The Criminal Violation of Financial Trust

Author(s): Donald R. Cressey

Source: American Sociological Review , Dec., 1950, Vol. 15, No. 6 (Dec., 1950), pp. 738-743
Published by: American Sociological Association

Stable URL: https://www.jstor.org/stable/2086606

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 THE CRIMINAL VIOLATION OF FINANCIAL TRUST 739

ceptions, thus making possible the perfecting has been considered a "pillar of the commu-
or refinement of generalizations. However, nity" and a trusted and loyal employee
this notion, which is essentially an assump- actually has been gambling with his own
tion regarding the proper design for scientific and his company's money, an indication of
research, has been applied only rarely in immorality has been revealed, but his be-
criminology, and never in an attempt to havior has not been explained. Equally in
formulate a sociological theory of trust vio- contrast to the assumption regarding proper
lation. In fact, while the criminal violation scientific methodology are those conceptions
of financial trust poses serious problems for which assert that trust violation is caused
theoretical criminology, text-book writers by an assumed hidden variable, such as
and other sociologists who have offered "moral weakness" or "tensions,"4 or by
theories of criminal causation have for the weakness in the systems of checks upon the
most part ignored it.2 As a result, almost all trusted person. The latter "explanation"
publications on trust violation have been merely states, in a sense, that trust violation
issued by persons or agencies primarily inter- is caused by the existence of institutions
ested in the techniques used or in prevention whose functioning depends upon varying de-
of the crime, and the vast majority of the grees of trust.
explanations given in the literature merely The central problem of this study is
repeat and emphasize popular views. Few of that of providing an explanation in keep-
the explanations have been convincing since ing with the assumption of proper scientific
little attempt at an integration with an method and generalization by determining
explicit theory has been made. whether a definable sequence of events is
On the contrary, most of the current ex- always present when trust violation is pres-
planations are of a multiple factor type, ent, and never present when trust violation is
usually stated in terms of the way the trust absent. A major related problem is that of
violator spends the funds which he has dis- accounting for the presence in individual
honestly obtained. Thus, "gambling," cases of the events which make up the se-
"drink," and "extravagant living" are listed quence which differentiates violators from
as causes of embezzlement, even if behavior non-violators, These two problems are closely
of this kind is not present in even a majority related since the events in the person-situa-
of the cases.3 Such conceptions are in gen- tion complex at the time trust violation oc-
eral more in the nature of attempts to place curs cannot be completely separated from
blame or to indicate immorality than they the prior life experiences of the trust violator.
are explanations of the behavior. For ex- However, only the first problem, that con-
ample, if it is said that a trust violator who cerned with what Lewin calls "systematic"
causation, in contrast to "historical" or
2Only three sociologists have published detailed
account of research on the subject: E. Redden, Em- "genetic" causation,7 will be discussed here.
bezzlement, A Study of One Kind of Criminal Be-
havior, With Prediction Tables Based on Fidelity 4Cf. H. Koppel, "Other People's Money," Col-
Insurance Records, Ph.D. Dissertation, University of liers, 67 (April I6, 1921), 11-I2; J. Edgar Hoover,
Chicago, I939; Svend Riemer, "Embezzlement: op. cit., S. Lottier, op. cit.
Pathological Basis," Journal of Criminal Law and 'Cf. George E. Bennet, Fraud: Its Control
Criminology, 32 (Nov.-Dec., I940), 4II-423; S. Through Accounts, New York: Century, 1930, p.
Lottier, "Tension Theory of Criminal Behavior," 22; L. A. Pratt, Bank Frauds, Their Detection and
American Sociological Review, 7 (Dec., I942), 840- Prevention, New York: Ronald, 1947, pp. 7-I0.
848. 'Hall has pointed out that the economic system
3See, for example, The United States Fidelity in our modern society presupposes business tran-
and Guaranty Company, iooi Embezzlers, Balti- sactions based on a considerable amount of trust.
more: Author, I937, and iooi Embezzlers Post War, Jerome Hall, Theft, Law and Society, Boston: Little,
Baltimore: Author, Io50; J. Edgar Hoover, "Na- Brown and Company, 1935.
tional Bank Offenses," Journal of Criminal Law and 'Kurt Lewin, "Some Social and Psychological
Criminology, 24 (Sept.-Oct., IQ33), 655-663; V. Differences Between the United States and Ger-
Peterson, "Why Honest People Steal," Ibid., 38 many," Character and Personality, 4 (June, I936),
(July-August, I947), 94-I03. 265-293. For a discussion of these two types of ex-

