Stuff You Should Know - SYSK Selects: How White-collar Crime Works

Episode Date: September 19, 2020

White-collar crime often involves fraud and other nonviolent acts. For most people, the term "white-collar crime" conjures up images of CEOs conniving their way to fortune. But what is it, really? Listen in as Josh and Chuck break down the facts in this classic episode. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

On the podcast, Hey Dude, the 90s called, David Lasher and Christine Taylor, stars of the cult classic show, Hey Dude, bring you back to the days of slip dresses and choker necklaces. We're gonna use Hey Dude as our jumping off point, but we are going to unpack and dive back into the decade of the 90s.

We lived it, and now we're calling on all of our friends to come back and relive it. Listen to Hey Dude, the 90s called on the iHeart radio app, Apple Podcasts, or wherever you get your podcasts. Hey, I'm Lance Bass, host of the new iHeart podcast, Frosted Tips with Lance Bass. Do you ever think to yourself, what advice would Lance Bass

and my favorite boy bands give me in this situation? If you do, you've come to the right place because I'm here to help. And a different hot, sexy teen crush boy bander each week to guide you through life. Tell everybody, ya everybody, about my new podcast and make sure to listen so we'll never, ever have to say. Bye, bye, bye.

Listen to Frosted Tips with Lance Bass on the iHeart radio app, Apple Podcasts, or wherever you listen to podcasts. Hey everybody, it's me, Josh, your old pal, and for this week's SYSK Selects, I've chosen one of those overlooked gems from way back in July of 2012. Eight years ago, can you believe that?

It's how white collar crime works. So sit back, relax, and learn about how the other half commits crime. Welcome to Step You Should Know, a production of iHeart Radio's How Stuff Works. Hey, and welcome to the podcast. I'm Josh Clark, there's Charles W. Chuck Bryant. Siphon on his Lacroix mineral water.

Yeah, it's delicious. And this isn't even sponsored by Lacroix. They should be at this point. Those are free ad. We've done this like two or three times. Yeah, I agree. Lacroix, call us. And since you put the two of us,

a couple of microphones in an ice cold can of refreshing Lacroix mineral water together, you have something called Step You Should Know. It's a podcast. It's a podcast. I'm looking to see who makes this, actually. Oh no, I thought it was gonna say like Coca-Cola in small letters.

Is it Lacroix? No, it's Sundance Beverage Company. Oh yeah, they're huge. From Minnesota, I think. That's perfect. That is a perfect sponsor for Step You Should Know. A little guy that's producing a great product. Agreed.

Lacroix. So Chuck, I've got an intro today. Awesome, I miss these. Stop criticizing me. No, I mean. So very recently, a trio of Brits, economists, British economists, bone dry, they're like walking saltines.

They're very exciting. But anyway, these guys did something pretty cool. They studied bank robberies. And their study was published in a journal called Significance. It's actually kind of a cool journal. It takes statistics and applies it to real world stuff. So it's an interesting statistics journal.

Interesting. If there is such a thing. And if there is, this is it. And what these guys found was that bank robbery is actually a really terrible way to make a living. Yes, I would agree with that. Morally. Economically, it's a terrible way to make a living too.

Oh, sure. The payoff is no good. Right, yes. They looked at a lot of variables, like the number of people involved. And they found that the bigger the gang, the more the bigger the hall, I guess. But it also meant that's one extra mouth

to divide up amongst. Unless you're like one of those bank robbers that just kills everybody afterward. Yeah. You don't want to get in bed with one of those guys. Like Ben Affleck. Or like in Heat. When they're a lot of killing afterward in Heat.

Yeah, and in the town, Ben Affleck's a recent Heist movie. Yeah, yeah. A lot of killing going on there. I was going to let that one walk by, but you brought it up twice. I enjoyed it. Oh, really? Yeah.

OK, so anyway, there's a lot of variables involved. But what they found is no matter what, in the UK, you can make off with about 31 grand. That's not bad. Per? Yes, and on average, that's what the take was. So in the UK, it's not so bad. But at the same time, 31 grand, what

are you going to do with that? Yeah, I mean, if you want to live the high life, you've got to rob like four or five banks a year, easy. Right, right. OK, or if you're in the US, you have to rob a lot more than that. So the UK suffers about 106 bank robberies a year. In the US, there's 12,000.

Wow. And of those 12,000, the average take is like four grand. They only have how many a year? England? 106. God, that's amazing. They have really stiff gun laws. And I think that probably deterred bank robbery,

because you kind of have a gun. Or a note in your pocket that says something. Well, these guys figured out that the presence of a firearm increased your take. Oh, OK. But anyway, so $4,300. Yeah, that's not much at all. No, and about a third of bank robberies,

I guess in both countries, yield nothing. Zero? Zero. Wow. So it's a lot of hard work, a lot of risk, for very little gain. The real money is in white collar crime. Oh, yes.

You want to make some cash quick, maybe one good heist? Yeah. It's going to set you up for the rest of your life. And even if you're caught, even if you're caught, the chances are you will have a mild, if any, penalty levied against you. Well. White collar is the way to go.

