There are many offenses that fall under the category of white collar crimes, but all are generally motivated by the possibility of financial gain. Some of these crimes include money laundering, embezzlement, tax evasion, insurance fraud, bribery, certain Ponzi schemes, and securities fraud. The biggest factor that sets white collar crimes apart from other criminal offenses is that they typically don’t involve violence or overtly illegal activities, such as drug-related crimes.
In the majority of cases, white collar crimes are investigated by federal authorities. If evidence is sufficient to warrant criminal charges, the case may be prosecuted at the federal level as well. Much of the general population believes that those found guilty of white collar crimes are not punished accordingly, and often treated with leniency. The truth is many individuals convicted of tax evasion, Ponzi schemes, embezzling and other financial crimes often face sentences that are just as severe as those found guilty of more serious or violent crimes. Penalties may include significant fines, restitution, and long prison terms.
Bernie Madoff scandal
One example of a white collar crime that everyone is likely familiar with is the Ponzi scheme Bernie Madoff attempted to pull off prior to his arrest in 2008 when he was charged with securities fraud. Madoff, a former NASDAQ chairman, built a multi-billion dollar investment firm without the help of major firms who wouldn’t trade with him, and using fraudulent trading reports. Ultimately one of Madoff’s sons tipped off authorities which resulted in Madoff pleading guilty to several crimes including money laundering and securities fraud in 2009. He was sentenced to 150 years in prison and billions in restitution. Worst of all, three individuals committed suicide, including Madoff’s son.
This is one well-known example of what can happen when someone is accused of a white collar crime, depending on the seriousness of the allegations.
A little more information regarding various white collar crimes:
Embezzlement – this offense occurs when a person takes money from someone to whom he/she owes a type of duty. For instance, an employee may siphon off money from an employer into his/her own personal bank account. A bank employee may take money from customer accounts for his/her own personal financial gain. An investment advisor may use the funds of clients improperly, unbeknownst to those clients.
Money laundering – Basically, money laundering occurs when someone disguises the original control and ownership or proceeds derived through criminal conduct and makes it appear as though the money was secured in a way that was legitimate. Each year, hundreds of billions of dollars is laundered through banks and other financial institutions, although the banks aren’t aware of it. This money often comes from criminal activity, and is placed in the financial system. At this point, layering is a process in which the source and ownership of the money is disguised, therefore the money has been “laundered.” Finally, the laundered money that appears to be legitimate is re-introduced into the economy.
Fraud – a broad topic, there are many types of fraud including insurance and mortgage fraud, Ponzi schemes, and securities fraud. Tax fraud is a common type of white collar crime whereby someone may under-report income, take credits or deductions that aren’t legitimate, or even prepare clients’ returns using false or fraudulent information.
Insider trading is a specific type of securities fraud in which a person is privy to confidential information and uses that information to his/her benefit. For example, an executive may gain access regarding an upcoming corporate earnings report and determine it would be beneficial to sell a portion of his/her stock in the company. Ultimately, the person trades on inside information in a way that violates an obligation or duty.
These are a few examples of white collar crimes. When someone becomes aware that an investigation is underway regarding a financial crime he or she may have committed, it’s recommended that a criminal defense attorney is brought on board. This will help ensure the individual who is under investigation will not relent to demands of investigators, or waive constitutional rights unknowingly. In many instances, a white collar case can be resolved to the defendant’s advantage prior to formal court proceedings through negotiation.