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 740 AMERICAN SOCIOLOGICAL REVIEW

Hypotheses in regard to the first problem, of those convicted for larceny by bailee,
the problem of systematic causation, were forgery, and confidence game.
formulated progressively. When an hypothe- The main source of direct information in
sis was formulated, a search for negative regard to the behavior, now called "the
cases was conducted, and when such cases criminal violation of financial trust," was
were found the hypothesis was re-formulated interview material obtained in informal con-
in light of them. The behavior to be ex- tacts over a period of five months with all
plained in this manner was at first defined prisoners whose behavior met the criteria
as embezzlement, and a legal definition of and who were confined at the Illinois State
that crime was used.8 Upon contact with Penitentiaries at Joliet.9 In some cases we
cases, however, it was almost immediately were able to write verbatim notes during the
discovered that the term is not used in a con-interviews without disturbing the subject,
sistent manner in the jurisdiction where the but in other cases it seemed appropriate to
research was conducted and that many per- make only outline notes, and in some cases
sons whose behavior was adequately de- no notes could be taken at all. In the last
scribed by the legal definition actually had two instances the content of the interview
been sentenced to the penitentiary on some was written down in the subject's own words
other charge. Consequently, the legal defi- as soon as he left the room.
nition was abandoned and in its place two The length and frequency of interviews
criteria for inclusion of any particular case with individual subjects depended to a large
in the study were established: (a) The per- extent upon the subject himself. Those sub-
son must have accepted a position of trust in jects who seemed reluctant to talk were
good faith. This is similar to the implication seen more frequently than those with whom
of the legal definition that the "felonious a friendly and confidential relationship was
intent" in embezzlement must have been established early in the process, but those
formulated after the time of taking posses- who could not present the details of their
sion. All legal definitions are in agreement in cases and backgrounds, even if they so de-
this respect. (b) The person must have vio- sired, were not interviewed as frequently as
lated the trust. These criteria permit the in- those who were able to do so. That is,
clusion of almost all persons convicted for "good" subjects were interviewed more often
embezzlement and in addition a proportion and more extensively than were "poor" sub-

planation in criminology see E. H. Sutherland, Determination of whether or not a particular

Principles of Criminology, New York: Lippincott, prisoner's behavior met the criteria was made by
I947, p. 5, and J. F. Brown and D. W. Orr, "Field examination of documents in his personal file
Theoretical Approach to Criminology," Journal of and by preliminary or "screening" interviews. The
Criminal Psychopathology, 3 (Oct., 194I), 236-252. document most heavily relied upon for this pur-
'"The fraudulent appropriation to his own use pose was the "State's Attorney's Report" (the
or benefit of property or money entrusted to him official statement of facts in each case), but other
by another, on the part of a clerk, agent, trustee, documents, such as reports of the Chicago Crime
public officer or other person acting in a fiduciary Commission, letters from former employers and
capacity." Black's Law Dictionary, St. Paul: West from friends and relatives, and the prisoner's state-
Publishing Co., I933, p. 633. Almost all studies ment upon admission to the institution also were
pertinent to the current research have been studies consulted. In the screening interviews the subjects
of embezzlement. But since this term has been used were never asked the question, "Did you accept
to denote the behavior of all fidelity bond default- your position of trust in good faith?" but instead
ers, the criminal behavior of all persons employed in the interviewer waited for the subject to give the
banks, and the behavior of swindlers as well as em- information spontaneously. Ordinarily, evidence of
bezzlers, it is obvious that the factual conclusions acceptance in good faith came out in the first inter-
of the studies are not immediately comparable in view in form of statements such as the following:
all respects. The varied usage of the term is due to "I had no idea I was going to do this until the day
oversight on the part of some investigators, but it it happened." Evidence of acceptance in bad faith
is also due in part to the existence of a variety of was presented, for example, as follows: "My case
legal definitions among the states and foreign coun- isn't like embezzlement because I knew when I took
tries. their money that I was going to use it for myself."