Yeah. We're talking guys who tell people that they are financial investors and get friends and family and parents of the little league that they coach to give them 900 grand. There's other guys who just have little penny stock companies. Yeah. That pump up their stock prospects called stock touting.

Yeah. And dump all of their shares. Sure. That's investor fraud. They make hundreds of thousands, if not millions of dollars. It's where the real money is. And historically speaking, it has really low risk, even if you're caught.

All right, so we're endorsing white collar crime. We're not endorsing it. I was being facetious. Oh, OK. I thought you meant up with white collar crime in 2012. No. No, as a matter of fact, it's going down. The times are definitely changing.

There's a big struggle going on right now is to figuring out just the right amount of punishment with white collar crime, because there's a lot of factors involved. It's a lot different from blue collar crime, e.g. stealing a car, robbing a bank. Sure. There's a lot of differences that differentiate it.

Let's separate the two. And one of those now is the sentencing form is probably stiffer, which is a total reversal from how it used to be before. And they've also closed a lot of the club beds down that got so much press. Yes. Well, they've changed them.

They're still there. They just are changed. Well, a lot of them were shut down like period. Oh, really? Yeah, just to ship them to real federal penitentiaries. Penitentiaries. Penitentiaries. Penitentiaries.

That reminded me of a word that we'll definitely be hearing at some point in this podcast. What? It's a Ponzi. Oh, yeah. Because that's definitely white collar. Part of the problem with white collar crime, Josh, as you know from reading this, is that it's

hard to come up with an exact definition of what constitutes it. So that's why they have a hard time getting great statistics on punishment and fines levied and how many they're catching. But I'm going to go with nonviolent crime that typically involves. And you have to say things like typically,

because it's kind of all over the map, typically involves deceit and fraud given by a perpetrator because of their occupation. Yeah. And for that reason, a lot of times it's called occupational crime. And if you look at it through that view, which is a very broad view of white collar crime,

it's not just the execs in the $3,000 suits who are perpetrating this. It's the guy who's stealing pencils from work. Yeah, or nonviolent, deceitful, especially if somebody asks him if he did it and he says no. And it's because you're granted this opportunity through your occupation. Actually, I would call that petty theft.

But I'm saying a very, very broad definition of white collar crime that definitely counts. But for the most part, when you think of white collar, you think about the CEOs. You think about investor fraud, embezzlement, that kind of stuff. Exactly. Feds have been after it in the United States in earnest

since 1974, as far as a dedicated division. Yeah, the FBI. Yeah. And that's because of Nixon I read. And then despite that, about $300 billion a year. And that's a pretty rough estimate. That's a 2010 estimate. 2010?

Yeah. So let's talk about a few ways you can commit white collar crime. Yeah, because the definition you gave was beautiful. It was pretty good. And there are some that just, like I said, investment fraud or embezzlement are just prototypical white collar crime.

Insider trading is one. That's a big one, which falls under securities fraud, right? Yeah, I mean, it's a type of securities fraud. So basically insider trading, I swear we've done something on this. I don't think so. It must have been an Arfane and Freddie presentation then. Yeah, maybe so.

Because we studied a lot of this stuff. Did we? Yeah, and I thought we'd done a podcast on it, I guess not. But insider trading is essentially like, let's say that you and I find out the discovery had an awesome quarter. And so we go and buy a bunch of discovery stock for nothing. And then it just shoots through the roof

after the stock price comes up. That's insider trading. Sure. That's using private knowledge about a publicly traded company for your own gain. That's a no-no. Or give tips to other people. That would count as well.

And then if they took part. Like as Martha Stewart. Yeah, if they took part, then they would be insider traders as well. Exactly. And it works the opposite way as well. Like if you find out there's a lot of terrible information that's going to make your stock drop.

That's right. And you sell before that information becomes public. And you're in trouble. Big trouble. Securities fraud, which insider trading is kind of like that. But it is also manipulating, cooking the books you've heard that term, of your own company to maybe undervalue a stock before it goes public.

Or I mean, there's all different variations. But it basically involves manipulating numbers in a dishonest way. Right, that pump and dump scheme where it's stock touting. That's all securities fraud. And then there's antitrust violations for another good one. This has been kind of big lately.

So Google is supposedly hogging the YouTube metadata, which is preventing Microsoft from making a decent app for it. Oh, really? Yeah. And Google's like, well, it's proprietary or whatever. And Microsoft's like, no, you kind of have to share that. They're alleging an antitrust violation.

Companies kind of police one another with that. Oh, I'm sure. And then also price fixing is a big one, which is like the opposite of companies policing one another. It's collusion between companies. And like Apple and book publishers, fixing the prices of e-books allegedly has been going on. Oh, really?

Yeah. Huh. Yeah. Man, it's going on all over the place. It's a dirty, dirty, dirty world. Bribery, one of the oldest tricks in the book. Obviously, that involves some sort of a payoff or a kickback in exchange for whatever.

