 to simultaneously bomb the Egyptian, American, and other Western embassies in Pakistan.3 Inadequate monetary resources forced the group to focus on attacking only the Egyptian embassy. “A short time before the bombing of the [Egyptian] embassy the assigned group… told us that they could strike both the Egyptian and American embassies if we gave them enough money. We had already provided them with all that we had and we couldn’t collect more money.”4

A major source of terrorist funding involves criminal activities. Groups use a wide variety of low-risk, high-reward crimes to finance their operations. Those most likely encountered by local law enforcement involve six primary areas.

Captain Olson serves with the Douglas County, Nebraska, Sheriff’s Department.

Illicit Drugs

“If we cannot kill them with guns, so we will kill them with drugs.”5 Documented links exist between terrorist groups and drug trafficking, notably the smuggling of pseudoephedrine, a precursor used to manufacture methamphetamine. After purchasing the substance in multiton quantities, smugglers associated with one terrorist group moved truckloads of it into the United States to feed methamphetamine labs in California and neighboring southwestern states.

In three major drug investigations, DEA arrested more than 300 people and seized over $16 million in currency and enough pseudoephedrine to manufacture 370,000 pounds of methamphetamine. To put this quantity into context, the average annual seizure of methamphetamine throughout the United States in 2002 was 6,000 pounds.6

Fraud

Frauds perpetrated by terrorist groups include identity theft for profit and credit card, welfare, social security, insurance, food stamp, and coupon fraud. Industry experts estimate that $3.5 billion in coupons are redeemed annually.7 About 10 percent, or $3.5 million, is fraudulent.

In 1987, authorities disrupted a large coupon fraud ring involving more than 70 participants.8 The conspirators were accused of sending a portion of the proceeds to Palestine Liberation Organization (PLO) bank accounts in the Middle East and Europe. A Palestinian operating several grocery stores in the North Miami, Florida, area was the key player in a nationwide money laundering and financing operation for the PLO. The investigation discovered that 72 individuals from throughout the United States gathered in Hollywood, Florida, to further the fraudulent coupon distribution network. One person was identified as a cell leader of a terrorist network. Members of the group also were involved in hijacking trucks and selling stolen food stamps and property.9

In 1994, New York City officials identified the head of a coupon fraud ring who had established a network of stores by targeting those owned and controlled by Middle Eastern businessmen willing to participate in schemes that defrauded American commercial enterprises.10 Most of the time, a small store that normally submitted $200 to $300 in coupons monthly would suddenly begin sending in tens of thousands of dollars worth of them after joining the network. The store owners never saw the coupons; they only received the redemption checks. In many cases, the owners borrowed money or agreed to lease stores for a monthly fee set by the network. They used coupons to pay the debt on these loans, which sometimes required 49 percent interest per month.11

Stolen Baby Formula

In another scheme in the late 1990s, investigators in Texas discovered that organized shoplifting gangs paid drug addicts and indigent people $1 per can to steal baby formula. The groups repackaged the products in counterfeit cardboard boxes before shipping the bootleg formula to unsuspecting stores across the United States. One of the largest rings at the time netted $44 million in 18 months.12

As the terrorist attacks on September 11 unfolded, a Texas state trooper pulled over a rental van and found an enormous load of infant formula inside. Police later identified the driver as a member of a terrorist group and linked him to a nationwide theft ring that specialized in reselling stolen infant formula and wiring the proceeds to the Middle East.13 The investigation led to felony charges against more than 40 suspects, about half of them illegal immigrants.

Police also seized $2.7 million in stolen assets, including $1 million worth of formula. This investigation was only the beginning. In the years after September 11, police discovered and disrupted several regional and national theft rings specializing in shoplifted baby formula. At least eight of the major cases involved individuals of Middle Eastern descent or who had ties to that region.14

Intellectual Property Theft

According to media reports, the terrorists who bombed the World Trade Center in 1993 allegedly financed their activities with counterfeit textile sales from a store in New York City.15 A raid on a souvenir shop led to the seizure of a suitcase full of counterfeit watches and the discovery of flight manuals for Boeing 767s, some containing handwritten notes in Arabic. A subsequent raid on a counterfeit handbag shop yielded faxes relating to the purchase of bridge inspection equipment. While investigating an assault on a member of an organized crime syndicate 2 weeks later, police found fake driver’s licenses and lists of suspected terrorists, including the names of some workers from the handbag shop, in the man’s apartment.16

Pirated software constitutes a tremendous source of funds for transnational criminal syndicates, as well as terrorist groups. It is not difficult to see why software piracy has become attractive. A drug dealer would pay about $47,000 for a kilo of cocaine and then sell it on the street for approximately $94,000, reaping a 100 percent profit. But, for the same outlay of $47,000 and substantially less risk, an intellectual property thief could buy 1,500 bootleg copies of a popular software program and resell them for a profit of 900 percent.17 To put these numbers into context, the September 11 attacks cost approximately $500,000, or $26,000 per terrorist. One successful large-scale intellectual property crime easily could fund multiple terrorist attacks on the scale of those of September 11, 2001.

Items Common to Illegal Hawala Operations

· Spiral notebooks, scraps of paper, or diaries listing information for numerous financial transactions, which generally include the date, payer name, amount received, exchange rate, and payment method or remittance code

· An unusually high number of phone lines at a residence or business; short incoming calls and lengthy overseas calls

· Fax transmittal logs/receipts, which may contain name of sender, beneficiary, or a code

· Wire transfer receipts/documents

· Phone records/documents; multiple calling cards

· Multiple financial ledgers (one for legitimate transfers, one for criminal activity, and one possibly for settling accounts)

· Bank account information, particularly multiple accounts, under same name

· Multiple identification (false ID for the subject or for several other individuals)

· Third-party checks

· Evidence of other fraud activity

Cigarette Smuggling

Exploiting a considerable tax differential, smugglers bought van loads of cigarettes for cash in North Carolina and transported them to Michigan.18 According to prosecutors, each trip netted $3,000 to $10,000. In 1 year, the recipient of the profits, who had links to a terrorist group, had deposited over $735,000 in bank accounts while paying for houses, luxury cars, and other goods with cash. The group sent items, such as night-vision goggles, cameras and scopes, surveying equipment, global positioning systems, and mine and metal detection equipment, to other terrorists abroad.19 The ringleader was sentenced to 155 years in prison, and his second in command received a 70-year prison sentence.

