BASIC CONCEPT

In criminology, corporate crime refers to crimes committed either by a corporation (i.e., a business entity
having a separate legal personality from the natural persons that manage its activities), or by individuals
that may be identified with a corporation or other business entity (see vicarious liability and corporate
liability). Note that some forms of corporate corruption may not actually be criminal if they are not
specifically illegal under a given system of laws. For example, some jurisdictions allow insider trading.

Corporate crime overlaps with:

 white-collar crime, because the majority of individuals who may act as or represent the interests
of the corporation are employees or professionals of a higher social class;
 organized crime, because criminals can set up corporations either for the purposes of crime or as
vehicles for laundering the proceeds of crime. Organized crime has become a branch of big
business and is simply the illegal sector of capital. It has been estimated that, by the middle of the
1990s, the "gross criminal product" of organized crime made it the twentieth richest organization
in the world—richer than 150 sovereign states (Castles 1998: 169). The world’s gross criminal
product has been estimated at 20 percent of world trade. (de Brie 2000); and
 State-corporate crime because, in many contexts, the opportunity to commit crime emerges from
the relationship between the corporation and the state.

Historical background
The term white-collar crime only dates back to 1939. Professor Edwin Hardin Sutherland was the first to
coin the term, and hypothesize white-collar criminals attributed different characteristics and motives than
typical street criminals. Mr. Sutherland originally presented his theory in an address to the American
Sociological Society in attempt to study two fields, crime and high society, which had no previous
empirical correlation. He defined his idea as "crime committed by a person of respectability and high
social status in the course of his occupation" (Sutherland, 1939). Many denote the invention of
Sutherland's idiom to the explosion of U.S business in the years following the Great Depression.
Sutherland noted that in his time, "less than two percent of the persons committed to prisons in a year
belong to the upper-class." His goal was to prove a relation between money, social status, and likelihood
of going to jail for a white-collar crime, compared to more visible, typical crimes. Although the
percentage is a bit higher today, numbers still show a large majority of those in jail are poor, "blue-collar"
criminals, despite efforts to crack down on corporate crime.

Other fiscal laws were passed in the years prior to Sutherland's studies including antitrust laws in the
1920's, and social welfare laws in the 1930's. After the Depression, people went to great lengths to rebuild
their financial security, and it is theorized this led many hard workers, who felt they were underpaid, to
take advantage of their positions.

Much of Sutherland's work was to separate and define the differences in blue collar street crimes, such as
arson, burglary, theft, assault, rape and vandalism, which are often blamed on psychological,
associational, and structural factors. Instead, white-collar criminals are opportunists, who over time learn
they can take advantage of their circumstances to accumulate financial gain. They are educated,
intelligent, affluent, confident individuals, who were qualified enough to get a job which allows them the
unmonitored access to often large sums of money. Many also use their intelligence to con their victims
into believing and trusting in their credentials. Many do not start out as criminals, and in many cases
never see themselves as such

Definitional issues

Modern criminology generally rejects a limitation of the term by reference, rather classifies the type of
crime and the topic:

 By the type of offense, e.g. property crime, economic crime, and other corporate crimes like
environmental and health and safety law violations. Some crime is only possible because of the
identity of the offender, e.g. transnational money laundering requires the participation of senior
officers employed in banks. But the Federal Bureau of Investigation has adopted the narrow
approach, defining white-collar crime as "those illegal acts which are characterized by deceit,
concealment, or violation of trust and which are not dependent upon the application or threat of
physical force or violence" (1989, 3). This approach is relatively pervasive in the United States,
the record-keeping does not adequately collect data on the socioeconomic status of offenders
which, in turn, makes research and policy evaluation problematic. While the true extent and cost
of white-collar crime are unknown, it is estimated to cost the United States more than $300
billion annually, according to the FBI.
 By the type of offender, e.g. by social class or high socioeconomic status, the occupation of
positions of trust or profession, or academic qualification, researching the motivations for
criminal behavior, e.g. greed or fear of loss of face if economic difficulties become obvious.
Shover and Wright (2000) point to the essential neutrality of a crime as enacted in a statute. It
almost inevitably describes conduct in the abstract, not by reference to the character of the
persons performing it. Thus, the only way that one crime differs from another is in the
backgrounds and characteristics of its perpetrators. Most if not all white-collar offenders are
distinguished by lives of privilege, much of it with origins in class inequality.
 By organizational culture rather than the offender or offense which overlaps with organized
crime. Appelbaum and Chambliss (1997, 117) offer a twofold definition:
o Occupational crime which occurs when crimes are committed to promote personal
interests, say, by altering records and overcharging, or by the cheating of clients by
professionals.
o Organizational or corporate crime which occurs when corporate executives commit
criminal acts to benefit their company by overcharging or price fixing, false advertising,
etc.