Information. I get the bid. My company gets your bid for this government job. And I get a little kickback. Or I give you a little kickback, rather. Any kind of maybe favorable decision that can influence your company? Yeah.

Little grease in the palm going on. Like here's three high quality frozen steaks. Please consider it. And you say, consider granted. And within each of these steaks is a $1 million bill. It's not even any. That doesn't even exist. What, frozen steaks with money in them?

A million dollar bill. Oh, OK. We know about frozen Deutsch marks. Somebody sent us a dollar, by the way. I want the dollar. Well, I'll give you $0.50. All right. Oh, I guess $0.33 and a third.

We've got to give Jerry our cut. Don't go there. We'll talk about it later. Embezzlement? Yeah. Office space, everyone's seen the movie, Office Space. Sure. The little program they had to like shave a cent or something

off of a transaction. Yeah, it was like a penny. That's embezzlement. They were given the opportunity through trust with books, with accounting. They basically had access to the money and skimmed some off the top. That's embezzlement.

Pure and simple. Trust with the wrong guys. Yeah. Money laundering, which we have done a podcast on. Yep. Apostly Schemes, which we've done a podcast on. Tax evasion, huge. So basically, all of the, those are all the stars.

There's also other ones, like espionage, industrial espionage, corporate espionage. Yeah, selling secrets. It's white collar. Sure. Remember the lady who tried to sell Pepsi's secret to Coke? Yeah, that was pretty hackneyed. No, Coke's secret to Pepsi's, who's like, wait right here.

She wasn't. And they went and called the cops. She didn't do a real good job. I bet she was surprised. Environmental law, violations like dumping toxic waste. Yeah, covering that up, like Aaron Brockovich style. One of the things they point out in here, which is when it comes to things like your little office

space scheme that you just touted, a lot of times it's difficult to imagine victims, like in the office space, they think no one's going to miss a penny. It's a huge company. So you commit these crimes without realizing that someone has hurt somewhere down the line. If you dump your stock, your company stock

that you know is about to tank. And I'm not saying it's understandable, but if you've worked your whole career investing in this company with your 401k, you know it's about to tank. You're like, man, I need to sell this or else I'm done for. My family's done for. You don't think about the people buying the stock. They're the victims.

No, it's absolutely true. And I mean, you are being pawned. You are pawning your problem off on somebody else. But I think you paint a really, really excellent scenario. You can, in some cases, feel bad for the white collar criminal, especially if it's just some average Joe who's worried about his 401k. Yeah.

Or in the case of Enron, you don't feel bad for the upper dudes. You feel bad for everyone in that company that got defrauded. Right, but they were strictly victims. They didn't turn around and try to dump their stocks. But that's a very visible case of screwing over your own employees. But you make a good point, even if the criminal is sympathetic, there still is a victim.

Even if it's just some amorphous trader they'll never meet. Even if the victim is some hedge fund manager, it's really tough. There's a really weird spectrum here. There's, I don't know if it's a bell curve or the UV spectrum. Who knows? But there's sympathies placed in different spots. Sympathies and antipathies placed along this, depending on who did what and what they gained from it and what their motives were.

Agreed, because you also have credit card fraud and computer and mail fraud and counterfeiting and things like that, like the Nigerian email scams. That's white collar. But they're in the same boat as Ken Lay and Jeff Skillings or Enron. Exactly. Same scummy crooks.

Or let's say you commit a little credit card fraud or bankruptcy fraud and you're just like, is it the easy way to get out of my debts? Or I just say someone stole my credit card. It's very easy there to not envision a victim, because it's Chase Manhattan Bank and they're going to notice. But what happens is they raise the rates on you and me. And all of a sudden, everyone across the board is paying more money for stuff.

Yes, that is true. That is very true. And that is, I think everybody's probably, I think a good companion piece that occurred to me is to go listen to our wider corporations have the same rights as you. One of the fundamental flaws of corporate policy is that you serve your shareholders first.

Right. Like you need to adhere to the law, but really, ultimately, anything you can do to serve your shareholders is your mandate as a corporate governor. Right. That includes keeping the profit margin as high as possible, which you're not going to go to your shareholders and be like, hey, we're making enough money.

We took kind of a hit, but we're still making a ton of profit. So we'll just take a little hit this year. No, we took a hit, so we're going to fire people. However you reconcile that, I mean, that's your own personal beliefs, like what you feel about that. But that is reality as far as business goes, right? There's fraud, there's adjustments to the fraud.

They're absorbing the fraud, and it's the corporation trying to get as lean as possible. Yeah, they're not going to take the hit for that. They're not going to say, oh, well, a bunch of people defaulted on their credit cards this year. I guess we'll just have a bad year. No. And I know in reality, that's how it works,

but I just find it disingenuous to be like, well, everybody suffers. People lose their jobs because of fraud. It's like, there's a point B in there that has to be held accountable to some degree. Well, which is your own friggin' ethical code of conduct, and how about not doing that because it's the wrong thing to do?

