Given the virtual ubiquity of information technology (IT) today, it is not surprising that while collar crime using these resources has assumed new importance and relevance (Dervan, 2014). As discussed further below, white collar crimes are by definition nonviolent in nature but the enormous amount of funds that are derived from such unlawful activities are increasingly being diverted to fund violent terrorist organizations that target the interests of the United States at home and abroad (Ndubueze & Igbo, 2016; Priyatno, 2017). The purpose of this paper is to provide an overview of white collar crime in general and how IT has been used to perpetrate these crimes in recent years in particular. In addition, an examination will also be provided concerning the various types of white collar crimes that are committed using IT and how they are facilitated through collaboration between mainstream business practitioners and the criminal underworld preparatory to developing a final study concerning these issues. Finally, a discussion concerning how the current legal framework in the U.S. only encourages white collar crimes by high-level executives and corresponding recommendations will conclude the study.
Review and Discussion
Overview of white collar crime
In a speech delivered at the American Sociological Society in 1939, sociologist Edwin Sutherland coined the term â€œwhite-collar crimeâ€ to describe â€œcrimes committed by a person of respectability and high social status in the course of his occupationâ€ (as cited in Cliff & Wall-Parker, 2017, p. 1). This popular perception of white collar crimes being typically committed by the more otherwise-respectable members of American society have resulted in a concomitant view that these perpetrators should be treated less harshly than hardened criminals that engage in violent crimes. As previously reported, the definition provided by Blackâ€™s Law Dictionary (1990), states that white collar crime is â€œa term signifying various types of unlawful, nonviolent conduct committed by corporations and individuals including theft or fraud and other violations of trust committed in the course of the offenderâ€™s occupationâ€ (p. 1596). This legal definition of white collar crime is not universally accepted, however, and many sociologists cite other salient factors are being characteristic of these types of criminal behaviors, but they all share two common features that make this category of crime appear less â€œcriminalâ€ in nature compared to other categories: (1) their nonviolent nature and (2) their inextricable connection with perpetratorsâ€™ occupations.
The prevailing view that white collar criminals should be treated differently from other categories of law offenders serves, at least in part, to explain why some people turn to crime in order to achieve their personal and professional goals even when they were not necessarily forced to do so. Furthermore, there is a growing body of evidence that indicates some managers will commit white collar crimes whether they need to or not depending on the circumstances (Cliff & Wall-Parker, 2017). When managers are confronted with financial pressure, however, the likelihood that they will engage in some type of fraudulent behaviors at work intensifies greatly. In fact, financial pressure is considered one of the three primary causes of white collar crime as shown in Figure 1 below.
Figure 1. The fraud triangle: a framework for identifying white collar crime opportunities
As the fraud triangle depicted in Figure 1 above makes clear, many people may succumb to the temptation to commit white collar crimes by virtue of this combination of factors, but it is important to note that all of them (or even two of them) are not necessarily essential. In other words, each of these factors (or another factor altogether) may be sufficiently compelling to induce even the most loyal and honest employees to perpetrate some type of white collar crime. Moreover, it is the rare criminals who are unable to rationalize their actions for whatever reasons. The fact that the prevailing social view of such crimes places them in a lesser category compared to violent crimes only adds additional impetus to the process. It is also important to note that the â€œopportunityâ€ factor has been amplified greatly in recent years through the proliferation of IT resources at home and in the workplace, and these issues are discussed further below.
White collar crimes and information technology
Criminals of yesteryear could only dream about a technology that allowed them to commit crimes without ever leaving the comfort of their homes and it is little wonder that IT has created an explosion in white collar crimes. Based on the foregoing definition of white collar crime as involving individualsâ€™ occupation and being nonviolent in order to realize an unjust gain of some sort, it is readily apparent that IT can be exploited in a number of ways. While gaining unauthorized access to computer systems is a crime in and of itself, the foregoing definition of white collar crime also requires that the perpetrators unjustly benefit materially (e.g., monetarily) in some fashion as a part of their occupation.
One of the most common strategies for using IT for white collar crimes is to embezzle funds from an employer. According to one law firm, â€œEmbezzlement [can] involve the complex manipulation of computers through what investigators and corporate financial security experts refer to as computer embezzlementâ€ (What is computer embezzlement?, 2018, para. 3). While the types of white collar crimes that can be committed using IT resources are limitless, the five most common types of these types are as follows:
1. Logic bombs: These methods use time-specific computer commands that are invoked at different times in order to illegally transfer funds, delete data or even turn off a computer system at prescheduled intervals;
2. Data diddling: This method disables a computer systemâ€™s embezzlement-detection control mechanisms;
3. Trapdoor and â€œsalamiâ€ techniques: This method relies on the â€œslow but sureâ€ approach to embezzling funds by deducting tiny amounts of funds from every financial transaction in the expectation that their loss will go unnoticed and illicitly diverting it them another account to which the employee has access.
