Geis, Sutherland and the development of white-collar crime, Part 2 of 2

By Robert F. Meier, Ph.D.



 This article is excerpted from the 2001 book “Contemporary Issues in Crime & Criminal Justice: Essays in Honor of Gilbert Geis,” edited by Henry N. Pontell and David Shichor. This collection, published by Prentice Hall, was assembled in honor of Dr. Geis on his 75th birthday. We republish the article from the November/December 2001 issue of the ACFE’s The White Paper (the predecessor to Fraud Magazine) in honor of Dr. Geis, a pillar of the ACFE, who passed away Nov. 10, 2012. — ed.

Edwin Sutherland came to the field of white-collar crime from a strong interest in conventional criminality. And for most of his work on street crime, he studied the behavior of individual criminals. Some of those criminals, such as those reflected in his data on corporate crime, acted in concert with others, while other criminals acted alone. But Sutherland never strayed far from the integrity of his subject matter within the following context.

Crime is an act defined as illegal by law. Sutherland never wavered from his strong belief that white-collar crime was technically, and in all other ways, crime. The simple idea that white-collar crime is indeed crime led to one of the most well-known debates in criminology, the Sutherland-Tappan debates. Criminologist Paul Tappan, a legally trained sociologist, took exception to Sutherland’s contention that white-collar crimes were criminal acts. They were, Tappan argues, after all, not in most cases handled by the police, criminal prosecutors, or criminal courts, but in administrative courts with different procedures, legal rulings, and sanctions. White-collar crime was not criminal in either a technical or social sense, Tappan implied, and to argue that it was would merely promote a political agenda.

Tappan’s legal training undoubtedly shaped a narrower, more technical view, and his position was hardly outrageous. There can be a substantial difference between the formulation and enforcement of criminal codes and the formulation and enforcement of other state-defined rules. But Tappan’s restricted view of crime assumes that the differences between white-collar crime and conventional crime are not related to the power and influence of the offenders, important characteristics of white-collar crime.

Gilbert Geis, too, regards white-collar crime as real crime. White-collar crime is not a legal sleight-of-hand. Like Sutherland, Geis has understood well that in many cases the criminal law was not the initial point of reference because white-collar crimes were often found in the violations of administrative law. Yet, the violations of the rules of state agencies were backed by state sanctions, just as in street crime in which the offender breaks the rules (criminal law) of state agencies (legislatures) that are backed by state sanctions (e.g., imprisonment). In fact, aside from incarceration, the sanctions of most white-collar crimes are virtually identical to the sanctions of criminal laws.

Criminals are those who violate the law. This principle follows from the first. It mattered little to Sutherland that white-collar criminals were violating something other than criminal law; they were violating some law, and that law was backed by state-sanctioned penalties; so conceived, criminals are individuals who break the law, regardless of whether contained in the criminal code or some other body of state regulations.

Geis, too, regards criminals as real criminals, both in the technically legal and in a social sense. He notes that white-collar offenders violate real law with demonstrable legal intent. They are aware that what they are doing is wrong and they attempt to avoid legal punishment. In all these things, white-collar criminals are like conventional criminals. Where white-collar criminals differ from other criminals is the lack of shame they often display. As one of Geis’ electrical equipment conspirators claimed, what he had done was illegal but not criminal. Geis regards such verbiage as “smoke-and-mirrors” and dismissed them as self-serving statements designed more to protect the offender’s self-concept than to describe reality.

Corporate crime is merely the actions of individual offenders. Although Sutherland’s major study concerned the violations of corporations, he maintained that the activity was merely the actions of individual offenders. In this sense, Sutherland’s major work, which dealt with corporate crime, was a study in white-collar crime, as the title states explicitly.

Geis’ major single work on white-collar crime may be an investigation into a corporate price-fixing case: the heavy electrical equipment conspiracy. This case was a large-scale example of corporate crime, but, like Sutherland, Geis draws out attention not to the aggregate dynamics of the case, but to the individuals and their personal actions in support of the conspiracy. There is nothing abstract about this case; it is filled with concrete illegal acts by specific individuals. The conspirators develop a code to hide their actions. For example, the term Christmas card list stood for the names of attendees at meetings in which prices were fixed, and choir practice stood for the meetings themselves. The conspirators used only public phones and met only at trade shows so that their association didn’t look unusual. Nevertheless, when the Tennessee Valley Authority, one of the largest and most frequent consumers of the large electrical turbines of these companies, noticed irregularities, the case was broken. 

After the legal dust settled, there had been four grand juries that issued 20 indictments on 45 persons and 29 corporations. These actions resulted in fines of $2 million, and seven of the conspirators were convicted. As with many cases of white-collar crime, however, Geis notes that those who were incarcerated received jail terms of 30 days or less with up to five days off for good behavior. Victims of the conspiracy also sued two of the largest corporations, Westinghouse and General Electric, in civil court. General Electric paid out $160 million by 1964, a goodly amount even for a huge corporation, but Geis notes wryly that most of this was tax deductible! Even for a large corporate price-fixing case, the action is not with corporations as entities, but with the individuals in the corporations. 

