Examining the Costs and Impacts of White-Collar Crime in the U.S.

Abstract

Response Journal: Articles on White-Collar Crime Tangible and intangible costs of white-collar crime by Billings, B. A., Crumbley, D. L., & Knott, C. L. (2021). White-collar crime has significant financial and nonfinancial costs to organizations, shareholders, their customers, government agencies, and the general public. The article examines the various costs incurred as a result of white collar crimes in the United States and laws that seek to prevent such crimes. It is important that the society remains vigilant to protect vulnerable targets of white collar crimes such as fraud that could have significant financial costs to victims. According to Billings et al. (2021), major costs of white-collar crimes occur after the detection of fraud during investigations and when companies pay fines and damages to victims. The majority of costs resulting from white collar crimes are associated with malpractices of executives in corporations. Measures to ensure accurate accounting and reporting practices in the United States especially in the financial sector seek to prevent the costs of white-collar crime (Payne, 2022). In response to a high rate of white-collar crime in the financial sector in the late 1990s and early 2000s, Sarbanes-Oxley Act (SOX) came into place to streamline financial reporting. The article describes the application of SOX in the investigations and conviction of John Yates in the Yates v. U.S. case. The act played a major role in defining the role that Yates played in the fraud case and the resulting conviction. While he was not found guilty of cooking books, he was found guilty of throwing a tangible item based on SOX and he spent 30 days in federal prison. Incidents of white-collar crime have played a significant role in defining the legislation on crime and investigation processes. Yates actions had a significant impact on the investigation of potential criminal behavior since he actively concealed evidence (Billings et al., 2021). There is need to ensure that actions amounting to white-collar crime lead to convictions and penalties that deter malpractices in investigations. The costs of white-collar crime to organizations and targeted victims demonstrate the need to align the legal processes with deterrence measures. It is fundamental to protect vulnerable targets of fraud by increasing oversight in the financial sector and prosecuting perpetrators of white-collar crime. Gender and white-collar crime: Convenience in target selection by Dearden, T., & Gottschalk, P. (2021). Gender differences in white-collar crime could inform legal recourse and the protection of potential victims. The selection of targets among male and female offenders in white-collar crimes differ with female offenders being more likely to target random individuals, employers, and healthcare providers. Male offenders are more likely than female offenders to target their friends, and investors in their businesses (Dearden & Gottschalk, 2021). The consideration of the effect of white-collar crime on victims is a significant factor in target selection and a potential cause for disparity in gender patterns. The theory of convenience further explains the variation in the nature of crimes among male and female offenders. Using data from Utah’s White Crime Offender Registry, Dearden & Gottschalk (2021) investigated the nature of crimes for offenders and found that females are more likely to target their workplace than male offenders. On the other hand, males target organizational targets for white-collar crime than female offenders. The article offers significant insights on patterns of white collar crime that could facilitate mitigation and legal action. Victimization plays a greater role than the relative risk assessment as demonstrated by the findings of the article. White-collar crime offenders demonstrate consideration for the effects of their actions on their victims as indicated by the variation in target selection among males and females (Dearden & Gottschalk, 2021). Consequently, while male offenders are likely to target their acquaintances and investors, females are most likely to select employers as potential victims. Gender contributes to the identification and involvement in particular white-collar crimes and should inform legislation and legal procedures. It is critical to align crime prevention with occurrence patterns and the response by the criminal justice system. The relationship between victims and offenders is a major defining factor for white-collar crime with significant differences between male and female offenders in crime and victim selection. Measures to prevent white-collar crime should include determining gender patterns and how the theory of convenience defines occurrence. Trusted chief executives in convenient white-collar crime by Gottschalk, P. (2022). Convenience plays a major role in contributing to white-collar crime by chief executives of major corporations. Determining the aspects of convenience in a crime facilitates the investigation process and retrieval of evidence on individual cases. Trusted executives often engage in white collar crimes in different circumstances and determining the contributing variables enables investigators solve corporate white-collar crime. The article by Gottschalk (2022) categorizes convenience into motive, opportunity, and willingness propositions. Under each category, the article demonstrates how trusted chief executives make rational or irrational choices that lead to criminal acts. Offenders’ motivation is a major issue that investigators should consider when examining the circumstances involved in a white-collar crime. The actions of chief executives that lead to breaking the trust of their stakeholders is a major issue in resolving white-collar crime. The article offers interesting insights on white-collar crime from the perspective of the trusted chief executives. In particular, the convenience associated with access to resources of crime demonstrates how offenders