White collar crime is a recent concept included in Criminology. Many theories are now established to understand the psychology of the people and reasons why they steal. While researching a few reasons which came forward are that they don’t earn enough to feed their families, but then what about the people who earn enough yet steal? Though traditionally white-collar crimes were commissioned by privileged ones with the revolution of crimes through cyberspace the profile of these criminals has changed drastically. The term white collar crime gained meaning when Edwin Sutherland gave his Presidential Address to the American Sociological Society in 1939. Sutherland’s speech, “The White Collar Criminal” disrespected and denied the theories of crime which blamed poverty, broken homes, and disturbed personalities reasonable for crimes, he said that many law breakers in business do not come under the meaning of the reasons mentioned above.
With the improvement in cyber world the crimes occurring through it are increasing with speed that laws are lagging behind to chase them, the most destructive events of cyber-attacks (I Love You computer worm, Denial-of service) suggested that a new breed of crime is emerging over the past era namely Cybercrime. This is the term for all crimes committed with computers.
Illustrations of white-collar crime occurring through cyberspace
White Collar crimes are those crimes which do a great harm to the victim in commercial sagacity, most of these crimes occur through the internet. These crimes nowadays are nowadays gaining pace through the world wide web, before discovery of the internet these crimes occurred outside computer purview. Any but all crime committed on the Internet is referred to as a cybercrime. These cybercrimes however seem to be innocent as they lack violence and don’t occur on streets. Crimes included in this field are as follows.
· Hacking –
When hacking is commissioned as a white-collar crime, the term stated is generally defined as the accessing of a computer or internet without having proper authorization. It means to manipulate the inner working of information of the technology. Some hacks that shook the world are
1999: 15-year-old hacks NASA and US department of Defence.
2014: Suspected North Korea attack on Sony.
2015: Ukraine power grid hack.
2016: Russians allegedly hack US Democrats.
2019: German Bundestag attack.
· Salami Attack –
When Salami slicing is commissioned as a white collar crime, it transpires as small attack adding up to one major attack that goes undetected due to its nature, it includes carrying out illegal activities, it is large advantage with small increments so as to use it thereafter for perfectly legal works. Few examples of salami attack in history are
1993: In Florida four executives of rental cars were charged with defrauding customers using salami technique.
1998: Cheating with the consumer occurred through installing computer chips in gasoline pumps by overstating the amounts pumped.
2008: A man used to make money through verification deposits from online brokerage firms a few cents at a time for which he was arrested.
· Internet Fraud –
When Internet fraud is committed as a white-collar crime a person hacks another person’s computer for accessing personal information like credit card, social security, bank details.
· Theft to identity –
When a person takes other person’s identity information to commit mostly financial fraud it is committing theft to identity as a white-collar crime. It includes fake passports, IDs, fake names on credit cards etc.
· Phishing –
Phishing is an act commissioned as a white collar crime in which the hacker, by using e-mail messages completely resembling the original ones is used for verification of certain personal information like account number, passwords etc. Some examples of phishing are the RBI phishing scam, ICC world cup 2011.
· Copyright Piracy-
It is a means used for engaging white collar crime which includes sharing of copyrighted data on the internet. The hub mostly being Torrent. It attracts Intellectual Property Laws which include music, movies, etc.
· Corporate white-collar crime –
These crimes are also called organizational crime used to commit white collar crime to benefit their employing organization within their legitimate occupations, sometimes the companies are victims rather than perpetrators. They do not consider this a criminal activity.
· Ponzi and Pyramid Schemes –
These are fraudulent investment businesses depending on an ever-increasing pool of new investors to pay the return of the initial investors. This method is used for commission of white-collar crime. One spectacular Ponzi scheme in history was the recent Bernard Madoff scandal.
· Money Laundering –
When money laundering is commissioned as a white-collar crime Intentional concealment of sources of money typically money acquired from crime are made to appear as it came from some legitimate source. Billions of U.S. dollars are laundered every year according to estimation. It is also associated with organized crime and illegal drugs. Now it is also used to fund international terrorism.
· Internet Pharming –
Here the hackers aims at redirecting the website used by the customer to another bogus website by hijacking the victim’s DNS server and changing his I.P address to fake website by manipulating DNS server. Redirecting a user’s original website to a false misleading website to gain unauthorized information. This is a method commissioned as a white-collar crime.
