CONTROLLING CORPORATE CRIME:

AN ANALYSIS OF DETERRENCE VERSUS COMPLIANCE

*Katherine

Coleman Northwestern University

Introduction

Clyde Johnson, a technical support worker, devoted his career and life savings to Enron Corp. Johnson sacrificed for years in order to contribute to his 401(k) retirement plan and increase his earnings in the company. In 2001, Enron declared bankruptcy Johnson and 31,000 other Enron employees watched helplessly as the company crumbled and along with nearly all of their savings. Johnson spent four years after Enrons bankruptcy trying to find other employment in Houston, Texas. Despite his efforts, the U.S. Air Force veteran and single parent of two had no other choice but to file for bankruptcy in 20051. Johnsons story is just one example of the type of crime that plagues thousands of Americans each year. White collar crime, or a crime committed by a person of high social status within their profession2, is now more likely to affect ordinary citizens that other conventional types of crime such as theft or murder. A survey conducted by the National White Collar Crime Center (2005) found that 46.5 percent of all U.S. households and 36 percent of individuals reported experiencing at least one form of these victimizations within the previous year.

Katherine Coleman is a senior at Northwestern University. This piece, originally submitted as her undergaradute thesis, won Best Thesis Legal Studies Department 2008. 1 Palmeri, Christopher, and Peter Coy. "I Survived Enron." Buisness Week (2006). <http://www.businessweek.com/magazine/content/06_06/b3970081.htm>. 2 Sutherland, Edwin H. "White Collar Criminality." American Sociological Review 5 (1940): 1-12.

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Additionally, 62.5 percent of individuals reported having been victims of white collar crime at least once in their lifetimes3. Despite these statistics, white collar crime is still understudied relative to street crime. Most research in the field of criminology focuses on the origins prevention of street crime, namely murder, burglary, and sexual violence. White collar crimes, therefore, are less likely to prompt calls for tougher policing and punishment4. Moreover, the studies that investigate whitecollar crime use theories of compliance or theories deterrence to explain criminal motivations, yet they do not use these theories together, which would be much more effective. Accordingly, I argue that one type of white collar crime, corporate crime, can be better understood and prevented by combining the insights from both deterrence and compliance theories. I believe that regulatory agencies, generally thought to encourage compliance, may also be effective deterrents of corporate crime. This paper proceeds as follows. First, the literature review examines the history of corporate white collar crime in the U.S. in the last thirty years and discusses existing literature in the filed of sociology and criminology relating to the two most prominent theories of prevention: deterrence theory and compliance theory. The study then tests these theories using accounts of recent cases of corporate crime in America, highlighting the inefficiencies of current scholarly literature to fully address corporate crime prevention. These case studies are supplemented by interviews with criminal attorneys who are or have been actively involved in prosecuting and defending corporate criminals. Finally, the paper concludes by highlighting new legislation regarding corporate crime and offers suggestions for improving enforcement mechanisms in order to reduce corporate crime in the future.
3

The 2005 National Public Survey on White Collar Crime. The National White Collar Crime Center. 2006. <http://www.nw3c.org/research/visitor_form_val.cfm>. 4 Hazel, Croall. Understanding White Collar Crime. Buckingham: Open UP, 2001. 4-5.

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Corporate Crime

As characterized by scholars of criminal behavior, corporate crime is a type of white collar crime5. In 1933 Sociologist Edwin Sutherland coined the term white collar crime in order to help explain crime commonly found among individuals associated with business or of an upper socio-economic class6. Sutherland defined white collar crime as a crime committed by a person of respectability and high social status in the course of his occupation.7 His study focused mainly on crimes within the business profession, and he made several observations particularly with regard to the behavior of corporate offenders. Sutherland noted that corporate criminals have a high rate of recidivism, their illegal behavior is widespread, and those individuals who violate the law do not always loose status among their associates8. Following Sutherlands observations, sociologists have attempted to define corporate crime more clearly. According to sociologist David Friedrichs (1996), corporate crimes are illegal and harmful acts committed by officers and employees of corporations to promote corporate and personal interests.9 Similarly, sociologist David Simon (2001) refers to corporate crime as acts of economic domination.10 According to most definitions, corporate crimes victimize the general public, consumers, a corporations employees, or a corporations

Simpson, Sally. Corporate Crime, Law, and Social Control. Cambridge: Cambridge UP, 2002. 7-8 Prior to this, scholars and practitioners had made little distinction between the types of crimes committed on the streets and those committed by powerful individuals in the corporate boardroom. Early criminologists were especially concerned with the crimes of lower-class individuals and invariably ignored the behavior of those in the middle and upper classes; Freidrichs, David. 1996. Trusted Criminals: White Collar Crime in Contemporary Society. (New York: Wadsworth Publishing Company), 3. 7 Sutherland, Edwin H. "White Collar Criminality." American Sociological Review 5 (1940): 1. 8 Simon, David. Elite Deviance. 7th ed. Boston: : Allyn and Bacon, 2002. 116. 9 Freidrichs, David. Trusted Criminals: White Collar Crime in Contemporary Society. New York: Wadsworth Company, 1996. 40. 10 Simon, David. Elite Deviance. 7th ed. Boston: : Allyn and Bacon, 2002. 36.
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competitors. Offenses often include acts like corporate stealing, corruption, or fraud and have broad domestic or, in some cases, international implications11. Many types of corporate crime may not have violent consequences, but the price paid by its victims is catastrophic nevertheless. Corporate crimes generally impact a greater number of people. Fraud and anti-trust violations can impact on an entire organization, the economy, or possibly society as a whole. In 1991, corporate crime cost the American consumer $260.06 billion, six thousand times less than the amount taken in all bank robberies that same year and forty times more than the amount taken in all street crime. 12 Employees and consumers are forced to foot the costs of these activities through job loss and inflation13. These statistics illustrate the seriousness of corporate crime and urgency with which it should be studied and prevented.

