White-Collar Crime: The Privileging of Serious Financial Fraud in New Zealand
| DOI | 10.1177/0964663919883367 |
| Date | 01 August 2020 |
| Author | Lisa Marriott |
| Published date | 01 August 2020 |
| Subject Matter | Articles |
Article
Social & Legal Studies
2020, Vol. 29(4) 486–506
White-Collar Crime:
ª The Author(s) 2019
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The Privileging of Serious
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DOI: 10.1177/0964663919883367
Financial Fraud
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in New Zealand
Lisa Marriott
Victoria University of Wellington, New Zealand
Abstract
Bagaric and Alexander (2014) argue for fundamental reform of the sentencing process
for white-collar offenders in Australia and other jurisdictions. This study has two
objectives. First, it challenges Bagaric and Alexander’s proposals. Second, using data from
cases prosecuted by the New Zealand Serious Fraud Office, it instead proposes that
white-collar offenders should not receive more lenient treatment in the justice system
due to the privileged position from which the offending commences. This article suggests
that an absence of restitution should be considered an aggravating factor, rather than the
presence of restitution viewed as a mitigating factor; as an offender’s good character is
often an enabler of the offending, this should not be considered as a mitigating factor and
as extra-curial punishments, such as reputation damage or loss of future employment
opportunities, are short-term for white-collar offenders, there is little justification for
reduced sentences and extra-curial punishments can be viewed as a natural corollary of
the offending.
Keywords
Aggravating factors, deterrence, financial fraud, mitigating factors, punishment, restitu-
tion, white-collar crime
Corresponding author:
Lisa Marriott, School of Accounting and Commercial Law, Victoria Business School, Victoria University of
Wellington, PO Box 600, Wellington 6140, New Zealand.
Email: lisa.marriott@vuw.ac.nz
Marriott
487
Introduction
There has been considerable commentary in recent times on the different treatment of
those who engage in crimes of the privileged (e.g. serious tax evasion) and crimes of the
poor (e.g. welfare fraud) (Marriott, 2012, 2014a). It is generally agreed that treating
different ‘types’ of people in different ways in the justice system, and in other spheres of
society, is undesirable. However, there is yet to be much movement towards equalising
the treatment of those who are more or less privileged. This article addresses the issue
from a different perspective. Instead of focusing on the gap between the poor and the
privileged, the article investigates dimensions of the privileged: those who engage in
serious financial fraud.
The study has two objectives. First, it challenges proposals made by Bagaric and
Alexander, who investigate the sentencing of white-collar criminals in Australia (Baga-
ric and Alexander, 2014). Bagaric and Alexander make a case for changing sentence
practice in relation to white-collar crime. The changes proposed would have the ultimate
outcome of generating more lenient sentences for white-collar criminals. There are five
key components to Bagaric and Alexander’s proposals. These are that the sentencing
process should give greater weighting to: the ‘good character’ of white-collar offenders,
any restitution made and future employment deprivations that result from the offending;
less weighting should be given to the general deterrence factor in sentencing and crimes
against individuals should be regarded as more serious than crimes against corporations.
The first four of these are discussed in this article.
While Bagaric and Alexander’s study is situated in Australia,1 the current study is
located in New Zealand. The second objective of the study is to use Bagaric and Alex-
ander’s proposals as a framework to challenge the sentencing process for serious white-
collar crime prosecuted in New Zealand.
This study proposes that the ‘good character’ of white-collar offenders should not be
considered as a mitigating factor, as it is this ‘good character’ that often facilitates the
crime. The study also proposes that restitution made should not be treated as a mitigating
factor of the offending, but rather the absence of restitution may be considered as an
aggravating factor. With regard to employment deprivations, research suggests that any
reputation damage resulting from white-collar crime is only short-term and white-collar
offenders return to the same position as prior to their offending. Thus, there is no
justification for taking this factor into account in sentencing decisions. Reducing the
focus on general deterrence signals that deterrence is not a desired outcome of the
sentencing process. Moreover, deterrence is more likely to be achieved by increasing
efforts into detection and prosecution, rather than reducing the focus on deterrence.
Therefore, the study proposes that greater investment is made into detection and prose-
cution, rather than reducing the focus on general deterrence.
