Few bankers are familiar with the name Catherine Kissick, a former executive at Colonial Bank who was sentenced to
Even fewer have heard of Janice Weston, a senior vice president and compliance officer at the failed Washington Federal Bank for Savings in Chicago, who
Yet these female bankers are part of a larger trend in which women are more likely to be convicted of one specific category of financial crime — embezzlement — than men, according to new research. The study is groundbreaking because it is based on U.S. Sentencing Commission conviction records from all 94 U.S. federal District Courts.
Women were the target of 55.4% of embezzlement convictions from 2007 to 2017, compared with 44.6% for men, according to the
In 2012 alone, women made up 60.5% of convictions. His research is the first large-scale study of embezzlement to examine the gender, education and age of perpetrators.
"The key element in all these crimes is opportunity," said Weber, a former enforcement official at the Office of the Comptroller of the Currency, the Securities and Exchange Commission and the Federal Deposit Insurance Corp. "What makes embezzlement unique is that by virtue of its definition, it takes place in the workplace and is committed by insiders."
The study provides insights into theft in the workplace and which employees are more likely to be prosecuted for stealing from a company or its customers. The prevailing research on embezzlement was based, in part, on Yale University studies from the 1970s and 1980s that did not identify women as significant white-collar criminals.
"It was a shocking finding considering that prior research put women convictions at only 15%," Weber said. "One reason the numbers are higher today is because women have pierced the glass ceiling and plainly have more opportunity in the workplace today than they did in the past."
The research both simultaneously supports and upends notions about the so-called "fraud triangle," a theory from the 1950s that has held sway in the field of criminology and forensic accounting for decades. The study also raises questions about the fairness of which kinds of white-collar cases get prioritized and who gets charged.
"There's a whole lot of white-collar crime and very little of it gets prosecuted," said June Carbone, a law professor at the University of Minnesota Law School. "What's different about embezzlement is it's low-hanging fruit. Typically you'll have a bank self-report the embezzlement that is easy to prove and a jury gets it."
The literature on why women are more likely to be prosecuted for white-collar crimes and specifically for embezzlement is a complex one, Carbone said.
In the past, researchers argued that women accused of embezzling were typically low-level bank tellers, bookkeepers or office managers. They were often referred to as "criminals of the middle class."
But Weber's study found that the median amount embezzled by women was $221,000, roughly the same amount as men. The difference is that men tended to steal larger amounts in one fell swoop, while women stole less in value but engaged in criminal activity more frequently.
The research also found that a majority of women convicted of embezzlement during the period studied had some college education, a college degree or graduate work, further altering prior assumptions that such crimes were committed by lower-level workers. Bank tellers typically hold between $20,000 to $30,000 in cash in their drawers, so stealing large quantities is challenging.
"In the past they called this a crime of the middle class, but this can't be a crime of the middle class because the median amount stolen is so much higher," Weber said. "These crimes are being committed by women in the C-suite or just below it, so this is clearly officers and directors."
Much of the past research on embezzlement is based on the theories of Edwin Sutherland, long considered the father of criminology, who wrote a seminal textbook, "Principles of Criminology," and coined the term "white-collar crime" in 1939. His student, Donald Cressey, a sociologist at the University of California, Santa Barbara, wrote "Other People's Money," a 1953 study on embezzlement that originated the so-called fraud triangle concept. That theory, still in use today, claims that three elements must be present for embezzlement to occur: financial pressure, opportunity and a rationalization to steal.
Bill Black, an associate professor of economics and law at the University of Missouri-Kansas City, called the fraud triangle "kind of silly," largely because it came out of the 1940s and was based primarily on interviews with women convicted of embezzlement, who had what at that time was termed "an unshareable financial need."
"Women convicted of embezzlement had just what you'd expect: a really embarrassing problem in the family where they needed money," Black said. "This was in the late 1940s and almost always it was the husband or the boyfriend who caused the financial crisis, and the women couldn't go to their boss and say their husband was an alcoholic or a drug addict or a gambling addict."
Embezzlement is the only category of financial crimes in which women in federal prison outnumber men.
"Back in the '40s, it was two-thirds women, but now it's about 53%," Black said. "We live in a slightly less-sexist era."
The theory of the fraud triangle is one of the few areas of criminology that has made it into the official accounting literature and is still used today in training materials put out by the Association of Certified Fraud Examiners. Jason Zirkle, training director at the ACFE, an Austin, Texas, organization that certifies fraud examiners said the theory has merit.
"Who has the opportunity to commit the fraud? It's the people that handle the money: the accountants, the auditors, the accounts payable clerk, the accounts receivable clerks," Zirkle said. "Those tend to be dominated by females versus males. The roles that typically have their hands on money are the ones who have more opportunity to commit fraud."
That men tend to steal larger amounts of money at a time can also be explained easily, Zirkle said, since men overwhelmingly hold senior positions at most companies compared with women.
The three former Washington Federal Bank for Savings board members were accused of giving the OCC false information in an attempt to hide embezzlement. They could face up to five years in prison for attempting to deceive the OCC.
Embezzlement is a unique form of white-collar crime because it involves the fraudulent "taking of personal property" by someone legally entrusted to protect it, said Weber, who was involved in the investigation of the Taylor, Bean & Whitaker case at the OCC and FDIC.
He described Kissick, the executive at Colonial Bank, as an example of how women steal for vastly different reasons than men.
"Women steal more frequently for necessity," he said. "Kissick felt that she would be held responsible if the loan [to Taylor, Bean & Whitaker] was charged off and she was trying to conceal her own lack of performance as an officer and director. And that's different from men. She's not stealing for an affair or because she has an addiction."
Another major takeaway from the study is that the number of criminal prosecutions dropped sharply after the financial crisis even though the median loss amount from embezzlement tripled in the period studied. The Obama administration faced significant criticism for failing to prosecute big-bank executives after the 2008 mortgage crisis, and that trend continued in the Trump administration. Weber's research is broadly compatible with those findings.
"White- collar prosecutions are complicated and difficult to investigate, and we know they don't prosecute the elite white-collar criminals," said Carbone, who has a book coming out on women and economic justice.
Weber's research into embezzlement was prompted by his own experience at federal regulatory agencies, where he saw women being prosecuted in greater numbers.
"I put many, many female CEOs and bank presidents in federal prison," he said. "I set out to prove the conventional wisdom and prior research was wrong."
Prosecutors also need to have a good reason to investigate a white-collar crime given the tremendous commitment of resources. Women are more likely to be prosecuted for misconduct either in retaliation for complaining to management or because their bosses are under pressure from federal regulators to demonstrate they're taking steps to prevent internal financial wrongdoing.
Bank executives, she said, often will "sacrifice a person they don't like or they don't need, and that's more likely to be a woman. They pick the person who is most expendable or disliked, and women are more likely to be punished if they do anything shady."