Literature Review

There are two theories that attempt to explain how to prevent corporate white collar crime: deterrence theory and compliance theory. Theories of deterrence focus on preventing individuals from committing crimes based on a fear of the consequences.14 Compliance theories, on the other hand, concentrate on the power of regulatory agencies to encourage individuals to comply with the law before crimes are committed.15 The biggest difference in these theories is the way that laws are enforced on corporate criminals. Deterrence theories rely on criminal prosecutions to prevent corporate crime after the crime has already been committed, where as
Ibid, 115. Ibid, 91. 13 Simon, David. Elite Deviance. 7th ed. Boston: : Allyn and Bacon, 2002. 91. 14 Piliavin, Irving, Rosemary Gartner, and Craig Thornton. "Crime, Deterrence, and Rational Choice." American Sociological Review 51 (1986): 101-102. 15 Hawkins, Keith. Environment and Enforcement: Regulation and the Social Definition of Pollution. Oxford: Clarendon, 1984. 3-4.
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compliance theories focus regulatory agencies that encourage compliance with the law before the crime takes place. This section reviews the most prominent literature regarding deterrence and compliance, and how scholars presently use them to address corporate crime prevention. In order to fully understand the arguments for and against these theories, it is important to first identify the motivations and organizational settings that underlie corporate crime. First, corporate crime typically occurs in large, complex business organizations. Corporations operate based on a complex hierarchy of positions, ranging from a board of directors, executives, corporate divisions, and individual employees. This structure facilitates corporate crime by making it difficult to detect and hold someone liable.16 Second, corporate executives are thrust into a world where attaining higher profits is the chief concern of the profession. As leaders of their companies, executives have a responsibility to act in the interest of their shareholders and seek to maximize profits at all costs17. Theories of Anomie and Strain explained by sociologists like Emile Durkheim, help explain the motives of corporate criminals. According to Durkheim, individuals perceive an unlimited amount of success that they can achieve, emphasizing monetary success and individual prestige and crime is motivated by the desire for more wealth and power.18 The likelihood preventing corporate crime is greatest when the setting and motivations of corporate criminals are taken into consideration. With this in mind, it is now possible to address the theories of deterrence and compliance.

16 17

Simon, David. Elite Deviance. 7th ed. Boston: : Allyn and Bacon, 2002. 38. Pearce, Frank, and Tombs. "Law, and Class: Contextualizing the Regulation of Corporate Crime." Social and Legal Studies 6 (1997). 18 Stephen, Marks. "Durkheim's Theory of Anomie." The American Journal of Sociology 80 (1974): 330-331.

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Deterrence Theory

Deterrence theory argues that individuals act in accordance with their self-interest and obey the law because they fear the penalties of criminal behavior. More often than not, they choose not commit crimes because they have seen harsh punishments imposed on others. Current research on deterrence emphasizes the role of the criminal justice system enforcing and punishing offenders. The fear of detection, conviction, and punishment resulting from prosecution forms the core of deterrence theory.19 Therefore, individuals decide whether or not to commit crimes based by weighing the possibility of punishment from criminal prosecution against their ability to profit from illegal activity.20 Although deterrence is one of the central objectives of the criminal justice system, there is little consensus as to whether or not prosecutions effectively deter corporate crime. Sociologist John Braithwaite (1999) argues that strong criminal prosecution is an effective way to deter corporate crime. Braithwaite suggests that corporate executives can be deterred from crime more easily than other criminals because they fear falling within the profession. 21 In other words, if corporate offenders are caught and prosecuted, they risk of losing their jobs and social status within the profession, often the very things they sought to increase through their behavior. Even worse, corporate criminals may risk going to prison.22 The criminal justice system currently plays a large role enforcing corporate crime laws; however, some sociologists have noted significant problems with relying solely on prosecution as a means of deterrence. Sociologist David Simon (2001) argues that prosecutors are limited in
19 20

Simpson, Sally. Corporate Crime, Law, and Social Control. Cambridge: Cambridge UP, 2002. 9. Freidrichs, David. Trusted Criminals: White Collar Crime in Contemporary Society. New York: Wadsworth Company, 1996. 342. 21 Braithwaite, John. "Restorative Justice: Assessing Optimistic and Pessimistic Accounts." Crime and Justice 25 (1999). 22 Hazel, Croall. Understanding White Collar Crime. Buckingham: Open UP, 2001. 133.

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the number of cases they are able to pursue and typically choose those with the most public appeal. Simon notes that until recent scandals involving Enron and Martha Stewart, the public had very little knowledge about the laws that govern corporate activity in the United States, arguing that the media has done little to expose the vast number of corporate crimes that occur each year.23 Public pressure, and consequently political pressure, to prosecute criminals is typically less intense than in cases of violent crime. In order for prosecutions to serve as a deterrent, corporate criminals must be pursued as vigorously as other types of crime.24 Some scholars of criminal behavior have responded to these criticisms by arguing for stronger penalties for corporate criminals. A majority of corporate crime cases currently result in large monetary sanctions for offenders. These scholars believe that criminal prosecution is an effective method of deterring crime, but only if corporate criminals are given more severe penalties like longer prison sentences in harsh prison conditions. By increasing penalties, corporate executives would be deterred from crime due to an increased fear of the consequences of their actions.25

Compliance Theory

The second theory of crime prevention, compliance theory, states that regulatory bodies should encourage compliance with the law rather than rely on criminal prosecution to prevent crime. The theory suggests that by making prosecution a last resort, corporate executives would gain greater respect for the law and trust in the system, thereby making it less likely that they
Sim Simon, David. Elite Deviance. 7th ed. Boston: : Allyn and Bacon, 2002. 74-75. Freidrichs, David. Trusted Criminals: White Collar Crime in Contemporary Society. New York: Wadsworth Company, 1996. 272. 25 Swenson, Winthrop, and Ilene Nagal. "The Federal Sentencing Guidelines for Corporations: Their Development, Theoretical Underpinning, and Some Thoughts About Their Future." Washington University Law Quarterly 71 (1993): 224-225.
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would commit crimes.26 Enforcement by regulatory agencies is typically employed through the use of sanctions.27 Scholars of criminal behavior have argued in favor of regulatory agencies punishing white collar criminals as far back as Edwin Sutherland. 28 Sociologist David Freidrichs (1996) contends that although the regulatory agencies have a much lower profile than federal prosecutors, they their power to enforce is the law is more or equally effective because they are less likely to invoke adversarial confrontations with corporations.29 Such proponents believe that regulation is a completely necessary in a complex and competitive society. They argue that independent forces should exist in order to protect the public from harmful business activities of which they may not have knowledge.30 Corporations often fail to recognize that they actually benefit from increased regulation because without it they would face more civil suits from workers or consumers, and possibly avoid the possibility of criminal prosecution.31 Other sociologists contend that regulatory agencies are less effective than criminal prosecutions due to the politics associated with regulatory bodies and the low number of sanctions imposed each year. The heads of regulatory agencies in the United States are politically appointed and the argument can be made that corporations and elite offenders use their power and resources in order to influence the government officials in charge of appointing

26 Hawkins, Keith. Environment and Enforcement: Regulation and the Social Definition of Pollution. Oxford: Clarendon, 1984. 3-4. 27 Freidrichs, David. Trusted Criminals: White Collar Crime in Contemporary Society. New York: Wadsworth Company, 1996. 278. 28 Sutherland, Edwin H. "White Collar Criminality." American Sociological Review 5 (1940): 1-12. 29 Freidrichs, David. Trusted Criminals: White Collar Crime in Contemporary Society. New York: Wadsworth Company, 1996. 279. 30 Tolchin, Susan, and Martin Tolchin. Dismantling America. Boson: Houghton Mifflin, 1983. 8-10. 31 Freidrichs, David. Trusted Criminals: White Collar Crime in Contemporary Society. New York: Wadsworth Company, 1996. 281.