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 THE CRIMINAL VIOLATION OF FINANCIAL TRUST 74I

jects-those whose intelligence, educational
background and vocabulary restricted the
communication of their experiences. Those
who described their behavior fluently became
crucial cases, their testimony causing the
abandonment of the hypotheses which had
guided the research up to the time they were
encountered. The new hypotheses were then
checked against the less fluent cases.
The initial hypothesis, which was aban-
doned almost immediately, was that posi-
tions of financial trust are violated when
the incumbent has learned in connection with
the business or profession in which he is
employed that some forms of trust viola-
tions are merely "technical violations" and
are not really "illegal" or "wrong," and, on
the negative side, that they are not violated stating that persons become trust violators
if this kind of definition of the behavior has when they conceive of themselves as having
not been learned. This hypothesis was sug-
gested by Sutherland in his writings on white sidered as non-socially-sanctionable and
collar crime.10 In the interviews, however,
many trust violators expressed the idea that
they knew the behavior to be illegal and
wrong at all times and that they merely
"kidded themselves" into thinking that it was
not illegal. Others reported that they knew
of no one in their business or profession who
was carrying on practices similar to theirs and havior on the part of the trusted person, are
some of them defined their offenses as theft
rather than as trust violation.
In view of these negative cases, a second
hypothesis, which included some of the
"multiple factor" ideas of gambling and
family emergencies, as well as the potential
trust violators' attitudes toward them, was
formulated. This hypothesis was in part de-
rived from Riemer's statement that the
"opportunities" inherent in trust positions
form "temptations" if the incumbents de-
velop anti-social attitudes which make pos-
sible an abandonment of the folkways of
business behavior.11 The formulation was
that positions of trust are violated when the
incumbent structures a real or supposed need
for extra funds or extended use of property
as an "emergency" which cannot be met by
legal means, and that if such an emergency
does not take place trust violation will not
occur. This hypothesis proved fruitful, but
like the first one it had to be revised when
persons were found who claimed that while
an emergency had been present at the time
they violated the trust, other, perhaps even
more extreme, emergencies had been pres-
ent in earlier periods when they did not
violate it. Others reported that there had
been no financial emergency in their cases,
and a few "explained" their behavior in
terms of antagonistic attitudes toward the
employer or feelings of being abused, under-
paid, or discriminated against in some other
way.
The next revision shifted the emphasis
from emergency to psychological isolation,
incured financial obligations which are con-
which, consequently, must be satisfied by a
private or secret means. Negatively, if such
non-shareable obligations are not present,
trust violation will not occur. This hypo-
thesis had the advantage of calling attention
to the fact that not all emergencies, even if
they are created by prior "immoral" be-
important to trust violation. It had been
suggested by LaPiere and Farnsworth who
cite Sutherland as having shown that in cases
of white collar crime the person is frequently
confronted "with the alternative of commit-
ting a crime or losing something he values
above his integrity,"12 but it was brought
into the present study by a suggestion from a
prisoner who stated that he believed that no
embezzlement would ever occur if the
trusted person always told his wife and
family about his financial problems, no mat-
ter what the consequences. However, when
the cases were re-examined in light of this
hypothesis it was found that in a few of
them there was nothing which could be
considered as financial obligation, that is,
as a debt which had been incurred in the
past and for which the person at present

1 E. H. Sutherland, White Collar Crime, New 12R. T. LaPiere and P. R. Farnsworth, Social
York: Dryden, I949. Psychology, New York: McGraw-Hill, I949, p.
1 Svend Riemer, op. cit. 344.