No, but I'm saying there's an institution that's absorbing the hit, and then turn on firing this poor guy. Yeah, exactly. It's tough because I came across a word when they were describing white collar crime, giving a definition of it. And they said, victims colon diffuse. Yeah.

You don't meet the person. The victim passes along the hit to other people. It's a big, it's nebulous. Yeah. And even if they're raising rates by like a quarter of a percentage point, or you're paying an extra $2 as a consumer a year, it's still not right, you know? Yeah.

On the podcast, Hey Dude, the 90s, called David Lasher and Christine Taylor, stars of the cult classic show Hey Dude, bring you back to the days of slip dresses and choker necklaces. We're going to use Hey Dude as our jumping off point, but we are going to unpack and dive back into the decade of the 90s.

We lived it, and now we're calling on all of our friends to come back and relive it. It's a podcast packed with interviews, co-stars, friends, and nonstop references to the best decade ever. Do you remember going to Blockbuster? Do you remember Nintendo 64? Do you remember getting Frosted Tips? Was that a cereal?

No, it was hair. Do you remember AOL Instant Messenger and the dial-up sound like poltergeist? So leave a code on your best friend's beeper, because you'll want to be there when the nostalgia starts flowing. Each episode will rival the feeling of taking out the cartridge from your Game Boy,

blowing on it, and popping it back in, as we take you back to the 90s. Listen to Hey Dude, the 90s, called on the iHeart radio app, Apple Podcasts, or wherever you get your podcasts. Hey, I'm Lance Bass, host of the new iHeart podcast, Frosted Tips with Lance Bass. The hardest thing can be knowing who to turn to when questions arise or times get tough,

or you're at the end of the road. OK, I see what you're doing. Do you ever think to yourself, what advice would Lance Bass and my favorite boy bands give me in this situation? If you do, you've come to the right place, because I'm here to help. This, I promise you. Oh, god.

Seriously, I swear. And you won't have to send an SOS, because I'll be there for you. Oh, man. And so will my husband, Michael. Um, hey, that's me. Yep, we know that, Michael. And a different hot, sexy teen crush boy bander each week

to guide you through life, step by step. Oh, not another one. Kids, relationships, life in general, can get messy. You may be thinking, this is the story of my life. Just stop now. If so, tell everybody, yeah, everybody, about my new podcast and make sure to listen so we'll never, ever have to say bye, bye, bye.

Listen to Frosted Tips with Lance Bass on the iHeart radio app, Apple Podcasts, or wherever you listen to podcasts. So where did this come from? Josh, it came. It sounds like it came from a cold wool delivery boy. I want to know more about this. Was this dude just cold, or did he really steal a lot of wool? No, so you're talking about the Carrier's Case.

The Carrier's Case of 1473-ish. It's the first white collar trial. Yes. And it resulted in the first white collar law in 15th century England. And this wool transporter was given a bunch of wool and said, hey, take this wool to this person. And it was his job.

So he decided to instead just keep the wool for himself for his own use. OK, so you looked into this more? Yeah. I thought he might have been like cold on his journey and said, I'm going to keep some of this wool. No, he kept some of the wool. I think he kept all of it.

But somebody gave it to him. He's like, thanks, chump. See, that was it. He was. But the key is, and this is something that is woven into the history of white collar crime, what he did was not illegal at the time. The law that was enacted as a result of the Carrier's Case

was they were saying, OK, this isn't illegal, but it's obviously there's a huge problem with this. So we're going to create a law that outlaws this act so people can't do it anymore. Good point. And basically, that's what happened. Well, that's kind of what happens with every law, I guess. Someone commits it first and then someone says, hey,

maybe we shouldn't do that. Yeah, yeah, I guess. But in this case, especially like the Industrial Revolution in the West, obviously, you started getting these larger corporations and all of a sudden things like monopolies and price fixing and employee safety and all these things come into effect for the first time.

So that's sort of when it was really born and when they started saying, hey, we need to look at something called antitrust. Yeah, again, monopolies were not illegal, but when a company bought up all of its competitors and said, oh, suddenly the price for your groceries are through the roof. Where else are you going to go?

It wasn't illegal, but the people of the world started screaming and governments finally responded. And it was really the US that had the real first solid response in the Sherman Antitrust Act. In like the 1870s, maybe, I think, 1890s. Yeah, 1890, name for Senator John Sherman of Ohio, Republican dude, chairman of the Senate Finance Committee, which I didn't know they even had way back then.

I didn't either, but it seems like a basic committee there. So this is interesting in that it was voted on, it won by vote of in the Senate 51 to 1 in the House by 242 to 0. So there was one dude that didn't vote for it. And then, I think 25 years later, when they came up with the Clayton Antitrust Act to really put some punch into the Sherman Act, it was 277 to 74 and 46 to 16.

So in that 24 years, it sounds like maybe things got slightly corrupt here and there. Well, it wasn't that, it was that, well, maybe it was. But there was also some real problems with the Sherman Act. It was really vague. It basically said, now from here forth, all anti-competitive corporate measures are illegal. And then it left it to the courts to decide what was what.

