Red collar crime is a sub-group of white collar crime in which the perpetrator uses violence to avoid detection or prosecution. Although red collar crime appears to be a rare event in the U.S., this is not necessarily the case, and it is advisable for businesses to have a process through which white collar crime can be reported anonymously.
The term “white collar crime” is usually identified with financially motivated, non-violent crimes committed by employees against their employer, or by individuals against a financial institution. The crimes typically consist of forgery, insider trading, fraud, or embezzlement, and were estimated by the FBI in 2016 to cost U.S. business more than $500 billion per year.
Nobody really knows the true cost of white collar crimes because not all white collar crimes are detected. Furthermore, when they are, only 58% of white collar crimes are reported to law enforcement agencies according to the Association of Certified Fraud Examiners (PDF), who also claims businesses on average lose 5% of their revenue each year due to forgery, insider trading, fraud, or embezzlement.
When White Collar Crime Turns Red
When white collar crimes are detected, the most common outcome is an admission of guilt and – depending on the nature and severity of the crime – a custodial sentence, a financial settlement, or disciplinary action. However, when the perpetrator doesn’t want the nature of his actions disclosed, the outcome can be much different.
Around fifty recorded cases have occurred in the past thirty years in which the perpetrator has either murdered the person who discovered their crime, or paid somebody else to do it. Many of these cases were reviewed by Frank Perri – a criminal psychologist at the DePaul University in Chicago – to develop psychological profiles of offenders who commit red collar crimes.
Perri’s results were published in the International Journal of Psychological Studies in 2016, and they make fascinating reading. His review of the cases found red collar criminals typically harbor behavioral risk factors that lead them to use violence as a solution to a perceived problem, in the same way as non-white-collar offenders resort to violence.
Examples of Red Collar Crime in the Workplace
One of the earliest examples of recorded red collar crime in the workplace dates back to 1982, when the owner of the Candor Diamond Company of Manhattan – Irwin Margolies – contracted a hitman to kill two employees. The first he suspected of alerting federal prosecutors to his multimillion dollar fraud, and the second was due to testify against him – even though she had benefitted from the fraud herself.
In the workplace, red collar crime does not necessarily result in the murder – or attempted murder – of a colleague. In 2008, Sallie Rohrbach, an agency examiner with the North Carolina Department of Insurance, was murdered by insurance company owner Michael Howell after she discovered evidence of insurance fraud. In this case, Sallie was a lone worker at risk rather than a colleague.
More recently in 2016, a former bank employee – Naquan Reyes – was convicted of paying for the murder of a co-conspirator, who had been caught conducting check fraud on Reyes’ behalf and who had agreed to testify against him. Although not a colleague-on-colleague red colleague crime, other co-conspirators had worked in the bank with Reyes and were equally as guilty in the check fraud scam.