Unit 1
Changing Awareness of Crime Task 1
AC1.1 analyse different types of crime
White-collar crime
A crime committed by a person of respectability and high status in the course of their occupation.
Include people such as company directors and managers, as well as professionals such as
accountants, lawyers, doctors and dentists.
(White-collar crime refers to a financially motivated, nonviolent crime committed by businesses and
government professionals. It was first defined by the sociologist Edwin Sutherland in 1939 as "a
crime committed by a person of respectability and high social status in the course of their
occupation")
Corporate Crime: When a crime is committed by or on behalf of a company (for example evading tax
to increase its profits).
Professional Crime: When a crime is committed by professionals (for example accountants stealing
their client’s funds).
Victims:
Consumers: (for example, companies may fake claims when advertising their products, or sell unfit
or dangerous goods).
Taxpayers and the government:(companies who evade tax are defrauding other taxpayers and
depriving the government of funds to pay for public services)
employees(Employers may subject their workers to bullying,sexual harassment or racial
discrimination. Criminologists Steve Tombs calculates that as many as 1,000 work-related deaths a
year result from employers breaking the law.
The public at large: (We all suffer when companies pollute the environment,for example through
illegal dumping toxic waste or by selling cars that breach emission standards).
Offenders: This can include people such as company directors and managers, as well as professionals
such as accountants, lawyers,doctors and dentists.
- Examples of acts that are considered white-collar crime
Defrauding customers, tax evasion, breaking health and safety laws, polluting the environment and
illegally discriminating against their employees.
- Discuss a real-life case of the crime
Bernie Madoff: he ran the biggest Ponzi scheme in history. Ponzi schemes take money from
investors and rather than investing to make again, they use the latest investments to pay dividends
to existing investors. They require a constant source of money to be able to keep all the investors
happy.
KEY FINDINGS:
● Bernie Madoff was a money manager responsible for one of the largest financial frauds to
date.
, ● Bernie Madoff's Ponzi scheme, which likely ran for decades, defrauded thousands of
investors out of tens of billions of dollars.
● Investors put their trust in Madoff because he created a front of respectability, his returns
were high but not outlandish, and he claimed to use a legitimate strategy.
● In 2009 Madoff was sentenced to 150 years in prison and forced to forfeit $170 billion.
● As of December 2018, the Madoff Victims Fund had distributed more than $2.7 billion to
37,011 victimized investors in the U.S. and around the world.
In 2009, at age 71, Madoff pleaded guilty to 11 federal felony counts, including securities fraud, wire
fraud, mail fraud, perjury, and money laundering. The Ponzi scheme became a potent symbol of the
culture of greed and dishonesty that, to critics, pervaded Wall Street in the run-up to the financial
crisis. Madoff was sentenced to 150 years in prison and ordered to forfeit $170 million in assets, but
no other prominent Wall Street figures faced legal ramifications in the wake of the crisis.
Health Care Fraud Case Study
Delores Knight, her son Isaac, and two associates incorporated the business Just Like Familee to
provide in-home health care for the elderly and disabled in Ohio. The four employees forged
documents and falsified medical records, then billed federal health care programs for services that
were never provided. They defrauded Medicare, Medicaid, and the Department of Veterans Affairs
of more than $8 million and purchased two homes with the profits. In 2017, Delores Knight was
found guilty of conspiracy to commit health care fraud, sentenced to 10 years in prison, and ordered
to pay over $8 million in restitution. Her son Isaac was sentenced to 7 years in prison with $8 million
restitution payments, and the other 2 employees received prison time or home confinement and
must pay restitution as well.
Enron
This Houston-based corporation marketed electricity and natural gas, commodities, financial
services, and risk management services to customers around the world. It achieved a ranking as the
sixth largest energy company in the world.
The company faked energy shortages in California in order to drive up the price of electricity. 2
Enron committed accounting fraud and lied about profits and corporate assets in order to keep the
price of stock high.
In December 2001, the company filed for Chapter 11 bankruptcy, two months after the SEC opened
an investigation into its accounting practices. In January 2002, the U.S. Department of Justice
opened a criminal investigation into Enron’s collapse. The investigations led to indictments of
Enron’s top executives.
Kenneth Lay, the chairman and CEO, was convicted of six counts of fraud and conspiracy, and four
counts of bank fraud. He could have faced life in prison, but he died of a heart attack three months
before he was scheduled for sentencing. 3
Jeffrey Skilling, who resigned as CEO in 2001, received the harshest sentence. Skilling was convicted
of one count of conspiracy, one count of insider trading, five counts of making false statements to
auditors, and 12 counts of securities fraud. His original sentence, 24 years in prison, was reduced to
14 years in 2013 as part of a deal with federal prosecutors to end his appeals. 4 As part of the deal,
Skilling will pay more than $40 million back to investors who were harmed by Enron’s collapse.