my commit white-collar crimes. In the Enron case, the executives of the company enriched themselves by falsifying financial reports to show that the company had high cash flows (FBI, 2024). The power that chief executives possess to access resources of crime increase the likelihood of offending. One of the results of the crime is the SOX Act that limits such power by ensuring that executives abide by financial reporting guidelines. Opportunity is one of the prepositions that the article shows causes trusted chief executives to commit white-collar crime. It sheds light on the factors involved in crime and variables that can increase the likelihood that senior managers in organizations defraud their investors and customers. The response by government agencies and investigators targeting the convenience of criminal acts could reduce the risk of offending in white-collar crimes. Enron and the California energy crisis: The role of networks in enabling organizational corruption by Nix, A., Decker, S., & Wolf, C. (2021). Corruption in organizations has the potential to cause significant costs on consumers and cause unfavorable market manipulations. The California energy crisis is an example of the significant implications of corruption on the end-consumers of products and services. The article by Nix et al. (2021) describes the corruption scandal and shows the role that enabling organizations in the case facilitated corruption at Enron. While the energy crisis was not unique to the state of California in 2020 and 2021, the article demonstrates how Enron and its partner organizations worsened the crisis in the state with high prices and statewide outages. Investigations into the corruption case led to a guilty plea by West Power’s executives for their contribution to Enron’s fraudulent activities and profiting from the scandal. It showed that Enron manipulated power supply all over the state to raise prices for consumers and benefit from the corruption. The article shows that the actions of Enron’s partners enabled the company to commit fraud and contribute to the energy crisis. The guilty plea by Timothy Belden and Jeffery Richter during the investigations on the California energy crisis demonstrated the significant role of enabling organizations on white-collar crime. The senior leaders of West Power were sentenced to two years’ probation for their involvement in the Enron corruption case. While they did not directly orchestrate the corruption that led to overbilling of consumers in the state, their actions enabled Enron to commit the crime. The California energy crisis affected citizens and consumers across the state with power outages and high energy prices. West Power was a major contributor to the corruption and their senior leaders’ involvement warranted financial and legal repercussions for their actions. The state should have recommended financial penalties and potential jail time for the leaders of the companies that enabled Enron to commit corruption in during the California energy crisis. The significant implications of the case on the state’s energy sector and consumers was greater than the sentence resulting from the guilty plea by West Power’s senior leaders. Why do consumers perpetrate fraudulent behaviors in insurance? By Ribeiro, R., Silva, B., Pimenta, C., & Poeschl, G. (2020). The rising rate of insurance fraud warrants an assessment of the contributing factors to the fraudulent behavior of consumers in the industry. Assessing the problem from the consumers’ perspective would demonstrate the measures that regulators and organizations could use to reduce the risk of fraud. Insurance organizations lose up to 10% of their claims expenditure to insurance fraud and the numbers may rise as a result of the alarming rate at which consumers commit fraud (Ribeiro et al., 2020). In particular, it is necessary to examine how consumers in the insurance industry view fraud and interventions for prevention. Determining the motivation for people to commit insurance fraud would increase the capacity of the organizations to limit their losses to such behavior. Consequently, it is necessary to examine the perception of consumers on fraud in general and insurance fraud in particular. The view of the society on insurance fraud offers insights on mitigation strategies for organizations and the effect on companies. The authors of the article demonstrate that based on the level of acceptance and justification, insurance consumers can be classified into three groups. According to Ribeiro et al. (2020), there are people who consider fraud to be unacceptable and unjustifiable, the second group feels fraud is unacceptable but could be justified, while the third group finds it acceptable and justifiable. The article demonstrate that the risk of offending for each group is different depending on how they feel about fraud. It is insightful that the personal views of the consumers can affect their risk of committing fraud against their insurance provider. The authors of the article share an interesting viewpoint on insurance fraud that could facilitate the prevention of white-collar crime. They show that an integrated approach to responding to fraud in the insurance industry could offer investigators and companies leverage in controlling the incidence of white-collar crimes. By taking the motivations of offenders into considerations, organizations can effectively reduce the risk of losing assets to crime. Tax evasion, technology, and inequality by Alm, J. (2021). Tax evasion is a major issue for many governments as a result of the financial implications it has on revenue collection efforts. Streamlining tax collection is a major concern for regulatory agencies as they seek to reduce risks of tax evasion. The article by Alm (2021) examines tax evasion in the digital era and potential trends that will arise in this category of white-collar crime. They show that technology will make tax evasion more difficulties especially for employees who have withholding and reporting through their employers. Through technology,...