And the courts weren't really in the mood to enforce it. So it went largely unenforced. Although American Tobacco Company and Standard Oil, like two of the biggest companies in the country, were dissolved under the Sherman Act. Standard Oil, big time. Imagine that, like imagine going to a company now and saying like, hey, Apple, it's too big.

So we're gonna dissolve you into 31 companies. We have all these federal regulators here and they're gonna come in and look at everything and then dissolve you into different companies, sorry. That's what they did. Okay, even still it didn't have enough tea. So they came up with the Clayton Antitrust Act. And then that one really spelled things out.

Like you couldn't do price discrimination anymore. Which if you were black in America during the Jim Crow era, price discrimination was mind boggling. Oh yeah, you walk into a store if you're allowed in there to begin with and they'll just make up whatever price they want. Yeah, it was really, I'm reading this Consumerism in America book and it's at this point now

is really just this blemish on American history. I mean like slavery wasn't bad enough. We had to like have slavery light through the Jim Crow era. It's just disgusting. Exactly. Okay, so there was no price discrimination, allegedly. Corporate mergers were outlawed. In the Clayton Act.

And then interlocking boards where you had like competitive companies but the same people on the board of each. Right, right. You can't have that. And then also exclusive contracts where it's like, hey Home Depot, you can sell our weed whackers, but you can't sell anybody else's.

Those contracts were out. Right. Hey Home Depot. They do stuff like that now though, right? Maybe not exclusively, but they carry like a very limited number of brands. Corporate mergers, interlocking boards, exclusive contracts. Oh, all that stuff went away.

They all got chipped away. Oh, okay. It's just, I mean this act is like not in force anymore basically. Well, that's one of the things that bugs me about like grocery or actually the big box hardware stores, grocery shopping, you only have access to what they, who they have partnered with.

Right, yeah. Whether it's your potato chip that you want or your weed whacker that you want. It's true and most of the big box stores also have exclusive contracts the other way. It's like, yeah, we'll sell your weed whacker, but you can't sell it, no one else can. Right.

So it's like a real gamble, I understand, to like sign on to one of these giant corporations. Well, that's in the Walmart effect. That was one of the things I think they used to, it's like a tent company or an awning company. And like this mom and pop awning company, all of a sudden gets a Walmart contract and they're like, sweet.

They answer to all our prayers. They ordered like 30,000 of these. They order 30,000, they open up like three new buildings, hire all these employees and then the next year they come back and say, we want 30,000 more, but we're gonna pay you about 60% less. And you've already bought the buildings and you've invested in the materials and the people

and all of a sudden you're screwed. You know, one thing that I've long thought and I'm gonna totally take flack for this, but I still think it's worth saying. Like you hear like, well, that's just business. Yeah. And I feel that any institution where like morally reprehensible acts

can just be, you know, offhandedly dismissed as a matter of course of that institution is inherently flawed. There's an inherent problem with it. That's not okay. Agreed. Like we don't just go, well, that's just murder. Right.

You know, or well, that's just stealing. You know, welcome to earth, human. No, we have moral and legal guidelines that we follow and business and corporations have so, so long stood outside of these things. Right. That it's just, it always bugs me when it's just like, what are you gonna do?

Yeah. I don't like that. So sorry, I'm off of my soapbox. No, I agree completely. I'm off of my Tide brand soapbox. Well said. So things are kicking along here in the industrial west. Corporations are getting larger

and all of a sudden these crimes start happening and something called a muck raker in the 19th and early 20th century comes about and I didn't realize a muck raker was exclusively a journalist. Yeah, it's another name for an investigative journalist. I thought it was anyone raking muck. No. But it's specifically a journalist who basically

early on said, you know what? There's bad stuff going on C and I'm gonna expose you. Right. And Sinclair was one. Oh, really? And he wrote The Jungle and changed. Oh, of course. I mean, the FDA basically came about

because of that investigation that he conducted. Well, muck rakers raked a lot of muck and caused a lot of problems in these companies and one of the things that came about because of the muck raking were, you know, things like the Clayton Act. That's exactly right. Exposing all the stuff.

Exactly. And things like the FDA, federal regulations, consumer protections, the muck rakers basically stirred up public sentiment. Like, hey, don't be idiots. Like this stuff's going on. Right. And a lot of people said, well, it's not illegal.

And then fortunately, there were guys like EA Ross who was a criminologist and a sociologist. And he started really kind of looking into this and said, hey man, these people might not be criminal, but let's call them criminal oids. Like that was the coin, the turn coin, for people who, especially in business, carried out these terrible acts that weren't illegal.

He argued that even though it's not illegal, they're causing ill and these people are still responsible for them. So make a law that outlaws at dummies. And he inspired a guy named E.H. Sutherland. Okay, he came before Sutherland? Yeah. Gotcha.

Ross was working at the time of the muck rakers and then Sutherland came about 20 years later. Yeah, Sutherland coined the term actually white color crime in 1939. And he was a criminologist and sociologist. And he pretty much, he had a broader definition that basically it was the high society and not the lower class at all committing these crimes.