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 742 AMERICAN SOCIOLOGICAL REVIEW
felt responsible. Also, in some cases there
had been non-sanctionable obligations at a
prior time, and these obligations had not
been alleviated by means of trust viola-
tion. It became increasingly apparent at this
point that trust violation could not be at-
tributed to a single event, but that its ex-
planation could be made only in terms of a
sequence of events, a process.
Again the hypothesis was re-formulated,
emphasizing this time not financial obliga-
tions which were considered as non-socially-
sanctionable and hence as non-shareable, but
non-shareable problems of that nature. This
hypothesis also pointed up the idea that not
only was a non-shareable problem necessary,
but that the person had to possess (a)
knowledge or awareness of the fact that the
problem could to some extent be solved by
means of trust violation and (b) the tech-
nical skill necessary for such violation. Nega-
tive cases appeared, however, in instances
where men reported that what they con-
sidered a non-shareable problem had been
present for some period of time and that
they had known for some time before the
violation took place that the problem could
be solved by violating their position of trust
by using a particular skill. Some stated that
they did not violate the trust at the earlier
period because the situation was not in sharp
enough focus to "break down their ideas of
right and wrong."
Such statements suggested the final re-
vision, which took the following form:
Trusted persons become trust violators when
they conceive of themselves as having a
financial problem which is non-shareable,
have the knowledge or awareness that this
problem can be secretly resolved by vio-
lation of the position of financial trust, and
are able to apply to their own conduct in
that situation verbalizations which enable
them to adjust their conceptions of them-
selves as trusted persons with their concep-
tions of themselves as users of the entrusted
funds or property.
This hypothesis proved to be far superior
to the others, and no evidence necessitating
its rejection has been found as yet. In all of
the cases interviewed the sequence has been
found to be present, and when cases were ex-
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amined with a view to answering the ques-
tion: "Why did these men not violate their
trust at an earlier period?" it was seen that
in earlier periods one or more of the events
in the sequence had not been present. A
search of cases reported in the literature also
showed no negative cases, though it should
be pointed out that in many of the reports
crucial information which would either con-
tradict or affirm the hypothesis is not given.
A similar search of about 200 unpublished
cases collected by E. H. Sutherland in the
1930's, before he had formulated the differ-
ential association theory, likewise showed no
negative cases.
The events present in the process cannot
be considered in great detail here. How-
ever, brief comments about the sequence are
in order.
(i) Criteria of an objective nature in re-
gard to the degree of "shareability" which
specific types of problems have in our cul-
ture were not set up, but instead the sub-
ject's definition of the situation was used as
a datum.'3 Consequently, a list which would
exhaust all of the possible problems which
could be considered as non-shareable and
which might play a part in the etiology of
trust violation is not conceivable. For pur-
poses of illustration, however, we may cite
one type of problem which is frequently so
defined.
This type of problem is that which the
trusted person considers to have resulted
from the violation of the obligations
"ascribed" to his position of trust, that is,
those obligations of a non-financial nature
which are expected of persons in consequence
of their incumbency in positions of financial
trust. Just as persons in trusted positions
have obligations not to violate the trust by
taking funds, most of them also have obli-
gations, for example, to maintain an enviable
position in the community and to refrain
from certain types of gambling and from
s Evidence of the presence of non-shareable
problems was found in the language used by trust
violators. None of them, of course, used the words
"non-shareable problem," but many of them stated
that they were "ashamed" to tell anyone of a cer-
tain situation or that they had "too much false
pride" to get help from others.
 THE CRIMINAL VIOLATION OF FINANCIAL TRUST 743

