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PSYC39H3 (177)


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David Nussbaum

Psychology of Criminal Behaviour: A Canadian Perspective Chapter 6: Economic Crime CHAPTER 6: Economic Crime Economic Crime LEARNING OBJECTIVES 1. Distinguish the various types of white-collar crime. 2. Differentiate between theft and fraud. 3. Contrast characteristics of prostitutes versus their clients. 4. Describe characteristics of organized crime groups. 5. List the illegal activities engaged in by organized crime. 6. Discuss the connection between substance abuse and economic crime. 7. Identify the core features of drug treatment courts. CHAPTER SUMMARY White-collar crime is partitioned into occupational crime versus corporate crime. Occupational crimes are offences committed against businesses and government by those with a “higher” social status. Examples include expense account fraud and tax evasion. In contrast, corporate crimes are committed by organizations to advance their own interests. Corporate crime offences include price fixing. The distinction between occupational and corporate crime can be thought of as occupational crime being focused on individuals and corporate crime being focused on organizations. Theft is the notion of “stealing”; that is, taking something that belongs to someone else. Theft is covered in section 322 of the Canadian Criminal Code. There is a demarcation line at $5000 when deciding on punishment for theft. Fraud occurs when deceit or fraudulent means are used to deprive someone of property, money, valuable security, or services. The Criminal Code defines fraud in section 380. There are two categories that are similar to theft: fraud under $5000 and fraud over $5000. Many thefts also can be frauds and it is sometimes up to the police to decide whether to charge an offender with fraud or theft. Compared to non-prostitute youth, adolescent prostitutes are classified as runaways more frequently and use a wider variety of drugs, whereas the non-prostitute youth experience more childhood physical abuse. The characteristics reported in previous research, although present in adolescent prostitutes, do not differ significantly from adolescent non-prostitutes. Although adolescent prostitutes have a number of issues (e.g., abuse and poor family relations, low self-esteem), these variables are also present in the adolescent non-prostitutes. Clients are significantly less likely to subscribe to a feminine sex role orientation, have lower social-sexual effectiveness, and have higher sensation seeking tendencies. Copyright © 2011 Pearson Canada Inc. 116 Psychology of Criminal Behaviour: A Canadian Perspective Chapter 6: Economic Crime A “criminal organization” is defined in section 467.1 of the Criminal Code as a group that is: 1. composed of three or more persons in or outside of Canada; and 2. has as one of its main purposes or activities the facilitation or commission of one or more serious offences that, if committed, would likely result in the direct or indirect receipt of material benefit, including financial benefit, by the group or by any of the persons who constitute the group. Organized crime groups engage in fraud, including mass-marketing fraud and intellectual property rights crime, the sex trade (including prostitution and human trafficking), and the drug trade, including the importation and distribution of a variety of drugs such a marijuana and cocaine. The drug trade often involves organized crime groups. Individuals in the drug trade may or may not have drug abuse problems. Those with substance abuse problems may engage in economic crimes such as theft and prostitution to support their drug habits. The core features of drug treatment courts include: 1. they reduce crime committed as a result of drug dependency through court- monitored treatment and community service support for offenders; 2. they reduce the cost of substance abuse on the Canadian economy; 3. offenders participate in a structured outpatient program where they attend both individual and group counselling sessions, receive appropriate medical attention (such as methadone treatment), and are tested randomly for drugs; 4. offenders make regular court appearances, where a judge reviews their progress and 5. can then either impose sanctions (ranging from verbal reprimands to expulsion from 6. the program) or provide rewards (ranging from verbal praise to fewer court appearances); 7. and staff associated with drug courts coordinate with community partners to address offender needs, such as housing and employment. Once an offender has conquered his or her addiction, criminal charges are either stayed (i.e., suspended or postponed) or the offender receives a non-custodial sentence (i.e., house arrest). If unsuccessful, an offender will be sentenced as part of the regular court process. LECTURE OUTLINE 2. Introduction:  A number of crimes are committed with the purpose of economic gain.  Although Canada may have a “getting tough on crime” position, which is evidenced in higher incarceration rates compared to other countries, this notion seems to apply to violent offending rather than economic offending. Copyright © 2011 Pearson Canada Inc. 117 Psychology of Criminal Behaviour: A Canadian Perspective Chapter 6: Economic Crime  on an international scale, Canada is viewed as soft” on white-collar crime, with few prosecutions and even fewer convictions.  Following a four-year span where a group of dedicated Royal Canadian Mounted Police were tasked with investigating white-collar crime in Canada, there were only two convictions—both against the same person.  