White-Collar Crime: History, Future, Examples

The History of White Collar Crime

White-collar crime is a non-violent form of crime committed mostly in the corporate world by persons who hold positions that allow them to control financial dealings and transactions. It is mostly committed for the purpose of financial gain mostly in commercial transactions through activities that are against the law. Edwin Sutherland first coined the term ‘White Collar Crime’ way back in 1939. During his presidential address to the American sociological meeting, he described white-collar crime as a “crime committed by a person of respectability and high social status in the course of his or her occupation” (Sutherland, 1949, p. 24).

The need that brought about this definition was driven by Sutherland’s views that the criminological community was more interested and preoccupied with crimes committed by people on the lower strata of the community while people on the higher strata of the community remained untouched when they committed economic crimes (Sutherland, 1949, p. 24). White-collar crime has a long history because it has happened since time immemorial. However, it can be traced to the 15th century in England when a law was enacted in 1473 due to embezzlement or larceny. The industrial revolution saw many companies and people come up with tactics that would give them an advantage over others by pushing their competitors out of business and implementing monopolistic practices. This would lead to consumers paying exorbitant prices for goods and services.

Political pressure led to the passing of the Sherman Antitrust Law of 1890 that effectively outlawed monopolistic practices, which were some of the early steps that led to the definition of white-collar crime. To date, crimes falling within this definition have increased tremendously, with the list being infinite. Stentzel (2013) states, “new forms of white-collar crime keep developing as individuals and organizations find loopholes in the systems, which they exploit to commit different forms of fraud” (p. 5). Time has allowed the development of white-collar crime to be sophisticated at all levels of society. This situation has been complicated by the development of technology and the world as a global village.

The Future of White Collar Crime

White-collar crime is one of the crimes that are on the rise every time crime statistics are discussed. Therefore, it grows more sophisticated as time progresses. Old tactics too seem to be replayed in committing this crime, thus giving it many faces that make its detection difficult. Legislation has been passed in different countries of the world. The move has seen the definition bracket for white-collar crimes expanding to rope in many types of crime that previously would go unnoticed and unpunished. However, this case has not dampened the spirit of criminals to commit white-collar crimes because there is a great effort to circumvent and break every law that is passed without attracting much attention.

The previous definition of white-collar crime had limited the scope of this type of crime committed by senior people in organizations. The expanded definition however has made it possible to encompass many other crimes that mostly touch on fraud by not only senior people in organizations but crimes by small people whose actions qualify as white-collar crimes (Croall, 1999, p. 34).

Efforts have been made to stem the rise in white-collar crime. However, the efforts can never be enough. White-collar crime has escalated with the rise in technology that allows individuals to transact and transfer huge sums of money globally within seconds and without leaving footprints behind. Many government organizations that are tasked with fighting this crime are mostly inadequately equipped in terms of personnel. It usually takes some time before a case is successfully investigated. The lucrative nature of this crime has made it an attraction for highly organized criminal gangs, which use lots of sophistication to commit the crime. The allure of making profits is a motivation that drives executives to resort to this crime as a way of keeping their organizations in a competitive position. Therefore, white crime is there to stay. In fact, it will continue growing to different levels.

Corporate Crime

Corporate crime is categorized as one of the many types of crimes that appear under white-collar crimes. This category of crimes provides the perfect description of a white-collar crime. A corporate crime is a crime committed by a corporation by violating certain laws, standards, and/or modes of operation as set up by the law. Under corporate crime, the corporation as an entity is the one that is usually charged with the crime. The meted punishment is usually in the form of fines. Corporations have different obligations to different stakeholders. At times, there occur circumstances that force the management of corporations to break some of the governance laws either on purpose or unintentionally, thus being cited to have committed a corporate crime (Hudson, 2003, p. 5).