Informal Value Transfer Systems

Informal value transfer and alternative remittance systems play a significant role in terrorism financing. One example, hawala, involves the transfer or remittance of money from one party to another, normally without the use of such formal financial institutions as banks or money exchanges. International financial institutions estimate annual hawala transfers at approximately $2 trillion dollars, representing 2 percent of international financial transactions.20

Because these systems operate below legal and financial radars, they are susceptible to abuse by criminal elements and terrorists.21 Moreover, few elements of this informal transfer system are recorded, making it difficult to obtain records of the transmitters and the beneficiaries or to capture the scale and magnitude of such transfers. Although operators keep ledgers, their records often are written in idiosyncratic shorthand and maintained only briefly.

Conclusion

From stolen baby formula to intellectual property theft, terrorist groups employ a variety of criminal schemes to raise funds. And, as with other homeland security matters, countering terrorist financing is fundamentally a local law enforcement responsibility. The more familiar officers are with the criminal enterprises used by these groups to raise money, the more effective they will be in finding ways to counter such activities.

Countermeasures must disrupt terrorist financing and starve such groups of the money necessary to sustain their organizations and to perpetrate attacks. Without the financial means to carry out their missions, terrorists will find it increasingly difficult to continue their wanton acts of death and destruction.

Endnotes

1 Interpol, Terrorism: The Financing of Terrorism (2005); retrieved July 2005 from http://www.interpol.int/Public/Terrorism/ financing.asp.

2 Loretta Napoleoni, Modern Jihad: Tracing the Dollars Behind the Terror Networks (Sterling, VA: Pluto, 2003), 4.

3 Nick Kochan, The Washing Machine (New York, NY: Thompson, 2005), 34.

4 Ibid., 32.

5 Rachel Ehrenfeld, Funding Evil: How Terrorism Is Financed and How to Stop It (Seattle, WA: National Press, 2003), 123.

6 Drug Enforcement Administration, More than 100 Arrested in Nationwide Methamphetamine Investigation, Federal News Service, January 10, 2002; retrieved July 2005 from http://www.usdoj.gov/dea/ major/me3.html.

7 B. Jacobson, Coupon Fraud, Testimony before the U.S. Senate Select Committee on Intelligence, Washington, DC, 1997.

8 Ibid.

9 “U.S. Grocery Coupon Fraud Funds Middle Eastern Terrorism,” New American 13, no. 5 (March 13, 1997); retrieved July 2005 from http://www.thenewamerican. com/tna/1997/vo13no05/vo13no05_ coupon.htm.

10 Ibid.

11 Ibid.

12 Mark Clayton, “Is Black Market Baby Formula Financing Terrorism?” Christian Science Monitor, June 29, 2005; retrieved August 2005, from http://www. usatoday.com/news/nation/2005-06-28baby-formula_x.htm.

13 Ibid.

14 Ibid.

15 John Nurton, “Why Counterfeiting Is Not So Harmless,” Managing Intellectual Property, September 2002, 43.

16 Kathleen Millar, “Financing Terror: Profits from Counterfeit Goods Pay for Attacks,” Customs Today, retrieved June 2005, from http://www.customs.gov/xp/ CustomsToday/2002/November/interpol. xml.

17 Jennifer L. Schenker, “Busting Software Pirates,” Time 2002, 54.

18 Patrick Fleenor, “Cigarette Taxes, Black Markets, and Crime,” Policy Analysis, 2003, 13.

19 Ibid., 57.

20 Larry Lambert, “Underground Banking and National Security,” Sapra India Bulletin, February/March 1996; retrieved July 2005, from http://www.subcontinent. com/sapra/bulletin/96feb-mar/si960308. html.

21 Supra note 1, 37.

Dealing with Hawala Informal Financial Centers in the Ethnic Community

By JAMES CASEY, M.A. © PhotoDisc

In the immediate aftermath of September 11, 2001, many experienced intelligence officers did not understand the concept of hawala, and few knew what it actually represented in the context of money laundering and terrorism financing. Then, as today, hawala constitutes an important economic aspect of life in America’s Middle Eastern and Southeast Asian communities.1 Law enforcement officers

who work in these locations or investigate white-collar crime or terrorism financing should know about and understand how to deal with hawala and other nontraditional financial centers.

How Hawala Works

Hawala comprises one type of the informal value transfer system (IVTS) used mostly by members of an ethnic community to send money around the world. Other forms of IVTS, which also can be elements of hawala, include physically transporting (smuggling) currency and stored-value transfers (chits). Hawala does not involve the immediate movement of any negotiable instrument nor are actual funds immediately transmitted anywhere. An ancient system that actually predates banking, it works in an analogous manner to a more formal system of “wiring” money.2 When individuals wire money, they contact a legitimate money-wiring service and provide an amount of funds they wish to send to another party plus a fee. If they send money overseas, they generally pay a recognized margin or exchange rate at which they purchase funds in that country’s currency. Of course, funds are not actually “wired” to the other person, and nobody physically sends money anywhere at that time. Instead, one vendor accepts the cash from the sender, and another gives the same amount to the recipient. Then, the two vendors settle at a later time.

In more legitimate operations, these settling transactions almost always involve the transfer of funds from one account to another at banking institutions. With hawala, however, either a transfer of funds to a bank or a number of less formal settling transactions may occur. Hawaladars (i.e., operators) may travel overseas on a regular basis to settle accounts in person with their contacts. They may have other business interests with these intermediaries that involve inventory and merchandise, which they can manipulate to reflect the hawala transactions. For example, hawaladars can trade premium goods, such as phone cards, at a discount to represent the value of earlier transactions.

Just like legitimate money-wiring operations, hawala often is contained within another community business, such as an ethnic market or travel agency, or run by freelancers who operate autonomously in the community. The global scope of IVTS and hawala is impossible to calculate. An International Monetary Fund/ World Bank estimate puts worldwide IVTS transfers on the order of tens of billions of dollars annually.3

Money Laundering

Hawala is not necessarily synonymous with money laundering or even white-collar crime or terrorism financing. Money laundering, by its very nature, involves attempting to make “dirty” money, often via drug activity or organized crime wherein criminals generate sums of wealth (usually cash) that cannot be easily explained or managed, “clean.” So, they transfer the money in and out of different accounts, banks, and various legitimate and partially legitimate businesses. This supposedly creates ambiguity as to its origin and lends legitimacy to otherwise criminal proceeds. It is significant to recall that money laundering, per se, generally is not, in and of itself, a criminal act.4 Most money-laundering statutes require evidence of a specific underlying enterprise, such as drug trafficking or other criminal activity, to successfully prosecute the money-laundering offense.