Relationship to other types of crime

Blue-collar crime
The types of crime committed are a function of what is available to the potential offender. Thus, those
employed in relatively unskilled environments and living in inner-city areas have fewer "situations" to
exploit (see Clarke: 1997) than those who work in "situations" where large financial transactions occur
and live in areas where there is relative prosperity. Blue-collar crime tends to be more obvious and thus
attracts more active police attention (e.g. for crimes such as vandalism or shoplifting, where physical
property is involved). In contrast, white-collar employees can incorporate legitimate and criminal
behavior, thus making themselves less obvious when committing the crime. Therefore, blue-collar crime
will more often use physical force, whereas in the corporate world, the identification of a victim is less
obvious and the issue of reporting is complicated by a culture of commercial confidentiality to protect
shareholder value. It is estimated that a great deal of white-collar crime is undetected or, if detected, it is
not reported.

State-corporate crime
In criminology, the concept of state-corporate crime, budget-bonus crime or incorporated governance due
to the P3- or Public-private partnership doctrine, refers to crimes that result from the relationship between
the policies of the state and the policies and practices of commercial corporations. The term was coined
by Kramer and Michalowski (1990), and redefined by Aulette and Michalowski (1993). These definitions
were intended to include all "socially injurious acts" and not merely those that are defined by the local
criminal jurisdiction as crime. This is not universally accepted as a valid definition so a less contentious
version has been adopted here. As an academic classification, it is distinguished from:

 corporate crime, which studies deviance within the context of a corporation and by a corporation;
 political crime, which is crime directed at the state; and
 state crime or "state-organised crime", which studies crimes committed by government
organisations (Chambliss: 1989).

One of the assertions made by those involved in this work is that a focus on the actual relationship
between the state and corporations dependent on the state for their profitability can expose a more
complete range of criminal activity than might be provided by independent analyses of corporate or state-
organised crimes.

Discussion

To be able to operate as a commercial business entity, the modern corporation requires a legal framework
of regulation and oversight within which to exploit the relevant markets profitably. The infrastructure of
law and commerce are provided by the government of each state in which the corporation desires to trade,
and there is an inevitable linkage between the political and commercial interests. All states rely on
businesses to provide an economic base consistent with each government's political policies. Without
policies that are supportive of economic activity, businesses will not be profitable and so will not be able
to provide the economic support that the state desires. In some cases, this symbiosis may lead to the
commission of crimes. The research studies situations where, for various reasons, the oversight of
corporate and/or state organisations by independent bodies has been manipulated or excluded, and either
existing criminal activity is redefined as lawful, or criminal activity results but is not prosecuted.

Harper and Israel (1999) comment:

...societies create crime because they construct the rules whose transgression constitutes crime.
The state is a major player in this process.

i.e. the way in which crime is defined is dynamic and reflects each society's immediate needs and
changing attitudes towards the local varieties of conduct. The process depends on the values underpinning
the society, the mechanisms for resolving political conflict, the control over the discourse, and the
exercise of power. Snider (1999) notes that capitalist states are often reluctant to pass laws to regulate
large corporations, because this might threaten profitability, and that these states often use considerable
sums to attract regional or national inward investment from large corporations. They offer new investors:
  preferential tax concessions not available to the ordinary citizen or local business if foreign
investment is sought;
 loans, guarantees and other financial support on preferential terms;
 directly trageted grants and other subsidies; and
 a purpose-built infrastructure to subsidise the set-up costs.

