Chapter 14 – Privileged Deviance

Privileged deviance

• highly profitable deviance that typically occurs among privileged people, the relatively young and powerful
• White-collar deviance
  • Sutherland “upper, white-collar class which is composed of respectable, or at least respected, business and professional men”
  • Occupationally related: occurs during offender’s white-collar occupation
  • Economic deviant is respectable and of high-status
  • Use skill, sophistication, and resources of power, influence, or respectability to avoid detection, prosecution, and conviction
  • Blue collars are more likely to get caught
  • Corporations participate in similar deviant activities
  • White-collar deviants see themselves as respectable rather than criminal
    • Rationalize crimes
    • Executives who fix prices argue that it helps “stabilize prices” of economy
    • Embezzlers say their stealing is “borrowing”
    • Employee thieves believe stealing from companies makes up their losses
    • Tax offenders see themselves as victims
  • Commit crime because victims are careless or ignorant
    • Victims don’t check companies/doctors
  • Little effort is made to catch white/collar deviants and they rarely go to jail if caught
  • Since 1980s, society has become more concerned with white-collar deviance
    • Larger corporations have been prosecuted for illegal activities
  • Judges are lenient with white-collar criminals
  • Causes of white-collar deviance
    • The greater the fear of loss or the greed for gain, the stronger the motivation for engaging in white-collar deviance
    • Opportunities exist to carry out crime; the higher the position in the company, the more likely the deviantly-motivated is to carry out profitable deviant act (easy access to company’s resources); the more power corporations have, the more likely they are to commit corporate crime
    • More powerful corporations and individuals are more likely than others to engage in deviant activities because of weaker social control; law enforcement against them is weak
  • Corporate deviance
    • Takes place in corporations, carried out by executives for their companies’ benefits and their own
    • Deviance against employees
      • Occupational Safety and Health Administration in 1970s enforced workplace safety
      • Still, today many workers are exposed to pollutants (coal dust, cotton dust, radiation)
      • These substances have been found to cause cancer and other diseases, yet corporations ignore and deny problems instead of taking corrective action and eliminating exposures to make plants safer
      • 3 reasons they are negligent about employee’s health
        • Profit maximization (elimination of hazards will decrease profit)
        • Nature of corporate structure (executives rewarded for short-term success; they don’t consider long-term consequences)
        • Government’s reluctance to take action against offending corporations (employees can’t be sued for negligence)