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these figures.32 The use of negotiated settlements may also provide an avenue for wealthy offenders to buy their way out of public prosecution and removes the social stigma that a trial would carry in the media.33

Role of Theory

There are a number of factors to consider when attempting analyzing corporate white collar crime. Sociologists have sought to explain this particular type of criminal behavior by analyzing the motives and decision-making processes of offender, the organizational structures in which they serve, as well as means of enforcement and prevention. However, current literature falls short of fully explaining how to best prevent corporate crime. The existing literature on corporate white collar crime focuses almost exclusively on criminal prosecution as a means of deterrence and fails to consider that regulatory agencies may also serve to deter potential corporate criminals. Therefore, theories that seek to explain the behavior of regulatory agencies should not only analyze their ability to encourage compliance with the law but also consider the power of regulatory agencies to deter crime. This study explains why deterrence theory is an effective means of preventing white crime. Given the strengths and weaknesses of current theories relating to deterrence and compliance, I argue that a combination of both theories is the best way to explain how to prevent corporate white collar crime. First, scholars of criminal behavior generally agree that corporate criminals are rational actors. Based on the rational-actor model, corporate criminals do not commit crimes based on need or vengeance but rather to gain power and profit either for themselves or for their

32 33

Hazel, Croall. Understanding White Collar Crime. Buckingham: Open UP, 2001. 58. Ibid., 113.

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corporation.34 Since white-collar offenders are not necessarily looking to accumulate wealth because the need it to survive, they are able to make rational decisions in determining whether or not to commit a crime based on a cost-benefit analysis.35 Consequently, offenders can be deterred from committing crime in a way different from the individuals who commit more conventional crimes like robbery or murder. Unlike criminals who often commit crimes due economic despair or passionate desires,36 the actual punishment might be a stronger deterrent for the white-collar crimes. White-collar criminals might be more easily persuaded that the costs, or punishments, associated with committing illegal activities outweigh any benefits they might receive. Corporate criminals are typically elite members of society, and thus have more at stake when they commit illegal activity.37 If convicted of wrongdoing, offenders may be forced to sacrifice their material assets or their reputation within the profession, the very things that they are attempting to increase through their crimes. These types of considerations could be better transmitted to potential corporate offenders via regulatory agencies that are built to deal with more rationally based policies. Furthermore, business professionals probably have more contact and perhaps even trust in regulatory agencies than in law enforcement officers. Existing literature has failed to recognize the advantages of regulatory agencies in deterring corporate crime. Studies of deterrence theory focus solely on the ability of criminal prosecutors to prevent corporate white collar crime. Yet, research shows that prosecution is an ineffective means of preventing corporate crime because corporate crimes continue to increase.38
34 35

Simpson, Sally. Corporate Crime, Law, and Social Control. Cambridge: Cambridge UP, 2002. 9-10. Vaughn, Diane. "Rational Choice, Situated Actor, and the Social Control of Organizations." Law and Society Review 32 (1998): 23-24. 36 Sutherland, Edwin H. "White Collar Criminality." American Sociological Review 5 (1940): 1-12. 37 Hazel, Croall. Understanding White Collar Crime. Buckingham: Open UP, 2001. 51-56. 38 According to the FBI statistics, the number of corporate fraud cases pending in federal court increased from 291 cases in 2002 to 490 cases in 2006. Likewise, the number of cases involving securities and commodities fraud

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This may be due to the lenience that is shown to corporate criminals in the criminal justice system. Less established, more illegitimate organizations that are seen as less likely to comply with the law are more likely to be prosecuted than prominent and well-established corporations, and only about two percent of successful corporate criminal prosecutions result in imprisonment39. Deterrence theory assumes potential criminals possess knowledge of the punishments that accompany specific crimes;40 however, this may not always be the case. Criminal prosecutions may result in punishments that vary significantly from case to case, including those in which the nature of the crimes were similar to one another.41 In order for deterrence theory to be effective, criminals must know the consequences associated with specific crimes. If there is uncertainty as to the punishments they could receive if they are caught, potential offenders may be more inclined to engage in illegal activity. Until now, scholars have emphasized the ability of the regulatory agencies to encourage compliance with the law; however, regulatory agencies may also be able deter corporate crime where criminals prosecutions cannot. Regulatory agencies could be effective at deterring white collar crime in two ways: (1) the agencies are able to successfully monitor, and (2) the potential offenders might be able to better understand regulation than the criminal procedures. By involving regulatory agencies in the day to day operations of the corporation, they could serve a watchdog function by closely monitoring the activities of the organization on a regular basis.

increased from 931 to 1,165 in the same four years; Federal Bureau of Investigation. Financial Crimes Report to the Public. 2006. http://www.fbi.gov/publications/financial/fcs_report2006/financial_crime_2006.htm#CorporateFraud 39 Hazel, Croall. Understanding White Collar Crime. Buckingham: Open UP, 2001. 58. 40 Simpson, Sally. Corporate Crime, Law, and Social Control. Cambridge: Cambridge UP, 2002. 8-10. 41 From 1984 to 1990, criminal fines for organizations resulting from prosecutions in federal court ranged from fines of up to $10,000 to over $100,000 for cases involving similar anti-trust violations; Cohen, Mark. Corporate Crime and Punishment: An Update on Sentencing Practice in the Federal Courts, 1988-1990. Boston University Law Review. (Vol. 71: 247), 254-255.