Once the state is committed to this offer, it can be difficult to enforce local laws against pollution, health
and safety or monopolies. Green and Ward (2004) examine how the debt repayment schemes in
developing countries place such a financial burden on states that they often collude with corporations
offering prospects of capital growth. Such collusion frequently entails the softening of environmental and
other regulations. The debt service obligation can also exacerbate political instability in countries where
the legitimacy of state power is questioned. Such political volatility leads states to adopt clientelistic or
patrimonialist patterns of governance, fostering organized crime, corruption, and authoritarianism. In
some third world countries, this political atmosphere has encouraged repression and the use of torture.
Exceptionally, genocide has occurred. But Sharkansky (1995) is careful to maintain a strict definition of
"crime" for these purposes. Many individuals and organisations may disapprove of what governments do
or fail to do, but such acts and omissions are not necessarily criminal.

Function of law
History shows that laws have always served as instruments of regulation. Lea (2001) argues that whereas
crime used to be the exceptional event, disrupting the otherwise normal socio-economic processes, as
crime becomes more frequent it lost its status as an exceptional event and became "a standard,
background feature of our lives—a taken for granted element of late modernity." (Garland 1996: 446)

Enforcement policy
Corporate crime has become politically sensitive in some countries. In the United Kingdom, for example,
following a number of fatal disasters on the rail network and at sea, the term is commonly used in
reference to corporate manslaughter and to involve a more general discussion about the technological
hazards posed by business enterprises (see Wells: 2001). Similar incidents of corporate crime, such as the
1985 Union Carbide accident in Bhopal, India (Pearce & Tombs: 1993) and the behaviour of the
pharmaceutical industry (Braithwaite: 1984).

The Law Reform Commission of New South Wales offers an explanation of such criminal activities:

"Corporate crime poses a significant threat to the welfare of the community. Given the pervasive
presence of corporations in a wide range of activities in our society, and the impact of their
actions on a much wider group of people than are affected by individual action, the potential for
both economic and physical harm caused by a corporation is great."

Similarly, Russell Mokhiber and Robert Weissman (1999) assert:

"At one level, corporations develop new technologies and economies of scale. These may serve
the economic interests of mass consumers by introducing new products and more efficient
methods of mass production. On another level, given the absence of political control today,
 corporations serve to destroy the foundations of the civic community and the lives of people who
reside in them."

Criminalization
Behavior can be regulated by the civil law (including administrative law) or the criminal law. In deciding
to criminalize particular behavior, the legislature is making the political judgment that this behavior is
sufficiently culpable to deserve the stigma of being labelled as a crime. In law, corporations can commit
the same offences as natural persons. Simpson (2002) avers that this process should be straightforward
because a state should simply engage in victimology to identify which behavior causes the most loss and
damage to its citizens, and then represent the majority view that justice requires the intervention of the
criminal law. But states depend on the business sector to deliver a stable economy, so the politics of
regulating the individuals and corporations that supply that stability become more complex. For the views
of Marxist criminology, see Snider (1993) and Snider & Pearce (1995), for Left realism, see Pearce &
Tombs (1992) and Schulte-Bockholt (2001), and for Right Realism, see Reed & Yeager (1996). More
specifically, the historical tradition of sovereign state control of prisons is ending through the process of
privatisation. Corporate profitability in these areas therefore depends on building more prison facilities,
managing their operations, and selling inmate labor. In turn, this requires a steady stream of prisoners able
to work. (Kicenski: 2002)

The majority of crimes are committed because the offender has the 'right opportunity', i.e., where the
offender simply sees the chance and thinks that he or she will be able to commit the crime and not be
detectedFor the most part, greed, rather than conceit, is the motive, and the rationalisation for choosing to
break the law usually arises out of a form of contempt for the victim, namely that he, she or it will be
powerless to prevent it, and has it coming for some reason. For these purposes, the corporation is the
vehicle for the crime. This may be a short-term crime, i.e., the corporation is set up as a shell to open
credit trading accounts with manufacturers and wholesalers, trades for a short period of time and then
disappears with the revenue and without paying for the inventory. Alternatively and most commonly, the
primary purpose of the corporation is as a legitimate business, but criminal activity is secretly intermixed
with legal activity to escape detection. To achieve a suitable level of secrecy, senior managers will
usually be involved. The explanations and exculpations may therefore centre around rogue individuals
who acted outside the organizational structures, or there may be a serious examination of the occupational
and organisational structures (often hinged on the socio-economic system, gender, racism and/or age) that
facilitated the criminal conduct of a corporation

Bribery and corruption are problems in the developed world, and the corruption of public officials is
thought to be a large cause of crime in poor countries that have large IMF debts and IMF sovereign
obligations.

