WHITE COLLAR CRIMES

White collar crime, are usually for economic gain. The term white collar crime was coined for
the very first time by the sociologist Edwin Sutherland. This was during the Presidential address
speech given by him on white collar criminals to the American Sociological society in
December, 1939. Further, he also talked about the concept of white collar crime in various
research papers he wrote in the American Sociological Review in the year 1940 and 1945. He
also published books on white collar crime. So, it can be said that Sutherland has a major
contribution towards, white collar crimes. Sutherland was a proponent of Symbolic
Interactionism with others. However, the definition given by him has been criticized by
Edelhertz and various other sociologist as his definition was restrictive in approach.

In generic terms, the white collar crimes refer to a wide range of illegal acts committed by
apparently respectable people in business arena as component of their occupational roles. White-
collar crime, therefore, coincides with corporate crime, reason being, the opportunity for fraud,
insider-trading, embezzlement, bribery, cyber crime; intellectual property rights infringement,
identity theft, money laundering, and forgery are readily available to the employees working in
white-collar jobs. The technocrats are the ones behind the master plan due which the scams are
facilitated with such as ease. With the advent of technological advancement and dishonestly,
fraud is being committed and the victim is the unaware common masses.

The motive behind white collar crime is economic gain by maximization of profits. This desire
for profit earning motivates them to commit white collar crime. The means used to commit such
crime is through deceit and fraud. There is misuse of position by undue influence over the
common individual. In reality, it is the offender’s prominent position which provides the
opportunity for such crimes. The terms and policies are drafted so brilliantly that it is difficult for
the common man without specific expertise to infer the correct meaning and nature of the
activities.

These types of crimes are generally based on trust bestowed upon the offenders who by the
means of deceit and by concealing true information, takes advantage of his position. There are a
wide range of anti-trust offenses which have been prevailing in our system, thereby causing huge
financial loss to the community at large. From healthcare fraud to food adulteration, black-
marketing and hoarding, and other forms of white-collar crime impose enormous financial gain,
physical & social harm on individual persons and the society at large. Also, they pose a
significant challenge to the law enforcement agencies and other regulating and vigilance
agencies to prevent the menace of such offenses.
White collar crimes, not only harms the individuals or society at large but also, in case of some
type of crimes likes counterfeiting of currency 1, drugs and narcotics substances,2 forgery and
offenses related to documents,3 bribery & corruption,4financial scams; cause serious impact and
concern towards the national security and governance. There has been flagrant violation of
import-export laws by resorting to such crimes for the sake of earning huge profits.

DEFINITIONS

According to Merriam-Webster dictionary, 5 they have given the definition of white-collar crime
as under:

Definition of white-collar crime- Crime that typically involves stealing money from a
company and that is done by people who have important positions in the company- crime
committed by white-collar workers.

Word by Word definitions-

White-collar: of, relating to, or constituting the class of salaried employees whose duties
do not call for the wearing of work clothes or protective clothing.

Crime: an illegal act for which someone can be punished by the government- a grave
offense especially against morality- criminal activity.

Legal definition of white-collar crime- Crime that is committed by salaried professional

workers or persons in business and that usually involves a form of financial theft or fraud
(as in securities dealing).

The definitions offered by legal scholars vary both across and within disciplines and linguistic
practices. Black's Law dictionary6defines white-collar crime as “a non-violent crime usually
involving cheating or dishonesty in commercial matters”. The Oxford English dictionary defines
1
The Indian Penal Code, 1860 , Section 498A-489.
2
Narcotic Drug and Psychotropic Substance Act, 1985.
3
Ibid, note 1, Section 463-489.
4
Ibid, note 1, Section 168, 169, 171B, 171C, 171E, 171H.
5
Webster’s dictionary (Lexican Publication Inc., United States Of America, 1997)
6
Bryan A. Garner , Black's Law dictionary (West Publishing Co., 8thedition, 2009)
the white-collar criminal as "a person who takes advantage of the special knowledge or
responsibility of his position to commit non-violent, often financial, crimes." The American
dictionary of Criminal Justice more specifically defines white-collar crime as "nonviolent crime
for financial gain committed by means of deception by persons whose occupational status is
entrepreneurial, professional or semi-professional and utilizing their special occupational skills
and opportunities."

