Informal Networks and White Collar Crime: Evidence from the Madoff Scandal

54 Pages Posted: 18 Jan 2011

See all articles by Emily Greene Owens

Emily Greene Owens

Cornell University

Michael Shores

affiliation not provided to SSRN

Date Written: August 17, 2010

Abstract

We examine the importance social and spatial distance in the criminal activity of Bernard Madoff, perpetrator of one of the largest white collar crimes in United States history. Most white collar crimes are exploitations of trust, which can be fostered by a shared religious identity between the victim and perpetrator; affinity fraud in particular targets members of a particular social, demographic, or religious group. We construct two measures of Jewish religious network strength at the county level: the concentration of Jewish non-profit organizations and the revenue of Jewish non-profit organizations relative to other religious non-profits. We show that residents of counties in which there were stronger Jewish networks were more likely to have been victimized by Madoff. In addition, we find that residents of counties that were geographically distant from areas where Madoff lived or worked were less likely to be victimized, but that Jewish network strength appears to counteract this “distance effect.” Non-profit organizations, which were also victims of Madoff, were less affected by informal network strength.

Keywords: White Collar Crime, Affinity Fraud, Victimization, Informal Networks

JEL Classification: K42

Suggested Citation

Owens, Emily Greene and Shores, Michael, Informal Networks and White Collar Crime: Evidence from the Madoff Scandal (August 17, 2010). Available at SSRN: https://ssrn.com/abstract=1742363 or http://dx.doi.org/10.2139/ssrn.1742363

Emily Greene Owens (Contact Author)

Cornell University ( email )

120 Martha Van Rensselaer Hall
Ithaca, NY 14853
United States

Michael Shores

affiliation not provided to SSRN ( email )

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