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Regulatory agencies have a better understanding of corporations and business practices than criminal prosecutors who work outside of the organization. Prosecutors generally only get involved in criminal cases only after the crime has been committed and begin to mount a case with limited knowledge of the specific activities of the organization or the actors involved. Regulators would be visible entities within the organization with inside knowledge of its business practices, increasing the likelihood that illegal activity by corporate executives would be detected. Regulatory agencies can also be effective at deterring corporate crime because the prosecutors alone do not have the time and resources necessary to successfully prosecute all instances of corporate wrongdoing. Corporate executives have the financial resources hire the best lawyers and mount a sophisticated legal defense. In the United States, large companies and wealthy individuals can use their resources to contest prosecution, negotiate settlements, and appeal convictions. This raises the cost of criminal prosecution because prosecutors must apply more resources in order to combat a well organized defense teams. It is more difficult to gather sufficient evidence for prosecution in complex cases, particularly when there are a number of individuals involved. This benefits larger, more prestigious organizations that are more difficult to navigate and who can organize skilled professionals in their defense. For these reasons, some corporate criminals go unpunished.42 Increasing the penalties associated with corporate crimes would do little to deter corporate criminals because of the low rate of successful prosecutions. In sum, existing literature regarding white collar crime has failed to provide a sufficient explanation for preventing corporate crime. It is clear that deterrence is the most effective means of preventing corporate crime because corporate criminals are rational actors. However, studies of deterrence have focused exclusively on criminal prosecutions as a means preventing corporate
42

Simon, David. Elite Deviance. 7th ed. Boston: : Allyn and Bacon, 2002. 40.

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criminals. Research has proven that criminal prosecutions are often ineffective at preventing white collar crime to the difficulties associated with prosecution and inconsistencies in punishment. In contrast, compliance theory has limited its analysis of regulatory agencies to only their ability to encourage compliance with the law. Sociologists have failed to consider that regulatory agencies may also serve to deter corporate crime because of their ability to detect illegal activity and assist in prosecution. Neither deterrence nor compliance theory alone is adequate enough to explain how to best prevent corporate crime. Instead, we can better understand how to prevent corporate white collar crime by considering not only compliance, but also the deterrent effect of regulatory agencies.

Methodology

In this paper, I examine the role of criminal prosecution and regulatory intervention in four case studies of prominent corporate crimes in the United States in the past twenty years: Revco Medicaid Fraud, Enron, Arthur Andersen, and the Great Chat Room Conspiracy. First, I examine the current legal structure surrounding corporate crime and analyzed the effectiveness of the regulatory agencies in detecting and enforcing criminal behavior in these cases by point out any possible strengths and/or weakness in their oversight. These cases were chosen because of the key role that regulators played in each case. I collected information on these cases from both primary and secondary sources. I have relied on academic books, news articles, court documents, and other case studies conducted by prominent sociologists in order to gain a complete understanding of the facts surrounding these cases. Second, I supplement my analysis of these case studies with interviews of prosecution and defense attorney involved in corporate white collar crime litigation. These interviews provided insight into the motives and of corporate

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criminals and how they are prosecuted and punished. Finally, the data from both my analysis of cases studies of corporate crime and interviews with criminal attorneys have been analyzed in order to test my theory that regulatory agencies are effective at deterring criminal behavior.

Results and Analysis

A) Revco Medicaid Fraud

Sociologist Diane Vaughn (1983) conducted a case study of the corporate wrongdoing of Revco Co., a large drugstore chain in Ohio. Although Vaughns case study is now nearly twenty five years old, little has changed in the way that corporate crime laws are enforced and prosecuted. The insights Vaughn makes about corporate white collar crime are still relevant and help explain how corporate crime can be prevented today. From 1973 to 1975, Revco began a computer generated double billing scheme that cost the state of Ohio over a half a million dollars in Medicaid funds. The company created false Medicare claims by transposing numbers on claims that had already been approved by the welfare department. A tip from one of the companys pharmacists began a year long investigation into Revcos activities by various government and law enforcement agencies throughout the state, including the Ohio Department of Public Welfare, the Bureau of Surveillance and Review (SUR), and the Economic Crime Unit of the Franklin County Prosecutors Office. The prosecutors office worked with SUR in order to piece together evidence against the drug store chain and led to a prosecution of the companys vice-president and program manager who oversaw the scheme.43

43 Vaughn, Diane. Controlling Unlawful Organizational Behavior: Social Structure and Corporate Misconduct. Chicago: University of Chicago P, 1983. 2-8.

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In her analysis of the Revco case, Vaughn noted the inability of prosecutors to access financial documents and information. The company claimed that they could not trust the prosecutors collecting the information out of fear that company secrets would somehow be leaked to competitors. Not only were the executives unwilling to provide information, but individuals throughout the organization were also did not want to be the persons responsible for providing access to these outside bodies. In contrast, the Ohio Department of Welfare entered the investigation at the request of Revco executives who were more willing to discuss their activity with government agencies. 44 Throughout the course of the investigation, Revco executives claimed they had been victimized because of perceived inequities the states Medicaid reimbursement policies toward drug stores. In the end, company and its executives agreed to a plea bargain. Revco paid back the funds that had been withheld from the government and the executives pled guilty to first degree misdemeanor charges.45 Deterrence depends on successful investigations and prosecutions of corporate criminals.46 The Revco case illustrates the relationship between companies and government organizations and the significance of this relationship in criminal investigations. These bodies have already cultivated a relationship between the organization and its employees, thus employees are more willing to work with people whom they trust and believe will treat them fairly47. In this particular case, Revco executives did not feel comfortable sharing information with prosecutors, though did so with government agencies. This speaks to the nature of criminals prosecutors as outside agents who descend upon a corporation only after a crime had been

44 45

Ibid., 113. Ibid., 10-12. 46 Simpson, Sally. Corporate Crime, Law, and Social Control. Cambridge: Cambridge UP, 2002. 9. 47 Hazel, Croall. Understanding White Collar Crime. Buckingham: Open UP, 2001. 45-47.

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committed. Prosecutors were not used to working with the company, making executives and employees less cooperative with criminal investigations compared to government bodies and regulators. In order to deter corporate crime, offenders must not only be successfully prosecuted, but also punished to the fullest extent so as to set an example for other potential offenders.48 In the Revco case, prosecutors filed criminal charges against the company and its executives who, with the help of a seasoned legal defense team, plead guilty to only misdemeanor charges.49 Whereas regulatory agencies, like the Ohio Department of Public Welfare, could have threatened Revcos status as a Medicaid claimant or prohibited the companys executives from engaging in business activity that involved Medicaid transactions, Revco executives faced only of fines and minimal prison sentences.50 Revco paid fines equal to what they owed the government and the executives kept their jobs with the corporation, and the prosecution and punishment the company set a poor example for others within the profession. Vaughns case study of the Revco drug chain demonstrates the need for greater regulatory presence in the investigation and punishment of corporate crime. Including government agencies in both of these processes could better deter corporate crime by ensuring that cases are properly investigated and that all possible penalties are considered. Although the Revco case took place in the 1970s, these problems are still apparent in corporate crime cases nearly thirty years later.

