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THEORIES OF OCCUPATIONAL FRAUD
white-collar workers, each of whom he argues have such opportunities each day. The issue, he contends, is that this latter population is much smaller, thus driving up the frequency of offenses when considering the absolute number of offenses versus a smaller base population of only white-collar workers.40
The next notable commentary on Gottfredson and Hirschi’s position appeared in 1996, when Reed and Yeager published “Organizational Offending and Neoclassical Criminology: Challenging the Reach of a General Theory of Crime.” They began their critique by recounting a bit of theoretical history, noting that since Sutherland’s work in 1939 criminologists have used the platform of white collar crime as a launching point for attacks on theories of criminal causation based on economic deprivation or personal defects. Conversely, many of these same theorists have constructed arguments that white collar crime exhibits characteristics unlike almost all other forms of crime.41
Reed and Yeager then go on to advance their critique by contending that Gottfredson and Hirschi selected those elements of white-collar crime that most closely resembled the general population of offenses committed by the young, typical, active offender. They then contrast a series of corporate white-collar offenses to show what they believe are the inadequacies of the general theory, noting that such corporate crimes are usually absent from much Uniform Crime Reports data. In this regard, we should note that while several theorists have also focused on corporate offenses, this is a stance markedly different from what we have been discussing as typical of occupational, or workplace, fraud.42
In supporting their position with regard to corporate crimes and the adverse implications its commission has for the general theory, they cite 18 studies on the frequency of such offenses, ranging from anti-trust violations to financial fraud to pollution violations. They note that these studies indicate these offenses, as opposed to the predictions of the general theory, are fairly frequently committed, even by large, powerful, corporations; highly complex in many instances; and distributed among both large and small organizations.43
They conclude their critique of the general theory, at least insofar as it fails in their view to address corporate crime, by noting that while corporate offenses such as embezzlement are roundly condemned and operate to benefit only the offender, the general theory is inadequate to explain those forms of corporate crime where the corporate entity itself benefits.44
Having spent some time examining the general theory and its critics, what are we to make of it? From a purely experiential perspective, it would appear to explain a fair amount of crime, particularly the type of street crime committed by the young. Unlike Reed and Cleary, whose focus was on corporate crimes committed on behalf of the organization, I believe we must also find weakness in the general theory as it applies to workplace fraud.
Certainly, some portion of occupational fraud is committed by persons motivated primarily by low self-control and the need for immediate gratification, and clearly some of these persons are young. The best evidence now available, however,
suggests a different offender profile from that suggested by the general theory. The 2002 Report to the Nation of the ACFE, reports the following offender and scheme characteristics:
• Occupational fraud schemes reported in this survey had a median duration from inception to detection of 18 months. Nearly two out of three schemes ran for a year before being detected.45 It is important to note here that the fact
of detection ended the scheme. Accordingly, it is reasonable to assume the scheme, and the offender(s), would have continued for some reasonable period past a year had they not been caught. Such findings run directly counter to not only the general theory’s postulation that criminal acts are immediate, but also that they are simple. One could argue that even a simple scheme could continue for some time without achieving a degree of complexity. While that is true, a counterargument could be made that some degree of complexity is required to perpetrate even a simple scheme over a substantial period.
• 13.5 percent of schemes ran for five years or more before detection.46 This finding raises questions not only as to the general theory’s predictions on immediacy and complexity, but also on the contention that crime is essentially unrewarding, being composed of a series of small scores. One could argue that an offender would continue a scheme for in excess of five years and be content to steal only $20 a week, but it strains credibility and common sense. Such long-term schemes might not achieve seven-figure headline status, but on the other hand they must have been worthwhile from a financial perspective if they were continued—at some risk—for that long a period.