There is no doubt that it is a crime against society but it is different than other ordinary crimes.
There is no particular individual victim in white collar crimes. The society as a whole is a victim.
The crime is organized against the society at large with no particular individual as a victim.
Various criminologist and penologist have defined white collar crime as following:

According to Edelhertz: “An illegal act or series of illegal acts committed by non-physical kinds
of means and by concealment or guilt, to obtain money or property or to obtain business
advantage.”

According to Sutherland: “Crime committed by persons of respectability and high social status
in course of their occupation”

According to Federal Bureau of Investigation7: “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 violations”

According to Paul Tappan: “White collar crime is a special type of solitary professional
criminality. It involves real violation of criminal law systematically or repeated by business,
professional and clerical workers in addition to their occupation”.

According to Sir Walter Reckless: “White collar crime represent the offence of businessmen who
are in position to determine the policies and activities of business”.

According to Frank Hartung: “A violation of law regarding business which is committed for a
firm by a firm or its agents in the conduct of its business”.

7
United Stated Federal Bureau of Investigation, White collar crime: A report to the public, (US Department of
Justice, 1989).
According to Marshall Clinard: “A violation of the law committed primarily by groups such as
businessmen, professional men, and politicians in connection with their occupations”

Sutherland’s concept

The definition given by Sutherland is restrictive in nature. It is based on an offender’s

perspective. The offenses committed by people of high social status who are not suffering from
any deficiency or poor surroundings, or other conditions associated with perpetrators of violent
crime. It explains why educated people who had access to all societal resources and are members
of a respectable society resorted to crime as a means of achieving the goals. This paramount
success they would have been able to achieve without violating the law of the land. Sutherland’s
contribution enlarges the discussion and includes illegal deviance perpetrated by those who have
achieved success through socially acceptable methods.

 His view did not comprehend crimes committed outside one’s occupation. Ready
examples of crimes falling outside one’s occupation would be personal and non-business
false income tax returns, fraudulent claims for social security benefits, concealing assets
in personal bankruptcy, and use of large-scale buying on credit with no intention or
capability to ever pay for purchases. His definition does not take into account crime as a
business, such as a planned bankruptcy, or an old-fashioned “con game” operated in a
business milieu.

Sutherland was basically concerned with society’s disparate approach to the crimes of the
respectable and well-to-do on the one hand, and those of the poor and disadvantaged on the
other. His definition of white-collar crime concentrated, therefore, on characterizing violators
rather than violations.8

Notably, Sutherland’s definition rejects the notion that a criminal conviction was required in
order to qualify. Sutherland took four considerations:

1. Civil agencies often handle corporate malfeasance that could have been charged as fraud
in a criminal court.
8
Edwin Sutherland, “The White Collar Criminal” 5 American Sociological Review (1940) 8.
 2. Private citizens are often more interested in receiving civil damages than seeing criminal
punishments imposed
3. White collar criminals are disproportionately able to escape prosecution “because of the
class bias of the courts and the power of their class to influence the implementation and
administration of the law” and
4. White collar prosecutions typically stop at one guilty party and ignore the many
accessories to the crime (such as when a judge is convicted of accepting bribes and the
parties paying the bribes is not prosecuted).9

White-collar crime can be committed by a bank cashier or the head of an institution. The
offender can be any government official with a conflict of interest. He can be a beneficiary of a
poverty program who is told to hire a work group and to put up fictional workers on the payroll
so as to appropriate their wages. The character of the crime has to be found in its modus
operandi(A particular way to do something) and the damage sought to be done rather than in the
nature of the offenders. It is important that to identify such crimes, we concentrate on their nature
only rather than on the personal characteristics or status of the delinquent.

White-collar crime has low visibility and comparatively higher impact on our society. As there
have been advancement in the nature of our economic organization, developments in marketing,
distribution, and investment and so there has been a rapid increase in such high level crimes. It is
a fair assumption that white-collar crime have increased exponentially.

The numbers of instances where such crimes have increased are seen horizontally as well as
vertically. The social and economic costs of tax violations, insider trading by corporate
employees and bank officials, adulteration of foods and drugs, frauds from charity collection,
insurance frauds, price fixing, frauds arising out of government procurement, and abuse of public
trust are seen even though not easily measured.

The ideal scheme or plan, from the point of view of the perpetrator, is one in which the victim
never learns the true nature of the blow struck. Charity frauds classically illustrate such a
scheme. The takings are small for each individual, and few victims have sufficient personal
interest in their contributions to attempt to follow up. As a result charity frauds almost always are

9
Ibid
exposed through the curiosity of news media or the vigilance of public officials, rather than the
result of investigations following victims’ complaints.

