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Organized Crime vs. White-collar Crime: Which is the Bigger Problem?

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Abstract

Organized crime and white-collar crime have the same objective, but only one of them dominates the public narrative. It is time to change that perception. We fear the former and complain only occasionally about the latter. The takeaway is that organized crime is not restricted to the activities of criminal syndicates. The interests of the powerful who benefit from the existing arrangements are difficult to overcome. The control of white-collar crime is inhibited by the entrenched interests of the legitimate sector of government officials, lobbyists and elites, who benefit from exploiting the financial holes in the existing system allowing for fraud, tax evasion, and money laundering. The control of organized crime is similarly compromised, especially when it is used as a tool of business and government for corrupt purposes.
ACADEMIA Letters
Organized Crime vs. White-collar Crime: Which is the
Bigger Problem?
Jay Albanese
Organized crime and white-collar crime have the same objective, but only one of them dom-
inates the public narrative. It is time to change that perception.
We fear the former and complain only occasionally about the later. A series of laws and
regulations, enacted over the last 50 years, have produced notably mixed results. Examples
include bank secrecy laws, drug control laws, anti-money laundering, corruption and racke-
teering laws. These laws began in the US and Europe, and their provisions have subsequently
been enacted in many other countries, largely due to the growing transnational nature of ma-
jor trafficking, frauds, and corruption—and the development of international agreements to
facilitate a more uniform approach (Albanese, 2018; Edelbacher, 2018).
The legislative history of these laws reveals they were touted as methods to attack the
profits derived from drug trafficking as a feature of organized crime. The narrative was that
networks of transnational criminals were making large amounts of cash by catering to the
global demand for prohibited drugs, and other illicit goods and services. This accumulation
of cash was then inserted into the banking, real estate, and luxury item economies around the
world, in jurisdictions that looked the other way when large purchases were made with cash,
and sellers did not want to know where all that cash came from (Burgis, 2020; Teichmann,
2020).
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Organized crime is only part of the problem, and it is not the largest part.
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Academia Letters, March 2021
Corresponding Author: Jay Albanese, justiceworks@yahoo.com
Citation: Albanese, J. (2021). Organized Crime vs. White-collar Crime: Which is the Bigger Problem?
Academia Letters, Article 310. https://doi.org/10.20935/AL310.
1
©2021 by the author — Open Access — Distributed under CC BY 4.0
It was easy to get public support to attack organized crime through legislation, given its
depiction as outsiders and predators. Unfortunately, it soon became evident that organized
crime is only part of the problem, and it is not the largest part. White-collar crime, manifested
by tax evasion by legitimate businesses and wealthy individuals, is rampant and increasingly
global, in order to “park” large amounts of cash in low-tax and tax-free jurisdictions. This
tax-haven ‘shopping’ is also very important for corrupt public officials stealing from their
own jurisdictions, who need foreign locations to hide the money. Wealthy individuals in the
business world sought the same kind of cover to hide money from tax authorities at home
(Bullough, 2020; Young & Woodiwiss, 2020).
A key similarity is that white-collar criminals attempt to profit from defrauding individuals
and legitimate businesses, as a deviation from legitimate business or government activity
by individuals acting alone or as part of a conspiracy. Therefore, the objective (profit) and
victim pool are the same for both white-collar and organized crime. The difference lies in that
organized crime occurs as a continuing criminal enterprise, which exists to profit primarily
from that crime, and there are always two or more actors involved (Albanese, 2015). Also,
organized crime must rely on coercion or intimidation when things go wrong, because they
do not have legal standing. White-collar criminals, on the other hand, can resort to subpoenas
and lawsuits in the legitimate legal process, because the offenders come from the ‘legitimate’
sector. Both organized crime and white-collar crime can result in violence and death, as is
illustrated by a large number of white-collar cases involving environmental harms, unsafe
products and working conditions.
Organized crime may not exist as an ideal type, but rather as a “degree” of criminal activity
or as a point on a spectrum of legitimacy (Smith, 1980; Martin, 1981). For example, given
the service of lending, is not the primary difference between loansharking and a legitimate
loan, their availability and interest rate charged? Is not the primary difference between legal
and illegal narcotics distribution whether or not the distributor is licensed (i.e., a doctor or
pharmacist) by the state? Therefore, a spectrum extends from lawful business activity along a
continuum, moving to ‘sharp’ or borderline business practices, to illegal activity that includes
both organized and white-collar crimes.
