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Hey, everybody, it's me, Josh, your old pal, and for this week's Y České Selex, I've chosen one of those overlooked gems from way back in July of 2012, eight years ago. Can't believe that. It's how white collar crime works. So sit back, relax. You'll learn about how the other half commits crime.

Welcome to Stuff You Should Know.

A production of art radio's howstuffworks. Hey, and welcome to the podcast, I'm Josh Clark, there's Charles Zewe, Chuck Friant sipping on his lukewarm mineral water.

Yeah, it's delicious. And this isn't even it's sponsored by the ad. And it's like two or three times. Yeah, I agree. Eloqua, call us. And since you put the two of us a couple of microphones in an ice cold can of refreshing look for mineral water together, you have something called stuff you should know. It's a podcast. It's a podcast.

I'm looking to see who makes this actually. Oh, no. I thought I was going to say, like Coca-Cola in small letters.

Does it look cool now? It's Sundance Beverage Company. Oh, yeah.

They're huge for Minnesota. I think that's perfect. That is a perfect sponsor for stuff. You should know a little guy that's producing a great product.

Agreed. So, Chuck.

Yes, I've got an intro today. Awesome. Amesys, stop criticizing me.

I mean, so very recently, a trio of Brit economists, British economists don't try to 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. If there is such a thing and if there is, this is it. Yeah.

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. They pay off is no good, right? Yes. They looked at 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 one extra mouth to divide up amongst, unless you're like one of those bank robbers, it 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 there are a lot of killing afterward.

In heat. Yeah. And in the town, Ben Affleck's recent heist movie, you know, a lot of killing going on.

I was going to let that one walk by. But you brought it up twice. I enjoyed it.

Oh, really? Yeah. And 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 thirty one gram.

That's not bad per. Yes. And on average that's what, that's what the take was. OK, so in the UK it's not so bad but at the same time 31 grainne. What are you going to do with that.

Yeah, I mean if you want to live the high life you got to rob like four or five banks a year. Easy, right. Or right.

OK, or if you're in the U.S., you have to rob a lot more than that. So the UK suffers about one hundred and six bank robberies a year. In the U.S. there's 12000. And of those 12000, the average take is like four grand.

They only have how many a year? English One hundred and six. Yeah, that's amazing.

They have really stiff, stiff gun laws. And I think that probably deters bank robbery because you kind of have a gun or a note in your pocket and says something.

Well, these guys figured out that the presence of a firearm increased your take.

OK, yeah. Um, but anyway.

So 4300 bucks. 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. Yeah. 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. Yeah. 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 met up with white collar crime in twenty twelve.

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 the just the right amount of punishment. Yeah. 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. A lot of differences that differentiate that separate the two and one of those now is the 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 changed them. They're still there. They just are cheap. Well, a lot of them were shut down, period. Oh, really? Yeah. Just to ship them to real federal penitentiary penitentiaries. Penitentiaries, penitentiary penitentiaries.

Uh, that reminded me of a word that will definitely be hearing at some point in this podcast. What? It's a poncy.

Oh, yeah.

Because that's definitely a white collar part of the problem with white collar crime. Josh, as you know from reading this, is that, um, 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. Yeah, that typically involves and you have to say things like typically because it's kind of all over the map. Right.

Typically involves deceit and fraud, uh, given by perpetrator because of their occupation. Yeah.

And for that reason, a lot of times it's called occupational, um, crime. Yeah.

And if you look at it through that view, which is a very broad view of white collar crime, it's not just the sex in the three thousand suits who are perpetrating this. It's the guy who's stealing pencils from work. Yeah.

Or nonviolent deception, especially if somebody asked him if he did it and he says no. Yeah. And it's because you are you're granted this opportunity through your occupation.

Actually, I would call that petty theft. It's but I'm saying like in a very, very broad definition of white collar crime, that 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.

The feds have been after it in the United States in earnest since 1974 as far as a a dedicated division there, the FBI.

Yeah.

And that's because the Nixon I read and then despite that, about three hundred billion dollars a year.

And that's a pretty rough estimate of the 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 like beautiful. It's 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?

Uh, yeah. I mean, it's a type of securities fraud. So basically insider trading, we've I swear we've done something on this. I don't think so. It must have been in our Fannie and Freddie presentation then.