Right. Which nowadays, you can't really say that because anyone can get a stock tip and commit, and it happens all the time across all spectrums of the class system. But Sutherland's point was, and he wrote a book called White Collar Crime. Yeah.

His point was is that there is a huge bias in the United States where law enforcement and the courts leaned heavily on the working class crimes. Sure. And just basically ignored the crimes of the upper class. Yeah. And said, this is not okay. Like if a guy's gonna steal $1,000 from a cash register

with no gun or anything like that. Right. Like there are other factors. But let's just say a guy steals $1,000 from a cash register and he's poor and a guy steals $1,000 from an investor and he's rich, they should be treated equally and they're not, and that's what Sutherland's point was. And he was the first dude

to really bring this to light, wasn't he? Yeah. Well, Ross kind of started to, but Sutherland was very well received. It was well received in certain corners, but there were also certain flaws pointed out by people over the years. One of the things mentioned in the article

is that if he failed to distinguish illegal crime from deviant, mere deviant behavior. Right. Like apparently his whole premise was like, you're into donkeys, you're a white collar criminal. Exactly. And the other thing I mentioned too was that he pretty much said it was anyone,

like any upper class nonviolent crime. Right. And that's definitely evolved and I think fairly. Sure. I think you can be a working class, you can be business class, if you, like that's a big, big part of white collar crimes definition is that your opportunity arises

because of the trust that's granted to you through your occupation. Yeah. Even if you're a lower level employee, you still may have access like the lady who wanted to sell the Coke secret. She wasn't like a CEO. No, she was an admin, I believe.

Letting things with jock and jock, shining on the face, stop you should know. On the podcast, Hey Dude, the 90s called David Lasher and Christine Taylor, the stars of the cult classic show Hey Dude, bring you back to the days of slip dresses and choker necklaces. We're gonna use Hey Dude as our jumping off point,

but we are going to unpack and dive back into the decade of the 90s. We lived it and now we're calling on all of our friends to come back and relive it. It's a podcast packed with interviews, co-stars, friends, and nonstop references to the best decade ever. Do you remember going to Blockbuster?

Do you remember Nintendo 64? Do you remember getting Frosted Tips? Was that a cereal? No, it was hair. Do you remember AOL Instant Messenger and the dial-up sound like poltergeist? So leave a code on your best friend's beeper because you'll want to be there

when the nostalgia starts flowing. Each episode will rival the feeling of taking out the cartridge from your Game Boy, blowing on it and popping it back in as we take you back to the 90s. Listen to Hey Dude, the 90s called on the iHeart radio app, Apple Podcasts, or wherever you get your podcasts.

Hey, I'm Lance Bass, host of the new iHeart podcast, Frosted Tips with Lance Bass. The hardest thing can be knowing who to turn to when questions arise or times get tough or you're at the end of the road. Ah, okay, I see what you're doing. Do you ever think to yourself, what advice would Lance Bass and my favorite boy bands

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So there's one thing that, like you said, they like to shoot a hole in Sutherland's theory that, or they say his definition is too broad because he did include behavior that's not illegal. But it's a very legitimate point to say, you kind of have to, because if not, then we wouldn't have had the Sherman anti-trust act. We wouldn't have had the Clayton act.

We wouldn't have had the FDA. All of these things that, the carrier's case, he would have gotten off scot-free. What he did was not illegal. So it has to evolve over time. Agreed. Okay, and it has. Agreed.

So let's talk about, I guess, the impacts of today's modern white color crime. I was like, man, that was suspenseful all of a sudden. Thanks, dude. Yeah, we've talked about a few of these, about seemingly not having a victim, but what happens is you rip off a huge corporation, they'll raise the prices, there's another ripple effect.

We talked about cutting jobs to meet the needs of the investors if it's a publicly traded company. Right. When there's stock fraud committed, insider scandals like Enron are gonna ripple out throughout the stock market, cause like, basically cause people to be unsure and have no faith in the stock market all of a sudden.

That's dangerous. Yeah, think about all of the people who just lost everything. I know. Oh my God. I get just as angry if not more angry at something like that than some like heinous crime. Yeah, I'd say equal.

They're both scumbags. Okay. So, you said like in 74, the FBI first started, that's when they've created this white collar crime division. Yeah. So apparently like- 1974.

Yes. And it was a response like this University of Michigan survey that they conducted between 1958, I think, and 1973, they found that people who said that they trust the federal government went from 73% to 37%. And then what span of time? Between 1958 and 1973.

Wow. Yeah, it flip flopped in that short of time. I could see that over that time period, the 60s. Yeah, one of the big ones was just like fraud and corruption at high levels. And so the FBI created this white collar crime thing. One of the other things that differentiates white collar crime from regular working class crime,

is the police's ability to police it. Right. You walk into a room and there's some guy weighing out cocaine, he's a criminal. Yes. You walk into a room and there's some guy on a computer doing a pump and dump scheme, who knows?