The following crimes are generally classified as white collar-crimes:

(1) Crimes by persons operating on an individual, ad hoc basis, for personal gain in a non-
business context.
(2) Crimes in the course of their occupations by those operating inside business,
Government, or other establishments, or in a professional capacity, in violation of their
duty of loyalty and fidelity to employer or client.
(3) Crimes incidental to and in furtherance of business operations, but not the central
purpose of such business operations.
(4) White-collar crime as a business, or the central activity of the business.

Sutherland’s formulation has a strong element of propaganda in terms of identifying activities of

the authoritative. It is rooted in the idea of public opinion. A deceitful method applied against the
powerless members of the underclass by the affluent criminals. Sutherland and those who
followed in his footsteps saw no problem in working with a definition that focused on upper-
class abuses of power. John Braithwaite, regarded by many as the most distinguished
criminologist of current times, after a thorough review of the state of white-collar crime,
concluded that “probably the most sensible way to proceed- is to stick with Sutherland’s
definition.” Braithwaite points out that this definition at least excludes welfare cheats and credit
card frauds.

Herbert Edelhertz’s concept

The definition of Edelhertz10 expands the concept more radically by including within scope not
only the violations of socio-economic laws, not directly connected with the occupation of
violators, but also violations committed or what were earlier designed as ‘lower class’ persons.
He is clear to hold that white collar crime may also attain professional dimensions. Such
dimensions may include smuggling, illegal foreign exchange manipulations, running illegal

Edelhertz, The Nature, Impact, an Prosecution of White Collar Crime (National Institute for Law Enforcement an
10

Criminal Justice, Washington, D.C, 1970)

lotteries etc. In this context, R.S. Sarkaria, Justice, Supreme Court of India 11 very correctly
observes:-

“Edelhertz’ expansion of the concept brings it up to date and gives it a dynamic

interpretation. It also enhances its utility from the criminological point of view.”

Edelhertz’s definition offers a roster of offenders who can self-evidently be regarded and studied
as white-collar criminals. Sutherland’s definition suffers from a certain degree of ambiguity, for
it is difficult to determine after all how high a status and how much respect need a person have to
meet Sutherland’s criteria.

Edelhertz’s definition has problems as well. For one thing, many persons he would regard as
having committed a particular crime actually had done something else and often more serious,
but a prosecutor deemed it the better strategy to try to convict them of an offense that was much
easier to prove before a jury or much more likely to result in a plea negotiation. Martha Stewart,
a household name in the world of elegant living, was suspected of insider trading on the stock
market. But she was tried and found guilty of perjury for lying to a grand jury about her behavior
with her stockbroker. Perjury was not the core offense, but it was the easiest charge by which to
persuade the jury of her guilt.

As a crime-based definition, it ignored offender characteristics and concentrated only on how the
crime was carried out. As a result, it covered a far larger swath of criminality including crimes or
other illegal acts. Edelhertz’s definition also extends to those acts that are prohibited by civil,
administrative, or regulatory law, whether or not the perpetrators are ever called to answer for
them) perpetrated outside of a business context, or by persons of relatively low social status.

Edelhertz identified four main types of white-collar offending:

– personal crimes (“crimes by persons operating on an individual, ad hoc basis, for

personal gain in a non-business context”),
– abuses of trust (“crimes in the course of their occupations by those operating inside
businesses, Government, or other establishments, or in a professional capacity, in
violation of their duty of loyalty and fidelity to employer or client”),

11
Ibid
 – business crimes (“crimes incidental to and in furtherance of business operations, but not
the central purpose of such business operations”), and
– con games (“white-collar crime as a business, or as the central activity of the business”).12

Martin R Haskell and Lewis agreed to the definition of white collar crime put by Edelhertz and
his extension of limits to include far more than crimes committed in the course of one’s
occupations. Appreciating Edelhertz’ definition as a comprehensive one, Emilio Viano and Alvin
Cohn, conclude that it “covers all of the most important facts of white collar crime”.13

The definition, put forth by Edelhertz, has been readily, widely accepted within a short span of
its formulation since 1970. Even as eminent and important a work as ‘The Encyclopedia of
Crime and Justice’ (1983)14, uses and applies the term in the same sense as Edelhertz did.

Eminent Scholar Venugopal Rao15 prefers to stick to Sutherland’s line of thinking and seems to
overlook even the caution given by Sutherland himself that the so called ‘blue-collar people’ as
white collar crimes. To ensure justice we must confine ourselves to the crimes committed by
persons employed in white collar occupations.