Penalties
In part, this will be a function of the public perception of the degrees of societal culpability involved.
Weissman and Mokhiber (1999) catalog the silence and indifference of the major media in the face of the
widespread corporate corruption. Only in part is this justifiable. The news media find it difficult to
respond to corporate crime both because reporting may compromise the trial by tainting the jury's
perceptions, or because of the danger of defamation proceedings. Further, major corporate crime is often
complicated and more difficult to explain to the lay public, as against street or property crimes, which
may provide graphic visual evidence of harm to victims injured, or of property that has been damaged or
vandalized in spectacular fashion. But, more significantly, the news media are owned by large
corporations which may also own prisons. Thus, the political decisions on the resources to allocate to
investigate and prosecute will tend to match the electorate's understanding of the dangers posed by
'crime'. In sentencing, the fact that the convicted individuals may have had an impeccable character as
presidents, CEOs, chairmen, directors and managers is likely to be a mitigating factor.

Examples of criminal behavior in most jurisdictions include: insider trading, antitrust violations, fraud
(usually involving the consumers), damage to the environment, exploitation of labour in violation of labor
and health and safety laws, and the failure to maintain a fiduciary responsibility towards stockholders.

Enforcement and legal or quasi-legal corrupt activities

One example, may be in the area of takeovers and top executive compensation:

It is fairly easy for a top executive to reduce the price of his/her company's stock—due to information
asymmetry. The executive can accelerate accounting of expected expenses, delay accounting of expected
revenue, engage in off balance sheet transactions to make the company's profitability appear temporarily
poorer, or simply promote and report severely conservative (e.g. pessimistic) estimates of future earnings.
Such seemingly adverse earnings news will be likely to (at least temporarily) reduce share price. (This is
again due to information asymmetries since it is more common for top executives to do everything they
can to window dress their company's earnings forecasts). There are typically very few legal risks to being
'too conservative' in one's accounting and earnings estimates.

A reduced share price makes a company an easier takeover target. When the company gets bought out (or
taken private)—at a dramatically lower price—the takeover artist gains a windfall from the former top
executive's actions to surreptitiously reduce share price. This can represent 10s of billions of dollars
(questionably) transferred from previous shareholders to the takeover artist. The former top executive is
then rewarded with a golden handshake for presiding over the firesale that can sometimes be in the 100s
of millions of dollars for one or two years of work. (This is nevertheless an excellent bargain for the
takeover artist, who will tend to benefit from developing a reputation of being very generous to parting
top executives).

Similar issues occur when a publicly held asset or non-profit organization undergoes privatization. Top
executives often reap tremendous monetary benefits when a government owned or non-profit entity is
sold to private hands. Just as in the example above, they can facilitate this process by making the entity
appear to be in financial crisis—this reduces the sale price (to the profit of the purchaser), and makes non-
profits and governments more likely to sell. Ironically, it can also contribute to a public perception that
private entities are more efficiently run, reinforcing the political will to sell off public assets. Again, due
to asymmetric information, policy makers and the general public see a government owned firm that was a
financial 'disaster'—miraculously turned around by the private sector (and typically resold) within a few
years.

Enron
.
Enron Corporation (former NYSE ticker symbol ENE) was an American energy company based in the
Enron Complex in Downtown Houston, Texas. Before its bankruptcy in late 2001, Enron employed
approximately 22,000[1] staff and was one of the world's leading electricity, natural gas, communications
and pulp and paper companies, with claimed revenues of nearly $101 billion in 2000. [2] Fortune named
Enron "America's Most Innovative Company" for six consecutive years. At the end of 2001, it was
revealed that its reported financial condition was sustained substantially by institutionalized, systematic,
and creatively planned accounting fraud, known as the "Enron scandal". Enron has since become a
popular symbol of willful corporate fraud and corruption. The scandal also brought into question the
accounting practices and activities of many corporations throughout the United States and was a factor in
the creation of the Sarbanes–Oxley Act of 2002. The scandal also affected the wider business world by
causing the dissolution of the Arthur Andersen accounting firm

