Lecture 9 - Economically Motivated Crime

Types of Economic Crime

  • Individual vs. group economic crimes

    1. White-collar crime

    2. Theft

    3. Fraud

    4. Sex Work

    5. Human trafficking

    6. Drug trade

    7. Property crime

White-Collar Crime

  • A crime committed by a person of respectability and high social status in the course of their occupation

    • Crime that occurs in a workplace setting

    • Not a specific Criminal Code offence

    • Does not preclude violence

  • General categories (not mutually exclusive)

    • Corporate crime

    • Occupational crime

    • State crime

    • Corporate-state crime

Canada’s White-Collar Criminals

  • Canada has had notable white-collar criminals:

    • Harold Ballard:

      • Controversial owner of the Toronto Maple Leafs.

      • Convicted of 47 counts of fraud in 1972.

      • Sentenced to 9 years but paroled after 1 year.

    • Alan Eagleson:

      • Known for improving hockey players' salaries and pensions.

      • Defrauded players like Bobby Orr and Darryl Sittler.

      • Lost membership in the Order of Canada and removed from the Hockey Hall of Fame.

    • Bernie Ebbers:

      • Involved in the largest accounting fraud in U.S. history before Bernie Madoff.

      • Convicted in the WorldCom false financial reporting scandal costing investors over $100 billion.

    • Garth Drabinsky:

      • Theatre impresario and co-owner of Livent.

      • Convicted in 2009 of fraud and forgery for misstating financial statements.

    • Conrad Black:

      • Built a significant newspaper empire including The Chicago Sun-Times.

      • Convicted of mail fraud and obstruction of justice; served over 3 years.

      • Originally fined $6.1 million by the SEC, reduced to $4.1 million.

      • Tax Court ruled he owed taxes on $5.1 million of income in 2002.

      • Permanent ban from being a director or officer of a publicly traded company in Ontario as of February 27, 2015.

Theft

  • Taking something that belongs to someone else

  • Theft

    • S. 322 of the Criminal Code

    • Indictable or summary offence

  • Types:

    • Breaking and entering

    • Possession of stolen property

    • Theft (under $5,000 and over $5,000)

  • May be a white-collar crime (e.g., stealing from an employer)

  • Theft is covered in section 322 of the Canadian Criminal Code, which states that “everyone commits theft who fraudulently and without colour of right takes, or fraudulently and without colour of right converts to his use or to the use of another person, anything, whether animate or inanimate, with intent.”

Fraud

  • Using deception to take something that belongs to someone else

  • Under $5,000 and over $5,000 (s. 380 of Criminal Code)

  • Some frauds are white-collar crime

  • Many different types of fraud - notable fraudulent scams:

    • Identity fraud

    • Sextortion

    • Phishing scams

    • Ransomware

    • Romance scams

    • Ponzi scam

  • Fraud vs. Theft

  • Some theft may also be fraud (e.g., switching price tags in a store)

    Critical difference – use of deception

Other Economically Motivated Crimes

  • Diverse and ever-evolving

    • Smuggling and trafficking

    • Illegal gambling

    • Environmental crimes

    • Non-renewable resource crimes

    • Loan sharking

    • Corruption and bribery

    • Counterfeiting and piracy

    • Money laundering

    • Extortion

  • Many are perpetrated by OCGs

Organized Crime Groups (OCGs)

  • More than 3 persons; exist for commission of serious offences in order to derive material benefit (s.467.1 of Criminal Code)

  • 2,600 crime groups in Canada (2021)

  • 7 types (outlaw motorcycle gangs (OMGs), mafia networks, street gangs and firearm violence, fentanyl-specific networks, methamphetamine networks, money laundering networks, and cyber-enabled networks)

Examples of Organized Crime and Fraud

  • Mass Marketing Fraud Organized crime groups in Canada target Canadians and consumers in other countries, including the United States and Australia. Top mass-marketing fraud schemes include prize/sweepstakes/lottery and gift schemes, Internet auctions, and vacation giveaways. Canadian mass-marketing fraud grosses over $500 million annually. Canadians are also targeted by foreign fraudsters from approximately 105 countries.

  • Mortgage Fraud Organized crime groups operate a number of schemes involving fraudulent mortgage applications that contain false information about the prospective buyer or property through the use of false appraisals and employment records. Organized groups may recruit family members to submit fraudulent mortgage applications to avoid detection.

  • Payment Card Fraud Information is transferred from point-of-sale terminals to vehicles nearby and almost instantly transferred to “card factories” (locations where payment cards are manufactured illegally), which can be located anywhere in the world. This presents a lucrative market for organized crime.

  • Contraband Tobacco Illegal cigarettes are primarily supplied by organized crime groups based in Ontario and Quebec. It is estimated that approximately 22% of the cigarettes smoked in Canada are illegal. Of these, some are legitimately manufactured, smuggled, and illicitly sold through Aboriginal reserves.

  • Intellectual Property Rights Crime Ever been tempted to buy a fake designer bag or watch? Organized crime groups are involved in the illegal import of counterfeit goods into Canada, mainly from China. Sometimes these fakes are difficult to detect and make their way into the legitimate market without the supplier or customer knowing. Counterfeit goods are sold on the Internet and through classified ad sites.

