EXECUTIVE SUMMARY This report describes the work of the United States Department of Justice during the period October 1979 through June 1980 in connection with the formulation of national white collar crime law enforcement priorities. Defining such priorities has been a matter of considerable interest within the Department for years. The Attorney General's order establishing the Economic Crime Enforcement Units (A.G. Order No. 817-79) directed the Assistant Attorney General in charge of the Criminal Division to develop proposals for national white collar crime law enforcement priorities to be submitted for approval to the Deputy Attorney General and the Attorney General. In furtherance of the Attorney General's order, the Criminal Division prepared and submitted an extensive report and specific recommendations on white collar crime law enforcement priorities, which serve as the basis for this report. The national white collar crime law enforcement priorities, and the district priorities that will subsequently be established in a number of federal districts, constitute a major step forward in enhancing our efforts to combat white collar crime. They will serve several important purposes, including the following: 1. Improved coordination and allocation of limited federal investigative and prosecutive resources on both the national and district level; 2. Better coordination of federal, state and local law enforcement efforts directed toward white collar crime; 3. More comprehensive and timely identification of trends or patterns in white collar crime requiring legislative initiatives or special emphasis in the areas of prevention, detection, investigation or prosecution; 4. Expeditious development of new and more effective investigative techniques, prosecution practices, and training programs in white collar crime law enforcement; 5. Furtherance of consistency and equal justice in federal law enforcement, in conjunction with prosecutive guidelines for United States Attorneys; and 6. Improved communication between and among law enforcement officials, Congress, the business community and members of the general public concerning white collar crime problems, their impact on society, and appropriate public and private measures for dealing with them. To supplement existing information with more current and more comprehensive data on white collar crime and corruption activity, the Criminal Division designed a lengthy White Collar Crime Information Request that was distributed to the major federal agencies and departments involved in the investigation and prosecution of white collar crime. The same Information Request was distributed to Department of Justice personnel directly involved in white collar crime matters, including the existing Economic Crime Unit Specialists in the field, Special Fraud or Corruption Units in United States Attorney offices, the Immigration and Naturalization Service, the Tax Division, and the Land and Natural Resources Division. All told, 240 respondents in 21 federal departments and agencies provided information concerning known or suspected white collar crime activity in every region of the country, along with their respective views on which deserved to have priority status. The FBI provided information concerning white collar crime activity from a Fiscal Year 1979 survey of all its field offices. The Bureau updated that information with additional data collected in a February 1980 survey. Most of the information serving as the basis for this report was provided during the months of January and February 1980. In analyzing the massive amount of information gathered, the Criminal Division assumed the following to be the broad, underlying objectives of federal law enforcement efforts directed at combatting white collar crime (no ranking implied): 1. The protection and enhancement of the integrity of governmental institutions and processes; 2. The protection and enhancement of the integrity of the free enterprise system, the competitive marketplace and the nation's economy generally; 3. The protection and enhancement of the well-being of the individual citizen, including his or her health, safety, physical environment and opportunities to exercise political, economic and other fundamental rights; and 4. The enhancement of the public's respect for and compliance with the nation's laws generally. In assessing the significance of various white collar crime problems and in defining white collar crime priorities, the following attributes of each criminal activity were studied: 1. Its scope and frequency; 2. The immediate victims and their losses; 3. The secondary victims and their losses; 4. The individuals and institutions involved as perpetrators and accomplices; 5. Any connection with organized crime or other criminal activity1 ; 6. The availability and feasibility of prevention or self-protection by the victims; 7. The need for federal law enforcement involvement; 8. Problems and obstacles confronting increased federal emphasis; 9. The benefits and costs likely to result from increased federal emphasis; and 10. Any other important