Enron filed for bankruptcy protection in the Southern District of New York in late 2001 and selected
Weil, Gotshal & Manges as its bankruptcy counsel. It emerged from bankruptcy in November 2004,
pursuant to a court-approved plan of reorganization, after one of the biggest and most complex
bankruptcy cases in U.S. history. A new board of directors changed the name of Enron to Enron Creditors
Recovery Corp., and focused on reorganizing and liquidating certain operations and assets of the pre-
bankruptcy Enron. On September 7, 2006, Enron sold Prisma Energy International Inc., its last remaining
business, to Ashmore Energy International Ltd. (now AEI)

Enron traces its roots to the Northern Natural Gas Company, which was formed in 1932, in Omaha,
Nebraska. It was reorganized in 1979 as the leading subsidiary of a holding company, InterNorth. In
1985, it bought the smaller and less diversified Houston Natural Gas.

The separate company initially named itself "HNG/InterNorth Inc.", even though InterNorth was the
nominal survivor. It built a large and lavish headquarters complex of pink marble in Omaha (dubbed
locally as the "Pink Palace"), that was later sold to Physicians Mutual. However, the departure of ex-
InterNorth and first CEO of Enron Corp Samuel Segnar six months after the merger allowed former HNG
CEO Kenneth Lay to become the next CEO of the newly merged company. Lay soon moved Enron's
headquarters to Houston after swearing to keep it in Omaha and began to thoroughly re-brand the
business. Lay and his secretary, Nancy McNeil, originally selected the name "Enteron" (possibly spelled
in camelcase as "EnterOn"), but, when it was pointed out that the term approximated a Greek word
referring to the intestines, it was quickly shortened to "Enron". The final name was decided upon only
after business cards, stationery, and other items had been printed reading Enteron. Enron's "crooked E"
logo was designed in the mid-1990s by the late American graphic designer Paul Rand.

Enron was originally involved in transmitting and distributing electricity and natural gas throughout the
United States. The company developed, built, and operated power plants and pipelines while dealing with
rules of law and other infrastructures worldwide. Enron owned a large network of natural gas pipelines,
which stretched ocean to ocean and border to border including Northern Natural Gas, Florida Gas
Transmission, Transwestern Pipeline company and a partnership in Northern Border Pipeline from
Canada. In 1998, Enron moved into the water sector, creating the Azurix Corporation, which it part-
floated on the New York Stock Exchange in June 1999. Azurix failed to break into the water utility
market, and one of its major concessions, in Buenos Aires, was a large-scale money-loser. After the move
to Houston, many analysts criticized the Enron management as swimming in debt. The Enron
management pursued aggressive retribution against its critics, setting the pattern for dealing with
accountants, lawyers, and the financial media.

Enron grew wealthy due largely to marketing, promoting power, and its high stock price. Enron was
named "America's Most Innovative Company" by "Fortune magazine" for six consecutive years, from
1996 to 2001. It was on the Fortune's "100 Best Companies to Work for in America" list in 2000, and had
offices that were stunning in their opulence. Enron was hailed by many, including labor and the
workforce, as an overall great company, praised for its large long-term pensions, benefits for its workers
and extremely effective management until its exposure in corporate fraud. The first analyst to publicly
disclose Enron's financial flaws was Daniel Scotto, who in August 2001 issued a report entitled "All
Stressed up and no place to go", which encouraged investors to sell Enron stocks and bonds at any and all
costs.

As was later discovered, many of Enron's recorded assets and profits were inflated or even wholly
fraudulent and nonexistent. Debts and losses were put into entities formed "offshore" that were not
included in the firm's financial statements, and other sophisticated and arcane financial transactions
between Enron and related companies were used to take unprofitable entities off the company's books.

Its most valuable asset and the largest source of honest income, the 1930s-era Northern Natural Gas, was
eventually purchased back by a group of Omaha investors, who moved its headquarters back to Omaha,
and is now a unit of Warren Buffett's MidAmerican Energy Holdings Corp. NNG was put up as collateral
for a $2.5 billion capital infusion by Dynegy Corporation when Dynegy was planning to buy Enron.
When Dynegy looked closely at Enron's books, they backed out of the deal and fired their CEO, Chuck
Watson. The new chairman and head CEO, the late Daniel Dienstbier, had been president of NNG and an
Enron executive at one time and an acquaintance of Warren Buffett. NNG continues to be profitable
today.

