Jan 12, 2018 in Law

Entrepreneurial Crimes

Entrepreneurial crimes are a form of white-collar crimes that occur in organizations. These crimes are aimed at benefiting a single individual at the expense of the organization or corporation. In china, the rate of entrepreneurial crimes is increasing at an enormous rate. One of the rampant entrepreneurial crime that happened last year is financial fraud. Financial fraud in china takes different forms. The most common case of financial fraud is the use forged financial bills and credit vouchers. This is with false deposit receipts and drafts as proof of payment to mortgage loans at financial institutions. This form of fraud also works effectively in defrauding a bank’s credit fund (English.news.cn , 2013).

The other form of financial fraud existent in China is financial fraud through illegal fund raising. These illegal fundraisers are common in Chinese towns such as Guangdong and Henan. In these fundraisers, the fraudsters promise the investors in the illegal fund raising high interest rates on their investments. The fraudsters also use another effective tactic whereby they pay high interest rates to the former investors. This tactic works effectively in attracting new investors and hence this results in the generation of more funds into by the fraudsters. After illegal fund raising has taken place, the initial deposit and promised interest is not refunded to the investor.

Another form of financial fraud present in china is with credit cards. Fraudsters in China defraud the banks off their credit cards through the fabrication of sale purchase contracts and the relation of departments to defraud money. The other type of financial fraud is through securing of loans through illegal means. This is the situation whereby banks and other related financial institutions are defrauded of loans for the sole purpose of illegal possession. These acquired funds are used for selfish needs by the fraudsters (English.news.cn , 2013).

There are many risk factors associated with financial fraud. One of the factors includes the loss of proprietary information and intellectual property. These are because of competition from the domestic and foreign competitors. The areas that are affected most because of a financial fraud attack in most companies are the areas of research and development, which takes the largest percentage. Other areas of interest include the customer lists and financial data. Financial fraud has a great impact on the affected companies. This is due to the reason that they lose their competitive edge and hence incur huge financial losses (English.news.cn , 2013).

The factors that lead to the commission of the most entrepreneurial crimes such as financial fraud are greatly influenced by psychological factors. This is evident from the act that the environment in which the individuals operate in can greatly affect the individual’s reaction to the commission of crimes such as financial fraud. Therefore, the corporate culture, which values the taking of risks, has a great psychological influence on individuals and hence encourages the rampancy of entrepreneurial crimes. On a macro-economic level, the involvement in entrepreneurial crime such as financial fraud presents opportunities for such individuals through job promotions.

Through a theory known as differential association, it is possible to account for the occurrence of entrepreneurial crimes. This theory emphasized that white collar crimes among individuals occur because of the attitudes individuals have in the society. Illegal and unethical behaviors are acquired because of influence of peers and the community and not as a factor of personal attributes. Hence, the behavior of individuals engaging in entrepreneurial crimes is viewed as conformist rather than deviant. Hence, psychological effects influence the indulgence of individuals in entrepreneurial crimes such as financial fraud (Thornhill, 2011).

Culture compliance also has an influence on the behavior and attitude of individuals in the society. Illegal and unethical behaviors become a routine and hence have an effect on the individuals in entrepreneurial world whereby entrepreneurial crimes are considered acceptable. There are also motivational factors to indulge in such crimes such as the luxuries that come with financial stability. Among the motivational factors is the lack of association with poverty among the fraudsters. These psychological factors have greatly contributed to the rampancy of entrepreneurial crimes. Another contributing factor to entrepreneurial crime is the accounting opportunity for omission. Poor accountancy has been observed as a great promoter of white-collar crimes due to the evidence of the crimes. Poor accountancy has led to the spread of financial fraud in countries such as China.

The United States government issues the Sarbanes Oxley act as a preventive measure of white-collar crime. The passing of this act by congress allowed the public companies heightened disclosure requirements. This act was considered aggressive due to the reason that security violations within organizations and companies faced serious penalties. This act forced many companies to revise their earnings reports. Therefore, this act was given the credit of restoring the confidence of investors whereby companies were forced to give accurate information about their finances (Financial, 2003).

The passing of this act came as a great cost because it had a negative impact on the conduction of business. This is because the Sarbanes Oxley Act limited business transactions between companies. The impact was great to the extent that it has a negative impact on the economy of the United States. The enactment of this regulation forced many companies to deregister from the American stock exchange. The number of deregistering companies soon tripled. Additional compliance costs were also introduced which forced many companies to relocate in an effort to avoid these fees.

The economy continued to collapse due to the continued relocation of companies from the United States. The Sarbanes Oxley Act also discouraged foreign investors as companies considered the business environment in the United States rigid. The Sarbanes Oxley Act also affected the free market in the United States. Although the act was introduced to control the spread of white-collar crimes such as financial fraud, the free market collapsed. This is due to the reason that the companies that created the free market relocated in the search for a better flexible working environment. Although the Sarbanes Oxley Act had a negative affect the economy, it contributed greatly to the reduction of white-collar crimes such as financial fraud (Financial, 2003).

White-collar crimes become civil cases when the prosecution of the crime is by the government. Civil action that is brought about by the government is usually aimed at seeking disgorgement. The profits obtained because of the white-collar crime in this case are turned over to the government. Payment as a form of restitution is also offered to the victims of the crime and law settles other incurred damages. Cases occur whereby the government seeks asset forfeiture. This means that the government takes all the purchases from the proceeds of the offence away. Victims of the white-collar crimes can choose to bring their own civil action. These civil actions enable the victims to recover from the financial losses of the offence (Sutherland, 1961).

White collar crimes are also considered criminal cases when as they face criminal penalties. The criminal penalties issued for white-collar crimes vary depending on the nature of the crime. Most laws authorize a prison sentence, a monetary fine or both. Majority of the defendants are issued sentences, which are less than the maximum sentences. The courts follow guidelines in the issuance of these sentences to ensure uniformity in sentences. The defendants lacking criminal records are usually sentenced to probation and fines levied against them.

The decision to use a non-adversarial approach to handle cases of white-collar crimes by agencies is effective and efficient in the crime regulation process. This is evident from the fact that the implementation of a non-adversarial approach will enable the regulatory agencies to save in the costs incurred in the regulation of white-collar crimes. Many staff is required in the implementation of the adversarial regulation of white-collar crimes. This is in the terms of the staff required in the justification of the white-collar crimes (Sutherland, 1961). Numerous expenses are also incurred in legal costs, which are expensive. The adversarial system used in agencies in the regulation of white-collar crimes is time consuming. This is due to the reason that many processes are involved in the justification of crimes. This is evident whereby staffs are placed in defensive positions to justify the actions of defendants through the proper complains procedures.

Therefore, the incorporation of the non-adversarial approach in agencies is the affordable and efficient alternative. This is evident from the fact that the non-adversarial approach offers results that are predictable in nature and the tedious processes involved in the adversarial court processes are removed. Hence, the applications of the non-adversarial approach to handle issues concerning entrepreneurial crimes are handled effectively. Considering the onset of industrial and economic espionage in companies, the application of the non-adversarial approach by agencies to regulate such crimes will enable the agencies handling the white-collar crime to handle the crime effectively and hence serve justice to the offenders.

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