test 1- white collar crime

White collar crime FBI definition

Synonymous with the full range of fraud committed by business and government professionals

• these crimes are characterized by deceit, concealment, or violation of trust and are not dependent on the application or threat of physical force or violence

• Lastly, the motivation behind these crimes is financial— to obtain or avoid losing money, property or services or to secure a personal or business advantage

Definitions of white collar crime-

Hourglass

• traditional thoughts of white collar crime on top of

• New areas/contemporary thoughts on the bottom

Definitions of white collar crime-

Sutherlands

• upper class crime

• Associated with business

• Civil and/or criminal

• Originally excluded from crime stats

Four components of theft

• opportunity

• Temptation

• Justification

• Motivation

UCR

• uniform crime report

• No federal investigations

• Fraud

• Embezzlement

• Forgery/counterfeiting

• Fraud v. Embezzlement

• Misrepresentation v. Stealing

NIBRS

• false pretenses

• Swindles

• Confidence games

• Credit card and atm fraud

• Wire and welfare fraud

• Impersonation

• Bribery

• Embezzlement

• Counterfeiting and forgery

• bad checks

Sutherlands offenses

• antitrust violations

• Kickbacks; give something and you get something in return

• Patents, trademarks, and copyright violations

• Misrepresentation in advertising

• Unfair labor practices

• Financial manipulations

• Corporate war time violations

• Miscellaneous (FDA violations)

Difficulties with police and white collar crime

• definitions

• Perceptions of working white collar crime

• Proof/complexity

• resources

• Relationship dynamics

• Time

Loss

• money

• Assets

• Proprietary information

• Reputation

• Life

Who gets investigated

• employers and employees

• Customers

• Other businesses

  • Ex. Industrial espionage

• Bystanders

The ultimate goal

• protect the brand or company

• Safety

• The bottom line (make money)

What is fraud?

• an intentional deception that causes the victim to suffer an economic loss and/or the perpetrator to realize a gain

Elements of fraud

• material false statement

• Knowledge of the falsehood

• Reliance of the false statement by the victim

• Damages by the victim due to the falsehood

Larceny

Stealing, taking and carrying, leading, riding, or driving away with another’s personal property (with intent and without permission)

Embezzlement

Willfully taking of property or money which the wrongdoer acquired possession lawfully, by reason of some office, employment, of position of trust

Fiduciaries

Persons in positions of trust (representative)

Invitation to theft CRAVED

• concealable

• Removable

• Available

• Valuable

• Enjoyable

• Disposable

Categories of fraud

• asset misappropriation

• Corruption

• Financial statement fraud

Two main components of financial forensics

• auditing

• Fraud examination

Shrinkage/shortage

Difference between what you are supposed to have and what you actually have

Who is in the white collar crime business battle

• professional services firms—consultants, auditing firms

• Public and private companies

• Regulatory agencies—SEC

• Government and non profits— IRA, school systems

• Law enforcement agencies

• Law forms

• Psychological and criminology— counseling and academics

• Information technology (IT)— controls, cyber forensics, cybercrimes

Sutherlands four aspects

• serious problem

• Recognized illegal activities by upper class

• Recognize characteristics of opportunity of class

• Recognize as a criminal activity

Who is a criminal— J.W. Tappan

• civil and/or criminal activity— too much

• Focus should be on criminal law

• Is a person a criminal if not committing a crime

Donald R. Crest

• student of Sutherland

• The fraud triangle: perceived opportunity; perceived pressure; rationalization

• No shareable financial pressures

• Also found non financial reasons for committing fraud

  • Violations of ascribed obligations (unbecoming behavior)

  • Problems from personal failure (personal bankruptcy; divorce)

  • Business reversals (ponzi schemes

  • Physical isolation (alone and without financial help)

  • Status gaining (materialistic)

  • Employer-employee relationship (disgruntled over pay, overworked)

