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White-Collar Crime

What sanctions or punishments should be imposed on white-collar criminals? Is imprisonment the best way to deal with serious white-collar criminals or might fines and restitution be a more appropriate remedy?

Seminararbeit 2009 16 Seiten

BWL - Allgemeines



1 Introduction
1.1 Definition of Punishment
1.2 Applicable Law
1.3 Different Types of White-Collar Crimes

2 The Sense of Punishment
2.1 Public Need for Punishment
2.2 Retributivism (Absolute Theory of Punishment)
2.3 Utilitarian Theory (Relative Theory of Punishment)
2.3.1 Deterrence in the Narrow Sense (General Negative Deterrence)
2.3.2 Consciousness of Law (General Positive Deterrence)
2.3.3 Incapacitation (Specific Negative Deterrence)
2.3.4 Rehabilitation (Specific Positive Deterrence)
2.4 Combination Theory

3 Types of Punishment
3.1 Restitution / Compensation
3.2 Asset Forfeiture
3.3 Fines
3.4 Imprisonment
3.5 Measures / Secondary Punishments
3.5.1 Public Notice of the Sentence
3.5.2 Confiscation of Assets
3.5.3 Occupational Ban
3.5.4 Affidavit of Means

4 Proposed Sentencing of White-Collar Criminals
4.1 Facts to be Considered
4.2 Basic Sentencing
4.3 Extension for Recidivism and Aggravated Crimes
4.4 Substitution for Impossible Sanctions

5 Further Problems about Punishment of White-Collar Criminals

6 Conclusion

7 Literature, Internet Sources.

1 Introduction

1.1 Definition of Punishment

Punishment “…is the authorized imposition of deprivations - of freedom or privacy or other goods to which the person otherwise has a right, or the imposition of special burdens - because the person has been found guilty of some criminal violation, typically (though not invariably) involving harm to the innocent.” [1]

In order to explain what kind of punishment should be imposed on white-collar criminals we need to figure out the intentions of punishment and why punishment is necessary in the first place.

1.2 Applicable Law

It should be pointed out that the following analysis is not based on the law of any specific state. It is an analysis of international acknowledged principles and theories and should be relevant for most common law systems in the western world.

1.3 Different Types of White-Collar Crimes

Due to the large amount of different white-collar crimes, the intention of the paper is not to cope with specific offences, but with the handling of white-collar criminals in general.

2 The Sense of Punishment

There are different theories and philosophies about the sense of punishment.

2.1 Public Need for Punishment

According to the sociologist Émile Durkheim, society has a demand for reaction in case if someone breaks laws. Those public needs for punishment can be satisfied via punishing reactions from the state. Would there be no reaction, vigilantism or even lynch law might appear as victims have a need for remedy. More than that, punishment helps the victims to handle their suffering while they observe how the wrongdoer gets punished.[2]

2.2 Retributivism (Absolute Theory of Punishment)

According to this theory, the wrongdoers should suffer because they made others suffer and the retribution of the crime is the only reason why punishment should appear. Other intentions like deterrence cannot be combined with the punishment.[3] Immanuel Kant, one of the most important supporters of the “absolute theory of punishment” wrote: “Judicial punishment (…) must in all cases be imposed on him only on the ground that he has committed a crime.”[4]

Another and probably the most popular source and explanation for this kind of punishment can be found in the bible: “And if any mischief follow, then thou shalt give life for life, eye for eye, tooth for tooth, hand for hand, foot for foot, burning for burning, wound for wound, stripe for stripe”.[5] This ancient principle of punishment, also called “lex talionis” includes a limitation of the toughness of the punishment. The wrongdoer gives one eye for one eye which means he should at least not suffer more that he made the victim suffer. The toughness of the punishment is therefore limited to the degree of guilt.[6]

2.3 Utilitarian Theory (Relative Theory of Punishment)

While the “absolute theory of punishment” relates to the past and punishes because a crime has been committed and the offender deserves to be punished, the intention of the “relative theory of punishment” is to avoid future crimes. The “relative theory of punishment” is divided in two forms of deterrence: General and specific deterrence, each of those forms has a positive and a negative dimension.[7]

“Deterrence concerned with trying to persuade others who might be inclined to offend not to do so is known as general deterrence."[8] General Deterrence is not concerned with the future behavior of the offender himself, but with the behavior of other potential offenders.

Unlike the general deterrence, specific deterrence is concerned with the future behavior of the offender himself. „The object is to prevent the offender from repeating the offence.”[9]

2.3.1 Deterrence in the Narrow Sense (General Negative Deterrence)

The negative dimension of general deterrence in particular intents to discourage potential wrongdoers from committing crimes by showing the implications of such behavior.5 Critics again say, “offenders do not pause to consider the possible punishment for a crime they are about to commit”.[10],[11]

2.3.2 Consciousness of Law (General Positive Deterrence)

The positive dimension of general deterrence intents to recover the affected law-abiding attitudes (ability to know right from wrong) by fulfilling the predicted implications.

