White Collar Crimes may have different definitions, but it is accepted that these crimes came into existence with the dawn of an industrialist and consumerist society. Present day criminology in general rejects a restraint of the term “White Collar Crime” by reference; rather it categorizes the form and motive of the crime. Following is a discussion of two kinds of White Collar Crimes, Environmental crime and Bribery.
White Collar Crime
'White-Collar Crime’ may be defined as a non-violent form of crime committed by someone, typically for financial gain. FBI (1983) defines white collar crimes as "those illegal acts which are characterized by deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force or violence”. An archetypal white-collar criminal can be anyone from an office goer, a business or fund manager to a top level executive. People working with accounts in Forensics, top level auditors and whistle blowers recognize and report crimes of these types. Several organizations investigate white-collar crimes, which include the FBI, Securities and Exchange Commission and the National Association of Securities Dealers in the United States.
White collar crimes are of many kinds; this article discusses two incidents set in different times. The first case is the infamous bribery case of Black Sox Scandal (Morris, 2010), and the other a more recent environmental crime scandal committed by the Wal-Mart as reported by the FBI (2013).
White-collar crimes instances include securities bribery, environmental crimes, embezzlement, money laundering etc. A White collar crime is generally classified in the following manner:
- Through the type of offense, e.g., crimes of property and corporate crimes like environmental law violations.
- Through the social class, status or occupation of offender
- Through organizational principles instead of a single offender.
- As occupational crime that are committed to support personal interests.
- Organizational or corporate crime caused by corporates and executives to benefit their companies by overpricing or price fixing, wrong advertising, etc.
A brief account of the Black Sox Scandal and a more recent Wal-Mart Environmental misconduct follows
This conspiracy was allegedly planned by White Sox first baseman Arnold "Chick" Gandil, who was thought of having longstanding links to the underworld. It is also alleged that Gandil persuaded Joseph "Sport" Sullivan, a professional gambler, to arrange for an intentional bribed loss in matches. The money was supplied by a New York gangster Arnold Rothstein through Abe Attell, a former boxer.
Gandil recruited some teammates, Eddie Cicotte, Claude "Lefty" Williams, outfielder Oscar "Happy" Felsch, shortstop Charles "Swede" Risberg and utility infielder Fred McMullin into this scheme of fixing. These men were motivated by a common hatred for the owner of the club, Charles Comiskey, which led them to plan the fix. Under MLB clauses, players were either allowed to take the salary they were given, or they were not allowed to play the League. Comiskey underpaid his players (Morris, 2010).
Stories of the Black Sox scandal usually include Comiskey as the antagonist, with a strong focus on Comiskey’s intentions concerning a clause in Cicotte's agreement that would pay Cicotte an additional $10,000, a bonus in reward for winning 30 games. Eliot Asinof accounts in his book, “Eight Men Out” (1963) that Cicotte was given "rest" for the season's final two weeks after reaching his 29th win, presumably to deny him the bonus. This fact is perhaps validated by closely examining the 1917 season, when Cicotte gave 28 wins before he was told not to play.
Eddie Cicotte and Shoeless Joe Jackson admitted their participation in the fixing scheme in front of the Chicago grand jury on 28 September, 1920. All of the players were sentenced to a life ban. This damaged the sport's reputation to such an extent that it led the League owners to assign federal judge Kennesaw Mountain Landis as first Commissioner of Baseball before the beginning of the season in 1921. Landis put all of the eight players accused of fixing on an "ineligible list", which banned them from all future major and minor baseball leagues (Eliot, 1963). Comiskey showed support to Landis, as he released seven of these players still under contract unconditionally from the White Sox team.
As seven of White Sox’s best players were permanently suspended, they slumped into seventh place in the 1921 season and were not seen as a competition again until 1936, five years after Comiskey's death, and did not win American League championship till 1959 or a World Series till 2005 (Morris, 2010). It was named as the curse of Black Sox, a lesson for players to learn to show how a single act of selfishness could not only ruin the future of that individual, but how it could destroy a team as a whole.
Wal-Mart Stores Inc. pleaded guilty on May 28, 2013 in cases filed by federal prosecutors in Los Angeles and San Francisco to six counts of violating Clean Water Act by unlawful management and disposing of hazardous materials at retail stores across the United States (FBI, 2013). Wal-Mart also pleaded guilty of violating the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) (FBI, 1983) as it failed to handle pesticides returned by customers properly at stores across the US.
Wal-Mart retains nearly 4,000 outlets throughout the United States that sell a large number of flammable, corrosive, reactive, toxic, or otherwise hazardous products as listed under federal law. These products are constituted of hazardous materials, including pesticides, detergents, solvents, aerosols, paints, and cleaners. Once such materials are discarded, they remain in the eco-system for long and hence are considered as hazardous waste under federal law.
In reference to documents filed in U.S. District Court of San Francisco, until January 2006, Wal-Mart did not incorporate an effective program and failed to train its employees on how to handle hazardous waste properly and what practices must be followed at the store level for the disposal of such wastes. Due to this, hazardous wastes were either thrown away into municipal trash bins for example or, in cases of liquids, emptied into local sewer systems or these materials were transported without proper safety precautions and documentation to one of the total six product returning centers found all over the United States.