Deviance against customers

• Dangerous foods
  • Food industry seeks greater profits by selling adulterated/contaminated foods
  • Meat-packing companies sell products without being certain meat is safe
  • Why health experts advise consumers to make sure hamburgers are fully cooked
  • 1993: E. Coli outbreak
    • Problem originated in slaughterhouse where meat was contaminated with feces
  • Adulterated food
    • Hormel company once took stale meat returned by customers and reconditioned, repackaged, and resold it for a higher profit to other stores without legally required re-inspection by US department of agriculture
  • Food industry uses chemical additives in products that are suspected to cause cancer and other diseases
    • Not only keeps food from spoiling, but makes them look fresh and appealing and gives them the right taste and smell
    • Increases profit
  • Unsafe products
    • Manufacturing/selling unsafe products by car, drug, tobacco, and other industries
    • Tobacco companies know smoking causes cancer and is addictive, but continue to make and sell cigarettes
    • Pharmaceutical/drug companies sell impure, over-strength, out-of-date, or non-sterile products
    • Fraudulent safety-testing of drugs
      • Experimental rats/monkeys developed terrible symptoms like tumors/blindness in drug trials
      • They were replaced by healthy animals
      • Dead animals were “resurrected” in lab reports: rats that died from using new drug reappeared later in data as alive
    • Withholding data about drug’s negative side-effects to the FDA
      • Potentially dangerous drugs get FDA approval, and consumers are used as guinea pigs
    • Frauds
      • Fraudulent practices in banking, insurance, real estate, securities
      • Made possible by inadequate government control
      • 3 types of frauds
        • Illegal nonbanking activities
          • Violate bank laws by engaging in unsafe practices like concentrating investment in 1 high-risk area (construction loans) without having conducted marketability study
        • Collective embezzlement
          • Using ownership of an S&L (savings and loan) to steal depositors’ money
        • Covering up
          • Falsifying records to make institutions look normal or financially healthy
        • Also problem in insurance industry
          • Government regulation is even more inadequate
          • Federal agencies police banks, savings and loans, securities, and commodities, but not insurance agencies
          • State agencies that regulate it are inefficient, underfunded, understaffed
          • Phony assets
            • Insurance company lies about its assets to show it has sufficient amount required by law
          • Small business scams
            • A firm administers an MEWA (multiple employer welfare agreement)
            • Several small employers combine money to insure health coverage for their workers
            • Steals money until it cannot pay any claims
          • Deceptive advertising
            • Similar to fraud
            • Advertising is an exaggerated claim for a product
              • “Nestle makes the best chocolate”
              • “Wheaties, breakfast for champions”
            • Claims are false, but legal
            • It is also legal to use misleading labels to make food products appear healthier or less fattening than they actually are
              • Pam and other cooking sprays say they are fat-free and calorie-free but they are made of 100 percent fat
            • Illegal to false advertise if it involves products that can seriously harm customer
              • However, company not subject to punishment as common criminal
              • Offender has to sign document that agrees to stop illegal activity
            • Antitrust violations
              • Antitrust laws prohibit companies from conspiring to reduce or eliminate competition
              • If there’s little or no competition, prices will go up and consumers will have no choice but to pay them
              • To violate laws, companies selling same kind of products usually get together to fix prices that are abnormally high
              • Sometimes corporations prevent new competition from entering market
                • Visa and MasterCard restrict banks from issuing American Express and Discover cards
              • Antitrust violations produce enormous profits
              • Baby-food industry
                • High price of baby formula
                • Stems from antitrust violations
                • 3 formula companies cooperate and dominate formula industry
                • Since they cooperate, they are able to keep price very high
              • Deviance against the government
                • Tax evasion
                  • Large corporations have pervasive and powerful political influence
                  • They can legally evade taxes through tax breaks provided by legislation and through tax loopholes made possible by the complexity of tax laws
                • Corporations also give campaign donations to both political parties to influence legislation toward favoring their business interests
                • Giant US corporations also bribe foreign governments or engage in other activities that are forbidden by US law
                • US corporations are less likely to use payoffs to do business abroad than are European and Asian companies
                  • It is a common practice in the global economy
                • Deviance against the environment
                  • Corporations dump wastes onto land and into air and water
                  • Find it too costly to develop ecologically safer alternatives or antipollution devices
                  • Unwilling to clean up mess or assume liability for health of citizens affected by it (because it would lower their profits)
                  • Corporations in the petrochemical, metals, electrical, and transportation industries are more severe polluters of the environment
                  • Residents in poor or minority neighborhoods suffer significantly more than others from environmental pollution
                    • Landfills, garbage incinerators, toxic dump sites, and environmentally hazardous plants are located near homes of poor/minorities
                  • Federal government has tried to stop environmental pollution, but has little success
                    • 1980: Comprehensive Environmental Response Compensation and Liability Act aka “Superfund program” cleans up some of the worst uncontrolled hazardous waste sites in the nation
                  • Corporations have to pay for cleanup
                  • Industry and its insurance companies argue cleanup costs should be paid through taxes and the general public should help pay for cleanup because public uses the products of the industry

A social Profile of Corporate Crooks

• Several notorious corporate of very famous companies were accused for being engaged in illegal business activities. On the background of their companies’ values dramatic drop and despite 162,000 of their employees losing their jobs, these funders managed to have a 1.4 billion profit.
• The causes for illegal business practices are as follows:
  • The filling of CEOs of being above the law.
  • Business deregulation because of which there is not much difference between criminal and legal business practices.

Occupational Deviance

• Among many types of deviant activities in white-collar occupations the most common and costly ones are employee theft and embezzlement.
• Employee theft affects both business and consumers, since more that thousand business go under every year and the ones that survived raise prices.
• There are three explanations why employees steal:
  • Since employee theft is more common in large and impersonal corporations, people who steal feel that they steal from nobody.
  • Employees steal when they are underpaid, abused or frustrated by their employers. They feel not stealing but taking what they deserve.
  • Stealing make the job for them more interesting and challenging.

