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Mon Feb 17, 2014, 10:40 PM

Edwin Sutherland: The 75th Anniversary of His Coining The Term White-Collar Crime

By William K. Black


This year is the 75th anniversary of Edwin Sutherland’s presidential address to the annual meeting of the American Sociological Association in 1939. In the course of beginning to write a book from a white-collar criminological perspective about our modern financial crises I decided to reread Sutherland’s address (which was published as an article in 1940) to see how it stands up in light of modern white-collar criminological research and theory. It reads exceptionally well today. It is not even archaic in tone. Sutherland begins by listing eleven (there were two van Sweringen brothers involved in their scam) examples of the kind of criminals he was referring to.

“The present-day white-collar criminals, who are more suave and deceptive than the ‘robber barons,’ are represented by Krueger, Stavisky, Whitney, Mitchell, Foshay, Insull, the Van Sweringens, Musica-Coster, Fall, Sinclair, and many other merchant princes and captains of finance and industry, and by a host of lesser followers.”

Musica-Coster is hyphenated because he used an alias, as did his brothers, to aid his ability to continue to defraud even after one set of his frauds was discovered. Each of the eleven people listed ran what we now call a “control fraud” (where the person controlling a seemingly legitimate entity uses it as “weapon” to defraud. Ten of the individuals controlled private entities. Secretary of the Interior Albert B. Fall was the corrupt public official leading the Tea Pot Dome scandal. I am near Minneapolis this semester (go north for the winter, brilliant idea) and in driving into the city tonight I saw Foshay Tower (the tallest building west of Chicago and east of California when it was built). Wilbur Burton Foshay made Sutherland’s list.

Nine of the eleven fraud schemes involved financial sector frauds. Harry F. Sinclair, who purchased the sweetheart lease to the Tea Pot Dome from Secretary Fall, was engaged in good old fashioned corruption. Sutherland recognized that accounting was what we now call the “weapon of choice” in financial sector frauds.


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