schemes or commodities fraud), while other offenses were described by the statute being violated (e.g., currency export violations or Securities Act violations).

Upon analysis, we conclude that for purposes of defining national law enforcement priorities, most of the ways in which white collar crime offenses have been traditionally defined by law enforcement agencies and the public are not workable. The traditional descriptions serve as useful, and necessary, building blocks for analysis. However, they are, for the most part, not useful as expressions of law enforcement priorities, as explained in Section D below.

B. Fundamental Law Enforcement Objectives and Categories of White Collar Crime

There are certain fundamental objectives that seem to underlie all of our efforts in the field of white collar crime law enforcement. While these objectives can be defined in a number of ways, for purposes of this report we define them as follows:

1. To protect and enhance the integrity of governmental institutions and processes;

2. To protect and enhance the integrity of the free enterprise system, the competitive marketplace and the nation's economy generally;

3. To protect and enhance 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. To enhance public respect for and compliance with the nation's laws generally.

These broad objectives suggest a useful way of grouping white collar offenses for purposes of determining priorities. They force us to think in terms of the type of harm inflicted upon society by white collar crime. Thinking in these terms, white collar crime activity can be grouped into the following categories:

A. Criminal Activity Threatening the Integrity of Government Institutions and Processes

B. Criminal Activity Defrauding the Government, Reducing the Effectiveness of Government Programs and Resulting in Higher Government and Taxpayer Costs

C. Criminal Activity Victimizing Business Enterprises

D. Criminal Activity Victimizing Consumers

E. Criminal Activity Victimizing Investors and the Integrity of the Marketplace

F. Criminal Activity Victimizing Employees

G. Criminal Activity Threatening the Health and Safety of the General Public

The discussion of national priorities in the next part of this report is organized according to these categories.

While the above-stated law enforcement objectives are helpful in grouping white collar crimes into relatively discrete categories, they are of limited use in choosing specific law enforcement priorities. The direct impact of specific types of white collar crime activities on such broad objectives is difficult to measure, due to their general nature.

More specific decision-making criteria are needed in order to analyze the various types of white collar crime and to make judgments about their relative significance. These criteria and their usefulness in choosing priorities are discussed below.

C. Criteria for Choosing Priorities

In choosing and defining white collar crime priorities, one must have in mind a set of criteria which, when applied to specific kinds of illegal activity, make some more significant or worthy of attention than others. Discussions with Department personnel and others indicate that a number of questions are generally raised, explicitly or implicitly, when one is asked to make judgments about the relative importance of white collar crime activities. These questions revolve around the victims, losses, offenders, complexity and other aspects of the illegal activity. They include the following:

1. Who are the victims, both individuals and institutions? What are their losses, both tangible and intangible? Is there especially severe impact on some? Are the victims in any sense culpable? Could they have adequately protected themselves before or after the crime?

2. Who are the alleged offenders? Are they or have they been involved in other illegal activity? Do they occupy positions of trust of either a public or private nature? Are the proceeds of the illegal activity being used to finance or promote other types of crime?

3. What is the nature of the illegal scheme? Does it involve activities that are especially difficult to detect and prevent? Is the fraud, deceit or corruption involved particularly offensive or heinous? Is it likely to grow if left unhindered?

4. Is federal law enforcement involvement necessary and appropriate? Is there federal jurisdiction over the crime? What is the level and effectiveness of state and local law enforcement activity? What impact would increased federal involvement have on the conviction of offenders, the deterrence of potential offenders, and the occurrence of other kinds of criminal activity?

We have attempted to translate the concerns implicit in these and other questions into meaningful criteria that can be used for analytical and decisionmaking purposes. These criteria are as follows:

1. The pervasiveness of the illegal activity how widespread is it and how frequently does it occur?

2. The immediate victims and their losses - how many and what types of victims? tangible and intangible losses to individual and institutional victims? distribution of the losses (widely spread or concentrated on certain victims)? impact on integrity of public and private institutions?

3. The indirect or secondary victims and their losses what impact beyond the immediate victims? tangible and intangible losses to individual and institutional victims? distribution of the losses? impact on integrity of public and private institutions?

4. Individuals and institutions involved as perpetrators or accomplices - who are they? do they occupy special positions of trust? do they have a history of criminal involvement?

5. Connection with organized crime or other criminal activity is there any indication that organized criminal groups or other criminal activity is associated with the illegal activity? what is the relationship?

6. Availability and feasibility of prevention or self-protection by victims - could the illegal activity be minimized or prevented by self-protection efforts of its victims? what is the current level of self-protection efforts? is the illegal activity susceptible to civil recovery or other civil action by victims?

7. Need for federal law enforcement involvement - is the illegal activity primarily or solely within federal jurisdiction? what is the level and effectiveness of state and local law enforcement activity addressed to this illegal activity? other reasons for federal emphasis? 8. Problems and obstacles confronting increased emphasis - are there problems, such as lack of investigative/prosecutive expertise, that would hinder increased law enforcement efforts? are there jurisdictional problems among federal agencies that might interfere? what organizational goals and procedures would have to be changed to address this problem more vigorously?

9. Benefits and costs resulting from increased federal emphasis - what kind of resources would be required to address the problem effectively? what benefits would flow from increased federal involvement both with respect to the particular illegal activity in question and others, e.g., increased public awareness, deterrence, knowledge regarding other types of crime? what opportunity costs are involved?

10. Other important factors are there other legitimate reasons for making or not making this a priority area? intense Congressional or public interest? opportunity to consolidate or make more efficient federal law enforcement efforts?

Each of these criteria needs to be considered in choosing national white collar crime law enforcement priorities. They are each addressed, to the extent our information allows it, in our discussion and analysis of potential priorities.