Casey heads the Eurasia Section
in the FBI’s Counterintelligence Division.

Terrorism Financing

An interesting paradox surrounds the financing of terrorism. First, cash proves as important, if not more so, to successful terrorist operations as it does to any other prosperous venture, legal or otherwise. But, at the opposite end of the equation, terrorist operations are not prohibitively expensive. After all, a teenage terrorist who straps on explosives and detonates himself in a Tel Aviv restaurant killing dozens costs little, yet his actions prove effective.

Ahmed Ressam, an Algerian loosely affiliated with al Qaeda, had lived illegally in Canada for several years when he tried to enter the United States with explosives in the trunk of his car. He was destined for Los Angeles International Airport where he intended to set off an explosion as part of a larger New Year’s millennium terrorism plot. His overseas handlers had instructed him to finance himself by burglarizing hotel rooms, stealing credit cards, and committing other petty offenses.5 Timothy McVeigh and Terry Nichols used the proceeds from several home burglaries and gun show sales to buy farm-grade fertilizer they mixed with fuel oil to bomb the Murrah Federal Building in Oklahoma City.

According to the 9/11 Commission, the entire cost of the September 11 plot was between $400,000 and $500,000. Considering that close to two dozen individuals (the 19 hijackers plus overseas support elements) were likely involved over an 18-month to 2-year period, the funds needed for significant international travel, terrorist-camp training, flight school, and living expenses only approximated $12,000 per person, per year.

The 9/11 Commission also found no evidence of any foreign government knowingly helping to finance the operation; instead, most of the funds were derived from donations to charity. While some media sources have claimed Saudi Arabia was responsible for providing a large amount of terrorism funding in general and particularly for the September 11 plot, a specific dollar-for-dollar nexus does not exist. While the royal family in Saudi Arabia maintains a complex relationship with both its citizens and conservative religious clerics and charities in the country, proving the government provided funds to these religious leaders and charities knowing that the money would eventually finance terrorism never has been established.6 Moreover, while the 9/11 Commission found that al Qaeda used hawala to move money in and out of Afghanistan, it also determined that the group did not employ hawala in any way to fund the 19 hijackers or the events surrounding the September 11 attacks.7

Hawala in the Community

People use hawala for any number of reasons; many of these are legitimate, while others are not. Investigators must understand that in the Middle Eastern community, the importance of family and other trusted relationships cannot be overemphasized. Often, a member of the community refers to another as belonging to a particular family when, in fact, the relationship is so distant that it is legally insignificant. These family and clan relationships perhaps are more significant than in any other ethnic community in the United States. At the same time, many members have relatives in their home countries they support financially.

Within these Middle Eastern and Southeast Asian communities, members trust local businessmen, including the hawaladar, a great deal. That trust is one element that invites the use of hawala. A fictional example of a member of the community employed in violation of his tourist or student visa can help illustrate the system. The young man does not have a social security number and wishes to send money to his homeland, a country where currently it is unlawful to do so, to support relatives. He has four immediate incentives to use a local hawaladar, rather than a traditional bank or money-wiring service.

1) He is violating the terms of his visa by working in the United States.

2) He does not have a social security number and may be working without paying taxes.

3) Treasury regulations do not allow him to legally send money to his country.

4) A hawaladar probably is more economical than other more legitimate means of moving money because of lower finance charges and exchange rates.

Passed in 2001, the United and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act8 called on the U.S. Department of the Treasury to determine whether Congress should stiffen laws relating to IVTS in the United States. The report to Congress concluded that although law enforcement had tools at its disposal for dealing with IVTS (hawala), further education was a key element. “The U.S. approach of regulating informal value transfer activity is preferable to outlawing the activity altogether, a course chosen by some nations. Attempting to outlaw the IVTS ultimately deprives law enforcement of potentially valuable information and drives the informal remittance providers further ‘underground.’ Outlawing the activity also deprives the mostly law-abiding IVTS customers of the primary channel through which they transfer funds.”9

© PhotoDisc

Techniques for Law Enforcement

As with any crime problem, a keen understanding of who is who in the community constitutes one of the keys to successfully dealing with hawala. Officers and investigators need to use their sources of information to determine which merchants and individuals in the community act as IVTS brokers. When suspicion arises that these entities are employing IVTS to facilitate drug trafficking, terrorism financing, or money laundering, law enforcement can exploit a host of local, state, and federal offenses these enterprises are committing.

Regardless of how well-meaning or “community oriented” hawaladars are, they violate technical infractions each time they engage in a financial transaction. The federal Bank Secrecy Act (BSA)10 requires any person or group acting as a money-services business (MSB) to adhere to numerous reporting and record-keeping requirements, most or all of which hawaladars routinely ignore. Additionally, these businesses, by law, must register with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), which, again, they usually disregard. Furthermore, MSBs are required by law to produce suspicious activity reports (SARs) for transactions over $2,000 that appear, or should appear to them, to involve illegal activity. Finally (although not all-inclusively), investigators should note that Title 18 of the U.S. Code makes it a crime to operate an MSB in the absence of compliance with applicable state licensing requirements.11 Undoubtedly, these enterprises also do not appropriately follow these regulations.

A misperception exists that hawaladars do not keep records; this is false. Many keep extensive documentation because the settling of accounts often takes place well into the future. What investigators need to look for are unconventional records or ones kept in a language other than English. Also, because hawaladars barter in other than cash products, investigators should check for large transactions involving food stamps, lottery tickets, and phone cards, all of which can be alternate forms of currency in the community.12 Of course, phone records and those from Internet service providers, as well as legitimate bank documents, can be valuable because they show who the hawaladar has dealt with. Investigators should focus on contacts and transactions that involve Great Britain,13 Switzerland, and Dubai as these comprise major financial centers with strict financial secrecy laws.14 Moreover, even when hawaladars are not knowingly involved in serious illegal activity, their nonconforming business practices put them in positions where they could assist law enforcement with the real criminal element in a community, especially those dealing in narcotics, laundering money, or financing terrorism.

Conclusion

The hawala concept is not prohibitively complicated. Its deviance from conventional banking and financial institutions, together with its place in the Middle Eastern and Southeast Asian communities, can pose a challenge for investigators experienced in more traditional financial crimes, including money laundering and terrorism financing. However, employing some specific techniques, coupled with a solid community intelligence base, should assist them with hawala and nontraditional financial centers.

Endnotes

1 These locales often include individuals of Indonesian, Indian, Palestinian, and Egyptian nationalities.

2 Patrick M. Jost and Harjit Singh Sandhu, Interpol General Secretariat, The Hawala Alternative Remittance System and Its Role in Money Laundering (Lyon, January 2000).

