You might not know it, but today is an important day for you. On Dec. 27, 1939 — 80 years ago — criminologist Dr. Edwin Sutherland, while speaking to the American Sociological Society, coined “white-collar crime” and placed the cornerstone in the foundation
for the fraud examination profession. (See White Collar Crime, by criminologist Dr. John Braithwaite, “Annual Review
of Sociology,” 1985.)
Dr. Sutherland, in his talk, “The White Collar Criminal,” scorned “traditional theories of crime, which blamed poverty, broken homes and disturbed personalities,” according to Dr. Braithwaite. Business lawbreakers were from happy families and mentally
sound, Sutherland said.
Dr. Eugene Soltes, a Harvard Business School professor, says that, in Sutherland’s view, “much of the most serious crime was being committed not by the poor or the ‘delinquent’ but, instead, by society’s most well-known and respected business leaders.”
(See Why They Do It, by Eugene Soltes, PublicAffairs, 2016.)
The New York Times, in its next-day paper, said Dr. Sutherland gave an address “which discarded accepted conceptions and explanations of crime.” The article’s author wrote that “the financial cost of white-collar crime is probably several times as great
as the financial cost of the crimes which are customarily regarded as the crime problem.” The article cited Dr. Sutherland’s example of a grocery store executive who embezzled $600,000 in one year — six times the entire amount from 500 robberies that
occurred at the same chain of stores during the same year. (See “Why They Do It” and “Hits Criminality in White Collars,’ ” The New York Times, Dec. 28, 1939.)
Differential association
“Dr. Sutherland is well-known not just for coining ‘white-collar criminal’ but for his theory of differential association, which he devised later in his career,” says Dr. Joseph T. Wells, CFE, CPA, founder and Chairman of the ACFE. “The theory first appeared
as a systematic formulation in 1939 in the third edition of Dr. Sutherland’s ‘Principles of Criminology,’ ” Wells says. “Dr. Sutherland believed that criminal behavior is linked to a person's association with a criminal environment.”
According to pioneering fraud examination researcher, Dr. W. Steve Albrecht, CFE, CPA, Sutherland “believed that people encounter various social influences throughout their lives. Some individuals have social interactions with individuals having criminalistic
tendencies and so become criminals as a consequence of this association.” (See Iconic Fraud Triangle endures, by Dr. Albrecht, Fraud Magazine,
July/August 2014.)
Dr. Albrecht, the first ACFE president, summarizes Dr. Sutherland's differential association theory:
- Criminal behavior is learned; it's not inherited, and the person who isn't already trained in crime doesn't invent criminal behavior.
- Criminal behavior is learned through interaction with other people through the processes of verbal communication and example.
- The principle learning of criminal behavior occurs with intimate personal groups.
- The learning of crime includes learning the techniques of committing the crime and the motives, drives, rationalizations and attitudes that accompany it.
- A person becomes delinquent because of an excess of definitions (or personal reactions) favorable to the violation of the law.
(See Criminology, by Edwin Hardin Sutherland and Donald Ray Cressey, Lippincott, 1978.)
Sutherland descendant, Dr. Donald R. Cressey
In addition to Dr. Wells and Dr. Albrecht, Dr. Sutherland (1883-1950) had several professional offspring directly and indirectly, including Dr. Donald R. Cressey.
Dr. Cressey (1919-1987) was one of Dr. Sutherland’s brightest students at Indiana University during the 1940s. Dr. Sutherland’s research concentrated on upper-world criminality, but Dr. Cressey took his own studies in a different direction, according
to Forensic Accounting and Fraud Examination, by Dr. Mary-Jo Kranacher, CFE, CPA; Dr. Richard A.
Riley, CFE, CPA; and Dr. Joseph T. Wells, CFE, CPA, Wiley, 2011.
Dr. Cressey (the namesake for the ACFE’s Cressey Award) concentrated his research on embezzlers, whom he called “trust violators.”
According to “Forensic Accounting and Fraud Examination,” he was especially interested in “the circumstances that led them to be overcome by temptation. For that reason, he excluded from his research those employees who took their jobs for the purpose
of stealing — a relatively minor number of offenders at that time. Upon completion of his interviews, he developed what still remains as the classic model for the occupational offender. His research was published in ‘Other People’s Money: a Study
in the Social Psychology of Embezzlement.’ ”
Here’s Dr. Cressey’s final hypothesis from “Other People’s Money”:
Trusted persons become trust violators when they conceive of themselves as having a financial problem that is non-sharable, are aware that this problem can be secretly resolved by violation of the position of financial trust, and are able to apply to their contacts in that situation verbalizations which enable them to adjust their conceptions of themselves as users of the entrusted funds or property.
Dr. Albrecht eventually combined Dr. Cressey’s concepts of perceived pressure (or nonshareable financial need), perceived opportunity and rationalization into the iconic Fraud Triangle. Dr.
Albrecht, with other collaborators, also devised The Fraud Scale (or “Fraud: three key variables”). (See Dr. Albrecht’s article, “Iconic Fraud Triangle endures” for his explanation of both models.)
Second father
Dr. Gil Geis (1925-2012), a pillar of the ACFE, a member of its first board and its second president, became known as the second father of white-collar crime, says Dr. Francis T. Cullen, Distinguished Research Professor Emeritus at the University of Cincinnati.
“Sutherland, who invented the concept of white-collar crime, is seen as the original dad of the field,” Dr. Cullen says. “But after Sutherland died somewhat prematurely in 1950, few scholars remained to carry on his tradition. To a large extent, Gil Geis
performed this role, almost single-handedly keeping alive the study of upper-world criminality until the topic resurfaced in the mid-1980s,” says Dr. Cullen. (See He sought and brought out the best in everyone,
Fraud Magazine, March/April 2013.)
“The promise in the pioneering work of Edwin Sutherland on white-collar crime has been fulfilled more in the works of Geis than in the works of any other scholar,” wrote Dr. Robert F. Meir, in the book Contemporary Issues in Crime & Criminal Justice: Essays in Honor of Gilbert Geis, edited by Dr. Henry N. Pontell; and Dr. David Shichor.
“The profound impact of Dr. Geis’ work was shown in a remark made some 30 years ago by former Yale sociologist Stanton Wheeler,” says Dr. Pontell, “who told his law school students on the first day of their white-collar crime seminar, ‘The only reason
we are here today is because of Gil Geis.’
“Gilbert Geis was a giant in the study of white-collar crime and fraud prevention whose keen sense of justice and humanity was evident in everything he wrote,” Dr. Pontell says. “He was also an ideal mentor and beloved colleague to so many.”
Dr. Pontell is a distinguished professor and former chair of the John Jay College of Criminal Justice Department of Sociology and professor emeritus of criminology, law & society in the University of California, Irvine School of Social Ecology and of
sociology in the School of Social Sciences. Pontell was the recipient of the ACFE’s 2001 Cressey Award.
Remembering our roots
So today, as you sift through evidence, prepare a fraud risk management plan or write a case report, remember that an academic 80 years ago placed a definitive name on a field of study that eventually, via other pioneers, would build a foundation for
the establishment of the ACFE and a new profession. Thank you, Edwin Sutherland.
Dick Carozza, CFE, is editor-in-chief of Fraud Magazine. Contact him at dcarozza@ACFE.com.