B) Enron

Ibid., 60. Vaughn, Diane. Controlling Unlawful Organizational Behavior: Social Structure and Corporate Misconduct. Chicago: University of Chicago P, 1983. 6-7. 50 Ibid., 10.
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In 2000, Enron sat at the forefront of the business world. With over 21,000 employees, offices and forty countries, and soaring stock prices, the momentum of the energy company seemed unstoppable. Just one year later, however, the companys top executives were charged on multiple counts of fraud and investors once lucrative shareholdings were worth mere pennies.51 The Enron case is one of the most elaborate and high-profile cases of corporate crime in American history, and exemplifies the need for tougher regulation to better prevent corporate crime. The same day that Jeffery Skilling resigned as Enron CEO, then Chairman Kenneth Lay sent a company wide email reassuring employees and investors of the companys robust business performance. I want to assure you that I have never felt more certain about the prospects for the company, said Skilling. Our performance has never been stronger.52 Despite these remarks, the company faced severe financial troubles. For months, Enron executives, including both Lay and Skilling, lied about the companys profits and debts in an effort to keep stock prices high, a clear violation of securities law.53 Enron executives sold nearly all of their stocks at optimal prices, all while encouraging employees to invest more of their retirement savings in they company. Before Enron went public with its financial troubles, executives had already managed to get rid of their investments in the company.54 On October 31, 2001, the Securities and Exchange Commissions (SEC) launched a formal investigation into Enrons activities. The company immediately revised its financial statements, revealing $586 million fewer profits and $690 million in debt accumulated over four

Fusaro, Peter C. and Ross Miller. 2002. What Went Wrong at Enron. (Hoboken, NJ: John Wiley & Sons, Inc.), 2. Ibid., 201. 53 Cathy Booth Thomas. 2006. The Enron Effect. Time Magazine, May 28. http://www.time.com/time/magazine/article/0,9171,1198917,00.html?iid=sphere-inline-bottom 54 Pontell, Henry, Stephen Rosoff, and Robert Tillman. 2007. Profit Without Honor: White Collar Crime and the Looting of America. 4th Edition. (Upper Saddle River, NJ: Pearson Prentice Hall), 300-302.
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years.55 As the SEC brought more evidence of the companys wrongdoing to light, Enron seemed doomed to failure. Investment accounts were frozen and Enron employees watched their 401(k) retirement plans disintegrate along with the company. In December, Enron became the largest U.S. company ever to file for bankruptcy.56 Enron demonstrates the difficulty prosecutors experience investigating and collecting evidence in complicated cases of corporate fraud. Sam Buell, a member of the Enron Task Force designed to investigate allegations against the company, pointed out the difficulty prosecutors faced assembling their case. He noted that nearly all employees resisted cooperating with prosecutors, stating nobody wanted to be a witness.57 It took two years before prosecutors had enough serious momentum to indict Skilling, relying on those like Enron CFO Andrew Fastow to provide evidence against the companys other executives in exchange for a plea deal.58 Like most corporate criminals, Enron executives had intimate knowledge of their business and the profession, far beyond that of the prosecutors. Prosecutors were forced to pick and choose which executives they wanted to pursue most vigorously and offered lesser sentences in exchange for evidence against them59. In doing so, this limits power of criminal prosecutors to effectively punish all of the actors involved in a particular case of corporate crime. In contrast, regulatory agencies, namely the SEC, played a key role in detecting and investigating wrongdoing in Enron. As the primary overseer of the U.S. Securities Markets, the SEC is designed to protect investors, maintain fair, orderly, and efficient markets, and facilitate

Ibid. Fusaro, Peter C. and Ross Miller. 2002. What Went Wrong at Enron. Hoboken, NJ: John Wiley & Sons, Inc), 4. 57 Cathy Booth Thomas. 2006. The Enron Effect. Time Magazine, May 28. http://www.time.com/time/magazine/article/0,9171,1198917,00.html?iid=sphere-inline-bottom Cite Website: http://www.time.com/time/magazine/article/0,9171,1198917,00.html?iid=sphere-inline-bottom 58 Ibid. 59 Pontell, Henry, Stephen Rosoff, and Robert Tillman. 2007. Profit Without Honor: White Collar Crime and the Looting of America. 4th Edition. (Upper Saddle River, NJ: Pearson Prentice Hall), 301.
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capital formation.60 As such, unlike prosecutors, the SEC has the knowledge and resources to detect and collect evidence in more complicated cases. Regulators understand the types of activities associated with corporate crimes, and can devote a larger portion of their efforts to combating specific cases. As the Enron case illustrates, once the SEC became involved, executives immediately changed their financial statements to accurately reflect the financial status of the company. The presence of government regulators forced the company to come clean with their financial wrongdoing. Strengthening the power of regulatory bodies might also have helped prevent the scandal in the first place by demanding greater transparency in the companys financial statements. The Enron case is one of the greatest examples of the need for stronger regulation of corporate activities. Executives easily hid their dubious accounting practices from investors and employees, while at the same time saving their own financial holdings in the company. Only after regulators stepped intervened did executive come forward with evidence of their financial irregularities. Additionally, although prosecutors zealously pursued high-profile executives like Lay and Skilling, they did so only by offering lesser sentences to other executives whose actions equally contributed to the companys demise. This case demonstrates the need for regulatory agencies in the day to day operations of the organization in order to encourage more transparency and compliance with the law and prevent executives from engaging in illegal activity would be less easily hidden. It also speaks to the role that regulatory agencies play in investigating allegations of wrongdoing. The weaknesses of prosecution in the Enron demonstrate how the power of regulatory agencies could be increased to deter corporate crime in the future.