Embezzlement

• Embezzlement stands for stealing money.
• There are two types of embezzlers:
  • Low-level employees who steal several hundred dollars for solving financial problems.
  • Top-level employees who steal several thousands of dollars every month.
• Embezzlers go through a social-psychological process consisting of three phrases:
  • They face financial problem that they are unwilling to share with others or don’t want to ask for help.
  • They come up with the opportunity of secret situation of the financial problem.
  • They rationalize themselves thinking that they will return the money, and that is a sort of loan rather than stealing.

Financial Frauds

• The most common form of financial frauds is the failure to pay income taxes.
• One of the reasons why is tax evasion so prevalent is the popular perception of tax evasion as a common activity which encourages many people to do it since everybody else does it too.
• Another reason is the complexity of income tax laws.
• Less common than tax evasion is a violation of securities law.
• Most violators are stock traders and because of that, the cost per violation is much higher.
• Next popular form of violation by stockholders is defrauding customers through sales of     worthless securities.
• Another form of violation is insider trading. It involves an insider of the company, such as its owner or one of its executives.

Deviance in the Professions

• There are many types of professional deviance. We will focus on three of them in this chapter: Medical Misconduct, Lawyerly Lawlessness, and Accounting Abuse

Medical Misconduct

• One form of medical misconduct is fee splitting which involves doctor receiving kickbacks from another for referring patients. They are usually general doctors referring their patients to surgeon or specialist which are very expensive and dangerous for patients.
• The second form of medical misconduct is an unnecessary surgery. It has been examined and found out that 1356 patients who were examined for surgery at least 25% were not needed.
• The third form of medical misconduct is fraudulently claiming payment for services. This includes billing insurance companies and the state and federal Medicaid and Medicare programs for services never rendered  or double-billing.

Lawyerly Lawlessness

• Legal lawlessness is widespread. It is mostly marked by the practice of overcharging clients.
  • Lawyers often provide intangible services such as giving a few words of advice, making a telephone call, writing a letter, preparing a document, negotiating with somebody.
  • A lawyer can intentionally delay the resolution of a case so as to have more court appearances, there are still many opportunities for fraudulent charging of fees.

Accounting Abuse

• Accountants assist their clients in falsifying their income or deduction in order to pay fewer taxes when preparing tax returns for companies and individuals.
• The job of auditing a corporation’s books to make certain that their accounting is extremely important in ensuring the stability and health of the nation’s economy.
• If the accountant says the company is financially sound and strong while, it is about to go bankrupt, the bank and investor will likely lose the money.
• The major cause of the accounting abuse is obviously the conflict of interest that is built into the the accountant’s position as an auditor paid by the company to audit itself.
• In shot, the conflict of interest prevents accountants from doing what they are supposed to do-detect fraud in the company they audit.

What Makes White –Collar Deviance Unique?

• White- collar deviance is unique in varies ways. However, the most distinguishing facets are the distinctive implementation of the offense or offenses in order for the deviant to maximize their revenue, along with power, influence or outward respectability to avoid detection. Additionally, the offender has a positive self-image and manages to get the victim to unsuspectingly cooperate and society seems to be indifferent towards the offense. 

The Deviant’s Respectable Self-Image

• White-collar deviants see themselves as respectable members of society, rather than a common criminal. This self-image plays an important role in the performance of various crimes. They typically tend to over rationalize their actions. For example, when CEOs are convicted of price fixing they quickly claim to have been attempting to stabilize the economy by, “stabilizing prices” in order to “recover costs” for their company to be able to provide jobs. Additionally, those who have been convicted of embezzling claim to have “borrow money” and claim they fully intend to pay the money back. Employees that are charged with theft feel they have not stolen from the company because the companies are believed to make up losses by using the employees as tax deductions and charge customers’ high prices. Tax offenders tend to see themselves as unlucky victims. They claim to be doing the same as many others but simply had poor luck and got caught. In the actions listed above the individuals admitted to the action that landed them in prison but do not admit to any criminal intent. They do not see themselves as a criminal.

