Basic HTML Version
July 1971
steals an average of $1500. According
to a National Crime Commission
Report: "Between S2 5 billion and
$40
billion of taxable income
is
not reportee!
to the government annually...."
Freguently directors of corporations
use inside information to make profits
at the expense of the stockholders,
whose interests they are supposed to
serve. Speculating manufacturers often
lift the price of their stocks by post–
poning legitimate operating expenses so
that their net earnings appear high. Jn.
siders can then sell their stock
advantageously.
White-collar crime can do even more
than clamage or bankrupt one business.
In sorne cases it may financially wreck a
whole community.
Bankrupting a Town
Edward Morton ( name is changed,
but the story is true) was born and
reared in a small community of about
5,000 people, located onJy a few miles
from New York City. His father was a
baokcr, who carefully traioed his son in
the same profession.
His hometown neecled more business
to make it thrive, and Ed adopted an
unusually liberal credit policy - for
businesses and citizens. Rarely were
people pressured even when they failed
to meet their financia! obligations. As a
result, most of the commuoity did busi–
ness with him instead of the more
con–
servative
competitor bank.
Friendly Ed was a popular man in
town. A common expression of towns–
people was:
"If
you need money, see Ed
Morton." Few people were ever turned
clown for loans. Many small business–
meo admitted they would have gone
bankrupt except for Ed's financia! help.
He 'became a community leader and
headed many of the town's organizations.
Wben people couldn't pay their bilis
he would just tell them to pay when
they could. Most of them did.
Two creditors, however, defaulted.
And this was friendly Ed's smashing
downfall. But not only
hiJ
downfall -·
virtually the whole town carne tumbling
clown with him!
The two disastrous loans cost the
bank about
011e
mil/ion
dollars.
Many of the citizens carne to his aid
and contributed over $200,000 to save
The
PLAIN TRUTH
the bank ( and of course, their own
money).
But as the bank records were exam–
ined more closely, authorities discovered
that while frienclly Ed was trying to
underwrite nearly a
whoie commtmity,
be had run through almost
1
V2
mil/ion
doiiars
of the bank's moncy. The bank
was closed.
Quite a stunning blow to a little com–
munity of 5000!
Business Infested With
Criminals
If
this example were only an isolated
case, the moral and economic impact on
our society would be slight. But, un–
fortunately, such conduct is widespread.
Most rationalize that they are only
"borrowing" money until the crime be–
comes a deeply ingrained habit.
Department store salesgirls have be–
come accustomed to the post-holiday
t"it–
flai
of executives' families loading up
with gifts that they don't personally pay
for. It is common for executives to
purchase $ 10,000 worth of gift
certificates at a department store for
client and customer gifts. This is
charged off as business expense. How–
ever, about half of the gifts often go to
the executives' families and friends.
The United States Treasury Depart–
ment reportee! that
ht~lf
of 3,000 doc–
tors who received $25,000 from the
government in Medicare or Medicaid
payments in 1968 failed to report a
"substantial" amount of income on
their tax returns.
In the lower echelons of white-colJar
crime, it is more often than not a
gang
activity.
Severa! people work together to
steal from the company. In one case a
control clerk became troubled by his
own petty thefts. He spent severa!
sleepless nights and he finally ap–
proached his superior, the credit man–
ager. The clerk then blurted out the
detai ls of his malpractices and resigned
himself to a jail sentence. But then a
shocking scenario occurred.
"The credit manager carefully closed
the door for privacy and said calmly,
'l'm not going to turn you in. Forget
this conversation. And don't discuss it
with anyone else. You see, this depart–
ment just can't afford a scandal - l've
been embezzling for years myself. We're
15
in this thing together.'"
(The Thief In
The lf/hite Coli11r,
by Norman Jaspan,
p.
33.)
Like termites, business criminals are
hidden in the woodwork - eating away
at the business structure. And tragically
as business worsens, crime increases.
Recession Increases Crime
The recent business slump has caused
white-collar crimes to rise alarmingly.
Management consultants, insurance in–
vestigators and industrial security spe–
cialists, who closely watch these trends,
are concerned. Shrinking paychecks,
stock market losses and career setbacks
have tempted many to steaJ from their
companies to compensate for the eco–
nomic crunch.
One top division executive for a rap–
idly growing U. S. West Coast company
borrowed S75,000 to take advantage of
stock options in 1969. Shortly after–
wards the stock dropped to less than
half the price he paid for it. The banks
began applying pressure for repayment
of the loans which he had hoped to pay
with stocks and gains. The executive, in
hopes of paying off the loan, started de–
manding and receiving payoffs and
kickbacks from suppliers and subcon–
tractors with whom he did business. He
stole roughly $200,000 before he was
caught and forced to restare the money.
N
o
ptmisbment
was
exacted
.'
Security specialists have told of
numerous examples similar to this one.
In spite of the rampant increase in
this type of crime, it is still met with
massive
indiffermce
(the criminal's
greatest ally). Many people don't care.
Others simply don't understand how it
affects them
personaliJ.
But it is, after
all, the individual - indifferent though
he may be - who pays for crime of
whatever type it is. ·
Stealing and payola cost business so
much, said one authority, Norman ]as–
pan, "that if they could be eliminated
the general price leve] of goods could
be cut by
1
5
PERCENT
!"
For the worker, this would mean
increased earnings.
Industry is figbting back in sorne
cases, and the cost is high. The demand
for undercover services has more than
tripled in the Jast few years. Jerry