White collar crime refers to offenses that are intended to generate illegal financial gain. These crimes are usually committed by business people who, due to their job or role, are able to access large quantities of money that belongs to other people. (georgetown.edu). White collar crime affects both domestic and international businesses.
Below are the most common types of white collar crime.
Corporate fraud is one of the most common white collar crimes and continues to be a top criminal priority for the FBI and other law enforcement. Corporate fraud does not just cause major financial losses for investors. It also can cause severe damage to the US economy the confidence of investors. (FBI.gov)
According to the FBI, most corporate fraud cases it investigates deal with accounting schemes that are made to defraud investors, analysts and auditors and about the actual financial condition of a company. By manipulating financial data, share prices, and other related valuations of a company, financial performance can appear to be higher due to fraudulent performance indicators that are offered to the public.
The most common corporate fraud investigations are in the following areas of white collar crime:
- Falsification of financial information: Can include fake accounting entries, or misinterpretations of the financial condition of a company; fake trades that are intended to artificially boost profits or cover up losses; and illegal transactions that are intended to evade oversight of regulators.
- Corporate insider self dealing: Insider trading, which is illegal trading based upon non public information; kickbacks; misusing corporate assets for your personal gain; and tax violations that are related to illegal self dealing, such as tax evasion and failure to report income.
- Fraud related to a legal mutual hedge fund: Late trading; engaging in market timing schemes; and faking net asset values.
Money laundering is a white collar crime where the criminal hides or disguises proceeds and makes them look like they came from legal sources. Money laundering lets criminals hide and accumulate their illegal money, avoid state and federal prosecution, evade state and federal taxes, boost profits through reinvesting them so that criminal activities can be funded later.
Many definitions exist of this white collar crime, but the simplest is that criminals are taking dirty money and making it clean money. It is a major state and federal crime: Money laundering undermines the stability and integrity of financial systems and institutions. It can discourage the investment of foreign companies and distort overseas capital flows.
State and federal law enforcement targets its resources on the facilitation of money laundering, goes after professional money launderers, gatekeepers, facilitators, financial institutions that are complicit and more.
Money laundering normally is related to other crimes that offer an illegal financial gain. Criminals who deal in money laundering derive illegal proceeds in a variety of ways.
Some of the common crimes that relate to money laundering are:
- Health care fraud, including Medicare and Medicaid
- Human trafficking
- International and domestic public corruption
- Tax evasion
- Insurance fraud
- Narcotics trafficking
- Complex financial crimes
The ways that white collar criminals launder money makes it hard to offer all of the possibilities, but therese are some of the common ways these criminals launder illegal money:
- Domestic and international financial institutions
- International trading
- Real estate investments
- Third party providers of various services
- Virtual currencies such as bitcoin and ethereum
Federal and state authorities take aggressive actions to detect and deter money laundering. Law enforcement agencies, such as the FBI, may coordinate with the following entities to fight this white collar crime:
- Various state, federal and local law enforcement organizations that can help to detect and deter various types of money laundering in the US
- International partners with federal and state law enforcement that can address money laundering as it affects the global financial system that is becoming more complex by the year
- All types and aspects of industries that are affected by white collar criminal money laundering
Securities and Commodities Fraud
The increasing integration of world capital markets is creating more chances for US companies to have access to capital and investors to better diversify their portfolios. Whether it is through personal brokerage accounts, college savings programs or IRAs and 401ks, more Americans are now investing in the domestic and global markets. This growth is leading to an increase in misconduct and fraud in financial markets. There are more complex investment vehicles today, and the high amount of money that is invested creates better chances for businesses and individuals to engage in fraudulent investment schemes.
Below are the most common types of securities and commodities fraud:
These schemes may be called high yield investment fraud. They involve illegal sale or the purported sale of various financial investments. A typical investment fraud scheme involves the offering of assorted low risk or no risk financial investments. There could be guaranteed returns, returns that are too consistent, complex financial strategies and securities that are not registered. These schemes may try to victimize specific religious or ethnic groups to grow trust so the scheme can be perpetuated. Typical white collar investment fraud schemes are:
- Ponzi schemes: Paying fake returns to existing financial investors from the money that is brought in by new investors. Ponzi schemes tend to offer highly consistent returns, even in bad markets; unregistered investments; high returns with no risk; and highly complex investment strategies.
- Pyramid schemes: Money is brought in from new people and is used to pay earlier participants. Participants in pyramid schemes get commissions for bringing in new people. Pyramid schemes are often offered as multi level marketing systems.
- Prime bank investment fraud: Criminals will claim they have access to a trading program that is secret that is endorsed by the US Treasury, World Bank, Federal Reserve or International Monetary Fund. Criminals may use complex terms and documents that look legitimate and legal, and claim the investments are backed by the federal government against loss.
- Advance fee fraud: Victims must pay up front fees to realize a larger gain. The victim may be told to be in the program, they need must send funds up front to cover a cost, which might be a phony tax or participation fee.
- Commodities fraud: Illegal sale or the purported sale of raw materials of semi finished products that are sold on exchanges. These criminals bring in investors by making false claims and using high pressure sales tactics. Perpetrators may devise artificial account statements that show alleged investments, when in reality, there were no such investments made. The money was actually diverted for the use of the criminal enterprise.
- Broker embezzlement: Illegal broker actions to steal from clients. Could be facilitated by faking client documents, faking account statements, and other conduct that breaches fiduciary responsibilities of the client.
- Market manipulation: These are also called pump and dump schemes. They are based upon manipulating lower volume stocks on smaller markets that are over the counter. The goal of this scheme is to boost the price of penny stocks so that criminals can sell shares at huge profits. The pump is accomplished by bringing in novice investors with deceptive sales practices and public information.
What to Do If You Are Charged
Anyone who may be accused with or charged with any number of white collar crimes, will need to consult with an experienced attorney as quickly as possible. Many courts will deal with this crime using very strict and serious guidelines, and your rights may not be protected fully if you proceed without the legal counsel that you are entitled to you. Remember that even if you believe yourself to be innocent of the charge, you will still need representation to help you prove your innocence, and it is best to seek the legal assistance of white collar criminal defense attorney such as Geoffrey G. Nathan Law Offices today.
- Definition of White Collar Crime. (n.d.). Retrieved from https://www.law.georgetown.edu/your-life-career/career-exploration-professional-development/for-jd-students/explore-legal-careers/practice-areas/white-collar-crime/
- Types of White Collar Crime. (n.d.). Retrieved from https://www.fbi.gov/investigate/white-collar-crime