This chapter will focus on crimes that occur with a primary goal of financial profit; examine various types of economic crime and their offenders and discuss the role of substance abuse both in the context of a commodity to be sold for financial gain as well as the role it plays in other types of offending.  Violence may or may not occur during the commission of these crimes, although most often, if violence does occur, it is when the financial gain is in jeopardy. Definition  economic crime can be defined as criminal offences where the primary motivation is for economic gain  to combat economic crime, a partnership must be formed across various levels of government, law enforcement, business, and private sectors.  The Reporting Economic Crime Online (RECOL) group – the Royal Canadian Mounted Police (RCMP), along with the Ontario Provincial Police (OPP) and the Internet Fraud Complaint Centre (IFCC), joined together to provide a mechanism to report economic crime that deals with corporate/occupational/white-collar crime and fraud.  For other types of economic crime, such as prostitution and drug trafficking, the RCMP and/or provincial police and international agencies may be involved. 2. Types of Economic Crime: White-Collar Crime  white-collar crime is partitioned into occupational crime versus corporate crime.  Occupational crimes are offences committed against businesses and government by perpetrators with a “higher” social status.  These offences include expense account fraud and tax evasion.  Corporate crimes are offences committed by organizations to advance their own interests.  Corporate crime offences include price fixing (i.e., companies that all sell the same product decide on a price, preventing price variability for the consumer) and the payment of kickbacks to manufacturers or retailers (who use the organization’s product).  The distinction between occupational and corporate crime can be thought of as crime focused on individuals versus crime focused on organizations  White-collar criminals tend to work for the institution they are stealing from. Copyright © 2011 Pearson Canada Inc. 118 Psychology of Criminal Behaviour: A Canadian Perspective Chapter 6: Economic Crime  this theft may be ongoing due to lack of detection, or the organization may prefer not to report it to avoid publicity.  White-collar criminals may be fired and/or requested to pay back the equivalent of what they stole.  Federal, provincial, and municipal laws prohibit various corporate crimes.  Typically, government inspectors are responsible for the enforcement of corporate offences and tend to have less authority to investigate than police.  Corporate crime can cause far greater financial harm and personal injury (sometimes leading to death) than traditional crimes such as assault. Profiling the Typical Offender of White-Collar Crime  Historically, white-collar criminals were viewed as high status and respectable are often male, highly educated, and in an upper management position.  Following the work of Sutherland in the 1940s, a further distinction was made to recognize corporate crime that occurs with the support of an organization and occupational crime committed by an individual offender  Occupational fraudsters were thought to be primarily middle class  the common characteristics of offenders of “white-collar” crime: Age, Race and Gender:  Unlike “traditional” offenders, the common white-collar offender is a White, male, approximately 40-years-old  In contrast, the common street offender is described as a Black, male, approximately 30-years-old (U.S. statistics).  Male offenders seem to outnumber female offenders when it comes to white-collar crime.  Historically, women tended to occupy lower level positions such as clerical positions compared to males who tended to have higher level positions making it more likely that males would be in a position to commit white-collar or economic crime. Education:  White-collar criminals tend to have greater educational attainment compared to other types of offenders  Higher level corporate positions require a particular level of education whereas, more traditional offenders may have histories of low academic achievement and be high school dropouts for example. Position:  Often white-collar criminals will have knowledge and be involved in the financial aspects of the organization that would facilitate occupational crime such as embezzlement.  An individual’s position in the organization facilitates the types of white- collar crimes possible to commit.  Those in managerial or executive positions may have greater opportunities to commit white-collar crime. Copyright © 2011 Pearson Canada Inc. 119 Psychology of Criminal Behaviour: A Canadian Perspective Chapter 6: Economic Crime  It should be noted that for most crime, including white-collar crime, male offenders outnumber female offenders; an exception being prostitution as described later in this chapter. Common Characteristics of Victims of Organizational Crime Organizational Type:  A study found that there was a positive association between the size and level of bureaucracy of the organization and the willingness to approve of stealing from that organization.  Corporations with large bureaucracies can receive little sympathy from the public, often perceived as making large profits Organizational Size:  Very generally, larger organizations are associated with greater crime than smaller organizations  A number of factors have been found to interact with organizational size however, including decentralization and level of control Internal Controls:  Organizations that have greater internal controls such as audits and anonymous reporting systems, are less likely to be victimized.  