White-Collar Crime: History of an Idea

White-collar crime, in either its individual or organizational form, often involves complex paper manipulations and sophisticated cover-up activities. When these traits are combined with the embeddedness of illegalities in organizations, the problems of gathering evidence with respect to motive, intent, and act are compounded. It is often extremely difficult to know who engaged in or authorized the conduct in question, what specific illegality has been committed, or whether there is a crime at all. For these reasons, crucial differences between white-collar crime and common crime appear when one examines how each is detected and prosecuted.

For common crimes, prosecution and defense are typically brought into play only after a crime has occurred and an arrest has been made; but in the case of white-collar crimes, the investigative work of prosecutors and the protective efforts of defense counsel characteristically precede, rather than follow, formal action. Indeed, from an enforcement perspective, white-collar crimes are those detected and investigated by white-collar workers, in contrast to the men in blue who respond to common crimes (Katz, 1979). The first officials to be brought into the case are not police but, more likely, tax agents or employees of a regulatory agency. Defense counsel will be hired when the defendant first becomes aware that he is a target of an investigation—typically, long before an indictment is forthcoming. This means that white-collar crime prosecution and defense often more closely approximate complex civil litigation, with its various strategic moves to gain or shield information from the opposing side, than they do the typical common-crime case. The effect of these differences is to make prosecution of white-collar cases vastly more expensive and time-consuming than that of typical common crimes. With limited resources, prosecutors may find it difficult to justify heavy expenditures for a problematic white-collar investigation when the same resources might be devoted to a number of common-crime cases.

Sentencing of white-collar offenders is also complicated. As in common crime, most cases will be settled by a guilty plea. But sentencing is problematic because the white-collar defendant, although frequently having committed offenses of long duration and great economic magnitude, is more likely to have an exemplary prior record. Judges are torn between the desire to show such offenders leniency because of their past good citizenship, and the desire to show severity because the white-collar offender has abused a position of trust.

With the advent of determinate sentencing, sanctions for white-collar offenders have become more severe. The Federal Sentencing Commission, for example, substantially raised the sentences for white-collar offenders in order to guarantee short terms of imprisonment for offenders whom judges had previously been fining and placing on probation (Federal Sentencing Guidelines § 1A4(d) (Nov. 1998). In no other offense category did the Commission raise sentencing severity relative to pre-Guidelines averages; the appropriateness of its doing so for white-collar offenders remains a matter of intense political and academic controversy.

Thus, at each stage of the criminal justice system, white-collar offenses present a distinctive set of problems for law enforcement officials. For the legal philosopher as well as the policymaker, these differences raise questions of equality of treatment between common-crime and white-collar crime defendants, as well as questions of fundamental fairness in the operation of the criminal justice system. For the researcher, they point to the need to devote detailed attention to the comparative study of the administration of justice in white-collar-crime and common-crime cases.