Yeah. The average cop is an equip to detect this kind of crime. And as a matter of fact, even very, very well-trained cops aren't typically equipped to detect this kind of crime. One of the hallmarks of white collar crime is that it's very difficult to prove, it's very difficult to uncover,

and it's also difficult to prosecute. Yeah, and there's no smoking gun, there's no paper trail, or there may be a paper trail, but it's probably electronified. Sure. So it's a little harder to follow. You gotta really, you know,

you gotta have people that know what they're doing, and that's why the FBI created that division. And I guess they're doing a good job, but it's kind of hard. Well, the Justice Department has been going after white collar crime lately under Obama, pretty hard here, there. And then the Sarbanes-Oxley Act,

definitely step things up. And some say too much. Yeah, I mean, I've had to comply with this at various, when I worked in the field, Mrs. Production Company's had to, like, jump through way more hoops with paperwork because of Sarbanes-Oxley. Yes.

Do you want to tell them? Well, it was in 2002, and it was to improve corporate governance, which is basically accountability between the corporation and the stakeholders, what it amounted to was a lot more paperwork, essentially. A lot more proving of numbers and showing numbers and jumping through hoops.

It was a direct reaction of the fallout of Enron, from the fallout of Enron and Tycho and like all the other companies around that time. But one of the other things it did, Chuckers, was it quadrupled sentences in a lot of cases for white collar crime. So now you have guys like Bernie Madoff getting 150 years.

There's a guy named Sholem Weiss, who was involved in like the breakup of some insurance company. He got 845 years. Wow. He gets out in 2754. I don't think he's gonna see that. I don't either.

But I mean, a guy named Rich Harkness got 100 years for a $39 million Ponzi scheme. Like these, and all of this is like post-Sarbanes-Oxley, except Sholem Weiss, which is really saying something. But they still got that kind of sentence. But I mean, like, so now sentences are like quadrupled. And it's like, well, wait a minute, maybe this is a little too much.

Like just retribution on the Rich. It is. And that's kind of, I think, why a lot of people are having a hard time feeling bad for ridiculously wealthy people who were hucksters and frauds. Or people who built people out of their retirement accounts. It's tough to feel sorry for them.

But legally speaking, it's like, well, wait a minute, you were worried about the guy who stole $1,000 out of a till being treated differently from the guy who stole $1,000 from an investor. Now it's flip-flopped. How is that any better? Exactly. One of the arguments for these kind of things

is that these people are traditionally and historically have been treated differently because they look like the judges that are sentencing them. And so judges historically like really have taken it easy on them. Let's go ahead and just call them white dudes. But they also have been, you can make the case that they are usually first-time offenders.

They're usually family people. That's something that the judges put out there. Like, well, this is a family man. He's not much of a flight risk. He's probably never going to do this again. Yes, he a danger to society. Yes, he didn't use a weapon, which is a huge, huge differentiation.

And so sentences have typically been light. But you can also kind of say, well, it feels like we haven't quite felt it out. Like, we've traditionally ignored white-collar crime. Now we're really sticking it to them. Well, it's that whole argument with prison. Is it like punishment for a crime done? Or is it rehabilitating a person who has a problem with crime?

Well, with an 845-year sentence, it's making an example out of that person. Because since you can't police it, another way to prevent it is to send a message through the courts. Like, you do this, man. You're going to prison for a long time. Yeah, I don't know if that's such a deterrent, though,

for some of these people. I don't know. I mean, think about it. 20 years in a federal pen, you say club fed is not around any longer. Yeah, true. And I mean, this is like 20 actual years. Some guy named Thomas Petters recently got 50 years.

And he will spend 40 years in jail. And he's 52. And he will probably die in prison now. That's a big deal to somebody who's like, maybe I shouldn't do this insider trade. Maybe I should let this 50 grand just walk by, because it's not really worth it. Well, something like that.

I'm talking about the ones who are getting rich by the tens of millions of dollars. What I want to see is that these people don't get out of prison and still have all those millions of dollars, like hidden in different foreign accounts, and offshore islands, and like the financial part is what really bugs me. I didn't get a chance to.

I meant to look up and see if any of the Enron victims and employees were ever repaid, or if they were just SOL. I'm under the distinct impression they were SOL, because the company was in such bad shape that even dissolving it and splitting its assets up. No, I think some people did get some money, but I don't think it was anything approaching what they lost. Well, if whoever commits these crimes gets out of jail

and they have two pennies to rub together, then those two pennies more than they should have, I think. Well, that's the thing. So the government started prosecuting under the RICO Act, which is the same thing they bust up mafia organizations with. And they've been fighting white-collar crime with that. And one of the things about the RICO Act is it allows states and individuals who

are harmed to sue for up to three times the damages. Yeah, but even then, all they have to do is say, yeah, I don't have that money, you kidding me? It's true. Can't pay it. No, it's true. In the Madoff case, the guy who was assigned to basically get money back for investors has gotten,

I don't remember how much Madoff leased, but let's say it was $8 billion. The guys managed to get like $6 billion back. Oh, really? Yeah, he's done a really good job of getting the money back. And that's just an example. That's not an actual figure. But it's something pretty significant.