what may be loosely described as riotous
living.'4 When persons incur financial re-
sponsibilities as a result of violation of these
ascribed obligations they often consider that
they must be kept secret, and meeting them
becomes a non-shareable problem.
The concept of the non-shareable problem
and consideration of the type of non-share-
able problem just discussed help to make
understandable the reported high incidence
of "wine, women and wagering" in the be-
havior of embezzlers and other trust vio-
lators, but these modes of behavior are not
used as explanatory principles. In fact, it
appears that the use of them as explanations
of trust violation merely indicates lack of
understanding of the problem.'5
(2) A non-shareable problem becomes a
stimulus to violation of a position of trust
only when the position is perceived as offer-
ing a private solution to this specific prob-
lem. In addition to having a financial prob-
lem which he feels he cannot share with per-
sons who, from a more objective point of
view, could help him, the trusted person
must have a certain amount of knowledge
or information about trust violation in
general, and he must be able to apply that
general information to his own specific situa- "trust violator." He often does not think of
tion. The presence of this event is often indi- himself as playing that role, but instead
cated by trust violators in their use of the
language "it occurred to me" or "it dawned
on me" that the entrusted funds could be
used for such and such purpose. This "dawn-
14E. C. Hughes has pointed out that in additionfeatures of trust violation and for some in-
to the specifically determining traits, a complex of
"auxiliary traits" is expected of incumbents of cer-
tain statuses. "Dilemmas and Contradictions of
Status," American Journal of Sociology, 50 (March,
I945), 353-359. In law, this type of obligation times
called an "obediential obligation" since it is a con-
sequence of a situation or a relationship, not of
a contract. Black's Law Dictionary, op. cit., p.
I274.
15 We do not mean to imply that statistical
studies of personal and social traits as selective fac- whose behavior the sequence was not pres-
tors in trust violation have no place. A study, for
example, showing a precise relationship between the
presence of certain personal and social traits and
the structuring of a financial problem as non-share- included in the scope of the present hypothe-
able would be extremely valuable. What we wish
to imply is that such studies of selective factors,
even if properly carried out, do not solve the prob-
lem of etiology. Cf. A. R. Lindesmith, op. cit., pp.
I57-I58.
ing" or "insight" or "perception" that the
non-shareable problem can and may be
solved by trust violation involves both
knowledge of this fact and a "rationaliza-
tion" of the behavior.
(3) The verbalizations ("rationaliza-
tions") used by trust violators are reflec-
tions of contact with cultural ideologies
which adjust for the person contradictory
ideas in regard to criminality on the one
hand and in regard to integrity, honesty and
morality on the other. Upon the appearance
of a non-shareable problem the trusted per-
son applies to his own situation a verbaliza-
tion which the groups in which he has had
membership have applied to others, or which
he himself has applied to the behavior of
others. This is his motivation.1 The hy-
pothesized reactions of others to "borrowing"
(criminal behavior) in order to solve a non-
shareable problem, for example, are much
different from the hypothesized reactions to
"stealing" or "embezzling," and the trusted
person behaves accordingly. It is because of
an ability to hypothesize reactions which
will not consistently and severely condemn
his criminal behavior that the trusted person
takes the role of what we have called the
thinks of himself as playing another role,
such as that of a special kind of borrower or
businessman.
The final hypothesis in its complete form
made it possible to account for some of the
dividual cases of that behavior which could
not be accounted for by other hypotheses.
However, the fact that it was revised several
is probably means that future revision
will be necessary if negative cases are found.
The location by another investigator of per-
sons who have violated positions of trust
which were accepted in good faith, but in
ent, will call for either a new revision of the
hypothesis or a redefinition of the behavior
SiS.
16 Cf. C. Wright Mills, "Situated Actions and
Vocabularies of Motive," American Sociological Re-
view, 5 (Dec., I940), 904-9I3.

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