Accounting scandal of 2001

After a series of revelations involving irregular accounting procedures bordering on fraud perpetrated
throughout the 1990s involving Enron and its accounting firm Arthur Andersen, Enron stood on the verge
of undergoing the largest bankruptcy in history by mid-November 2001 (the largest Chapter 11
bankruptcy until that of Worldcom in 2002, now surpassed by the collapse of Lehman Brothers). A white
knight rescue attempt by a similar, smaller energy company, Dynegy, was not viable.

As the scandal unraveled, Enron shares dropped from over US$90.00 to just pennies. Enron had been
considered a blue chip stock, so this was an unprecedented and disastrous event in the financial world.
Enron's plunge occurred after it was revealed that much of its profits and revenue were the result of deals
with special purpose entities (limited partnerships which it controlled). The result was that many of
Enron's debts and the losses that it suffered were not reported in its financial statements.

Enron filed for bankruptcy on December 2, 2001. In addition, the scandal caused the dissolution of Arthur
Andersen, which at the time was one of the world's top accounting firms. The firm was found guilty of
obstruction of justice in 2002 for destroying documents related to the Enron audit and was forced to stop
auditing public companies. Although the conviction was thrown out in 2005 by the Supreme Court, the
damage to the Andersen name has prevented it from returning as a viable business.

Enron also withdrew a naming rights deal with the Houston Astros Major League Baseball club to have
its name associated with their new stadium, which was formerly known as Enron Field

Accounting practices
Enron had created offshore entities, units which may be used for planning and avoidance of taxes, raising
the profitability of a business. This provided ownership and management with full freedom of currency
movement and the anonymity that allowed the company to hide losses. These entities made Enron look
more profitable than it actually was, and created a dangerous spiral, in which each quarter, corporate
officers would have to perform more and more contorted financial deception to create the illusion of
billions in profits while the company was actually losing money This practice drove up their stock price
to new levels, at which point the executives began to work on insider information and trade millions of
dollars worth of Enron stock. The executives and insiders at Enron knew about the offshore accounts that
were hiding losses for the company; however, the investors knew nothing of this. Chief Financial Officer
Andrew Fastow led the team which created the off-books companies, and manipulated the deals to
provide himself, his family, and his friends with hundreds of millions of dollars in guaranteed revenue, at
the expense of the corporation for which he worked and its stockholders.

In 1999, Enron launched EnronOnline, an Internet-based trading operation, which was used by virtually
every energy company in the United States. Enron president and chief operating officer Jeffrey Skilling
began advocating a novel idea: the company didn't really need any "assets." By pushing the company's
aggressive investment strategy, he helped make Enron the biggest wholesaler of gas and electricity,
trading over $27 billion per quarter. The firm's figures, however, had to be accepted at face value. Under
Skilling, Enron adopted mark to market accounting, in which anticipated future profits from any deal
were tabulated as if real today. Thus, Enron could record gains from what over time might turn out to be
losses, as the company's fiscal health became secondary to manipulating its stock price on Wall Street
during the Tech boom. But when a company's success is measured by agreeable financial statements
emerging from a black box, a term Skilling himself admitted, actual balance sheets prove inconvenient.
Indeed, Enron's unscrupulous actions were often gambles to keep the deception going and so push up the
stock price, which was posted daily in the company elevator. An advancing number meant a continued
infusion of investor capital on which debt-ridden Enron in large part subsisted. Its fall would collapse the
house of cards. Under pressure to maintain the illusion, Skilling verbally attacked Wall Street Analyst
Richard Grubman, who questioned Enron's unusual accounting practice during a recorded conference
call. When Grubman complained that Enron was the only company that could not release a balance sheet
along with its earnings statements, Skilling replied "Well, thank you very much, we appreciate that . . .
asshole." Though the comment was met with dismay and astonishment by press and public, it became an
inside joke among many Enron employees, mocking Grubman for his perceived meddling rather than
Skilling's lack of tact. When asked during his trial, Skilling wholeheartedly admitted that industrial
dominance and abuse was a global problem: "Oh yes, yes sure, it is."

Peak and decline of stock price

In August 2000, Enron's stock price hit its highest value of $90 At this point Enron executives, who
possessed the inside information on the hidden losses, began to sell their stock. At the same time, the
general public and Enron's investors were told to buy the stock. Executives told the investors that the
stock would continue to climb until it reached possibly the $130 to $140 range, while secretly unloading
their shares.