3 Secretary of the U.S. Department of the Treasury, Report to the Congress in Accordance with Section 359 of the USA PATRIOT ACT.

4 While transferring money between different accounts and banks may not constitute money laundering per se, investigators are encouraged to look carefully at all federal, state, and municipal laws and regulations and consult with financial crimes prosecutors as activities, such as “structuring” and improper record keeping, in fact, may constitute specific criminal conduct sufficient to establish money-laundering charges.

5 National Commission on Terror Attacks Upon the United States, The 9/11 Commission Report: Final Report of the National Commission on Terrorist Attacks upon the United States (Washington, DC, 2004), 175.

6 Ibid., 170-171.

7 Ibid., 499 (note 131 to chapter 5).

8 PL 107-56, October 26, 2001, 115 Stat 272.

9 Supra note 3.

10 See 31 USC 5311.

11 Supra note 3.

12 Recently, some companies have begun issuing traditional credit cards that can be legally obtained anonymously. Customers prepay a fixed amount for the cards then use them at retailers (currently, online auctions), which accept the card anonymously as payment.

13 For additional information, see Marc D. Ferbrache, “Offshore Financial Centers: The Channel Islands and the Isle of Man,” FBI Law Enforcement Bulletin, February 2001, 10-15.

14 Supra note 2.

WHITE COLLAR CRIME IN CONTEMPORARY SOCIETY 4TH ED.

CHAPTER 7
ENTERPRISE CRIME,
CONTREPRENEURIAL CRIME,
AND TECHNOCRIME
Trusted Criminals
Designed by: Jordan Land, M.S.

Enterprise Crime:
Organized Crime and White Collar Crime
Enterprise refers to the interrelated dealings of legitimate businesspeople, political officials, and syndicated racketeers

Organized crime refers to any organized illegal activity, including organized professional theft, business theft, terrorist groups, motorcycle gangs, and “racketeers” who extort money by intimidation and violence

Enterprise Crime:
Organized Crime and White Collar Crime
Organized crime is most commonly associated with the Mafia or La Cosa Nostra, an alleged national syndicate of criminals of Italian decent engaged in systematic illegal enterprises involving:
The sale and distribution of illicit drugs
Gambling
Prostitution
Loan sharking
Labor racketeering

Enterprise Crime:
Organized Crime and White Collar Crime
Perhaps the easiest solution is to refer to the popular image of Mafia-type syndicates, as syndicated crime and use the term organized crime more broadly
Several features are commonly associated with syndicated crime:
It’s a self perpetuating organizational with a hierarchy
A limited membership
Specialized roles
Particular obligations
Omerta

Enterprise Crime:
Organized Crime and White Collar Crime
Several obligations that are commonly associated with syndicated crime:
Omerta- vow of secrecy
Conspire to monopolize illegal enterprises by threat of or actual use of:
Force
Violence
Intimidation
Seek to protect itself from prosecution by corrupting the political and legal system

Enterprise Crime:
Organized Crime and White Collar Crime

Legitimate businesses and syndicated crime engage in many of the same activities but in ways that are somewhat arbitrarily defined as legal or illegal

Syndicated crime performs important functions for corporate enterprises and the capitalist political economy
Syndicated crime and capitalist institutions coexist profitably

Enterprise Crime:
Organized Crime and White Collar Crime

Perhaps the most accurate assessment of the economic impact of syndicated crime acknowledges that it cuts both ways

It benefits some elements of the capitalist political economy while harming others

The Relation between Governmental Crime
and Syndicated Crime
The survival of syndicated crime may depend on the cooperation or connivance of some governmental officials

Investigations have uncovered evidence linking governors, state legislators, judges, and various other government officials with syndicated crime

On the national level, ties between government agencies and syndicated crime go back at least as far as the early half of the 20th century

The Relation between Governmental Crime
and Syndicated Crime
Lucky Luciano assisted the U.S. Navy Intelligence in preventing sabotage and unrest on the New York docks

CIA enlisted the cooperation of syndicated crime in its attempts to overthrow Fidel Castro

Organized crime must be understood both as a product of a capitalist economy and as the illegal activity of a network of interdependent businesspeople, government officials, and racketeers

Historical Roots of Organized Crime
Piracy might be regarded as the first form of organized crime

John Hancock apparently operated an organized crime cartel that engaged in large-scale smuggling in the pre-Revolutionary colonies

The syndicated form of organized crime is often considered to have its roots in the Mafia, which emerged in southern Italy

Historical Roots of Organized Crime
Italian-American syndicated crime was widely regarded as the dominant form of authentic organized crime in the United States in the 20th century

Prohibition provided an ideal opportunity for the dramatic growth and expansion of syndicated crime because it created enormous demand for a product, alcoholic beverages, in the absence of a legal supply
The repeal of Prohibition hardly diminished the potency of syndicated crime

Historical Roots of Organized Crime

The objective of those involved in syndicated crime thus parallels those of individuals in legitimate occupations, and syndicated crime is simply seen as an unorthodox form of white collar crime

The Relation between Syndicated Crime
and White Collar Crime
One thesis concerning the connections between syndicated crime and white collar crime suggests that the methods used to establish the great industrial empires and sprawling Western ranches of the 19th century were fundamentally no different from the methods used by 20th century mafiosi and syndicated crime members
The 19th century Robber Barons and cattle barons were the forerunners of 20th century organized crime

The Relation between Syndicated Crime
and White Collar Crime
The general public perception of syndicated crime has in fact been somewhat ambivalent

Syndicated crime mobsters do not enjoy the same status of respectability that white collar offenders do
They are more vulnerable to:
Suspicion
Investigation
Conviction

The Relation between Syndicated Crime
and White Collar Crime
Legitimate businesses provide both a front and an important tax cover for illegal activities

They provide employment for associates and relatives who are on probation and parole

Altogether, increasing involvement with legitimate business can reduce the exposure of syndicated crime figures to prosecution and may also reflect an aspiration for greater respectability

Hazardous Waste Disposal
The business of disposing of toxic waste has been heavily infiltrated by syndicated crime because of its longstanding domination of the garbage-carting and disposal business

The illegal disposal of hazardous waste costs only a fraction of the cost of safe and legal disposal

Less than 20% of these wastes are disposed of properly

Hazardous Waste Disposal
Illegally disposed of hazardous waste endangers the health of people exposed to it

