By Susan Buckner, J.D. | Legally reviewed by Melissa Bender, Esq. | Last reviewed August 28, 2023
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Not all crime is violent, street-level crime. Some of the most expensive crimes never physically harm anyone. Some of the biggest criminal cases in history did not involve a drop of blood or use a single bullet. These crimes, sometimes called "white-collar crime" or "corporate crime," are underreported and under-investigated, although they are far more costly to the public. The FBI estimates that while street crime costs America about $15 billion annually in lost income and revenue, white-collar crime costs more than $1 trillion in money transfers, fraud, and waste.
White-collar crime is poorly enforced because of the lack of public knowledge. "White-collar" crime remains the domain of wealthy perpetrators in corporate offices, or so the public and law enforcement think. But anyone with a computer and Wi-Fi access can commit some type of white-collar crime.
White-collar crime is generally nonviolent criminal activity. Most crimes focus on financial gain or profit. Most need some financial or computer technology expertise, although they don't need years of experience in those fields. They do require audacity and access to sensitive information.
Typical white-collar offenses include:
These are nonviolent crimes, and both the offenders and their corporations usually face no more than stiff fines and misdemeanor charges. Sometimes, racketeering and fraud can result in criminal charges for offenders.
Fraud covers a wide range of criminal behavior. Legally, fraud is any act committed "with intent to deceive." Insurance fraud is the use of falsified or fake insurance claims to make money. Mortgage fraud is lying about facts about a mortgage to deceive the mortgage holder or the bank.
One of the most famous financial crimes is the Ponzi scheme. In a Ponzi scheme, the criminal pays off the initial investors with later investors' money. A Ponzi scheme can last years or even decades, as long as enough new investors keep coming into the scheme to pay off the old ones. The most famous Ponzi schemer of all, Bernie Madoff, died in prison at the age of 82.
Fraud is difficult for the legal system to prosecute because victims are often embarrassed to admit someone scammed or defrauded them. As a result, frauds take a long time to investigate.
A subset of fraud, securities fraud, involves misstating the value of a company or misrepresenting one's knowledge of the market to potential investors. Securities fraud includes insider trading when someone with knowledge of a company's upcoming merger or acquisitions uses that knowledge to buy or sell their own stocks. The practice is also known as "shorting the market."
Market manipulation and securities fraud cost millions of dollars but are hard to see in the daily stock market fluctuations. Federal prosecutors must rely on whistleblowers, internal investigations, and audits to uncover this fraud.
Embezzlement means taking assets by a person in a position of fiduciary trust. A cashier is not in a position of trust over the cash drawer, so stealing money from the till is ordinary theft. If the manager slips a twenty into their pocket every night and uses their ability as manager to cover the loss by juggling receipts, it becomes embezzlement.
Nearly all state laws focus on the "position of trust" aspect to separate embezzlement from ordinary larceny or theft. In addition, the theft must be through the position of trust and not through some other means. For instance, the cashier was not hired to account for all the money in all registers every night, so taking money from one till is simple theft. The manager was, so stealing money from the store becomes embezzlement.
Another famous crime, this one through the medium of TV drama, is money laundering. It consists of moving "dirty" money, or money obtained through illegal means, into a "clean" account. Money obtained through drug trafficking or illegal weapons sale must be "washed," or passed through a clean bank account. The U.S. Treasury Department tracks large deposits (over $10,000) and follows where they came from and where they go.
Money laundering is the process white-collar criminals use to break up large funds into small, legal chunks and deposit them back into legal accounts. Money laundering is secondary to the original crime, and the funds are subject to asset forfeiture when seized.
If you have ever seen a mysterious transaction on your credit card, you've felt the touch of identity theft. This so-called nonviolent crime has brought white-collar crime into the average person's life in a way that bank fraud and Ponzi schemes never could. Anyone can be a victim of identity theft, and once your card numbers are online, you may never get your life back.
Identity theft begins on the internet when online criminals steal credit card numbers, Social Security numbers, and other essential information. They sell it to brokers, who then sell it back to criminals who use it for online purchases through retailers. The sales happen quickly, often before the victim knows their information is gone.
Criminal tax evasion means intentionally failing to pay income taxes or other taxes when they are due. Tax evasion by itself is not always a crime. There must be an intent to defraud the government as well as a failure to pay. Tax evasion can include falsifying tax documents, concealing property, and lying to investigators.
There are criminal and civil penalties for failure to pay taxes, but the IRS prefers tax cheats pay what is due rather than go to jail. Only if the criminal activity is excessive or if there is other illegal activity does the IRS resort to criminal charges.
There are state laws for white-collar crimes, but federal courts handle most cases. The FBI, the Securities and Exchange Commission (SEC), or other government agencies investigate and prosecute the crimes. The average person won't need a high-powered white-collar criminal defense attorney, but the companies and people who commit these crimes often do.
This has to do with the nature of the crimes. The federal government prosecutes wire fraud crimes. State governments cannot investigate or prosecute the transmission of money over the internet and across state lines. The FBI can and does. Since banks are federally insured, the FBI may investigate bank fraud, even if no wire fraud is involved.
The SEC has the white-collar crime attorneys needed to investigate and prosecute securities fraud and insider trading. These crimes require an experienced attorney with forensic financial training to locate the details of the crime. Most clients, fortunately, do not need this kind of skilled attorney.
You may need legal advice if you have been the victim of a white-collar criminal, such as an identity thief or a Ponzi schemer. If you're facing charges of embezzlement or fraud, you need a criminal defense lawyer immediately. An experienced white-collar defense attorney can help navigate potential criminal liability and develop a sound defense strategy.
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