As executives sold their shares, the price began to drop. Investors were told to continue buying stock or
hold steady if they already owned Enron because the stock price would rebound in the near future.
Kenneth Lay's strategy for responding to Enron's continuing problems was in his demeanor. As he did
many times, Lay would issue a statement or make an appearance to calm investors and assure them that
Enron was headed in the right direction.

By August 15, 2001, Enron's stock price had fallen to $42. Many of the investors still trusted Lay and
believed that Enron would rule the market. They continued to buy or hold their stock and lost more
money every day. As October closed, the stock had fallen to $15. Many saw this as a great opportunity to
buy Enron stock because of what Lay had been telling them in the media. Their trust and optimism
proved to be greatly misplaced.

Lay has been accused of selling over $70 million worth of stock at this time, which he used to repay cash
advances on lines of credit. He sold another $20 million worth of stock in the open market. Also, Lay's
wife, Linda, has been accused of selling 500,000 shares of Enron stock totaling $1.2 million on
November 28, 2001. The money earned from this sale did not go to the family but rather to charitable
organizations, which had already received pledges of contributions from the foundation. Records show
that Mrs. Lay placed the sale order sometime between 10:00 and 10:20 AM. News of Enron's problems,
including the millions of dollars in losses they had been hiding went public about 10:30 that morning, and
the stock price soon fell to below one dollar. Former Enron executive Paula Rieker has been charged with
criminal insider trading. Rieker obtained 18,380 Enron shares for $15.51 a share. She sold that stock for
$49.77 a share in July 2001, a week before the public was told what she already knew about the $102
million loss.

Post-bankruptcy
Enron initially planned to retain its three domestic pipeline companies as well as most of its overseas
assets. However, before emerging from bankruptcy, Enron spun off its domestic pipeline companies as
CrossCountry Energy.

Enron sold its last business, Prisma Energy, in 2006, leaving it as an asset-less shell. In early 2007, it
changed its name to Enron Creditors Recovery Corporation. Its goal is to pay off the old Enron's
remaining creditors and wind up Enron's affairs.

Shortly after emerging from bankruptcy in November 2004, Enron's new board of directors sued 11
financial institutions for helping Lay, Fastow, Skilling and others hide Enron's true financial condition.
The proceedings were dubbed the "megaclaims litigation." Among the defendants were Royal Bank of
Scotland, Deutsche Bank and Citigroup. As of 2008, Enron has settled with all of the institutions, ending
with Citigroup. Enron was able to obtain nearly $20 billion dollars to distribute to its creditors as a result
of the megaclaims litigation. As of December 2009, some claim and process payments are still being
distributed.

California's deregulation and subsequent energy crisis

In October 2000, Daniel Scotto, the top ranked utility analyst on Wall Street, suspended his ratings on all
energy companies conducting business in California because of the possibility that the companies would
not receive full and adequate compensation for the deferred energy accounts used as the cornerstone for
the California Deregulation Plan enacted in the late 1990s. Five months later, Pacific Gas & Electric
(PG&E) was forced into bankruptcy. Senator Phil Gramm, the second largest recipient of campaign
contributions from Enron, succeeded in legislating California's energy commodity trading deregulation.
Despite warnings from prominent consumer groups which stated that this law would give energy traders
too much influence over energy commodity prices, the legislation was passed in December 2000.

As Public Citizen reported, "Because of Enron’s new, unregulated power auction, the company’s
'Wholesale Services' revenues quadrupled—from $12 billion in the first quarter of 2000 to $48.4 billion in
the first quarter of 2001.
Before passage of the deregulation law, there had been only one Stage 3 rolling blackout declared.
Following passage, California had a total of 38 blackouts defined as Stage 3 rolling blackouts, until
federal regulators intervened in June 2001. These blackouts occurred mainly as a result of a poorly
designed market system that was manipulated by traders and marketers. Enron traders were revealed as
intentionally encouraging the removal of power from the market during California's energy crisis by
encouraging suppliers to shut down plants to perform unnecessary maintenance, as documented in
recordings made at the time. These acts contributed to the need for rolling blackouts, which adversely
affected many businesses dependent upon a reliable supply of electricity, and inconvenienced a large
number of retail consumers. This scattered supply raised the price exponentially, and Enron traders were
thus able to sell power at premium prices, sometimes up to a factor of 20x its normal peak value.