Some very famous white-collar scams are given below
· Harshad Mehta Securities Fraud (1988-1995)
Protagonist – Harshad Mehta
Harshad Mehta was a reputed name in the stock market, he has established a firm under name “Grow More Research & Asset Management Limited”. He was called ‘Sultan of Dalal Street’, misusing the belief of the investors, his status he manipulated the stock prices of certain scripts for his gain as a result of which unnatural pumping of money in the stock market was done causing abnormal price rise of shares, this was immoral but not illegal yet, the problem begin when He obtained capital to invest in market by embezzling bank’s money. This stealing led to money fall in purview of money laundering where he earned ₹5000 crores. This unabated selling caused the market to lose ₹0.1 million in a day. This was the biggest crash Indian stock market experienced. various changes were then made in SEBI rules and regulations to avoid such transactions.
· Satyam Scandal: Biggest corporate accounting fraud
Protagonist – B. Ramalingam Raju
A confession letter was published in Times of India by Founder and chairman of Satyam Computers Services Limited on 7th January 2009. The confession was about manipulating his books of account by overstating the assets and understating liabilities.
Account books are important tools on which investors rely for investing their money. They act as a financial standing of the company’s financial standing. These books were manipulated to cheat investors and stakeholders. The whole cost was ₹14,000 crore and was an important factor of recession of 2009. SEBI held Ramalinga Raju and nine others guilty of insider trading, indulging in fraudulent and unfair trade practice. They were barred from accessing the security market for 14 years and payment of ₹3000 crore within 45 days.
· Ketan Parekh Security Scam
Protagonist – Ketan Parekh
Ketan was involved in circular trading and stock manipulation through 1999-2001. The scandal amount was approx. ₹1,250 crore. he had borrowed stock from Global trust Bank and Madhavpura Mercantile Co-operative bank and manipulated stock named K-10. He had spent only one year in jail, but he was barred from trading in the Indian Stock Market till 2017. He is yet accused of playing from backstage. Parekh and his associates are alleged to be engaged in circular and insider trading through front entities by Intelligence Bureau Report.
· Saradha chit fund case
Protagonist – Sudipta Sen
This was a major scandal by the Saradha group which occurred by the collapse of the Ponzi scheme of this group. More than 10 groups were alleged for committing fraud through public money pooling. SEBI barred managing director of the group from securities market till winding up of all collective investment schemes and refunding the same amount to CIS violation was done. After the case went under CBI many prominent people were arrested for their involvement in this scam. To investigate similar Ponzi schemes a multi-agency under Income tax department was formed by the central government.
· Punjab National Bank Fraud
Protagonist – Nirav Modi
India’s 85th richest person Nirav Modi, elite jewellery designer was the man behind a fraudulent letter of undertaking worth ₹11,356.84 crore which was issued by the Punjab National Bank at its Brady House branch in Fort, Mumbai. PNB was made liable for the amount they alleged that the funds seemingly so raised for the purchase and sale of diamonds were unused for the purpose. Bank said that Modi and companies linked to him plotted with the official to get the guarantee letter to help fund buyer’s credit from other overseas banks.
White Collar Crime in India – Landmark judgements
· Bharat Sanchar Nigam Limited Case (2009)
N G Arun Kumar a software professional of Bangalore was convicted of 1 year of imprisonment under 420 of Indian Penal Code and section 66 of the Information Technology Act for unauthorized access to internet user id and password of the Press Information Bureau Chennai and 52 BSNL broadband subscribers.
· Varpaul Singh vs. State of Punjab (2010)
Varpaul Singh was a worker in a Motor vehicle company. It was accused that in the company creation of fictitious bills were taking place and deletion of important data from the computer took place. The Receipts of the completed works were deleted from the CPU of the computers.
Cyber-crime is not physically occurring crime so it cannot really be controlled, but it is quite possible to check them. Every defence to a financial crime is fact explicit. No legislation has until now been fully able to eliminate crime from the world. Punjab National Bank fraud, scam by Nirav Modi etc. are such examples of lack of actions on them in India. Enforcement of theories and provision by countries will help to improve the condition of the problems, for this criminologist can play an important role, if white-collar crime is fundamental and normative within the values of our society, then no punishment will eradicate it. It cannot be cured by externally imposed sanctions so there is a need for the people to believe in their basic instinct that doing this is wrong and this can happen when theorist will not only make provisions of punishments but also of rewards to the distribution of society, a new frontier in criminology will come in existence.
One solution to curb this crime can be by understanding of their knowledge of technology taken over by the terrorists. Because irrespective of the technology being good enough to curb those crimes, there is no guarantee that it would stay out of reach of cyber terrorists. Therefore, it’s high time to update law by amendments or by adopting sui generis system.
- What is white collar crime?
- What do we mean by cyberspace?
- What are the types of white-collar crimes occurring using the platform cyberspace?
- What are the various crimes that occurred in this field that shook the world?
- What are the various cases that brought up awareness of these crimes?
- How can the improvements be made in this field in future?
 Newman, D. (1958). White-Collar Crime. Law and Contemporary Problems, 23(4), 735-753. doi:10.2307/1190396