U.S. Securities and Exchange Commission. The Investor's Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation. http://www.sec.gov/about/whatwedo.shtml

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C) Arthur Andersen

Just four days before Enron publicly disclosed its losses and the scandal that surrounded the organization, Arthur Andersen, Enrons auditor and one of the worlds top accounting firms, instructed its employees to destroy nearly all documents related to recent audits of the Enron Corporation. Dave Duncan, a partner at Andersens Houston office, sent out an urgent email strongly encouraging employees to comply with these orders, going as far as to state that the task was so important that Andersen employees should work overtime to get it done. At the time, federal prosecutors were beginning to mount their case against the Enron Corporation and Andersen was likely to be investigated itself as the primary auditor of the companys financial activities.61 Federal prosecutors began an investigation into the activities of Arthur Andersen in connection with Enron. However, by the time that they began to search for documentation of Enrons audits, most of the paperwork no longer existed. By March, Arthur Andersen had been indicted on charges of obstruction of justice. During the course of the trial, prosecutors disclosed that Andersens involvement with Enron was not the first instance of corporate wrongdoing. Just one year earlier, Arthur Andersen agreed to pay a $7 million settlement based on charges that it filed misleading audits of one of its other clients, Waste Management, Inc62. In June of 2002, Andersen was convicted on charges of obstruction of justice, but after three years of appeals by

Pontell, Henry, Stephen Rosoff, and Robert Tillman. 2007. Profit Without Honor: White Collar Crime and the Looting of America. 4th Edition. (Upper Saddle River, NJ: Pearson Prentice Hall), 311.
62 Pontell, Henry, Stephen Rosoff, and Robert Tillman. 2007. Profit Without Honor: White Collar Crime and the Looting of America. 4th Edition. (Upper Saddle River, NJ: Pearson Prentice Hall), 312..

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Andersens defense attorney, the U.S. Supreme Court overturned the conviction on the ground that the jury did not convey the requisite consciousness of wrongdoing.63 The case against Arthur Andersen illustrates problems inherent in the prosecution of corporate criminals. As previously states, the 2002 conviction of Andersen was not the first time that the company had ever violated the law. Andersen was a repeat offender, who after settling with the government chose to commit crimes just one year later. In both cases, Andersen was prosecuted, not the executives in the agency who decided to commit the activities. Based on their previous convictions, Andersen executives were aware that any illegal behavior they chose to engage in would be the responsibility of the organization rather than their own. Further, Andersens previous conviction resulted in a minimal monetary fine compared to the companys substantial early earnings. Had the Andersen executives believed that they could be held personally liable, then this may have had a deterrent effect and causes them to think twice before committing future violations. A regulatory agency might have more effectively monitored Andersens activities and prevented employees at Arthur Andersen from destroying documents essential to the prosecution against Enron. In addition, regulators could have more effectively punished the company by imposing significant sanction. Instead, Andersen spent thousands of dollars in legal defense fees in order to overturn their conviction.64 Richard Webb, one of the most recognized attorneys in the field of corporate law commented on the ineffectiveness of criminal prosecution in the Arthur Andersen case. Webb remarked, I'm not quite sure what the criminal justice system accomplished by indicting and convicting Arthur AndersenThere would have been other ways to handle that case with appropriate administrative and civil penalties that would have punished the company, but
Ibid., 312-313. Pontell, Henry, Stephen Rosoff, and Robert Tillman. 2007. Profit Without Honor: White Collar Crime and the Looting of America. 4th Edition. (Upper Saddle River, NJ: Pearson Prentice Hall), 312-313.
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not caused the destruction of a major firm because of the wrongdoing of a few people. I personally question the wisdom of that strategy.65 Today, Arthur Andersen, a repeat corporate offender, still remains virtually unaccountable for its actions.

D) The Great Chat Room Conspiracy

Changes in technology and communication have made corporate crime more complicated and widespread than ever before. In 2000, the internet played a key role in the largest criminal insider trading case in American history66. On March 14, 200 the Securities and Exchange Commission (SEC) filed charges against nineteen individuals accused of trading insider information about U.S. and Canadian companies in an internet chat room. The case centered on John Freeman, a part time computer graphics worker at two of the nations biggest investment banking companies, Goldman Sachs and Credit Suisse First Boston. During the course of his work, he stole documents before they could be shredded and rummaged through the desks of employees after hours to uncover confidential information about mergers and acquisitions. In mid-1997, Freeman met John Cooper, a Kentucky insurance agent, and Benton Erskine, vice-president of a West Virginia laser printing company, in an internet chat room devoted to the performance of a particular stock in which all three of the men had invested in and lost money.67 Freeman sold information about stock prices, mergers, and acquisitions to

Corporate Crime Reporter. WEBB, KEKER, WEINGARTEN, SULLIVAN, BENNETT, GREEN ARE TOP WHITE COLLAR CRIMINAL DEFENSE ATTORNEYS, SURVEY SHOWS. Press Release, May 27, 2003. http://www.corporatecrimereporter.com/05_27_03_pressrelease.html 66 The Great Chat Room case is considered the largest case of criminal insider trading based on the number of people who allegedly made illegal trades and the number of business deals for which inside information was stolen; John Freeman and John Labate. 19 Charged in 8.4m Dollar Insider Trading Case. Financial Times, March 15, 2000. 67 U.S. Securities and Exchange Commission. Complaint: Securities and Exchange Commission v. John Freeman. March 14, 2000. http://www.sec.gov/divisions/enforce/extra/freecomp.htm

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Cooper and Erskine, among others, who subsequently sold the information to family members and colleagues. Soon, what had once been an anonymous partnership between three businessmen became a ring of insider trading that spanned the entire country. In 1998, the SEC began to notice suspicious trading activity in three American based firms. When regulators looked more closely at the trade deals, they discovered the names of the same investors and that they stemmed from places not typically associated with considerable investment activity, like Bowling Green, Kentucky and Tennessee. In each of the cases, the trades had taken place before the firms activities had been announced in the news.68 The Chat Room Gang, as they would come to be known by prosecutors, made a total of twenty-three illegal trade and netted a combined profit of $8.4 million.69 The Great Chat Room Conspiracy illustrates the emergence of a new type of corporate crime involving cyberspace and an increased need for regulation. The internet has made lines of communication easier between companies and investors, and subsequently made crime more accessible to criminals and less visible to prosecutors. For these reasons, the need for stronger regulation is greater than ever before. Prosecutors have limited time and resources to investigate and prosecute all of the actors involved in a case this complex. In the end, prosecutors offered both Freeman and Cooper plea deals in exchange for their help in unraveling the entire trading ring.70 This is an example to other potential criminals that if they cooperate with prosecutors, they can avoid receiving the harshest penalties. Further, it demonstrates that the prosecutors needed the criminals themselves in order to determine the full extent of the crimes they committed. According to theories of deterrence, individuals act based on their knowledge of the
Pontell, Henry, Stephen Rosoff, and Robert Tillman. 2007. Profit Without Honor: White Collar Crime and the Looting of America. 4th Edition. (Upper Saddle River, NJ: Pearson Prentice Hall), 269. 69 Ibid., 270. 70 Pontell, Henry, Stephen Rosoff, and Robert Tillman. 2007. Profit Without Honor: White Collar Crime and the Looting of America. 4th Edition. (Upper Saddle River, NJ: Pearson Prentice Hall), 270.
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consequences associated with crimes. Therefore, allowing criminals to receive lesser sentences in exchange for their needed cooperation lessens the chance that they can be deterred from this type of criminal behavior. The presence of a regulator with more knowledge of the crimes and more resources to investigate specific instances of misconduct could help eliminate the governments dependence on criminals as informants, heighten the likelihood that offenders receive punishments proportional to their crimes, and thus prevent potential criminals from engaging in the same kind of activities. The internet has created a new avenue for corporate crime, making it more difficult to detect and prosecute all of the individuals involved. Corporate crimes may have once been confined within specific businesses or geographic regions, but now criminals from California to New York can now instantly and more anonymously be linked together through internet chat rooms and instant messaging. In keeping with the general premise of deterrence theory, in order to deter crime it must be effectively prosecuted. The internet has made it much more difficult for criminal prosecutors to detect and successfully prosecute every case of corporate crime in cyberspace. Regulatory agencies like the SEC can help fill this void by using their power to prosecute offenders themselves.