The article commences in the second section with an outline of the literature pertain-
ing to white-collar crime. This study does not extend to ‘corporate crime’. Instead, it
focuses on crime committed by individuals in positions of power or privilege, usually
involving significant sums of money. The second section also discusses the legislation in
New Zealand that is relevant for sentencing serious financial crime. The third section
outlines the data that are used for analysis in this study, which is collected from
488
Social & Legal Studies 29(4)
prosecutions taken by the New Zealand Serious Fraud Office (SFO) over the 5-year
period from 2014 to 2018. The fourth section discusses the issues raised from the second
and third sections. Conclusions are drawn in the fifth section.
Background
This section has two objectives. First, it discusses the literature pertaining to white-
collar crime. Second, it outlines the New Zealand legislation that is relevant to the
sentencing process.
White-Collar Crime
Bagaric and Alexander note the factors that differentiate white-collar offences from
other types of crime, including those who engage in white-collar offending are not
usually from a socially deprived background; often white-collar crimes are first offences
and involve a breach of trust; white-collar crimes can typically be rectified with financial
restitution; the harm generated from white-collar crime may be wide-reaching and
additional sanctions may be suffered by white-collar criminals as a result of their offend-
ing, such as reputation damage (Bagaric and Alexander, 2014). Moreover, white-collar
crime often requires some degree of sophistication and is typically undertaken over a
long period of time. Croall (2001) notes that white-collar crime can be relatively invi-
sible and more easily concealed than more traditional crime. Perhaps, one of the key
differences with some white-collar crimes is the tendency to view them as ‘victimless’,
particularly where the victim is the state or large corporations, which may be able to
claim insurance reimbursements from fraudulent activity. It is perhaps more accurate to
view some crimes as having diffused, rather than individual, impact. However, this
diffused impact ultimately results in wide-ranging impact, such as higher insurance
premiums or higher tax rates for society.
The objectives of white-collar crimes frequently differ from other more conven-
tional offending, whereby the offender seeks some personal financial gain from
the behaviour, at the expense of someone else (Bequai, 1978). Wheeler et al. (1987:
339–341) highlight some of the complexities and other differences in ‘common’
(non-violent) crime and white-collar crime. These are outlined in Table 1 (adapted
from Wheeler et al., 1987: 339–341):
Table 1 illustrates some of the distinctive differences in white-collar and other crim-
inals, showing that the two categories of offenders draw from different sectors of the
population (Wheeler et al., 1987). Different patterns of the offending are also visible.
The figures in Table 1 show that white-collar criminals have higher levels of education
and employment than ‘common’ criminals. Moreover, white-collar criminals have
higher levels of education and employment than the general population.
Table 1 also presents that white-collar crimes are more organised, longer lasting and
more likely to involve an organisation. Moreover, white-collar criminals are more likely
to be male, White and older than those committing more traditional (non-violent) crime.
White-collar offenders are nearly eight time as likely as common criminals to own their
own home, suggesting greater wealth and/or asset holdings.
Marriott
489
Table 1. Differences in (non-violent) common and white-collar crime.
White-
Non-violent
collar
General
common crimes
crimes
public
Pattern to the crime
23.9%
65.1%
N/A
Crime lasting more than a year
7%
50.9%
N/A
Involving an organisation
2.4%
40.2%
N/A
Involving five or more persons
18.9%
35.7%
N/A
High school education
45.5%
79.3%
69%
College education
3.9%
27.1%
19%
Unemployed
56.7%
5.7%
5.9%
Steady employment
12.7%
58.4%
N/A
Male
68.6%
85.5%
48.6%
Race (White)
34.3%
81.7%
76.8%
Age (average)
30
40
N/A
Home owner
6%
46%
N/A
There is little research that challenges the finding that white-collar criminals are
privileged in the justice system. From the time that Sutherland suggested this in the
1940s (Sutherland, 1940), there have been only a handful of research outputs that
suggest this is no longer the case (Wheeler et al., 1982). Instead, the key findings in
relation to white-collar crime and punishment tend to agree that white-collar offend-
ing is treated less harshly in the courts than blue-collar...
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