Case Study 2: White-Collar Crimes Law Case Study Paper

White-Collar Crimes.
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White-Collar Crimes.
According to Gul (2020), white-collar crimes are crimes committed by business or government officials and are characterized by deceit and non-violence. Often crime offenders have a financial motivation to acquire money or property illegally. Most white-collar crimes are committed by individuals from high socioeconomic status or people having psychiatric issues (Gul, 2020). White-collar criminals, in most cases, end up being wealthy. The consequences of these crimes have a great effect on the members of a particular community. Its impact is felt financially and socially and surpasses the effect that blue crimes have on people. These crimes include embezzlement of funds, bankrupting clients, and techno crimes. White-collar criminals strive to conceal their illegal motives by winning people’s trust. This paper identifies and discusses a recent white-collar crime, and evaluates some of its elements.
Wells Fargo, an American multinational financial services company, was accused of opening over a million illegal accounts and was selling to its customers' unwanted products in summer 2016. These allegations cost Wells Fargo huge amounts of fine. For instance, in September that year, after consumers made complaints, the company was fined $185 million, and later a fine of $1 billion was added to settle the legal claims (Healy & Serafeim, 2019). By the end of that month, Wells Fargo’s stock price reduced by 13% and this continued to be the case in the later years. Healy and Serafeim (2019) mentioned that the company’s CEO, John Stumpf, resigned in the following month while his colleague, Carrie Tolstedt, announced that she was retiring that same month. The two forfeited over ten million dollars following the financial losses they caused to the company from the lawsuits.
These crimes, added to those of senior managers, tarnished the reputation of Wells Fargo. The company’s board of directors overlooked these misconducts despite having a risk-management system. Healy and Serafeim (2019) noted that other accusations included a warped corporate culture and poor leadership. The crimes were orchestrated to the pressure to make huge sales and increased promotions. Despite the warnings that Wells Fargo received between 2000 and 2004 when its employees' sales rose by tenfold, little was done to correct the situation. In 2011 and 2013, the issue of employee turnover featured in the Wall Street Journal and Los Angeles Times, respectively (Healy & Serafeim, 2019). However, the management blamed a few of its employees for these crimes.
Frost and Giel (2017) reported that the former Wells Fargo Chairman, John Stumpf admitted committing most of the crimes. He mentioned in a board review that he formed a culture that led to abuses such as the creation of fake consumer accounts. This review comprised of a chairman, Stephen Sanger, and independent directors. This board made the former chairman and CEO forfeit 24 percent of his pay the pointed out all the cases committed from 2002. He was accused of not criticizing Carri Tolsedt, his former community bank head. He hesitated to fire her despite the allegations against her. Frost and Giel (2017) added that the board blamed Stumpf for the “high-pressure sales culture’’ at the bank. He carried a significant amount of blame for the problems and did little to address them.
Tolsedt failed to change the culture at the bank even when she was presented with shreds of evidence of illegal sales practices. She still went further to pressure employees to make great sales. Tolsedt was adamant to change things and often became so protective whenever reports were made touching on these malpractices. Though Tolstedt declined all the requests by the board to interview her, Wells Fargo’s Chairman Stephan Sanger mentioned to CNBC that Tolstedt was also to blame for these offenses. Frost and Giel (2017) reported that the board members had misinformation on the situation at the bank hence failed to question Stumpf’s leadership.
Benson et al. (2017) characterized white-collar crimes as corporate fraud, identity theft, embezzlement, dishonesty, violation of trust, unfair labor practices and money laundering. From these elements, one can conclude that the Wells Fargo former CEO and Chairman, John Stumpf, together with his former community bank head, Carri Tolsedt, committed a white-collar crime. For instance, these two, together with the other four senior managers, took advantage of the trust their consumers placed in them and opened several accounts that could not be accounted for. Stumpf’s white-crime offence was illegally cross-selling customers’ accounts (Frost & Giel, 2017...