Changing Awareness of Crime Task 1
AC1.1 analyse different types of crime
White-collar crime
A crime committed by a person of respectability and high status in the course of their occupation.
Include people such as company directors and managers, as well as professionals such as
accountants, lawyers, doctors and dentists.
(White-collar crime refers to a financially motivated, nonviolent crime committed by businesses and
government professionals. It was first defined by the sociologist Edwin Sutherland in 1939 as "a
crime committed by a person of respectability and high social status in the course of their
occupation")
Corporate Crime: When a crime is committed by or on behalf of a company (for example evading tax
to increase its profits).
Professional Crime: When a crime is committed by professionals (for example accountants stealing
their client’s funds).
Victims:
Consumers: (for example, companies may fake claims when advertising their products, or sell unfit
or dangerous goods).
Taxpayers and the government:(companies who evade tax are defrauding other taxpayers and
depriving the government of funds to pay for public services)
employees(Employers may subject their workers to bullying,sexual harassment or racial
discrimination. Criminologists Steve Tombs calculates that as many as 1,000 work-related deaths a
year result from employers breaking the law.
The public at large: (We all suffer when companies pollute the environment,for example through
illegal dumping toxic waste or by selling cars that breach emission standards).
Offenders: This can include people such as company directors and managers, as well as professionals
such as accountants, lawyers,doctors and dentists.
- Examples of acts that are considered white-collar crime
Defrauding customers, tax evasion, breaking health and safety laws, polluting the environment and
illegally discriminating against their employees.
- Discuss a real-life case of the crime
Bernie Madoff: he ran the biggest Ponzi scheme in history. Ponzi schemes take money from
investors and rather than investing to make again, they use the latest investments to pay dividends
to existing investors. They require a constant source of money to be able to keep all the investors
happy.
KEY FINDINGS:
● Bernie Madoff was a money manager responsible for one of the largest financial frauds to
date.
, ● Bernie Madoff's Ponzi scheme, which likely ran for decades, defrauded thousands of
investors out of tens of billions of dollars.
● Investors put their trust in Madoff because he created a front of respectability, his returns
were high but not outlandish, and he claimed to use a legitimate strategy.
● In 2009 Madoff was sentenced to 150 years in prison and forced to forfeit $170 billion.
● As of December 2018, the Madoff Victims Fund had distributed more than $2.7 billion to
37,011 victimized investors in the U.S. and around the world.
In 2009, at age 71, Madoff pleaded guilty to 11 federal felony counts, including securities fraud, wire
fraud, mail fraud, perjury, and money laundering. The Ponzi scheme became a potent symbol of the
culture of greed and dishonesty that, to critics, pervaded Wall Street in the run-up to the financial
crisis. Madoff was sentenced to 150 years in prison and ordered to forfeit $170 million in assets, but
no other prominent Wall Street figures faced legal ramifications in the wake of the crisis.
Health Care Fraud Case Study
Delores Knight, her son Isaac, and two associates incorporated the business Just Like Familee to
provide in-home health care for the elderly and disabled in Ohio. The four employees forged
documents and falsified medical records, then billed federal health care programs for services that
were never provided. They defrauded Medicare, Medicaid, and the Department of Veterans Affairs
of more than $8 million and purchased two homes with the profits. In 2017, Delores Knight was
found guilty of conspiracy to commit health care fraud, sentenced to 10 years in prison, and ordered
to pay over $8 million in restitution. Her son Isaac was sentenced to 7 years in prison with $8 million
restitution payments, and the other 2 employees received prison time or home confinement and
must pay restitution as well.
Enron
This Houston-based corporation marketed electricity and natural gas, commodities, financial
services, and risk management services to customers around the world. It achieved a ranking as the
sixth largest energy company in the world.
The company faked energy shortages in California in order to drive up the price of electricity. 2
Enron committed accounting fraud and lied about profits and corporate assets in order to keep the
price of stock high.
In December 2001, the company filed for Chapter 11 bankruptcy, two months after the SEC opened
an investigation into its accounting practices. In January 2002, the U.S. Department of Justice
opened a criminal investigation into Enron’s collapse. The investigations led to indictments of
Enron’s top executives.
Kenneth Lay, the chairman and CEO, was convicted of six counts of fraud and conspiracy, and four
counts of bank fraud. He could have faced life in prison, but he died of a heart attack three months
before he was scheduled for sentencing. 3
Jeffrey Skilling, who resigned as CEO in 2001, received the harshest sentence. Skilling was convicted
of one count of conspiracy, one count of insider trading, five counts of making false statements to
auditors, and 12 counts of securities fraud. His original sentence, 24 years in prison, was reduced to
14 years in 2013 as part of a deal with federal prosecutors to end his appeals. 4 As part of the deal,
Skilling will pay more than $40 million back to investors who were harmed by Enron’s collapse.