Hollinger and Clark

• contemporary criminologists with a niche area in retail/employee theft and white collar crime

• Multitude of focuses

• Management’s responsibility (organized controls) in white collar crime

Ethical principles- imperative principle

Directives and rules without exception and are in the best interests of society as a whole

Ethical principles- utilitarian principle

Problem should be solved by weighing good vs. bad consequences

Ethical principles- the generalization principle

Ethical norms as guidance

What is organized crime

• a continuing enterprise that rationally works to make a profit through illicit activities, and that it ensures its existence through the use of threats or force and through corruption of public officials to maintain a degree of immunity from law enforcement

• Tends to be restricted to illegal goods and services that are in great public demand through monopoly control of an illicit market

• Criminals have a career pattern

• Hierarchy structure— “bosses”

Five characteristics of organized crime investigations

• conspiracy: planning and profiting of crime

• Illicit goods: good such as drugs and stolen property; possession and distribution of

• Illicit services: services such as gambling, loansharking, prostitution and pornography, marketing and distribution

• Extortion: threat of future harm; also called blackmail

• Racketeering: the organizing to commit crime; most commonly a business structure

Three organized crime models

• hierarchical

• Local/ethnic

• Enterprise

Hierarchical model

• also known as bureaucratic, conspiracy, or corporate model

• Structure consists mainly of of: families, bosses, underboss, lieutenants, soldiers

• Military like structure

• Respect with organization among family rank and other families

• Model used mostly with organized crime in New York and other New England states

• Very traditional structure

Local/ethnic model

• first studied by sociologist Joseph Albini in 1970s

• Crime based on geography and heritage

• No structure— loose relationships

• Not national

• MS 13

• Bloods and crips

• Individuals control own activities

• Align with cultural partners as needed

Enterprise model

• entrepreneur/business like

• Smaller organizations

• Competitive, not monopolistic

• Focus on market for illicit services or goods

• Always concerned with suppliers, customers, and competitors

• May become very violent to grow profits

• Model growing due to the internet

Tools and las for prosecution in organized crime

• title III omnibus crime control and safe streets act of 1968

• Organized crime control act of 1970

  • Provides

    • Use immunity

    • Witness protection program (WITSEC)

    • Special grand jury

    • RICO act

• continuing criminal enterprise (CCE) law

  • Used mainly for drug trafficking

• Bank secrecy act

  • Deals with money laundering

Cybercrime

Any criminal activity which has been committed through the use of the internet

Comprehensive crime control act

The secret service became responsible for credit card fraud and computer crime

Computer fraud and abuse act (CFAA)

Expanded cybercrimes to federal jurisdiction (when intrusion were made between states)

Monetary/economic losses to business

• cost to respond to the damage from the perpetrator

• Damage assessments

• Restoration of data and programs

• Wages, of employees conducting tasks

• Lost sales

• Last advertising revenue on websites

• Harm to reputation

Three types of hackers

• white hat hackers

• Black hat hackers

• Gray hat hackers

Contemporary motivations for hacking

• boredom (least destructive)— gray hat

• Intellectual challenge (true hacker)

• Revenge (including insiders)

• Sexual gratification (stalking and harassment)

• Economic

• Political/religious

Hierarchy of cybercriminals

• script kiddies

  • Lowest form of cybercriminals

  • Usually do not understand programming and coding but use programs used by others

  • Usually do not now their own criminal result

• Cyberpunks

  • Employ general mischief, vandalism, and destructive programs on systems

  • The term has been thrown around quite a bit in pop culture

  • Mid level cybercriminals with low level criminal infractions

• Cybercriminals organizations

  • Criminally minded individuals who use the internet for cybercrime

  • Usually politically and economically motivated

  • The groups can range from ignorance of basic to complex knowledge of technology

• Crackers

  • Hackers who use their expertise for personal gain which may be used for further criminal activity