factors. With the above-mentioned objectives and decision-making factors in mind, white collar crime activity was divided into seven broad categories. These categories reflect the different, broad groups of institutions and individuals victimized by white collar crime: 1) Government institutions and 1The participation of traditional organized crime figures in white collar crime matters may make those matters organized crime law enforcement priorities, regardless of the presence or absence of other attributes; some white collar crime matters, however, involve non-traditional organized crime or other "organized" criminal activity. The presence of this type of activity is a factor to be considered in determining the relative significance of white collar crime problems. processes; 2) Government treasuries and taxpayers; 3) Private institutions; 4) Consumers; 5) Investors; 6) Employees; and 7) Members of the public generally. Based on the factors listed above and all information available, and after consultation with each of the federal departments and agencies involved, the following criminal offenses within each major category of white collar crime are designated as national law enforcement priorities: NATIONAL WHITE COLLAR CRIME PRIORITIES A. Crimes Against Federal, State or Local Government By Public Officials State corruption - major officials3; other employees where corruption is systemic B. Crimes Against the Government By Private Citizens Federal procurement fraud, non-corruption - $25,000 or more in aggregate losses Federal program fraud, non-corruption - $25,000 or more in aggregate losses Counterfeiting of U.S. currency or securities Customs violations duty violations, $25,000 or more in tax revenue losses, one transaction, or $50,000 or more in tax revenue losses, multiple transactions; currency violations, $25,000 or more in currency, one transaction, or $50,000 or more in currency, multiple transactions Tax violations - major federal tax violations$ Trafficking in contraband cigarettes - $100,000 or more in aggregate tax revenue losses 2 For some purposes, this item can be consolidated with other federal corruption items into one "federal corruption" category; however, it should remain as a separate item for record-keeping purposes. 3 Major officials = governors, legislators, department or agency heads, court officials, law enforcement officials at policymaking or managerial level, and their staffs. 4 Major officials = mayors, city council members or equivalents, city managers or equivalents, department or agency heads, court officials, law enforcement officials at policymaking or managerial level, and their staffs. 5 Priority matters are identified on a case-by-case basis by the Tax Division, in collaboration with the Internal Revenue Service, taking into account the amount of tax revenue losses and the adverse impact of the violation on the federal tax system. C. Crimes Against Business Insurance fraud, including arson for profit - $250,000 or more in aggregate losses or two or more incidents perpetrated by the same person or persons Advance fee schemes - $100,000 or more in aggregate losses or 10 or more victims Bankruptcy fraud - $100,000 or more in aggregate losses Other major crimes against business - fraud involving $100,000 or more in aggregate losses; labor racketeering; copyright violations involving manufacturers or distributors, distribution in three or more states or countries, and $500,000 or more in aggregate losses Bank fraud and embezzlement - $100,000 or more in aggregate losses D. Crimes Against Consumers Consumer fraud - $100,000 or more in aggregate losses or 25 or more victims Antitrust violations - price fixing, including resale price maintenance and other schemes affecting the food, energy, transportation, housing, clothing and health care industries; collusive activities involving public works projects or public service contracts - $1,000,000 or more in commerce affected Energy pricing and related fraud - $500,000 or more in costs reported or prices charged for energy products E. Crimes Against Investors Securities fraud - $100,000 or more in aggregate losses Commodities fraud - $100,000 or more in aggregate losses Land, real estate and other investment frauds - $100,000 or more in aggregate losses F. Crimes Against Employees Union official corruption - embezzlement of union pension, welfare or other benefit funds involving $25,000 or more in aggregate losses; bribery or kickbacks to union officials involving $5,000 or more in the aggregate Life-endangering health and safety violations: OSHA, Mine Safety "Life-endangering violations include business practices and other acts or products that are likely or may be reasonably foreseen to cause death or serious bodily injury to human beings (including a human fetus); serious bodily injury means an impairment of physical condition, including physical pain that a) creates a substantial risk of death or b) causes permanent disfigurement, unconsciousness, extreme pain or permanent or protracted loss or impairment of the function of any bodily member, organ, or mental faculty. |