You're still going to get an email. $8 billion. I'm looking forward to the ones where it's like, hey, man, we don't listen to you for free to hear your opinion about class. All right, let's move on to other countries. Things are different all over the world. Obviously, when it comes to big business and business dealings, Western Europe has followed right behind the US.

Most wholeheartedly with laws to prevent corruption. Eastern Europe is coming on board a little slower. But then you go into other countries like in Western Africa, and it may be customary to Greece Palms to get a deal going. Or in India, where apparently if you're a truck driver, you're going to have to bribe people to keep your rig on the road. And that's just how it is there. Right, and not only is it customary, it's frequently legal.

Yeah, Russia bribes all over the place. If you want to land contract, you might have to bribe somebody. So if you're a multinational corporation that's headquartered in America, yeah, you have a real problem facing you, especially, like I said, the Justice Department under Obama has been prosecuting white color crimes and going big time after people under the Foreign Corrupt Practices Act, which says if you're an American company,

you can't engage in bribes even if it's legal in that country. Well, good. But what's the point, like why hamstring American business abroad? Yeah, exactly. And to help this out, actually, there has been a unified committee called the company, I'm sorry, a committee called Transparency International, and they are out to get rid of corruption and to unify business ethics all over the world.

Right, and that's the reason that you hamstring American business, because basically saying, hey, we can take the hit in the hopes of pressing the rest of the world into the same competitive laws we have here in the States that work very well. So good luck to them. Yeah, that's it, man. I got nothing else. No, we should play this one out with the talking heads big business, OK?

Agreed. OK. So, Chuck, let's see if people want to learn more about white collar crime. I would strongly advise them to go read this article by Jane McGrath. She's a good job. And there's a Simpsons reference in it. It's a way to go, Jane. You can type in white collar crime in the search bar at HowStuffWorks.com,

which, friendo, brings up listener mail. That's right, Josh. I'm going to call this hot off the presses, good cause. I'm going to suck up at that stuff, OK? Chuck and Josh and Jerry, I want to say thank you for all the hours of listening. My brother Chase and I have been listeners nearly as long as he has been making them. There was even one New Year's Day where all we would do was listen to your hangover podcast on repeat.

I don't know if that's good for hangover. Yeah. It's funny and informative, and I always feel like calling my brother after listening to the latest episode. I'm writing you because it's recently his birthday. He's the best brother in the world and downright awesome human being. It would mean a lot to me if you could tell the stuff you should know listeners about his latest project.

When his friend Jim survived cancer, he told Chase that he gained strength from the music he loved. Over two years, 226 hundred tracks. 226 hundred tracks. That's a weird way to put it. What would that be? 226 hundred? Would that be?

Wait. How many? 226 hundred? Yeah. That'd be 2,800. Would it? Or 2,200? No.

2,600 plus 200 is 2,800. Nearly 200 artists from all over the world. This person's insane. No. She's not. Over two years, 226 hundred tracks, nearly 200 artists from other countries all over the world have allowed them to share that message. They are releasing their second compilation disc, Electronic Saviors colon industrial

music to cure cancer. These artist compilations are putting together. Can't you? Apparently 226 hundred tracks. They are a registered U.S. charity and all proceeds go to cancer research. If you want, if you're into electronic music and if you want to support cancer research, you can go to www.electronicsaviors.com and that is something Chase has got going and his sister Laura Dudley is a big fan of her bro.

He sounds like a swell guy. Nice. I'm all for it. Music. That is good stuff. During cancer. We need to promote a good cause, Chuckers. We try to do that.

You do good. Yeah, we always want to hear about good causes. So you can get in touch with us. Let us know about yours. We'll try our best to let everybody else know about it, especially if people can support it. Agreed. Let's see.

Also, enjoy little talking heads. Big business from the live album Stop Making Sense released in 1984. We're sure it's up on iTunes, Amazon, and elsewhere. You can get in touch with us at SYSK podcast on Twitter. You can go to facebook.com slash stuff you should know and you can send us a regular old email. Do stuff podcast at howstuffworks.com and as always, join us at our home on the web, stuff you should know.com.

Stuff you should know is a production of iHeartRadio's How Stuff Works. For more podcasts from iHeartRadio, visit the iHeartRadio app. Apple podcasts are wherever you listen to your favorite shows. On the podcast, Hey Dude, the 90s called, David Lasher and Christine Taylor, stars of the cult classic show Hey Dude, bring you back to the days of slip dresses and choker necklaces. We're going to use Hey Dude as our jumping off point, but we are going to unpack and dive back into the decade of the 90s.

We lived it and now we're calling on all of our friends to come back and relive it. Listen to Hey Dude, the 90s called on the iHeartRadio app, Apple podcasts, or wherever you get your podcasts. Listen to Frosted Tips with Lance Bass on the iHeartRadio app, Apple podcasts, or wherever you listen to podcasts.