  • Cracking the security code

Malware

Malicious programming code that causes damage to computer systems

Trap doors/back doors

Codes that allow users to enter computer systems without authorization

Trojan horse

A program that is perceived as legitimate but houses/trap back doors or hidden programs

Virus

A rouge computer which is designed to disperse copies of itself to other computers for destructive uprises by attacking itself to other programs

Worms

Similar to viruses other than it does not need programs to spread

Eras of the virus and worm

• classical era (1960s-1970s)

  • Hard drives to hard drives

• Floppy era (1980s-1990s)

  • Used floppy discs

• Macro era (1990s-2000s)

• Internet era (2000s-present)

Computer forensics

The acquisition, authenticiation, recovery, and analysis of digital crime

Data mining

A comprehensive analysis of large data sets designed to uncover patterns and relationships

• analysis includes: statistical models, math algorithms, and A.I.

Categories of online crime

• interference with lawful use of computers

• Theft of information and copyright infringement

• Dissemination of contraband or offensive material

• Threatening information

• Fraud

• Ancillary crime

DOS attacks

To disable large systems without necessarily gaining access to it

• ex. Mail bombing

Bot or zombie

• compromised computers attached to the internet which are often used to remotely perform malicious or criminal tasks

• Most owners do not know they have infected computer

Ransomware

• malware program which encrypts or otherwise renders computer or digital resources inoperable

Theft of information

• phone/internet scams

• Shoulder surfing

• Jump drives/ optical drives

• Network defaults???

Dissemination of contraband or offensive materials

• child pornography

• Child enticement/exploitation

• Online pharmacies

• Online gambling

Money laundering

An enterprise or practice of engaging in deliberate financial transactions to conceal the identity, source, and/or destination of income

Why is online laundering increasing?

• less overhead

• Less paperwork

• Ease of transaction

• Lack of physical interaction

• Reduction of risk

• Harder to identify

• Harder to prosecute

Identity theft

Any use of stolen personal information

Identity fraud

The use of a vast array of activities based on the fraudulent use of identifying information of a real or fictitious person

Breeder document

• birth certificate

• Drivers license

• Social security number

• Birthday

• Pay stub

• Tax documents

• Check

Types of sensitive information

• names

• Addresses

• date of birth

• Social security number

• Taxpayer ID number

• Alien registration numbers

• Passport number

5 types of identity theft/fraud

• assumptions of identity theft

• Theft for employment and/or border entry

• Criminal record identity theft/fraud types

• Virtual identity theft/fraud

• Credit or financial theft

Assumption of identity theft

An individual simply assumes the identity of his or her victim including all aspects of the victim’s lives

Reverse criminal record identity theft

When a criminal uses a victim’s identity not to engage in criminal activity but to seek gainful employment

Virtual identity theft

The use of personal, professional, or other dimensions of identity toward the development of a fraudulent virtual identity

Credit identity fraud/theft

• most common and most feared

• The use of stolen personal and financial information to facilitate the creation of fraudulent accounts

Issues concerning identity theft/fraud

• lack of reporting/knowledge of theft

• Lack of reporting by the police to federal agencies

• Jurisdictional discrepancies in crime measurement

• Selective enforcement

Physical methods of identity theft

• mail theft

• Dumpster diving

• Theft of computers

• Bag operations

• Child identity theft

• Insiders

• Fraudulent or fictitious companies

• Card skimming, ATM manipulators, and fraudulent machines

Types of non criminal loss

• administrative errors

• Merchandise issues

• Insurance

• Civil lawsuits/settlements

• Safety/risk management

• Loss of information

• Business continuity

• Depreciation

How can white collar crime become known

• victims/complaints

• Witness

• Surveillance (random)

• Audits/shortage

• Metrics/measurements/analysis

• Information collection

• Police

• Internal investigation

• Tips/informants

• Perpetrator

• Red flags

Red flags

• behavioral

• Trends

• Unusual activities

Collaboration

• speaking with department heads or employees with a high risk department

• Rapport building