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• Waste management data13
• Microchip trade secrets14
• Plant seeds15
• Adhesive labels16
• Photographic film17
• Motor oil additives18
• Soft drinks24
• Oil field data25
The list, unfortunately, could easily be extended. To the degree insiders were involved in compromises of this intellectual property, an occupational fraud was committed.
The FBI, as we know, does keep statistics on crimes reported to it as part of its Uniform Crime Reporting Program and National Incident-Based Reporting System. Unfortunately, they do not capture much of the data that would be of interest to us, and even some of the data they do capture may be difficult to segregate in a fashion that makes sense for our purposes.
Consider, for example, a Member of Congress who is taking bribes in return for favors. The FBI would consider this to be a political corruption matter, a federal crime, and perhaps also a violation of the Fraud by Wire, Mail Fraud, Fraud against the Government, and Conspiracy statutes. If the matter were tried in a state court it could be a kickback, bribery, or even extortion violation. For our purposes, it is an occupational fraud—maybe. The member was using the authority of his employer to take things of value, not unlike a traffic policeofficer who is willing to forget about a ticket for a price. Now, the thing of value did not come from the employer’s pocket, but the employer did suffer a loss, if nothing more than public trust and confidence in the institution. Are such matters occupational crimes?
Matters of definition are extremely important, but to the general public they may seem trivial. They are not. Jack Bologna, for example, defines the fraud he is interested in as follows: “Corporate fraud is a fraud committed on behalf of or against a corporation by its directors, officers, employees or agents.”26 Please note the difference between Bologna’s definition and that used by Wells. Bologna is also including improper acts committed “on behalf” of the organization, a much broader definition than Wells. Such distinctions are significant in considering a field potentially as broad as occupational fraud.
The definition used by the FBI in its National Incident-Based Reporting System, unfortunately, only clouds the picture further, making side-by-side analyses of fraud data from varying sources even more difficult and frustrating. The definition offered by the FBI of white-collar crime is: “a crime committed by a person of respectability and high social status in the course of his occupation.”271 have attempted to suggest the complexities of defining occupational fraud, much less dealing with the boundaries of “respectability” or “high social status.”
This observation is not to quarrel with the FBI for not choosing a definition more in keeping with either Wells or Bologna. That is not the point. The confounding reality is that each group or association uses a definition that makes sense from their point of view. The definition used by the FBI may well make sense as it attempts to segregate white-collar offenses from the huge sea of other data it also tracks, like assaults, robberies, drunken driving, murder, drug offenses, and sexual crimes. Some idea of the complexity of the FBI’s task is suggested by the subcategories in even its white-collar crime category (many of them reflecting common state charges, from which the FBI draws much of its reported data):
LIES, DAMNED LIES, STATISTICS (AND OCCUPATIONAL FRAUD)
False Pretenses/Swindle/Confidence Game; Credit Card/ATM Fraud; Impersonation; Welfare Fraud; Wire Fraud; Bribery; Counterfeiting/Forgery; Embezzlement; and Arson/Fraud.
Milton Meltzer has defined white-collar crime as being “crime committed by a person in a position of trust, for his or her personal gain.”28 In this regard he is somewhat close to the FBI’s definition, but we should note in the studies he cites he seems to be primarily interested in crimes committed by organizations, and not against organizations, especially crimes committed against them by insiders.
Lal Balkaran, writing of the importance of internal audit functions in controlling corruption within organizations, notes that it: “generally entails misusing one’s position for private gain or an unauthorized end. It can involve financial and nonmonetary benefit. Bribery, extortion, influence peddling, nepotism and fraud are all acts associated with corruption.”29 He goes on to note that corruption can have a significant and corrosive effect on the organization, increasing business risk, eroding investor confidence, and stifling growth.30 In offering this definition, Balkaran is somewhat close to Bologna, since he implies that both acts by the individual against the organization or acts by the individual against someone else on behalf of the organization meet the definition.