Corporations that generate hazardous waste strongly lobbied against laws that would impose substantial liability on them for the effects of improper or illegal disposal

This activity is an especially clear example of a hybrid type of white collar/organized crime

The Relations between Syndicated Crime
and Finance Crime
The theft and manipulation of stocks and bonds by syndicated crime has been a major problem since the early 1970s

The longstanding practice of laundering the huge sums of money generated by illegal enterprises obviously requires some complicity on the part of banks, which benefit from these large deposits
Syndicated crime outfits have had various forms of suspect dealings with financial institutions and have sometimes infiltrated them

The Relations between
Syndicated Crime and Finance Crime
Many connections exist between organized crime and white collar crime and the boundary lines between them have blurred

Donald Cressey speculated that at some point we would no longer be able to tell the difference between white collar crime and organized crime

Contrepreneurial Crime:
Professional Criminals and White Collar Crime
A professional criminal is anyone who engages in criminal activity regularly
It has been used interchangeably with the term career criminal

Professional criminals attempt to minimize the risk of arrest, prosecution, and imprisonment by carefully planning their crimes, avoiding violence, and putting in the “fix” with corruptible law enforcement and political officials

Historical Origins of Professional Crime
Origins of professional crime have been traced back to European feudalism when a certain proportion of the newly disenfranchised turned to:
Robbery, poaching, banditry, and other outlaw practices
Jesse James & John Dillinger have been regarded as one class of professional criminals

The Relation between Professional Crime
and White Collar Crime
Several parallels exist between professional criminal and white collar offenders
Both are prepared to take risks to make money
Both are prepared to violate the law to maximize profit
Both seek to immunize themselves by bribing or financing the campaigns of politicians or becoming informants for law enforcement officials
The classic professional criminal relies on skill and planning rather than direct force or intimidation to achieve an illegal objective
Both need to convey an aura of respectability and inspire some level of trust to carry out their crimes

The Relation between Professional Crime
and White Collar Crime
Professional
More accepting of their outlaw status
More likely to make a deliberate decision to become involved in criminal activities
Attempts a pure theft of money from a vulnerable victim or mark
White collar
Regard themselves as businesspeople
May drift into fraudulent enterprises
Defrauds by giving something of little or no real value in return for money
What are the differences between the
classical professional criminal and
the contrepreneurial white collar
criminals?

Fraudulent Businesses:
Swindles, Scams, and Rackets
A vast number of enterprises are swindles, scams or rackets that annually cost consumers, investors and other unwitting parties billions of dollars

Are these activities properly classified as white collar crime?
In some cases, the activity is more appropriately described as organized crime or professional crime
In other cases, a designation of white collar crime is clearly justified

Fraud
The two key elements of fraud in legal terms are:
Stealing by deception

Reports of fraud appear early in recorded history

Ex. In the 4th century BC in Greece, a ship owner attempting to defraud someone by seeking a cash advance for a ship laden with corn when all along the intent was to scuttle the ship instead of delivering the corn

Fraud
Other contemporary swindles and schemes include:
Phony charities, long lost-heir searches, magazine subscription rackets, referral schemes, travel deceptions, etc.
Consumer fraud has been understudied by criminologists despite the fact that it generates staggering annual losses that are estimated to be as high as $100 billion annually
Fraudulent businesses prey upon human vanity, fantasy, loneliness, insecurity and fear

Ponzi and Pyramid Schemes

In 1919, Charles Ponzi began advertising that he could return large profits to investors because he had learned how to take advantage of the international currency and postage markets

The claim was that international postal reply coupons purchased in a poor country such as Italy could be redeemed at a much higher rate in the United States

Ponzi and Pyramid Schemes
Ponzi was not investing the money
He was spending it on himself and paying off early investors with some part of the money pouring in from newer investors
Eventually, the scheme was exposed and Ponzi went to prison
High returns are promised
Some early investors may receive payoffs, but most of the invested money is spent on a lavish lifestyle for the perpetrators

Ponzi and Pyramid Schemes

March 12, 2009, Bernard L. Madoff pleaded guilty to 11 criminal counts in relation to a Ponzi scheme which the government claims involved $65 billion

The Madoff Ponzi scheme was surely the largest in history to date

Pyramid scheme is a special variant of a Ponzi scheme

Investment Frauds
Losses due to investments in fraudulent schemes and securities are especially widespread and substantial
By some estimates, Americans lose more than $2 billion annually by investing in low-price penny stocks
In recent years, fraudsters have been convicted in cases involving as many as 10,000 investors, and hundreds of millions of dollars in losses, in frauds involving bonds supposedly backed by a collection agency and the financing of leases on office equipment

Investment Frauds
The losses due to all such schemes are dwarfed by the losses to investors as a consequence of massive accounting fraud at Enron, WorldCom, HealthSouth and other major corporations

Home Improvement and Ownership Frauds
Some contractors are outright con artists

Many others are marginal contactors who mislead customers, do incomplete or shoddy work, and declare bankruptcy or engage in some other subterfuge to avoid settling claims

Builders, appraisers and mortgage brokers have conspired to sell poorly constructed homes at inflated prices with misrepresentation of tax obligations to prospective homeowners

Home Improvement and Ownership Frauds
In October 2008, Emmanuel Constant was accused of murder and torture in Haiti and was sentenced to 27 years in prison in connection with mortgage fraud using straw home buyers, falsified loan information, and inflated appraisals in Queens, NY

The FBI declared mortgage fraud as the fastest growing form of white collar crime in the early 2000s

Land Sale Frauds
In the 1920s, many people who bought “land” in Florida eventually discovered that their land was underwater
The basic scheme in these cases is to entice prospective retirees and other investors with some attractive brochures of beautiful developments complete with landscaping, gold courses, and lakes
They use high pressure sales tactics to persuade people to pay exorbitant prices for arid desert plots that turn out to be virtually worthless when promised development plans never materialize

Travel Scams
and Time-Share Vacation Resorts
Millions of Americans receive postcards or e-mails informing them that they’ve won a glamorous vacation
If they respond to the inducements they are persuaded to pay a “travel club” or “service” fee before receiving their “prize”
The free vacation would turn out to have so many restrictions it would be useless to the recipient
Recipients often ended up with no vacation at all or with one for which they paid a substantial amount of money

Payday Loans, Debt Relief, and Credit Repair
Payday lenders operating online or from storefronts target people with modest incomes who need small loans to make it through till payday
Some debt relief companies advise consumers to stop making payments on their debt on the claim that they will negotiate settlements on favorable terms, but by extracting large fees directly from clients’ bank accounts, often put clients in a deeper hole
Some companies that offer to raise credit scores do so by falsifying the customer’s credit history—a form of fraud—and charge a hefty fee to do so

