White-collar Crime

White-collar Crime

White-collar crime is a financially motivated nonviolent crime. As the name suggests, white-collar crime is committed by top business or government officials. The Enron case is one example of a white-collar crime that led to the bankruptcy of an international corporation.

I think the fraud scheme at Enron was committed to conceal profit loss and retain shareholders. According to MacCarthy (2017), the fraudulent activities at Enron began in the late 1990s, and they continued until they led to the biggest corporate bankruptcy in the history of America. Therefore, the fraud was initially intended to shake off the pressure from stakeholders, but as the competition grew, profits continued to shrink. Thus, the corporate officials tampered with figures to make losses appear less severe than the reality.

The Enron case relates to white-collar crime because top corporate officials facilitated the fraud scheme. According to Gottschalk et al. (2018), white-collar crime is committed by intellectual people is likely to go undetected because of the ingenious fraudulent schemes applied. In the case of Enron, the chief financial officer devised a method of hiding assets and concealing the real extent of the actual loses Enron was incurring.

The Enron case is a white-collar crime because the fraud was financially-motivated. According to Gottschalk et al. (2018), most white-collar crimes are frauds to achieve profits or conceal losses. Due to fierce competition, the profits of Enron were shrinking at a rapid rate. Therefore, to avoid pressure from stakeholders as well as maintain principal shareholders, Enron corporate leaders devised a scheme to cover the extent of the losses incurred.

In conclusion, the fraud at Enron was committed to conceal the loss incurred, and it continued until the corporation was declared bankrupt. The top officials of the corporation devised the fraud scheme, and it was financially-motivated.

References

Gottschalk, Petter & Gunnesdal, Lars. (2018). White-Collar Crime Research. 10.1007/978-3-319-75292-1_1.

MacCarthy, J. (2017). Using Altman Z-score and Beneish M-score models to detect financial fraud and corporate failure: A case study of Enron Corporation. International Journal of Finance and Accounting, 6(6), 159-166.