if these controls then result in the dismissal of guilty employees less victimization will occur  In a recent study, results found that individuals who made fraudulent statements tended to be “high status.”; those involved in asset misappropriation or corruption were considered “middle-class” offenders; the organizations that were victimized for corruption were large profit- generating corporations; asset misappropriation was committed in smaller organizations compared to larger organizations; fraudulent statements were primarily made in smaller organizations.  One study found that white-collar criminals were more hedonistic (i.e., more supportive of the pursuit of pleasure and life enjoyment) and had a greater likelihood of giving into temptation where they had the opportunity to make money illegally. The criminals also had stronger narcissistic tendencies and less behavioural self-control than the managers. White-collar criminals were more conscientious.  Another study found that found that white-collar criminal have lower integrity than non-criminals, irresponsibility, lack of dependability, and a disregard of rules and social norms on the part of white-collar criminals.  According to a 2007 survey by PricewaterhouseCoopers, approximately 52 percent of Canadian companies surveyed stated they had been victims of economic crime.  This rate is a 3 percent decrease from data obtained in 2005, but a 6 percent increase from 2003.  The estimated average loss was US$3.7 million. A similar survey was conducted among companies in various countries around the world.  Approximately 43 percent reported being victims of economic crime, losing an average of US$2.4 million. Copyright © 2011 Pearson Canada Inc. 120 Psychology of Criminal Behaviour: A Canadian Perspective Chapter 6: Economic Crime  white-collar crime results in a loss of approximately $250 billion per year in the U.S., compared to an approximate $17.6 billion for losses due to personal and household crimes.  the U.S. Department of Justice (2005) reports that white-collar crime is a low priority compared to violent crime and issues regarding national security.  This lower priority is reflected in the degree to which researchers and the criminal justice system investigate personal violence crime versus white- collar crime Punishing White-Collar Criminals  In a national telephone survey to assess the public’s view on white-collar crime versus street crime, a large proportion of respondents wanted white- collar criminals punished as harshly or more harshly than violent criminals.  This finding is contradictory to earlier research, possibly due to the recent media attention on a number of high-profile white-collar crime cases  Respondents also wanted greater government resources allocated to combat white-collar crime.  Along similar lines in 2007 a study found that U.S. citizens perceived street criminals as more likely to be apprehended and sentenced more severely than white-collar criminals.  These researchers also found that the public felt that those who commit robbery should be punished similarly to those who commit fraud.  In 2003, the National White-Collar Crime Centre of Canada (NW4C) was incorporated under the Canada Corporations Act in order to prevent and respond to economic crime by linking national and international systems through the Reporting Economic Crime Online centre (RECOL) and Phonebusters National Call Centre (PNCC) for private- and public-sector regulatory and law-enforcement organizations concerned with preventing, investigating, and prosecuting economic crime.  There are a number of acts dealing with various forms of economic crime. Theft  Economic crime generally is synonymous with the notion of “stealing”; that is, taking something that belongs to someone else.  The Criminal Code of Canada (section 322) states that “every one commits theft who fraudulently and without colour of right takes, or fraudulently and without colour of right converts to his use or to the use of another person, anything, whether animate or inanimate, with intent.”  there is a demarcation at $5000 when deciding on the punishment for a crime.  Theft over $5000 is an indictable offence with a maximum punishment of 10 years imprisonment.  Theft under $5000 is considered a hybrid offence, meaning it can be treated either as an indictable offence or a less serious summary conviction. Copyright © 2011 Pearson Canada Inc. 121 Psychology of Criminal Behaviour: A Canadian Perspective Chapter 6: Economic Crime  This decision is made by the Crown’s office prosecuting the case.  If theft under $5000 is prosecuted as an indictable offence, the maximum penalty is imprisonment for not more than two years.  As a summary conviction, the maximum penalty is six months imprisonment, a fine of $2000, or both.  A common type of theft is shoplifting.  It is not a specific criminal offence, but simply a theft categorized by the value of the merchandise stolen under the Canadian Criminal Code.  It incorporates both low-value and high-value items. Fraud  Under section 380 of the Criminal Code of Canada, fraud is divided into two categories: fraud under $5000 and fraud over $5000.  Fraud occurs when deceit or fraudulent means are used to deprive someone of property, money, valuable security, or services.  Many thefts can also be fraud, and it is sometimes up to the police to decide whether to lay a fraud charge or a theft charge against an offender.  Consider the scenario in which a person switches price tags at a store, attaching the price tag of a lower-priced good to a more expensive item.  