Yeah, maybe we studied a lot of this stuff. Did we. Yeah. And I thought we'd done a podcast and I guess not, but insider trading is essentially like, um, let's say that you and I find out that 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.

Yeah. For your own gain. That's a no no. We're talking to other people. Yeah. That would count as well. And then if they ask 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, terrible information going to make your stock drop, that's when you sell. Before that information becomes public, you're in trouble. Big trouble.

Uh, 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, um, 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. Yeah. Where it's stock touting, there's that's all securities fraud. Um, and then there's antitrust violations. Sure. Another good one. This has been kind of big lately. So, um, Google is supposedly hogging the YouTube metadata, which is preventing Microsoft from making a decent app for it.

Oh, really? Yeah. And and Google's like, well, it's proprietary or whatever.

And so it's like, no, you got to kind of have to share that. That's they're alleging an antitrust violation. Companies kind of police one another with that. Oh, I'm sure. And then also price fixing, the big one, which is like the opposite of companies policing or another. It's collusion between companies like Apple in book publishers. Um, 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 it's a dirty, dirty, dirty word. Uh, bribery.

One of the oldest trick 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, um, any kind of maybe favorable decision that can influence your company.

Yeah, little 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 stakes is a one million dollar bill.

It's not even that doesn't even exist. What, frozen steaks with money in them? A million dollar bill. OK, we know about frozen Deutschemarks. Somebody sent us a dollar, by the way. I want the dollar.

I'll give you 50 cents. All right. Well, I guess 33 and a third.

We got to give Jerry haircut. Don't go there. We'll talk about it later. Embezzlement? Yeah. Office space. Everyone's seen the movie office space. Sure. A little program. They had to, like, shave a cent or something off of, like a transaction. That's embezzlement. They were given the opportunity through trust, with books, with accounting. They basically had access to the money and skim some off the top. That's embezzlement.

Pure and strong guys. Yeah, money laundering, which we have done a podcast on. Yeah. The Ponzi schemes. Yeah, it's on tax evasion. Huge.

Um, so basically all of the those were all the stars. There's also other ones like um espionage, industrial espionage, corporate espionage, selling secrets, white collar.

Sure. Remember the lady who tried to sell Pepsi's secret. Yeah. Coke. Yeah. That was pretty hackneyed. No Coke secret.

The Pepsi. Yeah. She's like, wait right here.

She was anyway and called the cops. She didn't do a real good job but she was surprised. Yeah.

Um, environmental law violations like dumping toxic waste. Yeah.

Covering that up like Erin Brockovich style. Yeah.

Um 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, um, a lot of times it's difficult to imagine victims like in office space. They think no one's going to miss a penny is a huge company. Right. So you commit these crimes without realizing that someone is hurt somewhere down the line. If you dump your stock, your company stock that you knows about the tank.

And I'm not saying it's understandable, but if you've, like, worked your whole career.

Investing in this company with your 401k, you know, it's about to tank, you know, like, man, I need to sell this or else I'm done for. My family's done for. Yeah. You don't think about the people buying the stock.

They're the victims. No, it's absolutely true. And I mean, like, you are being pawned. You are pawning your problem off on somebody else's back.

But I think you paint a really, really excellent. Scenario like you can in some cases, feel bad for the white collar criminal, especially if it's just some average Joe who's worried about for a long.

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 want to turn around and try to dump the stocks.

But that's a very visible case of like screwing over your own employees. But you make a good point. Like even if 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, like, hedge fund manager. Yeah, it's really tough. There's like a really weird spectrum here.

There's like I don't know if it's a bell curve or like the movie spectrum.

Who knows. Yeah, but there's sympathy's like placed in different spot. Sympathy's in an antipathies. Yeah. Place along this depending on who did what and what they gain from it and what their motives were.

Agreed, because you got to also have credit card fraud and computer and mail fraud and counterfeiting and things like that, like, you know, the Nigerian e-mail scams.

That's white collar.

But and they're in the same boat as like Ken Lay and Jeff Skilling's Renren. Exactly same scummy crooks.

Or let's say you commit a little credit card fraud and you 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 a victim because it's it's Chase Manhattan bank and like 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.

Yeah.

Yes, that is that is true. That is very true, and that is I think everybody probably I think a good companion piece that occurred to me is to go listen to our why do corporations have the same rights as you? Yeah, 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, like anything you can do to serve your shareholders is your mandate as a as a corporate governor. Right.