In the United States of America, all sectors of the economy have seen and felt the effects of corporate crimes whenever they happen. Corporate crimes happen every day. In fact, some are detected, with actions being taken by authorities while some are not detected. There have been massive corporate crimes that have ended up affecting the economy of the United States of America and that of the world at large. Incidences such as the Enron scandal have gone down as some of the largest corporate crimes ever to be recorded, which in effect led to the wiping of the market of stocks worth billions of dollars besides affecting all the other sectors of the economy. Major banks in America have been cited too for corporate crimes due to some illegal practices of either commission or omission.

Bank of America

The Bank of America has been cited on several occasions for committing corporate crimes, which are punishable by the law. According to the law, a corporate body is held criminally responsible if any of its employees commits a crime that is found to have been committed as a way of benefiting the corporation (Korten, 1995). This applies under the doctrine of respondent superior. Regulators and the DoJ recently accused the Bank of America of committing fraud over mortgage securities it had sold to the DoJ. The accusations state that the Bank of America knowingly defrauded investors by selling them toxic securities, which were backed by residential mortgages of around $855million, which were earnestly bad loans. The crime committed by the Bank of America is that it knew the loans had underwriting errors when it was offloading them. Besides, it did not inform the DoJ of the problem as being the reason for offloading the loans (Stentzel, 2013, p. 26).

There are numerous cases involving the bank of America in what qualifies as corporate crime. In most instances, it has ended up reaching settlements without taking a position on the liability of either accepting it or denying the same. It has been viewed as a way the bank uses to escape the uncertainties of the outcomes of the legal processes. In February 2012, the Bank of America was one of the banks that reached a settlement with the US attorney general Eric Holder for a payout of about $25billion. This was in a settlement case of mortgage loan servicing and foreclosure abuses by the bank and other major financial institutions. In December 2011, the Bank of America was made to make a $335 million settlement after reaching an agreement with the US attorney general over claims of unfair lending practices (Touryalai, 2013). Under this practice, the bank employed racial tendencies while lending money to African-Americans and Latinos. In this case, it was found that the bank charged thousands of dollars more in interest rates between the years 2004-2008 to a group of clients totaling about 200, 000 over that period. The same group was subjected to prepayment penalties.

Chase Bank

The Bank of America is not the only major financial institution facing a federal probe for its corporate crimes. JP Morgan Chase bank has also been found to have violated the federal requirements, thus committing a corporate crime. According to a report by Forbes magazine, JP Morgan Chase & Co reported in its quarterly regulatory filings that criminal issues were probing it and civil divisions of the justice department for violating securities law between 2005-2007. Under this probe, preliminary findings indicate that the bank had violated securities law during its offering for mortgage-based securities for its Alt-A residential mortgage-backed securities (Touryalai, 2013).

In June 2011, JP Morgan Chase was charged that it misled investors by selling them toxic securities using complex transactions. In the end, it had to pay $153.6 million to settle the SEC. All investors had all the lost money paid back to them. Stentzel (2013) argues, “The bank failed to tell investors that prominent hedge fund would financially profit from the failure of the CDO assets” (p. 11). In July 2011, JP Morgan Chase agreed to pay $228 million after being found to have fraudulently bided for a municipal bond. In this case, JP Morgan won the bids after getting insider information on the bids made by other bidders, which is used in the preparation of its bids.

In the many cases, it has faced charges and/or made to pay fines, the bank refused to deny or accept the charges. Rather, it accepted to make the settlement. Corporate crimes committed by JP Morgan have always been given it an advantage in making profits, which have always been discovered years later after the bank has made its profits (Reuters, 2013). Therefore, the crimes committed by the bank have always been on purpose since they are calculated to benefit the bank after looking at the opportunity cost. The fines paid by the bank are massive in financial terms. However, they are nowhere near the profits the bank made by violating federal laws on finances (Barnett, 2013, p. 11).