This is really an example of theft, but police may choose to lay a fraud charge because the person technically paid for something.  In other words, the price paid was illegitimate, so the fraud is the difference between the actual value and the price paid.  A critical element in fraud is that the offender uses deception to take something that does not belong to them.  Identity theft refers to the collection, possession, and trafficking of personal information - it typically takes place independent of, or in preparation for, the commission of identity fraud.  Identity fraud refers to the use of another’s personal information without their knowledge or consent to commit various crimes such as fraud, theft, or forgery.  The Criminal Code lists as offences the misuse of another person’s identity information, including impersonation and forgery.  However, the collection, possession, and trafficking of identity information is not against the law.  The Canadian government is working on legislation to amend this area of the code.  The new legislation will provide law enforcement and the legal community with tools to deal with these offences. Other Types of Fraud  In addition to identity fraud, a number of other types of fraud are possible. These include: 1. Advance fee fraud: Fraud that requires a payment before delivery of service Copyright © 2011 Pearson Canada Inc. 122 Psychology of Criminal Behaviour: A Canadian Perspective Chapter 6: Economic Crime 2. Online auction fraud: Fraud that occurs through online purchasing (e.g., non-delivery of goods and services, non-payment for goods delivered) 3. Investment fraud: Fraud that occurs with investments impacting a person or company (e.g., insider trading) 4. Counterfeit: Fraud associated with counterfeit currency or payment cards (e.g., currency counterfeiting) 5. Home renovation fraud: Fraud associated with home and property renovation services or sale (e.g., real estate fraud) 6. Health fraud: Fraud associated with health care or services, including insurance 7. Fraudulent bankruptcy: Fraud associated with personal or corporate bankruptcy claims (e.g., concealment of assets) 8. Corruption/bribery: Any misuse of power and position by a public or non-government official (e.g., bribery of a public official) 3. Prostitution:  Providing sexual services in exchange for money is broadly known as prostitution.  This “exchange” requires a buyer and a seller, who may be heterosexual or homosexual.  Female sellers and male buyers constitute the most common form of prostitution, with male homosexual exchanges occurring less frequently.  Very little information exists regarding lesbian prostitution.  In Canada, there is no prostitution law per se in the Criminal Code, but the activities associated with prostitution are illegal.  Arranging to buy sex in a public place is illegal; living off of the monies someone obtained from prostitution (i.e., pimping) is also illegal, and can carry maximum sentence of 14 years imprisonment.  although prostitution itself may not be against the law, the unlawful activities surrounding it make the act virtually illegal.  There are currently four activities related to prostitution that are against the law, according to the Criminal Code:: 1. Procuring or living on the avails of prostitution 2. Owning, operating, or occupying a bawdy house (i.e., brothel) 3. All forms of public communication for the purpose of prostitution 4. Knowingly transporting another to a bawdy house  Prostitution can occur in brothels (i.e., a place where people pay to have sexual relations with prostitutes—brothels can sometimes disguised as massage parlours) or on the street. Some model and escort services are actually covers for prostitution.  Street prostitution in Canada is the smallest proportion of the sex trade, comprising about 10 to 33 percent.  Brothels were the prominent environment for prostitution through the 1800s in Canada. Copyright © 2011 Pearson Canada Inc. 123 Psychology of Criminal Behaviour: A Canadian Perspective Chapter 6: Economic Crime  These houses were often grouped together near taverns and poorer parts of town.  It was not uncommon to find alcohol and gambling in these brothels, as well.  Following the late 1800s, it became more difficult to legally operate brothels and prostitution moved to the streets.  It represented a means for some women to make money.  When greater opportunities existed for employment following World War II, the number of women involved in prostitution declined.  the prostitute/seller and the buyer are both engaging in illegal acts.  Prostitution is one crime where women are more likely to be penalized than men.  While male buyers accounted for approximately 56 percent of prostitution-related offences in the mid 1990s, they were less likely to receive incarceration than women convicted of prostitution-related offences (3 percent versus 39 percent) The Male “Client”  In one study, in terms of demographics, the clients and non-clients were similar in age, education, marital status, and occupation; were significantly less likely to subscribe to a feminine sex-role orientation, had lower social-sexual effectiveness, and had higher sensation-seeking behaviours.  