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Chapter 13

Chapter 13: Textbook Summary

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University of Guelph
SOC 1500
Andrew Hathaway

Chapter 13: Crimes of Power It has become easy in our global economy to use illegal tactics to make a profit. We refer here to these crimes of the marketplace as enterprise crimes and divide these into 3 categories: - White-collar crime - Cybercrime - Organized crime Enterprise crimes: crimes of opportunity for financial gain that involve breaking regulatory rules but not personal victimization White-Collar Crime White-collar crime: the illegal activities of people and institutions whose acknowledged purpose is profit through legitimate business transactions. - Illegal acts that capitalize on a person’s status in the marketplace - Ex: embezzlement, fraud, market manipulation, restraint of trade and false advertising Today’s definition of white-collar crime includes all individuals who use the marketplace for their criminal activity, from middle-income Canadians to corporate titans - Experts place the cost of white-collar crime at hundreds of billions of dollars. Occupational crime: crime committed by employees for personal gain using the structural advantage provided by their employment - Occupational crime alone amounts to billions of dollars per year International White-Collar Crime: Corporate crime: legitimate companies commit crime in the course of their usual business, fostered by a strongly competitive environment Government crime: includes illegal acts committed by government officials or with their knowledge and support, as well as cover-ups of other persons’ crimes Occupational crime: involves people making extra money by bending or breaking the rules, perhaps because of financial straits or other business related problems Organized/professional crime: involves people or groups of people whose primary source of income is illegal.Four categories of white-collar crime: Ad-hoc violations: committed for personal profit, such as welfare fraud or tax cheating Abuses of trust: committed against an organization, such as embezzlement, bribery or kickbacks Collateral business crimes: committed to protect business - Ex: concealing environmental crime Con games: committed to cheat clients - Ex: fraudulent land sales, sales of bogus securities Types of White-Collar Crime Swindling: stealing through deception by individuals who try to bilk people out of their money - Ex: door to door sale of faulty merchandise Chiselling: refers to cheating an organization or its consumers. - Chisellers are looking to make quick profits and might charge for bogus auto repairs or cheat customers on home repairs. - Can take place in the commodity and stock markets - Churning: repeated and unnecessary buying and selling of stock with either the intent to defraud the client - Insider trading: illegal buying of stock in a company based on information provided by someone in the company, such as an employee, attorney or accountant retained by the firm - Arbitrage: the practice of buying large blocks of stock in companies that are believed to be the target of corporate buyouts or takeovers o Speculate on the stock of companies that are rumoured to be takeover targets and make a profit on the difference between current stock prices and the price the acquiring company is willing to pay There are 3 major types of internet security fraud: Market manipulation: an individual tries to control the price of stock - In a pump and dump scheme, erroneous information is posted online to get unsuspecting investors to become interested in a stock and then selling previously purchased stock at an inflated price - Cyber smear: negative information is spread online about a stock, driving down its price, enabling people to buy it at an artificially low price before the company offers rebuttalsFraudulent offerings of securities: a criminal creates websites designed to fraudulently sell securities by inflating the value of assets, overstating returns and understating risks Influence Peddling and Bribery: individuals in important institutional positions can sell power, influence and information to outsiders, such as government employees taking kickbacks from contractors in return for awarding them contracts - Exploitation involves forcing victims to pay for services to which they have a clear right, while influence peddlers and bribe-takers use their institutional positions to grant favours and sell information to which their co-conspirators are not entitled Embezzlement and employee fraud: involves individuals’ use of their positions to embezzle company funds or appropriate company property for themselves. The company or organization that employs the criminal is the victim of the white-collar crime. - Blue collar fraud: o Blue collar employees have been involved in systematic theft of company property, commonly called pilferage (theft by employees through stealth
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