That includes keeping the profit margin as high as possible. Yeah. 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, it's we took a hit, so we're going to fire people. Yeah. 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, 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. No, they're not going to say. Oh, well, 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, you know, like people lose their jobs because of it. It's like there's a there's a point B in there that that has to be held accountable to some degree.

Well, which is your own friggin ethical code of conduct then? Like, how about not doing that because it's the wrong thing to do?

No, but I'm saying like there's an institution that absorbing the Internet and firing this poor guy.

Yeah, exactly.

It's just it's tough because I came across a word when they were describing white collar crime, giving a definition of it, and they said victim's colon diffuse.

Yeah. You don't meet the person. The victim passes along the 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 two dollars as a consumer a year, it's like it's still not right.

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Hi, guys. Welcome to the first meeting last year. We are having a moment.

Everybody has a podcast. All right. Every celebrity, everybody you knew in college, every family member at least once, there are literally hundreds of thousands of podcasts out there. And yeah, it's a bit of a mess. So I figured, what the heck, what's Woodmore, I'm Nicoya about you show Sevigne a pod, we'll give you the most interesting and important stories in podcasting. We'll talk to producers, entertainers and journalists. We'll talk to bigwigs and we'll talk to independent creators.

Servanda part. We'll give you a sense of what's happening in a growing world of podcasts and more importantly, why you should care.

Listen to serve in a pod on the I Heart radio app, Apple podcast or wherever you get your podcast.

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 you really steal a lot of wool?

So you're talking about the carriers, the carriers case of fourteen seventy three.

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. Yeah. So he decided to instead just keep the wool for himself, for his own use. OK, so you look into this more.

Yeah, I thought he might have been like cold on his journey and said, you know, I'm going to keep some of this wool now. He he kept some of the wool. I think he kept all of it, but somebody gave it to him.

He's like, thanks, chump. After all, 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. Right. The law that was enacted as a result of the carrier's case was they were saying, OK, this isn't this isn't illegal. But it's obviously there's a huge problem with this.

So we're going to create a law, right. That outlaws this act so people can't do it anymore.

Good point. And basically, that's what happened. Well, that's kinda 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, like monopolies were not illegal, but when a company bought up all of its competitors and said, oh, suddenly the price for your groceries, like through the roof.

Right.

Where else are you going to go? It wasn't illegal, but the the people of the world started screaming and governments finally responded. And it was really the US that first had the real first solid response in the Sherman Antitrust Act in the 70s, maybe I think 1890, 1890 name for John.

Senator John Sherman of Ohio, Republican dood. Yeah. Chairman of the Senate Finance Senate Finance Committee. Yeah. Which I didn't know they even had way back then. I figured they didn't either.

But I mean, it seems like a basic committee there.

So this is interesting in that it was voted on, it won by a vote of in the Senate, 51 to one in the House by 242 to zero. Wow. So there was one dude that didn't vote for it. And then I think twenty five years later when they came up with the Klayton Antitrust Act to really put some punch in to the Sherman Act. Yeah it was two seventy seven to seventy four and forty six to sixteen.

So in that twenty four years it sounds like maybe things got slightly corrupt here and there.

Well it wasn't that, it was that. Well maybe it was. Yeah. But there was also some real problems with the ceremony. There was really vague. Yeah.

It basically said like now from here forth all anti-competitive corporate measures are illegal. Right. 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 or dissolved under the Sherman Standard Oil, big time. Imagine that. Like imagine going to a company now and saying, like, hey, Apple, you're too big.

Yeah. So we're going to dissolve you into thirty one companies. We have all these federal regulators here and they're going to come in and look at everything and dissolve you into different companies. Sorry.

That's what they did. Yeah. OK, even still it didn't have enough teeth so they came up with the Klayton Antitrust Act and then that one really spelled things out, like you couldn't do price discrimination anymore. Right. 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. Yeah. 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, it's really just this blemish on American history.

Yeah. I mean like slavery wasn't bad enough. I mean like have slavery right through the Jim Crow era.

Yeah. It's just disgusting. Exactly. Um, OK, so there is no price discrimination. Allegedly corporate mergers were outlawed in the Klayton Yeah.