In terms of motivation to visit sex workers, the client group appeared to partition into two separate groups: 1. one group had low social-sexual effectiveness and seemed motivated to visit sex workers because they desired interpersonal intimacy, and 2. the other had a high level of sensation seeking and seemed motivated to visit sex workers because they wanted novelty and variety in sexual encounters. A Profile of the Adolescent Prostitute  Many children and adolescents who run away from home end up using prostitution as a means for survival  Research on youth prostitution suggests that many were abused sexually and physically  Their homes were often plagued with poor family relations, inter-parental violence, parental alcohol abuse, adolescent alcohol and/or drug use, and low self-esteem  research found that compared to non-prostitute youth, the adolescent prostitutes were classified as runaways more frequently and used a wider variety of drugs, whereas the non-prostitute youth had experienced more childhood physical abuse.  The characteristics reported in previous research, although present in adolescent prostitutes, did not differ significantly from adolescent non- prostitutes. Copyright © 2011 Pearson Canada Inc. 124 Psychology of Criminal Behaviour: A Canadian Perspective Chapter 6: Economic Crime Human Trafficking  Human trafficking is the recruitment, transportation, or harbouring of persons by means of threat, use of force, or other forms of coercion; abduction, fraud, or deception for the purpose of exploitation.  Trafficked females are often sexually exploited and frequently lured by individuals known to them or their families with promises of jobs as waitresses, nannies, or cleaners, then forced into sex work or exploited while working.  Women risk abuse and exploitation as prostitutes for up to 18 hours a day, 7 days a week, until they repay so-called travel debts to regain their passports from their captors/employers.  The trafficking of women and adolescents is increasingly recognized as one of the world’s fastest-growing crimes and a significant violation of human rights.  The RCMP estimates that 800 persons are trafficked into Canada each year.  Using data from non-governmental agencies, however, this figure is closer to 16 000 persons.  On an international scale, some sources suggest that there are approximately 4 million girls and women sold for prostitution, slavery, or forced marriage every year.  Bill C-49 (section 279.01—279.04) created three new indictable criminal offences to specifically address trafficking in persons: 1. Section 279.01 prohibits anyone from recruiting, transporting, transferring, receiving, holding, concealing, or harbouring a person, or exercising control or influence over the movements of a person for the purpose of exploiting or facilitating the exploitation of that person. The maximum penalty for trafficking involving the kidnapping, aggravated assault, aggravated sexual assault, or death of an individual is life in prison. 2. Section 279.02 prohibits anyone from receiving a financial or other material benefit for the purpose of committing or facilitating the trafficking of a person, with a maximum penalty of 10 years. 3. Section 279.03 prohibits the withholding or destruction of documents such as a victim’s travel documents or documents establishing their identity for the purpose of committing or facilitating the trafficking of that person (maximum penalty: five years).  Under the new federal legislation, charges were laid against an acupuncture centre in 2005.  The defendant was charged with bringing women into Canada under false pretences and forcing them into prostitution  The changes to the Criminal Code also allow for charges against Canadians who go to other countries to seek child prostitution (known as sex tourism). Copyright © 2011 Pearson Canada Inc. 125 Psychology of Criminal Behaviour: A Canadian Perspective Chapter 6: Economic Crime  The first such charge occurred in 2004 against a British Columbia man who travelled to Cambodia for child prostitution.  Law-enforcement agencies also can charge tour operators or travel agents who arrange for such services (Criminal Intelligence Service of Canada 2002).  Organized crime groups are involved in prostitution, human trafficking, and the drug trade. The Effects of Human Trafficked Women  In one study, all women had been sexually exploited; almost all (95 percent) reported being sexually and/or physically abused while being trafficked, and 59 percent had been abused prior to being trafficked; twelve percent had a forced or coerced sexual experience before 15 years of age; three-quarters of the females reported having had personal freedoms restricted and had not been able to do what or go where they wished; had physical symptoms experienced in the previous two weeks such as headaches, (82 percent), feeling easily tired (81 percent), dizzy spells (70 percent), back pain (69 percent), memory problems (62 percent), stomach pain (61 percent), pelvic pain (59 percent), gynaecological infections (58 percent), depression (39 percent reporting suicidal thoughts within the previous seven days). Treatment/Support for Sex-Trade Workers  Women working in the sex trade may experience violence, substance abuse, physical and mental health issues, and homelessness.  In order to address these issues, a group of Victoria, B.C., sex-trade workers formed the PEERS program (Prostitutes Empowerment Education and Resource Society) in 1995  PEERS is based on four principles: 1. Choice: PEERs supports both women who want to get out of the sex trade and those who want to continue working within it. PEERS focuses on providing sex-trade workers with concrete, practical, and accessible help without judgment. 2. Capacity building: Recognizing the strengths of sex workers (e.g., communication and interpersonal skills, adaptability, ability to work under pressure, experience with difficult clients, and the ability to negotiate). Capacity building includes employee therapy, counselling, and chemical dependency treatment. 3. Harm r
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