Within the field of criminology, white-collar crime has been defined by Edwin Sutherland as "a crime
committed by a person of respectability and high social status in the course of his occupation" (1939).
Sutherland was a proponent of Symbolic Interactionism, and believed that criminal behavior was learned
from interpersonal interaction with others. White-collar crime, therefore, overlaps with corporate crime
because the opportunity for fraud, bribery, insider trading, embezzlement, computer crime, copyright
infringement, money laundering, identity theft, and forgery is more available to white-collar employees.

CONCLUSION
The International Conference of Labour Statisticians (ILO) defines the unemployed as persons above a specified age
who, during the reference period, were without work, were currently available for work, and were seeking work.
The process of industrialisation encouraged working-class incorporation into society with greater social mobility
being achieved during the twentieth century. But the routine of policing tends to focus on the public places where
the economically marginal live out more of their lives, so regulation falls on those who are not integrated into the
mainstream institutions of economic and political life. A perennial source of conflict has therefore involved
working-class youth but, as long-term structural unemployment emerged, an underclass was created. Ralf
Dahrendorf argues that the majority class did not need the unemployed to maintain and even increase its standard of
living, and so the condition of the underclass became hopeless. Box (1987) sums up the research into crime and
unemployment at

The relationship between overall unemployment and crime is inconsistent. On balance the weight of
existing research supports there being a weak but none-the-less significant causal relationship. However,
properly targeted research on young males, particularly those from disadvantaged ethnic groups, which
considers both the meaning and duration of unemployment, has yet to be done. The significance of
unemployment will vary depending on its duration, social assessments of blame, previous experience of
steady employment, perception of future prospecAts, comparison with other groups, etc. Hence, there is
likely to be a causal relationship between relative deprivation and crime, particularly where unemployment
is perceived as unjust and hopeless by comparison with the lot of other groups. Thornberry and Christenson
(1984) analysed data from a longitudinal cohort study ofdelinquency in Philadelphia and found (at p405):
 Unemployment exerts a rather immediate effect on criminal involvement, while criminal involvement
exerts a more long-range effect on unemployment. What this and other empiricalresearch demonstrates is
that crime-rates, especially for property offences, were higher during periods of unemployment than of
employment. This suggests that holding constant other variables, the same youths commit more crimes
while unemployed. This is not surprising since unemployment provides an incentive to commit offences
and erodes the social controls which would otherwise encourage conformity. But crime also rose during the
so-called period of affluence, prompting the Right Realism of James Q. Wilson and his associates in
the United States who argued that the criminal justice system was failing, and the Left Realism attributed to
Jock Young, which argued for situational changes to reduce the availability of criminal opportunities in the
environment. More generally, the growth ofanomie (see Durkheim and, more recently, the Strain
Theory proposed by Merton), predicted a strong correlation between unemployment and property crime.
But Cantor and Land (1985) found a negative association for unemployment and property crime in the
United States. They argued that unemployment decreases the opportunity for property crime since it
reflects a general slowdown in production and consumption activities and it increases the ability to guard
property due to a greater concentration of time at home.

Conservatism alleges the failure of state agencies charged with the task of socialisation to instil self-
discipline and moral values resulting in permissiveness, a lack of conformity, and liberalisation. The
"evidence" that there are new affluent criminals allows populist politicians to deny any link between
inner-city deprivation and crime. The Left avoids the issue of morality and crime which denies earlier
work in Marxist criminology linking crime and the culture of egoism stimulated by economic advance
under capitalism as a more amorally materialistic culture emerges. As Durkheim asserted, moral
education cannot be effective in an economically unjust society. Thus, additional research is required,
using a more complex model of crime and control to include variables such as opportunities or
incentives relative to a country's standard of living, potential punishment, chance of being caught, law
enforcement efforts and expenditures on theft and property crime relative to other crimes, size of the
country's criminal population, education levels, and other socio-economic factors. A further factor
currently being researched is the role of the media in the social construction of "hot spots" or dangerous
places within a city. Crime is a substantial element in media news reporting. Media research is now
determining whether the coverage of crime is spatially representative of where crime occurs, or
disproportionately presents crime as occurring in certain areas of a city, thereby skewing public
perceptions and the political response

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