Act and then interlocking boards where you had like competitive companies. Yeah. 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 ah. Um, weed whackers but you can't sell anybody else's. Those contracts are out. Right. Hey Home Depot. They do stuff like that now though, right. Maybe not exclusively, but they carry like they do now with a limited number of.

Corporate mergers, interlocking boards, exclusive contracts, all that stuff went away. It all got chipped away. OK, it's just I mean, this this this act is like not enforced anymore, basically.

Well, that's one thing that bugs me about like groceries or actually the big box hardware stores, grocery shopping.

You only have access to what they who they have partnered with. Right. Whether it's your potato chip that you want or your weed whacker that you want.

It's true in 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 sign on to one of these giant corporations.

Well, that's in the Wal-Mart effect. That was one of the the things I think they used like a tent company or a mining company. And like this mom and pop owning company all of a sudden gets a Wal-Mart contract and they're like, sweet.

They answered all our prayers. They ordered like thirty thousand of these. They order thirty thousand. They open up like three new buildings, hire all these employees. And then the next year they come back and say, we want 30000 more, but we're going to pay you about 60 percent less than you've already bought the buildings. And you've, you know, invested in the in the materials and the people and all sudden you're screwed.

You know, one thing that I've long thought, and I'm going to totally take flak for this, but I still think it's worth saying, like, you hear like, well, that's just business. Yeah.

I feel that any any institution where, like, morally reprehensible acts can just be, you know, offhandedly dismissed as a matter of course. Yeah. Of that institution is inherently flawed.

There's an inherent problem with it. Yeah. That's not OK. Agreed. Like we don't just go well that's just murder. Right. You know. Well it's just stealing. Yeah. You know, welcome to Earth human. Right. Well we have moral and legal guidelines that we follow and business and corporations have so for so long stood outside of these things.

Right.

That it's just it always bugs me when it's just like, what are you going to do? Yeah, I don't like that. So sorry. I'm off my soapbox. I agree completely. Well, most of my time. Brand soapbox.

Well said. Um, so things are kicking along here in the industrial W, corporations are getting larger and all of a sudden these crimes start happening. And something called a muckraker in the 19th and early 20th century comes about.

And I didn't realize a muckraker was exclusively a journalist.

Yeah, it's it's a it was an investigative journalist. I thought I would. Was anyone Rakan Muk know? But it's specifically a journalist who basically early on said, you know what, there's bad stuff going on, see, and I'm going to expose you. Right.

And then Sinclair was one. Oh, really? And he wrote The Jungle Change. Oh, of course. I mean, the FDA basically came about because of that investigation that he conducted.

Well, muckrakers raped, a lot of marketing, caused a lot of problems in these companies. And one of the things that came about because of the muckraking were, you know, things like the Clayton Act.

That's exactly right. Exposing all this stuff. Exactly. And things like that. The federal regulations, consumer protections, the muckrakers 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 E.A. 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 those that coin the coin for people who, especially in business, carried out these terrible acts that weren't illegal.

He argued that even though it's now illegal, they're causing ill and these people are still responsible for him. So make a law that outlaws that dummies. Yeah, yeah.

And he inspired a guy named Sutherland, OK? He came before Sutherlands.

Yeah, he was that the Ross is working at the time, the muckrakers and then suddenly came about twenty years later.

Yeah. Suddenly coined the term actually white collar 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 to commit. And, you know, it happens all the time across all spectrums of the class system.

But Sutherlands 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 the were law enforcement and the courts leaned heavily on the working class crime. Sure. And just basically ignored the crimes of the upper class. Yeah. And said this is not OK.

Like. If a guy is going to steal a thousand dollars 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 a thousand dollars from a cash register and he's poor and a guy steals a thousand dollars from an investor and he's rich, that they should be treated equally and they're not. And that's what Sutherlands point was. And he was the first two 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 the article, it said that he failed to distinguish illegal crime from deviant mere deviant behavior.

Right.

Like, apparently his his whole premise was like, you're into donkeys. You're a white collar criminal.

Exactly. And the other thing I mentioned to you was that he pretty much said it was anyone like any upper class, nonviolent crime. Right. And that's definitely involved.