Employment Agency and Education-Related Scams
People have paid fees to “employment agencies” that guarantee them jobs. After sending in their money, many clients never hear from the agency again, or receive sloppily-prepared resumes or outdated lists of jobs or corporate contacts. In most cases, applicants do not obtain jobs
“Educational consultants” collect thousands of dollars in return for the false promise that the consultant will ensure their place in a school
Other scams exist involving diplomas, training, and financial assistance

Telemarketing or “Boiler Room” Scams
The National Consumers League estimated in a recent year that telemarketing frauds extract an average of $845 from each victim.
These operations may offer tempting investments, prizes, vitamins, etc.
Examples include enticements for “cash loans” in which callers are charged for generic information packages on how to apply for bank loans, “one-shot” credit cards, bogus health product promotions, and penny-stock offerings based on misleading information about new companies.

Schemes to Defraud the Wealthy
Middle-class people seeking a high return on their investments can be susceptible to fraud
Ex. About 6,000 people who invested $350 million in Colonial Realty in the 1980s lost much of their money when the operation turned out to be fraudulent
Some victims of investment fraud are quite wealthy
Ex. A New York college student persuaded 100 well-off individuals to invest millions with the investing entity he established and instead of investing the money, he spent most of it on a lavish lifestyle

Technocrime, Including Computer Crime
Technocrime is any crime facilitated by any sophisticated form of technology

It has been described as a subset of or new form of white collar crime

But not all illegalities committed with technology are white collar crimes. Ex.—technocrime committed by spies or terrorists, the use of computers for disseminating child pornography, or the use of the internet by pedophiles to solicit victims

Computer Crime
Computer crime is an illegal act wherein computers and computer technology are used to commit the offense
A computer may be the tool of a crime or the target of a crime
Categories include internal computer crimes (sabotaging programs), telecommunications crimes (hacking and illegal bulletin boards), computer manipulation crimes (embezzlements and frauds), computers in support of criminal enterprises, and hardware/software thefts

Computer Crime
An increasing proportion of theft today takes the form of stealing information, pirating software and electronic products, and copying intellectual property
An estimated 1/3 of business software is pirated
Business transactions carried out on the internet have generated broad new opportunities for criminal conduct
The relative anonymity of the internet can facilitate crime

Computer Crime
Businesses have become increasingly concerned about “click fraud”

Advertisers must pay for each “click” on their ads, but believe that in some cases competitors are deliberately driving their advertising costs up by fraudulent clicking

The internet has also facilitated identity theft and the theft of confidential information

Computer Crime
A considerable amount of computer crime or cybercrime is carried out by or through businesses or by people within the context of a legitimate occupation, victimizing consumers and individuals

The use of computers greatly increases the potential size and scope of thefts

It also enables people working in certain occupations to use a “salami technique”— that is, to steal small amounts of assets from many sources

The Law and Computer Crime
Despite increasing publicity about computer crimes, prosecutions for such crimes are relatively few in number, constituting a fraction of prosecutors’ caseloads

The single most common charges pertain to child pornography

Traditional criminal laws are not always applicable to crimes committed by manipulation of electronic software

The Law and Computer Crime
Most state and federal laws applicable to computer crime came into being in the 1980s
1986—Congress passed a computer Fraud and Abuse Act, which intended to make the use of computers for fraud and theft a felony
1996—passage of the National Information Infrastructure Protection Act eliminated some of the common defenses in computer crime cases
2000—Internet False Identification Prevention Act
2000—USA Patriot Act added amendments to the 1996 law

The Pursuit of Computer Crime Cases
Investigation of computer crime require specially trained personnel and tend to be quite time consuming

Criminal justice agencies on all levels must devote more resources to technocrime

It is often necessary to resolve computer crimes privately and informally, in part because special complications arise if cases are pursued through the criminal justice system

Other Types of Technocrime
ATMs, telecommunications systems, facsimile machines and other forms of technology also provide a range of opportunities for misappropriation or theft

Advances in all forms of copying technology have provided new opportunities for organized and professional crime

Businesses of all sizes are victimized by technocrime, but commit some of it as well

WHITE COLLAR CRIME IN CONTEMPORARY SOCIETY 4TH ED.

CHAPTER 8
EXPLAINING WHITE COLLAR CRIME
THEORIES AND ACCOUNTS
Trusted Criminals
Designed by: Jordan Land, M.S.

Introduction
A Theory is a formal version of an explanation, although it is not necessarily a comprehensive explanation

It attempts to explain a class of events, whereas an explanation might simply attempt to make sense of a specific event

In the conventional view, a good theory can be tested and fits the evidence provided by research

Underlying Assumptions and Points of Departure
Every attempt at explanation invokes certain metaphysical, ontological, and epistemological assumptions about the ultimate nature of reality and being, and how we come to know and understand our world

It is important to understand that almost anything we might say about white collar crime is rooted in our assumptions, whether explicit or implicit, concerning such questions

What Do We Want To Explain?
The conventional answer is that we must explain criminality, or what makes individuals or organizations commit white collar crimes
A second answer is that we must explain the crime, or the event itself
Criminal behavior has been treated as both an individual propensity and as an event
Among the elements cited to explain criminal behavior are motivation, freedom from social constraints, skill, and opportunity

What Do We Want To Explain?
A third answer to the question is that criminalization must be explained first
The process whereby particular activities, entities and individuals come to be defined as criminal

A truly substantial explanation for white collar crime must address each of these matters, and ideally it must explore the variety of interrelationships involved in white collar crime as criminality, as an event and as criminalized activity

What Do We Want To Explain?
Yet another issue in the explanation of white collar crime is the appropriate explanatory level
Macro-level
Focuses on the conditions within a society or the organization that promotes white collar crime
Micro-level
Focuses on the offenders and their individual propensities and choices
Meso-level
Focuses on situational factors

The Biogenetic Explanation
At its core was the notion that criminals are inherently different from other people, even down to their appearance
This explanation was promoted by Franz Joseph Gall’s phrenology and Italian criminologist Cesare Lombroso’s concept of the “born criminal” as an atavistic type
During much of the 20th century , biogenetic explanations of criminality emerged, focusing on factors ranging from body type to brain chemistry

The Biogenetic Explanation

Some criminologists who do not embrace the conservative agenda accept the proposition that genetic and brain dysfunction factors may play a role in criminality