D. Describing Law Enforcement Priorities

The above criteria indicate why traditional descriptions of white collar crime offenses do not necessarily suffice as descriptions of priorities, as mentioned earlier. We are seldom interested in focusing on a particular kind of illegal activity simply because of the government program involved, or because of the type of suspected offender, or because of the particular type of fraud or deceit involved. In most cases, we are interested in more--the magnitude and impact of the crime (measured geographically, monetarily or otherwise), the number and perhaps types of victims, and/or connection with other criminal activity. This suggests that in defining law enforcement priorities, we should consider adding qualifying terms to the more traditional white collar crime descriptions.

The FBI has partially accomplished this in defining its white collar crime priorities. For example, frauds against the major federal departments and agencies involving government officials or losses in excess of $25,000 are priority matters; other frauds against the government are not.' Interstate transportation of stolen securities or negotiable instruments worth $50,000 or more is a priority matter; interstate transportation of the same items valued at less than $50.000 is not a priority matter. Copyright matters involving manufacturers and distributors of sound recordings

10

'See Appendix A, describing the FBI's white collar crime classifications.

10 Ibid.

1

or motion pictures are priorities; other copyright matters are not. Domestic or international fraud by wire involving in excess of $25,000 or 10 or more victims is a priority; other frauds by wire are not.12

The FBI's priority descriptions described above are a step in the right direction, but additional qualifying terms seem appropriate for other kinds of white collar crime. Such priority descriptions are particularly important when the implementation and evaluation of priorities are considered. Priorities defined simply as "CETA fraud" or "Offenses involving Hobbs Act violations" do not send the proper signals to investigators and prosecutors and would not effectively target resources, unless we care about all such offenses regardless of their magnitude, their victims, or other attributes. The types of white collar crime that deserve such across-the-board emphasis are, in our view, very limited.

E. Grouping the Data for Analysis

The Department's Information Request contained a suggestive list of types of white collar crime, indicating the specificity with which the respondents should identify priority or problem areas. In answering the Request, the respondents added specific types of offenses to the suggestive list, as necessary, in order to describe illegal activities occurring within their respective areas and not on the list. The result was an extended "Master List" of white collar crimes, containing over 300 items (see Appendix B).

In order to analyze the information provided, the types of white collar crime described by the respondents had to be grouped into packages that seemed to make sense. This packaging of the data was done initially by members of the Criminal Division's Office of Policy and Management Analysis. When the packages of information were analyzed by members of the relevant sections of the Criminal Division, some crimes were re-grouped in order to make analysis more manageable or meaningful.

The result was approximately 50 groups of crime, with the contents of each group summarized on a two to three page "Summary Fact Sheet". In addition to the Summary Fact Sheets, other information, including a description of the respondents identifying that type of illegal activity as a priority area and other relevant material, was collected for each illegal activity. These materials form the basis for the analysis and the conclusions contained in this report.

11Ibid.

12 Ibid.

III. ANALYSIS AND RECOMMENDATIONS

Before analyzing crimes within various categories, some overview of the information the Department has gathered is appropriate. The figures given below, however, should be viewed with caution. The first table (Table 2) ranks various types of white collar crime according to how many respondents identified each crime as a problem or priority area. The table also shows how many different agencies identified each crime as a priority area.

In reviewing these numbers, one should bear in mind the distribution of those responding to the Information Request. Some investigative agencies sent the Request to all district or field offices (Secret Service, Customs, ATF), while others sent it to regional offices (SEC, Postal Inspection) or responded from headquarters only (most Inspectors General). Thus, if some types of illegal activity have a high number of respondents identifying them as priority areas, it may be partially attributable to the fact that the agency with jurisdiction over that activity had a larger number of field offices providing responses to the Information Request. An illegal activity identified as a priority by only a few respondents may nevertheless be a problem of great magnitude, if, for example, those few respondents are Inspector General offices with nationwide responsibility and large programs to monitor.

Secondly, the information in Table 2 reflects the information contained in the FBI's FY 1979 surveys of its field offices. That information was of a somewhat different nature than that provided by respondents to the Division's Information Request and therefore some interpretation of the FBI surveys has been necessary in order to make the data comparable. The more recent survey of FBI field offices, asking for identification of top problem areas as of February 1980, is summarized in Table 3.

Thirdly, the grouping of information into types of illegal activity obviously required some judgment. For example, real estate frauds are separated from other types of investor fraud in the table below. Had they been consolidated, a larger category of "All Investor Fraud" would most likely have shown more agencies and more respondents reporting it as a priority area, and therefore would have appeared higher on the table.

In sum, the following table indicates in only a very general and rough way the relative frequency with which various types of illegal activity are viewed as deserving priority status. The numbers should be viewed with all of the above caveats in mind.

Some of the results of the February 1980 FBI survey are summarized below. A more complete summary is provided in Appendix C to this report. Essentially, the FBI field offices were asked to do two things: 1) rank four major categories or program areas of white collar crime-corruption, financial crimes, federal program fraud, and other white collar crime-in order of importance; and 2) list, within each of the four major program areas, the three most significant problems in their respective geographical areas of responsibility.

As shown in more detail in Appendix C, the 61 FBI field offices responding generally indicated corruption as their number one program area (54% ranked corruption as number 1), with financial crimes second (33%), federal program fraud third (11%) and other white collar crime last (2%). The specific illegal activities listed most frequently by the FBI field offices as their most significant problem areas are listed below.

The figures contained in Tables 2 and 3 are of some utility in giving a general sense of investigative agencies' and others' perceptions of major white collar crime problems. Much more important in determining priorities, however, is the specific information about each major type of