As a distinct element of the framework proposed earlier, learning—specifically how offenders acquire the knowledge, skills and techniques necessary to carry out their crimes—is of interest from an academic and a practitioner’s perspective alike (Sutherland 1947). Learning is the process whereby the individual develops the required knowledge, skills, and techniques to carry out particular tasks. In considering white-collar criminals’ acquisition of knowledge, skills and techniques, it can be seen that it is in most instances an identical process, using the same legitimate methods, to that of law-abiding workers who have access to financial systems, with the obvious exception of learning criminal motivations and rationalisations.
Chapter 5: Insiders versus outsiders—alternative paths to criminogenic knowledgeResearch Report 10 | Australian Institute of Criminology
Sutherland (1947) suggested, when proposing differential association theory as a general theory of crime and one that addressed the white-collar criminal specifically, that this learning process occurs where individuals are exposed to a variety of definitions, some in favour of law violation and others opposed to law violation. Accordingly, the central principle is that, rather than being viewed as an inherited trait, criminal behaviour was communicated in interaction with others, in intimate groups; and the learning taking place involved the learning of both skills and techniques associated with the crime, as well as the motivational, rationalisation and justification aspects (Sutherland 1947). As a result, white-collar crime occurs when the
individual is exposed to an excess of definitions in favour of law violation, as compared with definitions in favour of abiding with the law. Matsueda (1988) argued that it was more important that the individual learned the relevant drivers, motivations and rationalisation for committing crime, and this aspect of differential association theory has received more research attention; however, it is the case that, without knowledge, skills and techniques, certain crimes, including many white-collar crimes, may not be possible.
The opportunities available to criminals to learn, however, are not restricted to discourse between professional peers, as the work of Burgess and Akers (1966) identified when integrating social learning theory (Bandura 1963), differential association theory (Sutherland 1947) and operant conditioning (Skinner 1938). Differential reinforcement theory asserts that learning occurs in social and non-social settings via observation, direct instruction and direct and vicarious reinforcement (Burgess & Akers 1966). Akers (1998), in a manner similar to differential association theory, also contended via social learning theory that intimate personal groups remain key to the transmission of knowledge, yet Akers also acknowledged the role of other avenues outside of closely defined family groups. Subsequently, understanding how criminogenic knowledge is acquired and where financial criminals source that learning will aid practitioners in understanding the factors that contributed to crime and provide an opportunity to refine theoretical explanations that seek to explain crime.
Method
The aim of this study is to develop an understanding of the potential sources of criminogenic knowledge and the variables that shape that access. This study involves the analysis of data from 19 law enforcement criminal investigation cases, finalised in a court of law, that were drawn from two Australian domestic law enforcement agencies. Case selection was determined by the following criteria. The financial crime must:
• have occurred within a definable financial system;
• be suitably complex in nature;
• involve fraud that required more than mere deception on the part of one individual;
• be valued at over AU$10,000;
• be committed across multiple jurisdictional boundaries; and
• have required the presence of an employee/internal actor for the crime to occur.
Data collected included interviews with case officers, statements of facts, witness and victim statements, offender interview transcripts and, where available, full case management files.
Data
Of the 19 cases that formed the dataset as seen in Table 1 below, approximately half (n=10) involved principal offender/s who were classified as trusted insiders, who were employed either directly by the victim organisation or on a contractual basis. The remaining nine cases involved principal offender/s who were classified as outsiders, who were external to the organisation they committed their crimes against. In addition to this, seven of the cases were classified as criminal syndicates, which is indicative of a self-organising group where individual members undertook distinct roles in the fulfilment of the joint criminal enterprise; the number of individuals per syndicate ranged from five to 42.
Table 1: Case data overview
Cases Insider/Outsider status How information needs were satisfied
Case number Crime type Principal offender/s–Insider Principal offender/s–Outsider Associate offender/s–Insider Associate offender/s–Outsider Internal masters Internal learners Insider –insider Outsider–victim Outsider–associate–victim Outsider–insider–victim
1 Accounting fraud X X X
2 Debit/credit card skimming X X X X X X
3 Debit/credit card skimming X X X
4 Debt refinancing X X X
5 ID manufacturing X X X
6 ID theft X X X X
7 ID theft X X
8 ID theft X X
9 Insider trading X X X X
10 Mortgage fraud X X X X
11 Mortgage fraud X X X X
12 Procurement fraud X X X
13 Superannuation fraud X X X X X
14 Tax evasion X X X
15 Tax evasion X X
16 Tax evasion X X X
17 Theft as an employee X X X X
18 Theft as an employee X X
19 Theft as an employee X X
Chapter 5: Insiders versus outsiders—alternative paths to criminogenic knowledgeResearch Report 10 | Australian Institute of Criminology
Results
A selection of the collected data as outlined in Table 1 provides an overview of the cases against a number of variables. From those cases identified as having the principal offender/s as an insider, three distinct subgroups arose. The first insider subgroup (n=8), or Internal Masters, consisted of highly experienced and knowledgeable insiders with high levels of access and mobility across their respective organisations; this group’s mastery of their role and
organisation was critical to the success of their criminal venture. However, the second insider subgroup (n=2), or Internal Learners, consisted of generally more junior or less experienced insiders who, having lower levels of knowledge and freedom of access, had to actively seek out the knowledge necessary to commit their crimes. The final insider subgroup (n=3), or Insiders, represented cases where the principal (either master or learner) also used an insider within another organisation to address information or data gaps in order to commit their crimes.
When looking at the nine cases where the principal offender/s was an outsider, three subgroups also arose. The first outsider subgroup (n=8), Outsider–Victim, represented cases where the principal offender interacted directly with the victim organisation in order to obtain the necessary information that was later used to commit their crimes. The second outsider subgroup (n=5), Outsider–Associate–Victim, consisted of outsider principals who engaged other outsiders, often criminal associates, to interact with the victim organisations in order to acquire necessary information. The final outsider subgroup (n=3), Outsider–Insider–Victim, consisted of outsider principals who used insiders from other organisations to obtain necessary information for them to commit their crimes.
Seven of the 19 cases, specifically case numbers 2, 3, 5, 6, 7, 10 and 13, were crimes committed by groups of offenders classified as organised criminal syndicates. In these cases, the principal offenders were all outsiders who, on three occasions, identified and acted upon the
requirement to corrupt insiders within the victim organisation in order to obtain the necessary information and commit their crime. A further connection between all seven cases is that, in every instance, the principal offender/s engaged directly, and in person, with the victim organisations when either flaw hunting (Walsh 2014), free-range negative thinking (Walsh 2014), planning or preparing for their crimes.