Psychological Explanations
The focus is on personality, mental processes, the enduring effects of early childhood traumas, and the like
The single most famous psychological explanations of human conduct were advanced by Sigmund Freud
Freudian approach can be viewed as a reflection of the eternal conflict between the desires of the individual and the needs of civilization
More specifically, could be linked with defects in the superego, the ego or the id

Personality
Personality traits are among the most examined of all psychological explanations of white collar crime

There are relatively few studies exploring the relevance of personality for involvement in white collar crime

They have not produced any clear evidence of psychological abnormality, and most offenders appear to fall within the range of normal personality types

Personality
Personality is most typically associated with the behavioral characteristics of an individual

Character and identity are associated with an individual’s nature, especially his/her moral or ethical qualities

Sociogenic Explanations
Some theoretical and empirical work that adopts a sociogenic framework also addresses the matter of criminality, especially in terms of alleged differences in criminal propensities among members of different social classes or groups

Gottfredson and Hirschi (1990) suggested that varying levels of self-control are fundamental factors in people’s choices to commit crimes and that low social control is more pronounced among lower-class individuals

Organizational Responsibility
When we engage in the common practice of referring to organizations or networks of organizations as actors, we are not simply speaking of a sum of people and their individual actions but of patterned institutional practices

Sutherland moved back and forth rather freely between discussing the crimes of people of the upper socioeconomic classes and the crimes of corporations

Organizational Responsibility
Donald Cressey criticized his former mentor Sutherland for attributing human capabilities to corporations rather than distinguishing them from real people

Cressey insisted that we must recognize that corporations are not people, cannot learn, do not have motivations and cannot form intent

Organizational Responsibility
In a specific response to Cressey’s critique, Braithwaite and Fisse defended the notion that corporations can take criminal action and can be properly held responsible for such action

They argued that a mixture of observable and abstracted characteristics defines both individuals and corporations

Organizational Responsibility
The entire organization is seldom involved in corporate crime
The majority of personnel do not directly participate
Organizations create opportunities for illegal conduct by:
Disproportionately serving affluent, accessible victims
Generating impersonal transactions
Creating and allocating resources
Providing strategic devices to facilitate and cover up illegalities
Conditioning the development of new normative prescriptions capable of being violated

The Various Dimensions
of Organizational Criminality
Different levels of organizational analysis are relevant to understanding organizational crime
On the psychological level, the organization is viewed as a context or environment that can influence individuals’ attitudes and behavior in a criminal direction
On a structural level, the organization is viewed as having structural features and social processes that facilitate the commission of crime
On an ecological level, the organization is viewed as part of an environment or interdependent system that has criminogenic tendencies

The Various Dimensions
of Organizational Criminality
Some organizations are crime coercive whereas others are crime facilitators

Theories of corporate crime have either attempted to explain why some corporations commit crimes and others do not or have addressed the apparent overall increase in corporate illegalities at particular periods of time

The Various Dimensions of Organizational Criminality
Externally, a variety of factors are related to corporate crime, including:
Economic climate, political and regulatory environment, level of industry concentration, style and strength of product distribution networks, product differentiation and normative traditions within industries

Corporations are more likely to engage in corporate crime when legitimate opportunities to achieve their goals are blocked but illegitimate opportunities are available

Explaining White Collar Crime: Theories and Perspectives
Many explanations of white collar crime focus more on the crime rather than on criminality
Sociological theories emphasize structural factors
A structural perspective in criminology focuses either on social conditions that account for specific forms of criminal behavior or on how the distribution of power and resources influences how crime is defined and generated
Some white collar crime is carried out individually, but much is a cooperative activity involving two or more individuals

General Theories of Crime and White Collar Crime Theory
Sutherland advanced his theory of differential association as a general theory that could account for both conventional and white collar crime

Although general theories may have some success in accounting for natural and physical phenomena, they are less usefully applied to the enormously variable realm of human activity

Classical Criminology and Rational Choice
The core notions of humans as capable of making rational choices and of a system of justice with equitable punishments that fit the crime have long been central to the operation of our criminal justice system

The classical assumptions about human nature have recently been embraced by neoclassical criminologists and proponents of rational choice, routine activities and social control perspectives

Classical Criminology and Rational Choice
Criminologists essentially see criminal offenders as people who reason and plan strategically, adapt to particular circumstances and weigh costs and benefits

Individuals who commit crimes are not averse to breaking laws if they see an opportunity they perceive to have a low likelihood of sanctions and the expectation of personal benefits

Classical Criminology and Rational Choice
Rational choice assumptions would appear to be especially applicable to white collar crime

If we assume that humans have the capability of making rational choices, then those who are better educated and better positioned in life would seem to have an advantage in considering and acting on various options

Alternative Dimensions of Crime and Choice
Paternoster and Simpson have characterized corporate crime as criminal activity that is rooted in instrumental and strategic choices made by risk-averse managers who weigh various options’ perceived costs and benefits to themselves
Routine activities theory also incorporates an assumption of rational decision making in its approach to crime
The theory focuses on crime events as a consequence of the presence of motivated offenders, suitable victims or targets and the absence of capable guardians

Social Control and Bonds
Social control theory reverses the conventional questions of why someone engages in criminal behavior and instead asks why someone does not engage in criminal behavior
The answer is that people with strong bonds to conventional institutions are constrained from engaging in delinquent or criminal conduct

If social control theory is valid then we would expect that corporate executives with stronger bonds to the corporation are more likely to engage in corporate crimes on behalf of the corporation

Control Balance and Control Fraud Theories
Control balance theory holds that crime and deviance are a function of the “control balance ratio” or the amount of control one exercises relative to the amount of control imposed upon one

So either a surplus of control or a deficit of control should foster criminal behavior and deviance

Control fraud holds that when control over an organization is realized, that organization becomes a weapon for perpetrating fraud and theft

Social Process and Learning
Differential association views criminal behavior as learned through contact with others with a law-violating orientation

An overriding limitation of this theory is that it does not adequately account for structural origins of the illegal patterns of behavior and appears to confuse a process of involvement in criminal behavior with a cause of such behavior

Social Process and Learning
Differential association does not address the problem that some white collar crime is individualistic and that collective forms of white collar crime are committed by individuals who hold many attitudes that are favorable to obeying laws

Sutherland’s theory hardly provides us with a comprehensive explanation of white collar crime

Interactionism and Labeling
Interactionist or labeling perspectives on crime are derived from a symbolic interactionist tradition emphasizing that meaning emanates from human interaction

Labeling theory has been principally concerned with the process of societal reaction on perceived crime rather than with the standard etiological question, “What made them do it?”