The Victim’s Unwitting Cooperation

• Unlike many other crimes such as, robbery or murder, white- collar deviance require the victim to cooperate. The deviant feeds on the victim’s ignorance or carelessness. For instance, a homeowner may hire a company to provide home repairs but may not check the company’s work history. While some may fault the victim for not being more precautious, it is difficult for the victim to know they are being targeted and victimized. For some it is nearly impossible to detect they are being victimized since it could be in the form of substances. An illustration of this is packaged meat that claims to be hormone and antibiotic free but in reality may contain antibiotics and hormones.

Society’s Relative Indifference

• Luckily for white-collar deviants there is little investigation into this type of crime. If and when they are discovered white-collar deviants rarely go to prison and if they do it is not to a harsh institution for a prolonged period of time. However, since the 1980s there has been an increase in concern for white-collar deviance. In 1985 a Chicago judge did convict three corporate executives to 25 years in prison due to their negligence to correct unsafe plant conditions that led to an employee’s death. Yet, not a single white-collar delinquent has been condemned to death, for causing deaths amongst employees or customers. While many lower class criminals have been convicted and sentence to death for causing a single death. Moreover, those who have robbed banks the traditional way have been sentenced on average to 7.8 years in prison, while the white-collar criminals have been sentenced on average to 2.4 years. Additionally, of all the cases that federal agents have investigated about 75% of the charges were dropped for white-collar individuals and corporate executives between the years of 1987 and 1992. Between the years of 1995 through 2002, only 57% of white-collar offenders have been sentenced to prison in comparison to 93% of street criminals. Additionally, white collar offenders spent an average of eleven months in prison, while street criminals spent an average of seventy-nine months in prison. 
• It is unlikely that the government will conduct a war on white-collar crime because many of the criminals are too powerful, influential, or respectable. Additionally, judges are habitually lenient with white-collar offenders. Furthermore, it is difficult to prove criminal intent and the evidence can be difficult to understand due to the convoluted language.

Causes of White-Collar Deviance

• Through analytical review by Neal Shover and Andy Hochsterler white-collar crime share three common characteristics that lead personnel to engage in deviant activities. The first being, individuals are predisposed to commit a white collar crime. The second, the lure of criminal opportunity and lastly the non-credible oversight. However, the data collected for the textbook illustrate different reasons such as, relatively high social position as covered in Chapter 3.

Deviant Motivation: Fear of Loss and Greed for Gain

• Evidence suggests that fear and greed have a considerable amount to do with deviant activities in the white-collar world.  For instance, it is well-known to Wall Street observers that fear and greed are the two most powerful human emotions driving the stock market. Causing those that work in Wall Street to manipulate their clients in order to avoid great loss due to their fear of lost investment and greed to gain as much income as possible regardless of the losses their investors may encounter. This behavior can be translated to those who have fear of losing their homes or status causing them to commit white-collar crimes such as, embezzlement and credit card fraud.
• So the greater the fear of loss or the greater the greed to gain the more appealing white-collar crime becomes. Due to the American culture of competitiveness and capitalism we generate and celebrate greed.

Deviant Opportunity: The Benefit of High Position and Power

• Although, greed and fear are great motivators they alone do not propel people to commit white-collar crime. The opportunity has to exists for one to be able to execute the crime. The easier the access, the more likely a person will commit a deviant act. Typically, this type of access is granted to those in high positions of power within companies. Hence, managers and CEOs are more likely to commit white-collar crimes. Those with higher status are also likely gain the trust faster than those who do not hold prestigious positions. A study found that, of large corporations only 42% percent of all companies investigated eternally but accounted for 70% of all violations, in comparison to 20% of medium sized companies and 10% of small firms.

Weak Social Control: Lax Law Enforcement

• At times it seems as if the government is encouraging the wealthy to engaged in white-collar deviance due to the deregulation policies. This was seen in the proliferation of banking frauds in the 1980s and in the medical industry providing care for individuals on Medicare and Medicaid. This may explain why doctors are overcharging government programs larger amounts for services not provided to the patients. Other studies have found that those in middle class actually have the highest rates of white-collar crime. Others point out, that they are simply the ones getting caught. However, its undisputable that high ranking, powerful corporations and individuals are more likely to engage in deviant white-collar activities due to weaker social control.

