Criminology and White Collar Crime: When Rich White Guys Get Greedy

By Greg Voakes | Related entries in Business, Ethics, Pictures

White-collar crime is quite an incredible industry – millions of dollars disappear each year to offshore bank accounts, hookers, drugs, and yachts because rich executives (generally rich white guys) aren’t satisfied with their Porsches. White-collar crime finally got some serious attention when corruption single-handedly destroyed the lives of four thousand Enron employees at the start of the economy’s downturn.

These days, criminology theories often blame the economy for the rise in these types of crimes. White-collar workers are losing money in the stock market and finding themselves unemployed. They want to maintain their same standard of living, which leads to Office Space style scenarios.

It generally consists of lying, cheating, and stealing. It’s normally a non-violent crime, but can wipe out the savings of entire families. (See scams such as the one in the movie Boiler Room.)

So what are the biggest all-time white-collar crimes in America, and does the criminology behind it change from case to case?

Top 5 Infamous White-Color Criminals and Their Crimes

5) Insider Trading: Ivan Boesky and Michael Milken

Pilfered: $200 million

In the 1980s, some of the big guys on Wall Street made millions through inside trading. The law was already in effect when Ivan Boesky was sold out by Dennis Levine for large-scale insider trading. Boesky in turn implicated Michael Milken. Milken and Boesky were the face of the largest corporate fraud scandal for a decade. Now insider trading is more commonly associated with our pal Martha Stewart.

Victims: Investors

Dennis Levine purchased a large amount of Nabisco stock just before a merger, then immediately sold them for a large profit. This got the SEC’s attention, and Levine turned in Boesky, who then turned in Milken.

4) Enron Corporation (Kenneth Lay and Jeffrey Skilling)

Pilfered: Over $1 billion

What appeared to be an incredibly successful company in a short period of time was in fact an incredibly complex scam. For fifteen years, executives of Enron fudged reports, used accounting loopholes, bribed foreign governments for contracts, and hid failed deals and projects. All in all, they were able to hide billions of dollars in debt from their investors, while manipulating and damaging the California energy market, and the Texas power market.

Victims: California energy was one of the big victims, but some 4,000 employees went from a cushy salary to unemployment when the company was swiftly brought down.

The Enron stock was trading at 55 times its earnings; analysts and investors did not know how it was making its income, and Bethany McLean shone light on this situation in her article, Is Enron Overpriced? She found strange transactions, erratic cash flow, and huge debt when she viewed the company’s 10-K report. When Enron reported $638 million third-quarter loss that October, the SEC began an inquiry to the company’s accounts, and it was all downhill from there.

3) WorldCom and Bernard Ebbers

Pilfered: $3.8 billion (Some sources state up to $11 billion in fraud took place.)

The second-largest long-distance telecommunications company in the U.S. didn’t get there with honest hard work. Though Bernard Ebbers began growing the company with well-timed acquisitions, a major one left them struggling, and caused their stock to suffer. Ebbers artificially inflated stock prices and cooked the books to hide the losses. He also “borrowed” $400 million from WorldCom to finance his other businesses.

Victims: Investors, and WorldCom, which filed for bankruptcy immediately

A team of internal auditors uncovered the original $3.8 billion fraud, and then discovered billions of losses concealed through false accounting practices. Some of the funds were siphoned off for personal use. They filed bankruptcy in 2002, and it was the largest filing at the time.

2) Adelphia Communications and John Rigas

Pilfered: $60 billion

In the 1950s, Adelphia Communications was founded, and in just a few decades became the fifth largest cable company in the country. It was a rags-to-riches-to- prison story that landed Rigas and his son behind bars. The head honchos hid $2.3 million in liabilities from investors, and failed to record $3.1 million in loans. He inflated Adephia’s subscriber growth and lied about their bottom line. He used company money for personal use, including investing in a golf course, and building luxury condominiums.

Victims: Investors and employees

The SEC actually caught Adelphia after taking a good look at the company’s financial statements and finding a loan for millions of dollars to John Rigas. As soon as the news hit Wall Street, the stock dropped from its peak of $66 a share, to 15 cents a share. Rigas was indicted for securities, bank, and wire fraud in 2002; he and his sons were also charged with tax evasion. John Rigas is currently serving the remainder of his 15-year sentence.

1) Bernard Madoff

Pilfered: $65 billion

Probably the biggest corporate con in history, Madoff created a huge Ponzi scheme by encouraging huge investments from individuals and corporations around the world. Their payoff came from future investments, not legitimate returns on investments, while he kept the payoff.

Victims: Mostly wealthy New York Jewish businessmen were targeted, though he also took advantage of charity circuits and country clubs.