4. Skimming: Popularly referred to as identity theft, this method involves stealing consumersâ€™ computer-based account information from an organizational database and using it to illegally acquire goods and services.
5. Trojan horses: Finally, this method involves planting hidden commands that invoke unauthorized functions in existing computer systems, typically to divert funds to another account to which the perpetrator has access (What is computer embezzlement?, 2018)
Although the five types of computer-assisted white collar crimes listed above are the most common, it is reasonable to posit that this list is certainly not exhaustive. Indeed, a trusted insider armed with nothing more than a company laptop and ill intentions can manipulate accounts payable and receivable as well as supply chain and inventory data to the point where the ill-gotten gains are so well concealed that it requires a full-blown audit to discover the crimes. For example, in the case of skimming techniques, an employer may remain unaware of these types of illegal activities unless and until the perpetrator is caught outside of the workplace setting. Similarly, payroll executives may be able to exploit weaknesses in their payroll systems to divert funds or pay fictitious employees with money that is diverted to an account to which they have access.
Likewise, insiders using the trapdoor/salami techniques may rake in thousands of dollars from the fractions of pennies left over from millions of financial transactions processed by their employers each week, reassured that few people will notice a missing fraction of a cent here or there. Even though larger organizations have more resources available and more avenues by which IT can be used to embezzle funds, small businesses in particular lack the same in-house resources and expertise enjoyed by the larger counterparts that are needed to monitor and detect these types of white collar crimes (van Wyk, 2017). Given that the majority of small businesses fail within the first year of operation, it is also reasonable to suggest that these types of white collar crimes are the cause in many cases. In fact, in some scenarios, these types of white collar crimes may go on for years before being discovered, if they ever are, and perpetrators are reassured that even if they are caught, they will likely be treated far less harshly than violent criminals as discussed further below.
Current legal framework for white collar crime in the U.S.
It is one of the perplexing aspects of the American criminal justice system that criminals that use a $50 â€œSaturday night specialâ€ to rob people of a few dollars are treated far more harshly, including lengthy prison sentences, than white collar criminals that may be guilty of extorting tens or even hundreds of thousands of dollars. One of the recurrent themes that quickly emerges from the scholarship concerning the use of IT resources and white collar crime is the laxity of punishment meted out to high-placed executives who intentionally bilk shareholders out of millions of dollars, only to receive a legal slap on the wrist as a result.
If criminal charges are brought at all, white collar criminals can expect to receive a monetary sanction of some sort (invariably far less than their illicitly gotten gains) or perhaps lose their jobs (Arya & Sun, 2011). In truly extreme cases, if white collar criminals are actually sentenced to serve prison time, they can expect to serve their time in cozy minimum-security federal prisons if their crimes involved the interstate transfer of funds where they enjoy comparatively comfortable accommodations. This does not mean, of course, that the penalties for violent crimes should be lowered to match the punishments given to white collar criminals, but it does mean that the problem is currently severe and most authorities agree that the proliferation of IT resources throughout all organizational settings will only make things worse in the future.
The current legal framework also fails to take into account the potential for the funds obtained through white collar crimes to be diverted to criminal organizations, including most especially international terrorist organizations that use this money to fund their violent operations, including those directed against the United States. Clearly, the percentage of white collar crimes being used for this purpose is currently most likely small, but the widespread deployment and increasing sophistication of IT mean that this percentage will probably grow well into the foreseeable future unless steps are taken to address the problem of white collar crime head on.
The optimal approach to reducing white collar crime in the United States is to remove the opportunities to commit these crimes. Far too many businesses, especially smaller enterprises, place an enormous amount of trust in their employees and fail to implement the security protocols that are needed to protect IT systems and sensitive data. As the fraud triangle depicted in Figure 1 above made clear, the opportunity to commit a white collar crime is one of the overarching reasons people succumb to the temptation, and removing this pillar of the triad represents the first important step in the right direction.
By definition, white collar crimes are nonviolent, and are committed as part of individualsâ€™ occupation which provide them with some type of unjust monetary gain. This definition means that the cashier who takes some office supplies home or slips a few bucks into his pocket instead of the cash register is guilty of a white collar crime. The popular view of white collar criminals, though, is that of a fat-cat executive who embezzles large sums of money and only receives a modest punishment if caught. The research was consistent in showing that this prevailing view and the legal framework used to combat it needs to be changed to reflect the reality of white collar crime and its facilitation through information technologies.
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