Governmental Deviance

• Most of us seem to be ambivalent about our government official. We may want them to break the law every now and then and at the same time make and implement it.
• Political Corruption
  • Political corruption is usually with graft or bribery-the abuse of power for personal gain. Kickbacks, using public funds for personal gains, and mail privileges are common in the US.
• Receiving Kickbacks from businesses
  • The federal government spends an enormous sum of taxpayer money on goods and services supplied by various businesses. Meanwhile, the official in charge of this might find it difficult to resist gifts from the same businesses.
• Abusive Management of Public Funds
  • The management of public finds is a potential source of political corruption. The city or state treasuries could be tempted to use the taxpayer money for personal gains.
•  Abusing the Frank
  • The most common form of official corruption is probably the abuse of frank-the privilege of sending mail free of charge.
• Election Improprieties
  • Our representative democracy requires that we, the masses, have the right to choose leaders.   
• Denial of Voting Rights
  • The masses of citizens are encouraged to participate in the presidential election. But in reality, it is the electoral college made up of political leaders that elects the president.
• Political Dirty Tricks
  • Dirty tricks are often employed to ensure victory in an election.
• Campaign Finance Abuses
  • Candidates for elected office often solicit and receive huge campaign contributions from moneyed interests and donors expect the politician to return the favor if elected.  
• Official Violence
  • There is a long history of governmental violence against various groups of citizens in the United States. As a democracy, however, the United States commits democide to much a smaller extent.

A Global perspective on Official Corruption

• Official Corruption is a common practice around the world. Generally, the poorer a country is, the more corrupt its public officials are. Official corruption discourages foreign investments in the country.

Official Ways of Neutralizing Deviance

• Governmental officials rarely admit guilt when it comes to deviant acts. They often cover up their deviant acts by Neutralizing it and making it appear as if they have done nothing wrong.
• Denying the Obvious
• Ronald Reagan in 1986 insisted he did not of the diversion of funds to the Nicaraguan Rebels. In a poll 47% of respondents said he was lying while only 36% said he was telling the truth.
• President Clinton denied there was anything wrong with having coffee or lunches with his wealthy contributors. He said it’s a good thing to listen to their worries.
• President Bush and his vice president was reluctant to admit making some mistakes in starting the war in Iraq.

Ignoring the Deviance

• If an illegal act is private individual officials disconnect their phones, go away on a trip, or “do not comment” on the issues.
• When government is supposed to take action against officials, it insists that the facts don’t warrant governmental intervention.

Accusing the Accuser

• Nixon administration attacked often attacked the news media for distorting facts when its illegal activities were publicized.
• When CBS broadcasted a documentary on the Pentagon. A house committee launched an investigation on CBS rather than the Defense Department.
• In 1992 when Senator Brock Adams of Washington was accused by a woman of sexually molesting her, he claimed she was mentally ill even after several women came forth about sexual harassment.

Promising to Take Action

• When the Watergate scandal broke Attorney General promised to make the investigation of the scandal the most intensive since the assassination of Pres. John F. Kennedy.
• In 1980’s when confronted with the scandal of selling arms to Iran and diversion of funds to the Nicaraguan Rebels, the president Ronald Reagan kept repeating that he wanted all the facts out but did not try hard to get them out.

Justifying the Deviance

• Although they admit to their wrongdoing they rationalize that it was necessary for them to commit the deviant act.
• Often times in wiretapping the CIA and FBI justify it against terrorism or criminal activities.

Cause of Governmental Deviance

• In various studies Governmental deviance suggest three important causes:
• Superabundance of Ambiguous Laws- Lack of clear cut laws for controlling official action. This creates a “discretionary wilderness” where governmental officials are left to rely on their own judgement to interpret laws.
• Governmental Complexity is best described as unintentional deviance among governmental officials because members do not have complete information and responsibility regarding what and how they should do their job.
• Abuse of Power is the intentional deviance among government officials.