Similar to the cause of the Great Depression, when the recession came around about a decade ago, investors tried to pull out around $7 billion from the fund. Obviously that money was no longer available, and Madoff’s scheme was uncovered. The person to finally turn him in? His son.

It seems that the criminology behind these crimes are pretty much the same. Too much power and responsibility, not enough good sense.


This entry was posted on Monday, August 29th, 2011 and is filed under Business, Ethics, Pictures. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

9 Responses to “Criminology and White Collar Crime: When Rich White Guys Get Greedy”

  1. Tillyosu Says:

    I’m curious, when you say Milken and Boesky’s victims were “investors,” what investors are you referring to?

  2. Tillyosu Says:

    millions of dollars disappear each year to offshore bank accounts, hookers, drugs, and yachts because rich executives (generally rich white guys) aren’t satisfied with their Porsches.

    I’m not sure why the race of the perpetrators is relevant here. Are you implying that whites are more likely to commit white collar crimes? If not, why even mention race at all?

    I was thinking about your little racial sneer and came across this little tidbit which I found interesting:

    The data from 2008 reveals that, though White Americans constituted the vast majority of total arrests made, African Americans were disproportionately represented in all forms of violent crime and property crime, as well as in the three measured forms of white-collar crime, with the average rates of representation 2 to 3 times higher than African American representation in the general population.

    Just sayin…

  3. MGeneM Says:

    Can someone please tell me how destroying the financial foundations of thousands of people is non-violent?

    If we started sending these assholes to death row, perhaps the next generation of sociopathic MBA graduates might think twice before using their genius to game the system at everyone else’s expense.

  4. theWord Says:

    Always ups your credibility when you link to Wikipedia and the the first line is

    This article has multiple issues one of which is neutrality

    and you don’t mention that.

    You may have a point, you may not but I’m trying to think of a single white collar criminal of any color other than white. The only one I can think of is the head of one of the banks that caused our current economic mess who was I believe Indian American and what they did while criminal was not criminal. Had there been any evidence or listing to back up your concerns it would have been interesting to read.

    Property crime is also an interesting crime to bring up since some might say the billions if not trillions of dollars of economic losses around the world should be laid at the feet of the actions of the protected class at the top. Makes the people at the bottom look like petty criminals by comparison. But of course, that doesn’t fit your world view.

  5. Tillyosu Says:

    Property crime is also an interesting crime to bring up since some might say the billions if not trillions of dollars of economic losses around the world should be laid at the feet of the actions of the protected class at the top. Makes the people at the bottom look like petty criminals by comparison. But of course, that doesn’t fit your world view.

    Oh boy here we go. Putting aside the fact that the “protected class” that you refer to bore the vast majority of the economic losses, the fact of the matter is that the people who made the financial decisions which may or may not have led to the crisis did not actually break any laws. You may have felt that their actions were “criminal”, but thankfully you don’t get to decide what the law is.

    Oh and when you’re attacking my information sources, it may “up your credibility” if you actually, you know, offer some of your own.

  6. theWord Says:

    @Tilly- Interesting slant on reality you have going there. The vast majority of the economic losses…? I guess you’d have to clarify how you reach that conclusion. I think someone who loses their job and their home and has to change their way of life has had the biggest blow. My guess is that if you start in the top 1% and end up in the top 1% and it affects you in no appreciable way, you’re basing it on the dollars lost. Laws were written for them and “buy” them so it is really no surprise. I guess by your snark comment that you think what got us into this mess and it would have been wrong to have laws and regulations that might have prevented it. I just don’t know how one arrives at that conclusion.

    As to the sources, the fact that yours were not credible was a reflection on you. I didn’t need to document anything more than that. I was trying to give you the benefit of the doubt and see if you had something, but you’ve got nothing other than predictability.

  7. Belinda Stroming Says:

    As it turns out, money (+greed) is the root of all evil

  8. Tillyosu Says:

    I couldn’t resist:

    “So you think that money is the root of all evil?” said Francisco d’Aconia. “Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil?

  9. Belinda Stroming Says:

    This …

    “Probably the biggest corporate con in history, Madoff created a huge Ponzi scheme by encouraging huge investments from individuals and corporations around the world. Their payoff came from future investments, not legitimate returns on investments, while he kept the payoff.”

    My mother was a victim of this scam… she used up all of her money to invest in what she thought was a great opportunity to lift herself up from poverty…. Whenever I think of what has happened…the millions of americans that was lied to and the way that ths guy enjoyed the money while other people live in poverty…. I really feel deep anger in my heart But all we can do now is move on.

    Belinda of wonder wheeler

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