Repercussions of White Collar Crime

Instructor: Millicent Kelly

Millicent has been teaching at the university level since 2004. She holds a Bachelor's degree in Criminal Justice and a Master's degree in Human Resources.

Some people don't think of white collar crime as real crime. The repercussions of this type of crime, however, can be devastating, and often surpass those of street crimes. This lesson will define white collar crime and discuss repercussions.

The Wolf of Wall Street

In 2013, the movie ''The Wolf of Wall Street'' was released, documenting the criminal activities of Jordan Belfort. Unless you invested with Belfort, you may not have heard of him, but Leonardo DiCaprio quickly made Belfort a household name. Jordan Belfort was involved in a white collar penny stock scheme. Belfort made millions of dollars, spending it on unimaginable luxuries and drugs. He eventually caught the attention of the FBI, who launched an extensive investigation. In 1999, Belfort pleaded guilty to securities fraud and other charges. He eventually served 22 months in prison and had a fine levied against him in excess of 100 million dollars. Since then, Jordan Belfort has reinvented himself as an author and sought after presenter who has speaking engagements all over the world.

What is White Collar Crime?

Until the 1930s, criminal activity was thought to be concentrated in populations that were impoverished and did not have the means of bettering their situation. However, Edwin Sutherland, a sociologist, changed this conception by coming up with the term white collar crime. Sutherland's ideas brought attention to crimes committed in the upper stratas of American society for financial purposes.

Types of White Collar Crime

There are several types of white collar crimes, including:

  • Investment and securities fraud - such as that committed by Jordan Belfort
  • Insurance fraud - defrauding insurance companies on false insurance claims
  • Non-compliance with government regulations - which can lead to injuries and deaths
  • Tax fraud - filing fraudulent tax returns to avoid paying the government what is due
  • Stealing from a business - also known as embezzlement, taking company funds for your own use

Repercussions of White Collar Crime

Unlike common perception, white collar crime is not a victimless crime, or a crime that doesn't hurt people. Although the motivation is almost always financial in nature, scams and frauds can significantly hurt thousands of people - financially and physically. In addition to this, they have societal consequences as well.

Financial Consequences of White Collar Crime

It is estimated that the financial consequences of white collar crimes far exceed those of street crimes. In a 2007 report released by the FBI, it was estimated that in the year prior the cost of white collar crime exceeded 300 billion dollars. When compared to property crimes, this accumulated to a cost approximately 17 times the amount.

Let's take a look at some additional consequences white collar crime has on organizations:

  • Significant financial loss - estimated more than 5% of total profit per year
  • Potential dissolution of an entity resulting in economic hardship for all employees
  • Distrust of organizational culture
  • Disgruntled employees

Physical Consequences of White Collar Crime

Although white collar crime is mostly construed as crime that involves money, the impacts can go far beyond that. For example, businesses that fail to comply with government regulations and thereby are unable to maintain a safe working environment are also guilty of committing white collar crime. Typically, businesses may choose not to comply because they might have to spend a substantial amount of money in order to do so. As a result, employees may get injured or even die.

In a study conducted by Reiman examining data collected over a 14-year period, results indicated that more than 55,000 deaths each year occurred in the workplace. Even though Reiman was unable to compute how many of those were due to non-compliance issues, when compared to deaths associated with street crime this number was almost four times higher.

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