Interactionism and Labeling
The first point relevant to white collar crime is that powerful individuals and organizations are more likely than the powerless to be able to avoid being labeled as deviant or criminal, or to be able to negotiate more successfully the terms of any effort to so stigmatize them

The claim that the labeling process itself inspires more criminal behavior than it deters has been challenged on various grounds, and it is difficult to demonstrate empirically

Interactionism and Labeling
White collar offenders who have been processed by the criminal justice system typically have more legitimate options than conventional offenders and are likely to be able to minimize the full effects of the stigma

Neutralizations, Rationalizations and Accounts
The interrelated concepts of neutralization, rationalization, and accounts play a central role in efforts to make sense of white collar criminality

White collar offenders tend not to be classic “outlaw” types
White collar criminals most typically conform to most laws and social conventions and are unlikely to identify with or endorse the activities of conventional offenders

Neutralizations, Rationalizations and Accounts
So, how do they become lawbreakers?
First, you must understand a vocabulary of motives:
Excuses- tend to be defensive
Justifications- positive interpretations of actions
Neutralizations- future or ongoing behavior
Accounts- are invoked after the behavior has occurred
Rationalizations- mental processes which allow a person who is committing or about to commit a crime to overcome guilt or moral inhibitions and justify the crime to themselves or others
People who embezzle money rationalize that they were only “borrowing” it

Structural Strain
and the Structure of Opportunity
Emile Durkheim’s conception of anomie referred to a situation of normlessness, a breakdown of the guidelines for conventional behavior during rapid social change

The insider trading crimes of the 1980s have been linked with an anomic situation that fostered “the unbridled pursuit of pecuniary rewards”

Structural Strain
and the Structure of Opportunity
Merton’s revised notion of anomie refers to an enduring situation in a society in which a generalized goal of material success is promoted, but the means to achieve such success legitimately are not equally distributed

Merton also gives the label “innovative” to one class of adaptations that those who lack equal access to legitimate means use to achieve material success
Among those “innovations” is illegal behavior

Structural Strain
and the Structure of Opportunity
Anomie theory has been applied quite specifically to understanding the innovative corporate use of illegal strategies to realize goals that cannot be achieved legitimately
There are theorists who have produced variations of Merton’s theory:
Status deprivation theory
Differential opportunity theory
General strain theory
Institutional anomie theory

Conflict Theory and Criminogenic Societies
Conflict theory rejects the consensus theory notion of the social world as an organic or integrated system

In its so-called “non-partisan” form, conflict theory is concerned with identifying how the values and interests of different groups in society are disproportionately able to influence the character and content of the law

The Structure of Contemporary Capitalist Society and White Collar Crime
The most basic form of structural explanation for white collar crime forces on the nature of society itself
One principle version of conflict theory is Marxist or neo-Marxist theory
Karl Marx viewed crime as an essential product of a social class society, and of capitalism in particular
He believed that humans manifest such patterns of behavior, and that capitalism promotes these tendencies in human beings

The Structure of Contemporary Capitalist Society and White Collar Crime
In the Marxist view, the worst crime committed in the name of capitalism is the systematic exploitation of the working class

Marx suggested that crime by the rich and poor alike is a rational, inevitable response to an economic system that fosters greed, egoistic or individualistic tendencies, competitiveness, and debasement of humans
Whenever the capitalist system undergoes an economic crisis, pressures to commit crimes increase

Limitations of the Marxist Account
There are two obvious limitations:
It does not explain either the existence of significant levels of white collar crime in socialistic countries or significant variations among different capitalist countries
It is not helpful in explaining why some individuals and organizations within capitalist societies engage in white collar crime while others don’t

Radical and Critical Perspectives
on White Collar Crime
Reiman (1982) argued that Marxism is materialist in explaining white collar crime as resulting from the organization of material production

Whereas radicalism is idealist, at least when it explains white collar crime as a function of the intentions of elites

Much of the radical criminological work for this period examined the criminalization process as opposed to the “causes” of crime

Radical and Critical Perspectives
on White Collar Crime
Since the 1980s, new perspectives emerged within an evolving radical or critical criminology
These perspectives include:
Left realism, peacemaking criminology, feminist criminology, and postmodernist criminology
Neither the causes of crime in the conventional sense nor white collar crime itself have been important preoccupations of these perspectives
They have been more concerned with how crime is conceived of or constituted

Explaining Criminalization
and White Collar Crime
Explaining criminal behavior and crime has historically been the primary focus of criminology

In a legalistic sense, no crime exists until and unless there is formal recognition that a type of activity should be designated a crime

The criminalization process has been directly linked with patterns of engagement in white collar crime

Explaining Criminalization
and White Collar Crime
The seminal critic of capitalism, Karl Marx, did not favor criminalization as a response to exploitative and harmful corporate activities
For Marx, law by its very form was likely to favor privileged segments of society
The failure to criminalize some forms of harmful white collar activity can help promote such activity
The removal of legal control can create a whole range of new criminal opportunities

Integrated Theories of White Collar Crime
Coleman (1987) developed an integrated theory that centers on the coincidence of appropriate motivation and opportunity
A culture generates motives for lawbreaking when it emphasizes “possessive individualism,” competition, and materialism, justifies rationalizations, and removes unified restraining influences

Braithwaite (1989) based his integrative theory on two traditions:
Structural Marxist theory
Differential association theory

Integrated Theories of White Collar Crime
Critical criminologists who address corporate crime typically adopt an integrated theoretical approach
Taking into account variables operating on the level of the:
Organization of the economy
Corporate structure
Market forces
Organizational culture
Interpersonal workgroups dynamics
Rationalizations
Identity factors

The Subprime Mortgage Market Frauds
The disintegration of the subprime mortgage market in the U.S. beginning in 2006, led to millions of homeowners in foreclosure on their homes or facing the prospect of foreclosure

An application of a sophisticated integrated theory of the subprime mortgage market frauds had certain elements:
Structural level (macro)
Organizational level and Dramaturgic level (meso)
Individualistic level (micro)

The Subprime Mortgage Market Frauds
On the structural level
A capitalistic political economy has a core characteristic – the relentless pursuit of profit and a constant search for new markets
On the organizational level
We have uncoupling of mortgage originators from mortgage holders
On the individualistic level
Those who were at the center of the frauds were sometimes afflicted with egocentric, overly optimistic, narcissistic, entitlement-oriented, and excessive risk-taking personality attributes, as well as character flaws in terms of integrity