And I think fairly sure. I think you can be working class. You can be business class if you like. That's a big, big part of white collar crimes definition is 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. It's no secret that in Washington, D.C., corruption is everywhere, you could say it's gone viral and I should know my mom's the speaker of the House. My name is James Parker. My friends are all in the same boat. Daughters of the D.C. elite. When are this close to power? There's nowhere to hide. And when my friends and I got a little too visible, our parents broke us up.

But now I need them back because I'm in deep.

You see, I'm a bit of a hacker in here.

No one knows me as James Parker. They only know me as Storm Boy and Storm Ally. Well, she went poking around somewhere she shouldn't have. I'm James. I'm Peyton. I'm Celia. I'm Natalie. And we're the daughters of DC. Join me and my friends, four daughters of DC, a new twelve part scripted podcast, political thriller from the team that brought you Liza Lit Einhorn's Epic Productions and I Heart Radio. Listen to Dogs for Free and I heart radio, Apple podcasts or wherever you get your podcast.

Um, so there's a there's one thing that, like you said, they like to shoot a hole in Sutherlands 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 Antitrust Act. We wouldn't have had the Clayton Act. We wouldn't have had, you know, the FDA, all of these things that that the carrier's case, he would have gotten off scot free.

What he did was not illegal. So, yeah, it has to evolve over time. Agreed.

OK, and it has agreed. So let's talk about, um, I guess the impact of today's modern. White collar crime. I was like, man, that was suspenseful all of a sudden things, um, 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.

He talked about cutting jobs to meet, you know, the needs of the investors if it's a publicly traded company. Right. When their stock fraud committed, insider scandals like Enron are going to ripple out throughout the stock market cause like, you know, basically cause people to be unsure and have no faith in the stock market and said, yeah, that's dangerous.

Yeah, I think about all of the people who just lost everything. I know. Oh, my God.

I get yeah, I get just as angry, if not more angry at something like that than, you know, some like heinous crime. Mhm. Yeah. To equal. Yeah.

They're both scumbags. Yeah.

OK, um so you said like in 74 the FBI first started, that's when they created this white collar crime division.

Yeah. So apparently 1974. Yes. Yeah.

It was a response like this. The University of Michigan survey that they conducted between nineteen fifty eight I think in 1973, they found that people who said that they trust the federal government went from 73 percent to 37 percent and then the time between 1958 and 1973. Wow. Yeah, it's flipflopped. Yeah. I'm that sort of talk.

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. Yeah.

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 isn't equipped to detect this kind of crime.

Right. 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. Yeah, 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. Electronic guide, sure. So it's a little harder to follow, you've got to really, you know, you got to have people that know what they're doing right. 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.

Yeah, definitely stepped things up. And it sounds like to some say too much. Yeah.

I mean, I've had to comply with this at various when I worked in the Philbin's production, companies had to, like, jump through way more hoops with paperwork because of Sarbanes-Oxley.

Yes. Do you want to talk to him and tell him? Well, it was in 2002 and it was to improve corporate governance, which is. Basically, accountability between corporation, the stakeholders, what it amounted to was a lot more paperwork, essentially more approving 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 Tyco and like all the other companies around that time. But one of the other things that did chuckers was it quadrupled sentences in a lot of cases for white collar crime. Yeah. So now you have guys like Bernie Madoff getting 150 years. There's a guy named Sholem Weiss who was involved in the breakup of some insurance company.

He got eight hundred and forty five years. Wow. He gets out in twenty seven. Fifty four. I don't think he's going to see that. I don't either. But I mean, a guy named Rich Harkness got one hundred years for 39 million dollar Ponzi scheme like these in all of this is like post Sarbanes-Oxley.

Yeah. Except Sholem Weiss, which is really saying something. But he still got that. Yeah. But I mean like so now, now sentences are like quadruple and it's like, well wait a minute, maybe, 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 bilked people out of their retirement accounts. It's tough to feel sorry for him, but legally speaking, it's like, well, wait a minute, you were worried about the guy who stole a thousand dollars out of a till. Right. Being treated differently from the guy who stole a thousand dollars 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.

Yeah. And so judges historically, like, really have taken it easy on them. Yeah.

Let's go ahead and just call them white dudes. OK, but they also have been you can make the case that they are usually first time offenders. They're usually family people.

Um, that's that's something that the judges put out there. Yeah. OK, well, this is a family man. He's not much of a flight risk. He's probably never going to do this again. Is 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 you can also kind of say, well, you know, where 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 him.