Wal-Mart pleaded guilty to six offenses of negligence and violation of the Clean Water Act. The six criminal accusations were filed by the U.S. Attorney’s Office, three from each Los Angeles and San Francisco, and the first two charges were amalgamated in the Northern District of California. Here, the guilty pleas were passed in before U.S. Magistrate Judge Joseph C. Spero. Subsequently, Wal-Mart pleaded guilty in Western District of Missouri of violating FIFRA. Wal-Mart allegedly began sending out nearly two million pounds damaged or returned regulated pesticides, to Greenleaf LLC, Neosho, Missouri; a facility that recycles waste products. This led to illegal use and unregistered sale of these materials in 2008, a direct violation of FIFRA. Greenleaf too was convicted of this FIFRA violation in November 2008 and was sentenced to pay a penalty of $200,000 in the year 2009 (FBI, 2013).
These criminal cases resulted from investigations conducted by FBI, EPA, the Department of Substance and Toxics Control, California, and the Missouri Department of Natural Resources.
Wal-Mart was sentenced to pay a $40 million fine and an additional $20 million that would be used to fund various community service projects. The additional amount included opening a Retail Compliance Assistance Center worth $6 million to help retail stores across the US to learn ways of proper handling of hazardous waste. Wal-Mart also agreed to pay a fine of $11 million to the Missouri Department of Natural Resources and another $3 million that would be given to the Hazardous Waste Program and will be used for funding future assessments and research on pesticide regulations to help the regulators, the community, and the people in general (FBI, 2013). Added to this is the fact that Wal-Mart had to spend more than $3.4 million to completely remove and properly dispose of all hazardous substances from Greenleaf LLC.
Apart from these fines Wal-Mart has agreed to pay a sum of $7.628 million as civil penalty to resolve civil violations of Resource Conservation and Recovery Act (RCRA) and FIFRA. Along with civil penalties, Wal-Mart has been told to device a nationwide environmental compliance agreement for management of hazardous waste generated by Wal-Mart stores. This agreement is supposed to include resources to guarantee satisfactory environmental training, covering all levels of Wal-Mart with precise documentation and supervision of use and flow of hazardous wastes, and development and application of Environmental Management Systems at Wal-Mart stores and return centers. Such an agreement has to meet compliance; as such conditions are probationary in nature and imposed in criminal cases (FBI, 1983).
As an after math of the three convictions, brought by the Judiciary, and another closely related civil case filed by U.S. Environmental Protection Agency (EPA), Wal-Mart will have to pay a total of nearly $81.6 million for its environmentally criminal conduct. When taken into account the previous schedules brought by states of California and Missouri for the same, a combined payment of more than $110 million as criminal and civil fines will have to be paid to resolve these cases of violations of federal and state environmental laws (FBI, 2013).
Crime, whether violent or not, is unacceptable in the society. Violence maligns the society and so does unethical conduct (Investopedia.com, 2013). White collar crimes may not be violent in nature, there may not be any lives lost when the crime is committed, but it eventually does cause a lot of destruction in the course of time. A white collar crime, like fixing or “Bribery” may begin from selfish motives completely and is therefore unethical from the very beginning. As is evident from the case of then Black Sox Scandal, one man’s wrong resolve, followed by a series of unfortunate events led to the spoiling of eight bright careers and a very long period for the team White Sox to recover, a record 42 years.
Corporate level white collar crimes, like the Environmental Crime committed by Wal-Mart, may arise from pure negligence or narrow minded, profit driven management. Wal-Mart may not seem like an organization that may pose a great threat to the environment, but the effect of their combined negligence through the years has landed not just allegations and convictions, but disrepute at a national as well as global level. The damage their misconduct caused may have far reaching effects known and unknown, but their ignorance of the law is punishable and the punitive measures dealt to them should set an example to deter all major corporations the size of Wal-Mart to closely monitor their conduct in environmental as well as ethical perspectives.
Asinof, Eliot (1963). Eight Men Out. New York: Henry Holt. ISBN 0-8050-6537-7.
FBI San Francisco Division (May, 2013). Wal-Mart Pleads Guilty to Federal Environmental Crimes, Admits Civil Violations, and Will Pay More Than $81 Million: Retailer Admits Violating Criminal and Civil Laws Designed to Protect Water Quality and to Ensure Proper Handling of Hazardous Wastes and Pesticides. FBI.gov. Retrieved from http://www.fbi.gov/sanfrancisco/press-releases/2013/walmart-pleads-guilty-to-federal-environmental-crimes-admits-civil-violations-and-will-pay-more-than-81-million
Federal Bureau of Investigation website (1983). White Collar Crime. FBI.gov. Retrieved from http://www.fbi.gov/about-us/investigate/white_collar
Investopedia.com (2013). White Collar Crime. ValueClick, Inc. Retrieved from http://www.investopedia.com/terms/w/white-collar-crime.asp
Morris, Peter (2010). "The Reserve Clause." A Game of Inches: the Stories behind the Innovations That Shaped Baseball. Chicago: Ivan R. Dee, 2010. Print.