  • Vehicle-Related Crime Primarily in Toronto and Montreal, organized crime groups are involved in the theft of vehicles, changing VIN numbers once obtained. These cars can be exported or disassembled, and the parts resold. Few vehicles are exported internationally. Some organized crime groups are involved in staging collisions for insurance fraud.

  • Identity Theft and Fraud This area is a highly profitable endeavour for organized crime groups with low potential for detection. Not all identity theft and fraud are committed by organized groups, however; some fraud occurs independently. Lower-level criminal groups are usually involved in activities related to identity theft, and mid-to higher-level groups are generally involved in identity fraud.

Sex Work

  • Providing sexual services in exchange for money

  • Canada v. Bedford (2013)

  • Bill C-36

Human Trafficking

  • •Recruitment, transportation, transfer, harbouring or receipt of persons, by means of threat, use of force or other forms of coercion; abduction; fraud; deception; abuse of power; or giving or receiving payments, for the purpose of exploitation (UN trafficking in persons protocol)

  • Elements: act, means, purpose

  • Sections 279.01 - 279.04 of the criminal code:

    • Prohibit human trafficking

    • Prohibit receiving a financial or other benefit for the purpose of trafficking

    • Prohibit destruction of victims’ travel/identity documents

  • Most common reasons for trafficking:

    • Sexual exploitation (50%)

    • Forced labour (38%)

    • Forced criminal activity (6%)

  • 96% of victims/survivors are girls/women

  • 81% of accused traffickers are men/boys

  • 75% of traffickers are OCGS

Drug Trafficking and the Drug Trade

  • The cultivation, manufacture, distribution and sale of substances that are subject to drug prohibition laws (UNODC World Drug Report, 2010)

  • Canada views the drug trade and organized crime as indistinguishable entities

  • 90% of OCGs are actively involved in the drug trade

Critical Stats and Facts

  • •Property crimes: 57% of all crimes reported to police

  • White-collar crime: 55% of Canadian agencies were victims of economic crime

    • 48% indicated that cybercrimes were the most problematic

    • 35% reported internal actors within the organization as the perpetrators

  • Crimes related to the sex trade, after changes in legislation:

    • Women accused of sex trade-related incidents decreased from 2010 to 2019

    • Men accused of sex trade-related incidents increased from 2010 to 2019

  • •Human Trafficking:

    • 2,977 incidents of human trafficking between 2010 and 2020

    • Most trafficking is domestic

    • Human trafficking incidents often involve additional criminal violations

  • Organized crime in Canada:

    • $40 billion is laundered annually

    • Opioid use alone costs around $6 billion annually in Canada (lost productivity, related health care costs, criminal justice involvement)

    • 46% of firearm-related homicides are gang-related

Explaining Fraud and White-Collar Crime

  • Fraud Triangle (opportunity to commit fraud, pressure to commit fraud, rationalization of fraud)

  • Fraud Diamond (opportunity, pressure/incentive, rationalization, capability (traits and abilities to commit fraud))

Explaining Human Trafficking and The Sex Trade

  • •Human traffickers take advantage of pre-existing vulnerabilities

  • Indigenous girls and women are at high risk

  • Traffickers maintain control (blackmail, psychological control, chemical dependency, grooming)

  • Trauma bonding

  • Sex trade: systematic evidence into the reasons for entering, staying in (or returning to) the sex trade voluntarily is scarce

  • Anecdotal evidence suggests opportunity and economic necessary play key roles

Explaining Organized Crime Groups

  • •Interaction theory: breakdown of positive bonds with society leads to delinquent behaviour and seeking similar peers

  • Strain-based theories: OCGs use illegal means to obtain conventional success (wealth) due to blocked access to legal means

  • Since OCGs are diverse and dynamic, over-arching theoretical approaches are a starting point – also need to understand nuanced differences within specific OGCs

Factors Associated with Economically Motivated Crime

  • •Procriminal attitudes, beliefs and values and criminal associates

  • Substance use and misuse

  • Antisocial personality pattern

  • Family/marital problems

  • Poor school/employment achievement

Protective Factors

  • •Little known about protective factors and specific types of economically motivated crimes

  • Wormith and Truswell (2022):

    • Protective factors are flip side of risk factors

    • Interventions should aim to transform risk factors into protective factors (e.g., Replace criminal associates with prosocial associates)

Assessment Approaches

  • •No specialized (and well-known) risk assessment tools designed specifically for individuals who have perpetrated economic crime

  • General risk assessment measures designed to predict general criminal conduct are used

    • Level of Service/Case Management Inventory

    • Hare Revised Psychopathy Checklist (PCL-R) (sex trafficking, fraud)

  • Specific tools designed for OCGs generally do not exist

    • There are measures designed to assess the degree of organized crime activity at an aggregate country level

    • Global Organized Crime Index (2021)

Legislative, Enforcement, and Global Initiatives

  • •Canadian Anti-Fraud Centre (CAFC)

  • Financial Action Task Force (FATF)

  • Proceeds of Crime (Money Laundering) and Terrorist Financing Act

  • Royal Canadian Mounted Police (RCMP)

Individualized Treatment Approaches

  • •Sex trade harm reduction and safety interventions

  • Human trafficking exit and post-exit programs

  • Organized crime group interventions