The use of case studies. Sutherland and Geis generally adopted a “ground up” approach in studying crime. One of the reasons to examine white-collar crime from the basis of the offender is not merely that individual criminals are the basic unit of analysis for both Sutherland and Geis, but also because each of these scholars believe that the awareness of biographic and situational experiences of offenders is critical for understanding the nature of the crime and the circumstances that brought the offender to the crime. Sutherland’s motivation for doing this may have been tempered heavily by this fundamental allegiance to his theory of crime, a theory that stresses an understanding of the learning experiences of offenders through time.

Sutherland’s biography of a professional thief and Geis’ account of the electrical equipment conspiracy are the most obvious examples of this grounded approach, but there are others as well. Geis’ more recent work on physician fraud is rife with individual cases on physician wrongdoing drawn from newspaper accounts, interviews with doctors, and official case files from state and federal agencies.




These elements of common ground between Sutherland and Geis are best illustrated in one issue: the nature of corporate crime and its relation to white-collar crime. The legal dimension of this issue is whether corporations, as distinct entities, may be held liable for corporate acts, while the social dimension is whether corporate crime is merely the actions of individuals within the corporation.

The legal issue has been settled largely in American law. For over a century, the criminal sanction has been an appropriate federal mechanism in response to corporate misconduct. The idea that corporations would be held criminally responsible actually extends back to 17th century English common law (Brickey, 1995, 9), but it was not until the Sherman Antitrust Act of 1890 that this idea was expressed in American law. The Sherman Act brought a combination of civil and criminal sanctions against corporate misconduct. Even so, the issue of the use and extent of criminal sanctions against corporations has been visited by the U.S. Supreme Court on several occasions in view of the fact that the financial impact of criminal fines on corporations could be borne ultimately by innocent stockholders. Closure has not yet been reached on a number of issues, including the extent to which corporations can be held criminally responsible for the conduct of their employees, the nature and extent of criminal penalties, and the objective these sanctions are attempting to achieve.

While federal law continually has considered corporations criminally liable, state laws developed slowly in this regard, and state statutes are uneven and sometimes inconsistent with federal law. One attempt to impose uniformity in criminal law, the American Law Institute’s Model Penal Code, last revised in 1985, provided one basis for state statutes. Section 2.07 of that Code stipulates that a corporation may be convicted of a crime if:

The offense is a violation or the offense is defined by a statute other than the Code in which a legislative purpose to impose liability on corporations plainly appears and the conduct is performed by an agent of the corporation acting in behalf of the corporation within the scope of his office or employment. 

The Code further stipulates that such crimes may be acts of omission or commission and may be violations of criminal law or regulatory rules. It also stipulates, however, that corporations may defend themselves if by a preponderance of evidence (the usual civil, not criminal, standard) the corporation can prove it attempted through “due diligence” to prevent the crime. The distance between managerial supervision of “due diligence” and the actions of individual employees who are working without corporate approval represents an important stumbling block in prosecuting these crimes.

The notion of criminal liability is closely tied to that of individual guilt. One should not be convicted for something one did not intend to do. If so, how can corporations be prosecuted and punished for something they did not do if they did not authorize the employee’s actions? Corporate crimes should not be the actions of employees acting alone or with personal motives. Corporate crimes must in some sense reflect corporate policy or, at least, show that the corporation benefited from a crime it did not reasonably prevent. In other words, courts should be satisfied that the acts of individual employees represent acts of the corporation, and that the actor who commits the crime acted within the scope of his or her authority and on behalf of the corporation. Present federal law does not require that the actor be highly placed in the corporation or that corporate management perform an active role in the crime.

Sutherland and Geis have approached the issue of whether white-collar crime refers only to individual offenders or aggregates of them in similar manner. As suggested earlier, Sutherland’s major work dealt with the violations of corporations, but his attention never strayed far from the individual offenders within those corporations. His effort to apply differential association was focused on individual white-collar criminals, not the corporations as a whole. Geis, too, has been very grounded in his attention on individual white-collar criminals. A recent exchange with Braithwaite and Fisse reduces to the question of whether it is better to consider corporations themselves as offenders or whether the real offenders are the employees of the corporations. Braithwaite and Fisse argue that corporations in the modern world are real entities, legally and socially. Corporations act with unified purpose, and at times those acts are illegal. Geis (1995) rejects this position as needlessly abstract, preferring instead to merely regard corporate violations as the actions of individual offenders. It is, after all, he argues, not Amoco or General Motors who violates laws, but specific corporate employees who may be acting on behalf of the corporation. Whether their intent is self- or corporate-gain, these offenders are in the most real of worlds the individuals who violate the law.




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