White collar crime refers to those criminal offenses that use some form of deception to produce financial gain. These crimes are often committed by business professionals and government employees since they are able to gain access to large amounts of other people’s money. They are typically victimless and do not involve violence, drugs, or overtly illegal activities.
White collar crime” can describe a wide variety of crimes, but they all typically involve crime committed through deceit and motivated by financial gain. The most common white collar crimes are various types of fraud, embezzlement, tax evasion and money laundering. Many types of scams and frauds fall into the bucket of white collar crime, including Ponzi schemes and securities fraud such as insider trading. More common crimes, like insurance fraud and tax evasion, also constitute white collar crimes
The following is an overview of offenses generally considered to be examples of white collar crime.
Securities Fraud
Securities fraud comes in many flavors, but one common type is “insider trading,” in which someone with inside information about a company or investment trades on that information in violation of a duty or obligation. For example, an executive knows confidential information about an upcoming company earnings report decides to sell of a chunk of his stock in the company. That would be considered securities fraud; specifically, insider trading.
Another type of securities fraud occurs when someone seeks investment in a company by knowingly misstating the company’s prospects, health, or finances. By luring an investor to put up money based on false or misleading information, the company and individuals within it commit securities fraud. False or misleading statements in public reports from publicly traded companies also can constitute securities fraud. To commit securities fraud, those speaking on behalf of the business must make these false statements with knowledge that they’re false, or at least reasonably should have known them to be false.
Other White Collar Frauds
Many types of fraudulent schemes, including mortgage fraud and insurance fraud, are amongst the more common white collar crimes. These can be as common as an individual embarking on an insurance scheme to improperly collect on an insurance policy after lying in application materials. They can also extend to larger scale schemes by businesses to defraud their customers or others in the marketplace.
Ponzi schemes and other business related scams to fraudulently take money from investors have been some of the most famous white collar crimes. These can take all shapes and sizes.
For example, disgraced investor Bernie Madoff (who’s currently serving a prison sentence for running a Ponzi scheme) inflated his earnings numbers in order to entice more investors to put money into his fund. He would then use those funds to pay off earlier investors who wanted to withdraw their funds. But once the market cooled and a critical mass of investors pulled their investments, it became clear he didn’t have the money to repay the investors.
Most white collar crimes are investigated and prosecuted by federal authorities such as the U.S. District Attorney’s offices, which have significant resources available to pursue suspects. In addition, corporations hire internal investigators, attorneys, or employ the SEC to conduct an investigation into suspected criminal activity.
In order to prove that a white collar crime was committed, the prosecution must prove the following four elements:
- Intent – The defendant must intentionally commit an unlawful, wrongful act.
- Disguise and concealment – The defendant hides or conceals their criminal activity to avoid getting caught.
- Knowledge – The defendant must have known that they committed the crime.
- Reliance – The plaintiff or victim relied on the defendant’s fraudulent act or scheme.
What makes white collar crimes unique in comparison to other crimes is that suspects will often become aware of the investigation days, weeks or even months before an arrest is made. Although this can make suspects fearful and apprehensive about the future, it also offers an opportunity to prepare to strong defense to protect their rights, reputation, and freedom with the help of a skilled criminal defense attorney.