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 eight hundred and forty five 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. Twenty years in a in a federal pen, you say Club Fed is not around any longer. Yeah, true. And I mean, this is like 20 actual years. Yeah. 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 trading.

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.

Yeah. What I want to see is that these people don't get out of prison and still have all those millions of dollars. Yeah. Like hidden in different foreign accounts and offshore islands.

And like the financial part is what really bugs me.

I meant to 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 so.

Well, I am under the distinct impression they were so well, really, because the company was in such bad shape that even dissolving it. And and just like, you know, I can do I think they some people did get some money. Yeah. But I don't think it was anything approaching what they lost. Well, whoever commits these crimes gets out of jail and they have two pennies to rub together, then the two pennies more than they should have, I think.

Well, that's the thing. Like 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?

Well, it's true. Can't pay it. No, it's true. Like in the Madoff case, the guy who's. Who was assigned to basically get money back for investors? Yeah, has gotten I don't remember how much Madoff fleeced, but let's say it was eight billion, OK? The guys managed to, like, get like six billion back. Oh, really? Yeah. He's done a really good job of getting the money back. And that's just it.

That's an example. It's not big numbers on figure, but it's it's something pretty significant.

You're still going to get email. It wasn't a billion.

I'm looking forward to the ones which came in. 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. Uh, Western Europe has followed right behind the U.S. 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 grease palms to get a deal going right. 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, yeah. Bribes all over the place. You want to land contract, you might have to bribe somebody. So if you're a multinational corporation, it's tough to do this. Headquartered in America. Yeah. Yeah. You have like a real problem facing you, especially, like I said, the Justice Department under Obama has been prosecuting white collar 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. Yeah, 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 committee called Transparency International. And they are out to get rid of corruption and to unify business business ethics all over the world. Right.

And that's the that's the reason that you hamstring American business is basically saying, hey, we can take the hit in the hopes of pressing the rest of the world into the same clean up their act 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, uh, 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. People Job. And there's a Simpsons reference in some way to go. Jane, um, you can type in white collar crime in the search bar.

HowStuffWorks Dotcom. Which friend. Oh. Brings up listener to.

That's right. Josh, I'm going to call this hot off the presses. Good. Cause I'm a sucker for that stuff. OK, Chuck and Josh and Jerry, I want to say thank you for all the hours of listening. And my brother Chase and I've 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 a Hangover podcast on YouTube. I hope is I don't know if that's good for a 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 would mean a lot to me if you could tell the stuff you should tell 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, 220 hundred.

It's a weird way to put it, but would that be two hundred twenty six hundred? Would that be. How many? Two hundred and twenty six hundred. Yeah, would be twenty eight hundred would it. Or twenty two hundred.

No twenty six hundred plus two hundred is twenty eight hundred. Nearly two hundred artists.

Person is insane. No she's not.

Over two years two hundred and twenty six 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 Colen Industrial Music to Cure Cancer. So it's these artist compilations are putting together apparently two hundred and twenty six hundred tracks.

They're registered U.S. charity and all proceeds go to cancer research. And if you want if you're into electronic music and if you want to support cancer research, yeah, you can go to electronic saviors dotcom. And that is something Chase has got going. And its sister, Laura Dudly is a big fan of her, bro. He sounds like a swell guy. I'm all for it. Those Karaka answer me to promote a good cause chuckers. We try to do that.

You did good.

Um, yeah. We always want to hear about good causes. Yeah. 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. Agree. Let's see. Also enjoy a little talking heads. Big business from the live album Start Making Sense, released in nineteen eighty four it we're sure it's up on iTunes, Amazon and elsewhere. You can get in touch with us.

It? S Why Escape podcast on Twitter. You can go to Facebook dot com slash stuff you should know and you can send us a regular old email to Stuff podcast at HowStuffWorks dot com and as always join us at our home on the web stuff you should know dot com.

Stuff you should know is a production of radios HowStuffWorks for more podcasts, my radio is the radio app, Apple podcasts or wherever you listen to your favorite shows. It's no secret that in Washington, D.C., corruption is everywhere, and I should know my mom's the speaker of the House, my friends are all in the same boat, daughters of the D.C. elite. When you're this close to power, there's nowhere to hide.

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