Critics of Edelhertz’s formulation have deemed it unnecessarily verbose with a tendency, not
uncommon in legal writing, to throw in anything that might conceivably be relevant. Why, for
instance, does he employee the phrase “a series of acts” when a single act is sufficient to meet
the definition? Why focus on motive, which is not required to be demonstrated in an American
criminal court? Why include con games? Nor is it clear whether Edelhertz stood on the issue of
formal criminal adjudication of an act before it should be regarded as a crime of the white-collar
variety. Should a person who is apparently guilty of a specified white-collar crime but who goes
free because of a technical violation by law enforcement personnel be regarded as a white-collar
criminal or as an innocent party.

The fact that he excluded violent acts from his definition has been another point of contention.
Offenses such as unnecessary surgery, the knowing manufacturing and marketing of unsafe
pharmaceuticals and automobiles, and a failure to label poisonous materials in the workplace or

12
Ibid.
13
Emilio Viano, Alvin, Social Problems and Criminal Justice 45 (Chicogo-Nelson Hall Co., 1975).
14
Stanford H. Kadish, Encyclopedia of Crime and Justice 57 (Free Press,1983).
15
Venugopal Rao, Crime in Our Society 49 (Vikas Publication, New Delhi, 1983).
to adequately protect dangerous machinery could be regarded as white-collar crimes with a
strong component of violence.

CHARACTERSTICS OF WHITE COLLAR CRIMES

Characteristics of white collar crimes are radically different from ordinary or conventional type
of crimes in several respects. The salient characteristics that make white-collar crime
distinguishable from other crimes are:

 White collar crimes are committed by people of high social status in society with
education and professional degrees like government officials, doctors, advocates, charted
accountants, other professionals and businessmen etc. and not by layman and hardcore
criminals.
 The mode of operation is fraud and not force. The means of crimes differ from the
traditional crimes as fraud, misrepresentation, adulteration, malpractices, irregularities
etc.
 The act is thoughtful. These crimes are committed by means of deliberate and planned
conspiracies without any feelings and sentiments.
 The victims of white collar crimes are normally the main section of the community,
society or even the entire nation besides the individuals. The victim is usually the State or
section of the public particularly the consuming public. Even when there is an individual
victim the more important element of the offence is harm to society.
 In white collar crimes mens-rea is not an essential ingredient of crimes. Only the actus-
reus on the part of offender makes the offender liable for the offence. The motive is
avarice or rapacity and not just hate.
 The financial loss to the society from white collar crime is probably greater than the
financial loss from burglaries, robberies and larcenies committed by persons of lower
socio-economic class.

The Contributing Factors for White Collar Crimes

There are certain factors which contribute towards the growth of white collar crimes. In other
words, there are certain situations under which white collar crime flourish and they are as below:

1. The economic and industrial growth throughout the world has been the most potential cause of
increasing in the White-Collar crimes.

2. The changing socio – economic scenario of the society coupled with increase in wealth and
prosperity has furnished opportunities for white-collar crime.

3. Twenty-ninth report of Law Commission observed that the modern scientific and
technological developments and monopolistic trends in business world have led to enormous
increase in white-collar crimes

4. The contravention of regulatory measures gives rise to white-collar criminality (to ushered
welfare activities that necessitated regulatory measures on the port of the government to control
means of production and distribution so as to sub serve the common good)

5. Marshal B Clinard – the competitive business community which tries to oust their rival
competitors in order to earn huge profits is the root cause of white-collar crime.

6. The white-collar criminals are enjoying relatively high social and economical status. They
belong to an influential group which is powerful enough to handle their occupation tactfully and
persons affected thereby hardly know that they are being victimized.

7. Criminal law administrators and Judges being members of upper strata of the society are
generally sympathetic towards white – collar criminals while dealing with them

CAUSES OF WHITE-COLLAR CRIME

The White collar crimes are committed because of greed or economic instability. But these
crimes are also committed because of situational pressure or the inherent characteristic of getting
more than others. However, there are various reasons for white collar crimes.
Not really a crime: Some offenders convince themselves that the actions performed by them are
not crimes as the acts involved does not resemble street crimes.

Not realizable: Some people justify themselves in committing crimes as they feel that the
government regulations do not understand the practical problems of competing in the free
enterprise system.