Currently, the Division of Enforcement in the SEC has the power to file civil charges in U.S. District Court, often calling for an injunction in order to end the activity of the company found to be in violation of the law. The SEC may also ask that an investor or corporate director be suspended from his or her duties71 thereby stripping them of future profits as well as power and prestige within the profession corporate criminals seeks to increase through their behavior. This coincides with Braithwaites notion that professionals can be deterred from crime based on
71 U.S. Securities and Exchange Commission. The Investor's Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation. http://www.sec.gov/about/whatwedo.shtml

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a fear of falling within the profession. Therefore, prosecutions by the SEC and other regulatory agencies may be just as effective at punishing criminals and deterring future offenders. Case Study Analysis Revco, Enron, Arthur Andersen, and the Great Chat Room Conspiracy cases demonstrate key points relating to corporate crime prevention. First, prosecutors are not always successful at punishing corporate criminals, especially those with the resources to hire sophisticated legal defense teams. In the Revco case, executives received minimal punishments compared to their offenses, and Arthur Anderson avoiding punishment altogether through the appeals process. Second, regulatory agencies possess knowledge of specific practices, often beyond that of prosecutors, which allows them to more easily detect corporate crime. Arguably, the trading ring involved in the Great Chat Room Conspiracy would have never discovered without the aid of regulators who identified irregular trading activities in the stock market. These cases speak to the need for greater regulation of corporate activity and the way it could be used to deter corporate crime.

Interviews

In addition to case studies, I conducted in-person interviews in February and March 2008 with attorneys involved in corporate white collar crime litigation. I used their responses in order to test my hypothesis that regulatory agencies can deter corporate crime. I conducted interviews with four attorneys: an attorney in the Financial Crimes Bureau at the Illinois Attorney Generals Office, a U.S. District Attorney for the Northern District of Illinois, and two corporate defense attorneys from large Chicago-based law firms. I began each interview by providing a brief description of my research and the list of questions I planned to address. The interviews were

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semi-structured; I asked questions from the list, but I also detracted from it at times in order to probe new ideas or seek further information based on the answers that the respondents provided. Each interview lasted from twenty-five to thirty minutes, and provided important insights into nature of corporate criminals and the way that corporate crime is currently prosecuted. Results From the interviews, four patterns emerged regarding the current nature of corporate crime and law enforcement: 1) corporate criminals do not have sufficient knowledge of the penalties associated with criminal prosecution, 2) corporate criminals use their resources to escape criminal prosecution, 3) regulatory agencies help to detect corporate crime, and 4) regulatory bodies have limited power to enforce the law. First, the interviews indicated that corporate criminals to do not have sufficient knowledge of the penalties associated with criminal prosecution. When asked if existing penalties for white-collar law violations deter people from committing a crime, all four respondents said that they did not. They [corporate executives] have no idea what sentences they could receive, especially when it comes to prison, stated a corporate defense attorney. Based on the number of crimes that are actually committed, they dont really see a whole lot of people going to prison. They dont think that theyll end up there. In contrast, a prosecuting attorney in the Financial Crimes Bureau of the Illinois Attorney Generals Office offered, Sanctions are a lot easier to understand because they are monetary and usually easier to enforce. One of the defense attorneys stated that she believes her clients are more aware of regulatory agencies in general. She stated, My clients are much more aware of, say, the SEC than prosecutors They are really aware of regulators because there are so many things you have to do to comply with the law. People are aware generally of the criminal laws and punishments, but the SEC is something that is more prevalent.

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Second, the interviews responses supported the idea that corporate criminals use their resources to escape criminal prosecution. One of the defense attorneys remarked, They [corporate offenders] have an overwhelming sense of arrogance. They think that the rules dont apply to them, and that if they get caught they can use defense attorneys to keep them from getting the most severe penalties. The other corporate defense attorney I interviewed agreed with this position. Its my job to keep people from getting prosecuted. Its what Im hired to do. She added that out of all of the cases she has been involved with in her eight years of practice, only fifteen percent have resulted in successful prosecutions. In contrast, the federal prosecutor at the U.S. Attorneys Office noted the limited resources of her office. She said, Almost all corporate crime ends up being a federal crime, and thats just one tiny division in our office. Most of our resources are devoted to crimes involving drugs, guns, etc. One of the defense attorneys suggested that prosecutors often have to rely on defense attorneys to collect evidence against their own clients. We are allowed to interview the clients we represent. We are supposed to waive attorney-client privilege and report illegal behavior to prosecutors. It goes without saying that this doesnt always happen. I asked the attorney at the U.S. Attorneys Office her opinion on the best way to ensure that all corporate crime cases are more successfully prosecuted. We definitely need more help with investigation, she said. Collecting evidence and putting the case together is the most important part of the process. Next, the interviews supported the notion that regulatory agencies help detect corporate crime. Thats how most cases begin. Regulators see something suspicious going on and report it to the D.O.J. [Department of Justice], said a corporate defense attorney. I think that they really help the D.O.J. out by doing a lot of the legwork. All four attorneys agreed that the most effective way to deter white collar crime is to make sure that most of the offenders are caught

