Definition of White-Collar Crime
White-collar crime is a form of theft perpetrated by a highly ranked individual in a society or corporation, often one who is highly respected. Businesses and similar corporations have encountered such crimes in various departments. Such crimes endanger employees’ lives and reputations and could create many issues for the community. Moreover, the activities may lead to the destruction of organizational reputation.
A Recent Case of White-Collar Crime
A typical example of a white-collar crime is the WorldCom accounting scandal orchestrated by Bernard Ebbers in 2002 (Petra & Spieler, 2020). The fraudster was the telecommunications CEO, and the company’s stock had been declining for years due to the unprecedented activities in the accounting department. The CEO used the company’s accounting department to lure more investors to fund its operations, relying on misleading financial records that suggested strong performance. The department frequently underreported line costs and inflated revenues. The company eventually registered billions in fraud and was declared bankrupt. Ebbers then resigned in the following year and received a 25-year prison sentence.
Theoretical Explanation of the White-Collar Crime
Edwin H. Sutherland created the theory of differential association in his quest to understand criminology. The theory posits that crime is a learned activity that requires specialized skills (Jordanoska & Schoultz, 2019). WorldCom fraud has supported this feature by employing complex accounting techniques to issue misleading information. Understanding account concepts helped the company identify malicious information that could influence investment decisions.
Assessment of the Sanctions Imposed
The sanctioning of the company and its eventual declaration as bankrupt were just and deserved, as it constituted theft. Furthermore, it was appropriate to jail Ebbers after he admitted to the fraud, as it prevented him from committing similar thefts and warned other companies with identical plans. Other forms of punishment are used to prevent this behavior, including fining him and requiring him to refund the stolen money. This improves the judicial system and also protects him from angry investors.
References
Jordanoska, A., & Schoultz, I. (2019). The “discovery” of white‐collar crime: the legacy of Edwin Sutherland. The Handbook of White‐Collar Crime, 1-15.
Petra, S., & Spieler, A. C. (2020). Accounting scandals: Enron, WorldCom, and Global Crossing. In Corporate fraud exposed. Emerald Publishing Limited.