Lack of awareness: One of the main reason of white collar crime is the lack of awareness of
people. The nature of the crime is different from the traditional crimes and people rarely
understand it though they are the worst victims of crime.

Necessity: Necessity is another factor of committing crimes. People commit white collar crimes
in order to satisfy their ego or support their family.

Greed: People of high strata are financially stable. But, still they commit crimes out of greed.
For this purpose, they adopt all sorts of illegal methods to have an economic gain.

Technology: Another reason behind the commission of white collar crimes can be technology.
The emergence of new technologies, political pressure or growing business, has led to many
more ideas which has resulted in the commission of crimes.

Competition: White collar crimes usually occur because of the desire to beat the competitor and
to reach ahead of them. To win, crimes like forgery, bribery and frauds are committed.

Legislation: One of the major reasons behind the rise in the commission of white collar crimes
are that there are not enough laws to deal with such kinds of crimes. In most of the cases, white
collar criminals are not even prosecuted. The implementation of Information Technology Act
2008 is fragile due to lack of trained workers. It is tough to find white collar criminals because
the crimes which are committed are mostly done in private places and hence there is no
eyewitness.

TYPES OF WHITE COLLAR CRIMES

In the arena of criminology, white-collar crime has been conceptualized by Sutherland 16as crime
committed in the course of his employment by a person who has high status and has certain
16
Sutherland, White Collar Crime 23 (NewYork: Holt, Rinehart, and Winston, 1949)
respect in the society, which has been committed during the course of the occupation. Sutherland
was a proponent of Symbolic Interactionism with others. White-collar crime, therefore, coincides
with corporate crime, reason being, the opportunity for fraud, insider-trading, embezzlement,
bribery; cyber-crime; intellectual property rights infringement, identity theft, money laundering,
and forgery are readily available to the employees working in white-collar jobs.

Few infamous categories of white collar crime include hoarding, black marketing, adulteration,
tax evasion, etc. These days, white collar crimes are more linked with the profession in which it
is committed, and accordingly various names are given. Professional or occupational crimes by
doctors, engineers, legal professionals are individually, and sometimes institutionally through
hospitals, associations, institutions including educational institutions are generally involved in
committing these crimes.

From the theoretical perspective, four types of white collar crime are explained here. The first
category is that of personal, or ad hoc crimes in which offender pursue his own individual
objective, and has no face-to-face relationship with the victim. Tax evasion by individual, frauds,
credit frauds, etc. come in this category. In this category the offender is often persuaded by
greed, or sometimes by a very serious real or perceived need.

The second category is where the offender exploits the trust or faith bestowed over him by
individual or institution. Financial embezzlements by employees or fiduciaries, accepting bribes
or other favors to grant contracts on behalf of one’s government or business employer, misuse of
an employer’s property or information for private profit, misuse of labor union pension funds,
creating ghosts on payrolls or fictitious accounts payable. All of these examples are in this
category because the offender has power to cause harm by advantage of his or her position and,
through control and manipulation of paper or computer records, to temporarily or permanently
bury evidence of crime.

The third category, and the most difficult category of white collar crimes belongs to that type of
offender, usually with a real high status in society or their respective community, and they
commit crime incidental to, and in furtherance of their organizational operations. Since, under
this class, committing crime is not the central purpose of the organization and people too belong
to a real high status where they have influence over system and society, defeat not only
regulatory norms but also faith of people at large. Offenders, under this category often indulge in
anti-trust violations, collusive bidding, and corrupt practices at political as well as economic
fronts to support their individual or organizational interests etc. Fraudulent medical claims,
submission of a misleading statement, academic, institutional or financial, to obtain more credit
or fund or grant etc. also comes under this category of white collar crime. Crime committed by
upper class remain well hidden from the regulatory bodies due to connivance between the
culprits and authorities. The recent examples of such crimes are 2G Spectrum Scam, Coalgate
Scam, Commonwealth Games Scandal, Mumbai Adarsh defence Society Scam, Bihar Fodder
Scam, etc.

The fourth category of white-collar crime is a class where crime is committed as a part of the
business itself. Violation of trademarks or copyright, patent law or competition law etc. fall
under this category. The violation of domain name and other corporate crimes are also white
collar crimes of this type.17

DIFFERENCE BETWEEN WHITE COLLAR CRIMES & BLUE COLLAR CRIMES

Girjesh Shukla, Criminology- Crime Causation, Sentencing and Rehabilitation of Victims 101, (Lexis Nexis,
17

2013)