A US national commission recognized nearly 50 years ago that there are more similarities
than differences between organized and white-collar crimes. It found, “the perpetrators of
organized crime may include corrupt business executives, members of the professions, public
officials, or members of any other occupational group, in addition to the conventional racketeer
element” (National Advisory Committee, 1976).
The takeaway is that organized crime is not restricted to the activities of criminal syn-
dicates. A study of a major multi-bank scandal in the US scandal found that “much of [it]
Academia Letters, March 2021
Corresponding Author: Jay Albanese, justiceworks@yahoo.com
Citation: Albanese, J. (2021). Organized Crime vs. White-collar Crime: Which is the Bigger Problem?
Academia Letters, Article 310. https://doi.org/10.20935/AL310.
2
©2021 by the author — Open Access — Distributed under CC BY 4.0
involved organized crime” with a “recurring theme” of conspiracies between banking offi-
cials (“insiders”) and accountants, lawyers, and real estate developers (“outsiders”). (Pontell
& Calavita, 1993). Similarly, an investigation in Canada found organized crime groups in-
volved in typically white-collar mortgage frauds, employing straw buyers, check fraud, and
corrupted real estate insiders to carry out fraudulent activity (Tusikov, 2008). The discovery of
the Panama Papers revealed links and money trails between public officials, organized crime
figures, and banks, illustrating a corrupt thread among those involved (Bernstein, 2017;Orga-
nized Crime and Corruption Reporting Project, 2016).
********
The interests of the powerful who benefit from the existing situation are difficult
to overcome.
********
These examples illustrate it can be difficult to distinguish between white-collar and or-
ganized crime. When it comes to creating regulations to better control these activities, the
interests of public officials, and the constituencies lobbying governments, overlap because
these individuals generally come from the same social class of wealth and private interest in
protecting businesses from oversight. These interests support lax regulations in offshore finan-
cial locations, low (or no) tax jurisdictions, combined with strong financial secrecy policies to
protect wealthy users from exposure. This situation has contributed to the modest success of
many bank secrecy, anti-money laundering, and racketeering initiatives, because the interests
of the powerful who benefit from the existing situation are difficult to overcome (Pol, 2020;
Ruggerio, 1996).
Therefore, the control of white-collar crime is inhibited by the entrenched interests of the
legitimate sector of government officials, lobbyists and elites, who benefit from exploiting the
financial holes in the existing system allowing for fraud, tax evasion, and money laundering.
The control of organized crime is similarly compromised, especially when it is used as a tool
of business and government for corrupt purposes.
Organized crime and white-collar crime have the same objective, but only one of them
dominates the public narrative. It is time to change that perception.
********
Academia Letters, March 2021
Corresponding Author: Jay Albanese, justiceworks@yahoo.com
Citation: Albanese, J. (2021). Organized Crime vs. White-collar Crime: Which is the Bigger Problem?
Academia Letters, Article 310. https://doi.org/10.20935/AL310.
3
©2021 by the author — Open Access — Distributed under CC BY 4.0
References
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Academia Letters, March 2021
Corresponding Author: Jay Albanese, justiceworks@yahoo.com
Citation: Albanese, J. (2021). Organized Crime vs. White-collar Crime: Which is the Bigger Problem?
Academia Letters, Article 310. https://doi.org/10.20935/AL310.
4
©2021 by the author — Open Access — Distributed under CC BY 4.0
Teichmann, F. (2020). Recent trends in money laundering. Crime, Law, and Social Change,
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Academia Letters, March 2021
Corresponding Author: Jay Albanese, justiceworks@yahoo.com
Citation: Albanese, J. (2021). Organized Crime vs. White-collar Crime: Which is the Bigger Problem?
Academia Letters, Article 310. https://doi.org/10.20935/AL310.
5
©2021 by the author — Open Access — Distributed under CC BY 4.0
ResearchGate has not been able to resolve any citations for this publication.
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When Corruption and Organised Crime Overlap: an Empirical Hierarchy of Corrupt Conduct
  • J Albanese
Albanese, J. (2018). When Corruption and Organised Crime Overlap: an Empirical Hierarchy of Corrupt Conduct. In L. Campbell and N. Lord, eds. Corruption in Commercial Enterprise: Law, Theory, Practice. Routledge.
Secrecy World: Inside the Panama Papers Investigation of Illicit Money Networks and the Global Elite
  • J Bernstein
Bernstein, J. (2017). Secrecy World: Inside the Panama Papers Investigation of Illicit Money Networks and the Global Elite. Holt.
Kleptopia: How Dirty Money is Conquering the World
  • T Burgis
Burgis, T. (2020). Kleptopia: How Dirty Money is Conquering the World. Harper.