White Collar Crime and Its Effect on Society

How the behaviors of corporations, such as Ford, Firestone, and the financial institutions on Wall Street, could be understood as crime whether or not they have been prosecuted? How do these activities differ from those involved in “typical” street crimes?

To be prosecuted for a crime, the prosecution has to prove beyond reasonable doubt that the defense is guilty. The way in which street crime and white collar crime differ is that street crime can be proven readily that the actor committed a crime willingly and knowingly, while in white crime cases there is a higher difficulty proving it was made willingly and knowingly as well as the aspect that white-collar criminals can act in a more anonymous manner. In the case of Ford and Firestone, the ones with a higher risk of getting prosecuted are the engineers and lead engineers since they created the vehicle that caused the deaths and accidents, while the top of the hierarchy is able to testify that they didn’t know with complete certainty about the defects of the products. That is the main hurdle in trying to prosecute Senior partners at large firms and banks, proving that they knew what their employees were doing and encouraged that behavior. Another hurdle that faces the prosecution, is the size of the company or business that is being prosecuted. Just like Obama once said to General Motors when they were almost bankrupt “too big to fall.” Most banks and investment businesses have roots too spread out that if they were to collapse they would affect other people in a ripple effect. As said in the documentary, while the actions of the bankers should have caused them to be sent to jail, due to committing fraud by faking the mortgages, because they can’t prove it directly in the judicial system, they are thus not guilty of their actions.

As shown in the documentary, Senator Kaufman—who spearheaded the Senate’s investigation of Wall Street—was appointed to the office and thus did not receive campaign donations. How might this have influenced his ability to investigate financial crimes? How does this differ from other elected officials?

Due to not receiving financial contributions from donors, Senator Kaufman was unburdened and was not limited or pressured by any outside force to limit the investigation. In the United States political system, companies and individual donors have sway over government representatives due to the amount contributed in campaigns. For example, representatives that got money from the NRA voted against bills which would restrict the access to certain weapons. In Senator Kaufman’s case, since he did not receive money from a third party, his full dedication was to getting the job he was assigned done. Many elected officials worry about reelection, being in office again the next year. To be able to get reelected, these officials need to fundraise a large amount of money (usually in the one million range or more depending on how competitive the elections are) to be able and secure their seat. While it is important to hold true to the promises of the constituents, it is more imperative to secure high paying donors. A key aspect in the unique position Senator Kaufman was in, is the factor that he expressed his desire to not run for office again, as well as his loyalty and commitment to investigate the responsible in the Wall Street case. Due to these factors, Senator Kaufman was able to make ground in the case, while if another senator was to be given the same responsibility he/she might not have made an effort at all due to the pressure of their donors.

How does the social reaction to harms caused by powerful actors (i.e., from the criminal justice system, the media, and the public) differ from the social reaction to “street crime”.

To breach this question, it is important to understand two fundamental aspects that are lacking in street crimes and are present in white collar crimes, that being authority and influence. The notion of street crime is associated with people that possess a low education and/or are part of a minority group, while white collar crime is associated with white males who possess a high and extensive education and are “truly apologetic” about their actions. Street crime can be pinpointed as well as proven. Normal street crime is anything ranging from stealing a wallet or purse to murder and battery. It depicts a more gruesome idea in the public and media because it directly affects another individual, that is why the judicial system enforces a stricter sentence against violators. While in the case of white-collar crime, the aggressor hurts individuals financially instead. Because those that commit white-collar crimes are influential actors, they have the capability of influencing the media further than a regular person can. However, a key difference that permeates these two types of crime is how the media portrays individuals, those that are caught for committing white-collar crimes are pressed to find a motive behind their actions, the media looks for the how and the why. While those that commit street crimes, the media attributes their reasons to race, socioeconomic status, or other factors.

How might American cultural values (e.g., the American Dream) contribute to the perpetration of white-collar crime? How might these behaviors actually go against American values? How has cultural tolerance for white-collar changed in the last 10 years since the events described in the two sources?

The values of the American people gear towards achieving a high standard of living, a high economic standard, and moving through the social economic strata. The idea of moving to a higher economic class at all costs is the basis of the American dream as well as the prime motivator for white-collar crime. Even during Vanderbilt’s time, a century ago, white-collar crimes concept was still in its infancy and thus the fraudulent activities committed against Vanderbilt was not considered illegal at the time. As established before, American values are aligned with innovation, hard work, and perseveration. The behaviors of those that commit fraudulent activities to net more capital at the expense of the public go against all the notions of hard work and perseveration. They use the easiest route to cripple individuals and families to further exploit the system and the average Joe working hard to live a fulfilling life. Since the downfall of Wall Street, there has been a shift to punish more those involved with scandals of these magnitudes, however, even though the general public has lost credibility in large companies, the judicial system is still at the same impasse they found themselves in a decade ago. Wall Street still has power and influence over politicians and other agents, yet, individuals are made aware of the risks and the schemes that happen behind closed curtains.

How have you been affected by white-collar crime? How have these experiences shaped your perception of white-collar crime?

I lived in Spain during the housing recession of 2008. Spain is a den of political corruption. The citizens have lost faith in the judicial systems since many high profile cases of white-collar crime concluded with no jail time for the perpetrators. Many influential figures have used their authority and power to steal millions of dollars from the public and end up not receiving any type of repercussion for it. One prime case is the case of the Infanta Cristina, the daughter of the King of Spain. In this case, her husband used his status as the son-in-law of the king to sway contracts and steal money from the public. Even though the Infant pleads not guilty and avoided jail time, the public was outraged at how the lawful authorities handled the case. As well as, Infanta’s manner in which she used her status as royalty to avoid any responsibility for her actions. Because of this experience in Spain, I’ve somewhat become desensitized to white collar crime, however, I believe that these types of crime should be punished more heavily than they are now, since the crimes affect the general public at large. White-collar crime should be more heavily punished than street crime due to the amount of money moved and gained through illicit activities.

The New York Times reported the Rise and fall of Enron Corporation a merger company from two small Houston based regional companies. In the Enron scandal as reported in the New York Times, it describes how the company gave fraudulent information based on accounting fraud to attract shareholder and investors. The scandal revolves around how the company was losing a constant stream of money but changed the books to make the company seem more prosperous, as well as, allowed senior partners to partake in insider trading to profit millions of dollars’ worth of stocks. These practices were unknown to the investors. Enron also caused blackouts in California by pursuing a deregulation law due to its influence. Most articles mention the accounting practices by Enron Corporation, however, few mention the social impact caused by such actions as well as the lives affected by the blackouts in 2001. Because of the articles published, while they do condemn Enron Corporation for malpractice it those not give sufficient evidence for the conviction?

The most notable similarity is the willingness of the managing and senior partners to commit fraud, divert blame, and try to salvage reputation when forced to defend itself from scandals. In all cases, the companies knowingly committed fraud and lied to the public to profit a higher return and net gain. However, what differs is the manner in which they committed each crime. Enron Corporations used accounting fraud to fake profits and make stock prices rise while hiding the constant loss of capital. The banks committed fraud by formulating and selling horrible rated mortgages as supreme Triple-A secure mortgages. While Ford and Firestones hid the problems facing the Ford Explorer even though they were conscious that the vehicle could cause accidents and topple over in sharp turns. The Firestone and Ford scandal caused a greater social harm since, even though they didn’t steal millions of dollars from investors, their product caused multiple deaths and accidents hurting thousands. Human life is difficult to quantify, however, due to the fact that there is no form or way to recover a person’s life after death, the harm caused by Ford and Firestone is irreversible.