The low fines charged by authorities can therefore be viewed as one of the incentives for breaking the same laws because the bank will still come out with huge profits at the end of the day. Once more, JP Morgan Chase was cited under Litigation Release No. 18252 of July 28 2003 as having been fined $135 million for being a party to Enron’s securities fraud for the part it played in aiding and abetting Enron’s crimes.


CitiGroup is one of America’s largest banks. Just like all the major successful financial institutions, it has had its own share of corporate crime cases against it (Sally, 2002, p. 12). In many cases such as Citigroup’s case, the leadership of the institution deliberately committed crimes for the sake of making higher profits (Mizrach & Weerts, 2006, p. 153). On April 10 2010, Charles Prince who is Citigroup’s chief executive officer was quoted by the New York Times to have stated the bank’s plans to cut on the number of its compliance staff. Compliance was bogging down the bank’s progress. He felt that compliance was making the bank less competitive compared to the amount of profits other banks made by breaking the compliance laws.

Citigroup was cited as having been involved in suspicious foreign exchange dealings and loans. It was said to have moved up $58 million from high tax to non-tax jurisdictions as a way of tax evasion within that period in foreign exchange operations known as “parking”. Citigroup has also been cited for money laundering activities. In fact, it was named as one of the bank’s used by former Chile dictator Augusto Pinochet to the tune of $5million or more that could not be determined. This was a finding of the senate committee in 2004. Citigroup was one of the leading financial institutions that campaigned for the repealing of the Glass-Steagall Act, which was used in the establishment of the Federal Deposit Insurance Corporation (FDIC).

The repealing of this act allowed investment banking, insurance, and financial underwriting to be done by the same institutions when it was previously to be done by separate entities. This allowed Citigroup to underwrite securities for Enron while at the same time lending money to Enron. It can be viewed as a calculated assault on laws that control corporate crimes.

To sum up

Corporate crime is a big business in the corporate world because it enables financial institutions to make huge profits for not following the law. It also enables financial institutions to stabilize their positions when they feel that they might go down or have their business affected negatively by their current positions. On the other hand, the law under the doctrine of vicarious liability has made it difficult to differentiate between crimes committed by individual staff and those committed by the corporation as a whole because the crimes by individual employees are usually counted on the corporation.

White-collar crime has become more advanced with the development of technology, which has made it more complex to detect. This has led chief executives and management of corporations to behave like criminals in their quest to hit their targets. It takes the society back to the days when Sutherland came up with the term because executives steal in the name of their organizations for their own benefit as much as it is for the benefit of the organizations. They are not different from other thieves who steal for their individual benefit.

Reference List

Barnet, C. The Measurement of White Collar Crime Using Uniform Crime Reporting (UCR) Data. U.S Department of Justice, Federal Bureau of Investigation, Criminal Justice Information Services. Web.

Croall, H. (1999). Understanding White Collar Crime. Burkingham, Philadephia: Open University Press.

Hudson, M. (2003). Banking on Misery: Citigroup, Wallstreet and the Fleecing of the South. Southern Exposure, 31(2), 1-15.

Korten, D. (1995). When Corporations Rule the World. West Hartford: Kumarian Press and Berret-Koehler Publishers.

Mizrach, B., & Weerts, S. (1996). Does the Stock Market Punish Corporate Malfeasance? Corporate Ownership & Control, 3(4), 151-155.

Reuters. JP Morgan Faces Criminal and Civil Probes Over Mortgages. Web.

Sally, S. (2002). Corporate Crime, Law and Social Control. Cambridge: Cambridge University Press.

Stentzel, L. (2013). Federal Regulations Is not an Effective Deterrent to Corporate Malfeance. Web.

Sutherland, E. (1949). White Collar Crime. New York, NY: Dryden Press.

Touryalai, H. (2013). BofA not Alone, JP Morgan Chase May Face Criminal Charges Over Mortgages. Web.

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LawBirdie. "White-Collar Crime: History, Future, Examples." March 27, 2023. https://lawbirdie.com/white-collar-crime-history-future-examples/.