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and punished. The attorney at the Illinois Attorney Generals Office remarked, Obviously, its impossible to catch all white collar criminals, but the most important thing to do is just make sure that we catch the ones we can government agencies play a big role in that. One of the defense attorneys remarked, There arent a lot of people who cant be prosecuted. There is just a lot of corporate crime that prosecutors are unaware of. Finally, all of the attorneys suggested that the power of regulatory bodies to enforce the law is limited. The Department of Justice does not have a lot of respect for government agencies, like the SEC, noted one of the defense attorneys. They are two completely separate bodies. Responses from the attorney at the U.S. Attorneys Office were consistent with this idea. The SEC and federal prosecutions may have investigations going on at the same time, but ours always take precedent. Of the four attorneys, only one believed that power of regulatory agencies should remain the same. However, she qualified her statement by saying that she has limited knowledge of how much power they currently possess. If they can do more to help, then maybe they should. The other three attorneys mentioned recent reforms in legislation, such as Sarbanes-Oxley, that have helped increase regulatory power. Yet, each of them suggested that the bill be amended to be more comprehensive. It was a step in the right direction, said the attorney at the Attorney Generals Office, but we have a long way to go. Analysis Overall, results from the interviews remained consistent with my hypothesis that regulatory agencies can deter corporate white collar crime. Interview responses from both prosecutors and defense attorneys illustrate the limited resources of criminal prosecutors and their inability to detect and pursue all instances of corporate wrongdoing, a void that could be filled by regulatory agencies. Although all the attorneys believed that regulators were essential in

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detecting corporate crime, they also noted that they had limited power to enforce the law once they identified misconduct. Responses indicated that corporate executives had more knowledge of regulatory bodies and sanctions they could impose compared to their knowledge of punishments resulting from criminal prosecutions. Increasing the power of regulatory agencies to not only detect crime, but also to enforce law, could more successfully deter corporate crime because corporate executives possess greater knowledge of the consequences imposed by such bodies.

Discussions and Implications

The research in the paper supports my hypothesis that regulatory agencies can deter corporate white collar crime. Unlike previous literature on corporate crime, this study combines ideas from both theories of deterrence and compliance and provides a new way of looking at corporate crime prevention in America. Cases like Enron illustrate the life changing costs that corporate crime may have on its victims. The invention of new technologies like the internet have changed the way that corporate crime is conducted, and demonstrates the need for new approaches to thinking about prevention. The research in this paper provides one possible solution by suggesting that scholars reconsider the role of regulatory agencies in preventing corporate crime. This paper also provides much needed research in the field of corporate crime and regulation. Seventy-five years after sociologist Edwin Sutherland coined the phrase white collar crime, research on the topic still does not compare to the amount of literature on other conventional types of crime, and the amount of literature pertaining specifically to regulatory agencies is even more scarce. This study of corporate crime and regulation helps fill that void.

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Conclusion

After a case like Enron, it is easy to be pessimistic about the prospects for change that could effectively prevent corporate crime. The research in the paper demonstrates, however, that there are new approaches that can help prevent corporate crime. The ideas presented in this paper suggest that regulatory agencies can play a fundamental role not only in encouraging compliance with the law, but also deterring white collar crime. It is clear that corporate crime has substantial effects on its victims, yet corporations or their executives are not always held accountable for their actions. Compared to criminal prosecutors, regulators have more knowledge and resources to monitor corporations and potential offenders better understand the penalties associated with regulation. For these reasons, the power of regulatory agencies to monitor business practices should be increased. Despite these arguments, many within the business community have resisted increases in regulatory power. Regulatory enforcement of corporate crime involves tension between laissezfaire principles and the free market in which business operates, and some business leaders argue that too much regulation serves as a barrier to the pursuit of free enterprise.72 Current legislation and statues governing regulatory bodies have thus attempted to strike a balance between the interests of the public and those of corporate America. In 2002, Senator Paul Sarbanes and Representative Michael Oxley cosponsored legislation that established new standards for U.S. public companies and accounting firms and increased the power of the SEC to enforce the new laws. When President George W. Bush signed the Sarbanes-Oxley bill into law, it became the most significant reform of business

72

Punch, Maurice. 1996. Dirty Business. (London/Thousand Oaks/New Delhi: Sage Publications), 15.

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practices since the time of Franklin Roosevelt73. Six years later, however, many of the bills standards are being rolled back. The SEC is now only allowed access to specific parts of a corporations actives. For example, the SEC can monitor companys financial statements but is limited in its ability to oversee the actual financial operations of the organization.74 These recent changes signal an ease in oversight of corporate activities once again. The research in this paper indicates that there is reason to believe regulators can be effective deterrents; however, more research is needed in order to determine the extent to which regulatory agencies can prevent corporate crime. Corporate crime has existed for decades and will likely continue for years to come. Nevertheless, by seeking new approaches to prevention we might be able to limit the extent to which corporate crime impacts society and lessen the likelihood that innocent men and women are victimized.

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Elisabeth Bumiller: 2002. "Bush Signs Bill Aimed at Fraud in Corporations", The New York Times, July 31. A1. Carrie Johnson. 2005. Sarbanes-Oxley reforms corporate reform measure under attack. The Seattle Times, January 4. http://seattletimes.nwsource.com/html/businesstechnology/2002139509_corporate04.html

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Appendix A Interview Guide Opening Statement: I am conducting research on how to best prevent corporate crime in America. My study focuses on two different theories of criminal behavior: deterrence theory and compliance and theory. Based on your knowledge and experience in corporate crime litigation, I would like to get your personal and professional opinions about how to best prevent corporate crime and the way that corporate crime laws are currently enforced. 1. In the last 10 years in the US, do you think that the white-collar crime has: a. Increased b. Stay the same c. Decreased 2. What is the main reason for (decrease/increase/no change) in the white-collar crime in the US? 3. In your own opinion, what are the main reasons that people decide to commit illegal acts that constitute white-collar law violations? 4. Do you think that the existing penalties for white-collar law violations deter people from committing a crime? a. Yes b. No Why?______________________________________ 5. Do you think that potential violators are aware of the penalties before they commit illegal acts? 6. What is the best way to deter white-collar crimes? 7. Who should be in charge of enforcing white-collar crime, regulatory agencies or prosecutors? 8. What role do you think that regulatory agencies play in preventing white collar crime in the US? 9. Should the power of regulatory agencies, like the SEC, should be increased or decreased, or stay the same? a. Increased b. Stay the same c. Decreased 10. Why?