2.3.3 Incapacitation (Specific Negative Deterrence)

The goal of the negative dimension of specific deterrence is to incapacitate the offender, so he will not be able to commit such crimes again. Imprisonment might be one way to achieve this goal. But as deprivation of liberty is one of the hardest punishments used in the civilized world, imprisonment is only used in cases of recidivism or if the offence has been an aggravated crime such as capital crimes.

In cases of traffic violation, for example, taking away the driving license is also a way of achieving this. Presuming, the offender isn’t willing to commit another offence by driving without a license.

2.3.4 Rehabilitation (Specific Positive Deterrence)

Rehabilitation intents to prevent wrongdoers from recidivism “through instilling fear in the specific individual being punished such that they refrain from future violation of the law”.[12] Critics, like Jacqueline Martin, says “that potential offenders are more likely to be deterred by the threat of being caught rather than the threat of punishment”, and offers an example of areas with video surveillance and the associated reduction of crime rates in those areas.8

2.4 Combination Theory

Nowadays Immanuel Kant’s theory is no longer up-to-date and punishments are not “imposed on him (the offender) only on the ground that he has committed a crime”. Punishments have to be future-related and the states right to punish is seen as an act of self-defense in order to protect the society and to prevent socially detrimental behavior ("Défence sociale"). But the committed crime is still the initial reason why prosecution starts in the first place, and it is still the only reason why the state is allowed to punish this specific person. Furthermore, the earlier mentioned “lex talionis” (“eye for an eye”) is still the current limitation for punishments.[13] Therefore, a combination of the absolute and relative theory of punishment is used by jurisdiction for sentencing criminals.

3 Types of Punishment

There are a couple of possibilities to achieve punishment for the wrongdoer. The sense and functioning of those punishments should be explained in order to find out the right punishment for white collar criminals.

The sanctions described in the following can be divided into remedies under civil law, which are e.g. the restitution of gains or compensation of losses and asset forfeiture, and punishments under crime law like fines, imprisonment, and secondary punishments.

Punishments which are not used for sentencing white-collar criminals in the western civilization, like torture or death penalties are not explained in detail. One might take that for granted, but in China for example “financial fraudsters routinely are executed”.[14]

3.1 Restitution / Compensation

Compensation or restitution means either the repayment of the victim’s losses, or the repayment of the money the wrongdoer gained by committing a crime. In most cases of white-collar crime, restitution is more likely to be occurring than compensation. This means the offender has to repay the gains of the crime to the victim, which again wasn’t able to realize the profit himself due to the wrongdoing of the offender.[15]

As this kind of punishment is no punishment in the sense of crime law but civil law, the absolute and relative theories are not applicable. The intention of the restitution is to help the victim. But as the restitution is paid by the offender and gained by the victim, it prevents vigilantism as the victims need for remedy is satisfied. The offender’s circumstances after paying the restitution again are not worse than they have been before he decided to commit the crime, so there is no deterring effect.

3.2 Asset Forfeiture

Depending on the law system of the specific state, asset forfeiture can be civil or criminal law. However, it always means the confiscation of the wrongdoer’s assets which are either the result of unjust enrichment and the “property directly resulting from, or that can be traced to, an illegal activity”, or the instrumentalities which have been used for committing the crime or have been “involved in such an offence”. Therefore, forfeiture can be a source for cash to compensate or restitute victims, and it is a specific negative deterrent as the instrumentalities of the crime are taken away from the wrongdoer so he might not be able to repeat the crime. Furthermore, the gained assets can be used to improve law enforcement, as President George Bush said: "Asset forfeiture laws allow [the government] to take the ill-gotten gains (…) and use them to put more cops on the streets."[16]


[1] Bedau, H. A.: Punishment

[2] Ostendorf, H.: Vom Sinn und Zweck des Strafens

[3] Wilhelm, J. P.: Grundlagen staatlichen Strafens

[4] Jacqueline, M. The English Legal System, p. 174

[5] Kleffmann, T.: Das Buch der Bücher: Seine Wirkungsgeschichte in der Literatur, p. 115

[6] Kröber, H.-L.; Dölling, D.; Leygraf, N.; Sass, H.: Handbuch der forensischen Psychiatrie Band 3: Psychiatrische Kriminalprognose und Kriminaltherapie, p. 246

[7] Ostendorf, H.: Vom Sinn und Zweck des Strafens

[8] Ferris, T.: Sentencing: Practical Approaches, page357

[9] Clayton, R.: Sentencing, p. 11

[10] Jacqueline, M. The English Legal System, p. 176

[11] Ostendorf, H.: Vom Sinn und Zweck des Strafens

[12] Drislane, R. Ph.D; Parkinson, G. Ph.D.: Specific Deterrence

[13] Ostendorf, H.: Vom Sinn und Zweck des Strafens

[14] Lin, A.: Is China's White-Collar Death Penalty Fair

[15] Conflict Research Consortium: Compensation/Restitution

[16] Williford, E.: Backgrounder on Forfeiture


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Titel: White-Collar Crime