White collar crime describes non-violent criminal activity in the commercial or business realm. This term encompasses a wide variety of illegal acts and schemes. One common denominator is that the perpetrators commit the acts through deceit and in pursuit of monetary gain. The other is that white-collar crime perpetrators tend to be wealthy, educated, and powerful people in corporate or upscale business environments.
The most common white collar crimes are various types of fraud, embezzlement, tax evasion, and money laundering. These can include scams and frauds, like Ponzi schemes, securities fraud, and insider trading. Other common crimes, like insurance fraud and tax evasion, also can be considered white collar crimes when the perpetrators are powerful or sophisticated.
Both individuals and corporations can perpetrate and be charged as defendants in white collar cases. While individuals could see jail time as a result, corporations potentially face massive fines for their misdeeds. Criminal statutes governing white collar crime are found at both the state and federal levels. For definitions of other relevant legal terms, visit the FindLaw Legal Dictionary.
Types of White Collar Crime
Many white collar crimes are frauds. Fraud is the act of deceiving another for monetary gain. One common type of white collar fraud is securities fraud. This crime involves fraudulent trading of securities (like stocks and mutual funds) on highly regulated and publicly-traded markets. Other forms of white collar crime include Ponzi schemes and other business-related scams to fraudulently take money from investors. These scams, when successful, can bilk people out of millions of dollars. Another group of white collar criminals rip off the government through tax evasion.
Examples of Securities Fraud
Securities fraud comes in many forms. One common type is insider trading, which involves someone with confidential information about a company or investment trades on reliance of that information in violation of a duty or obligation. This type of accusation ultimately sent Martha Stewart to prison.
For example, an executive who has access to confidential information about an upcoming company earnings report decides to sell of a chunk of his stock in the company (or advises his friends and family to do so). These transactions would be considered securities fraud, specifically, insider trading.
Another type of securities fraud is 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.
Embezzlement occurs when a criminal improperly takes money from someone to whom they owe some type of fiduciary duty. The most common example is a company employee that funnels money from the company employer into a personal account.
Embezzlement is a good example of how status can distinguish "white collar" crime from garden-variety street crime. A cashier swiping twenty-dollar bills from a cash register would likely be charged with theft and would not be considered a white collar criminal. However, if that same company's CFO uses deceptive accounting practices to pay invoices to a shell company she secretly owns, that would be considered the white collar crime of embezzlement.
One case, the theft, only requires a single witness or surveillance video to support a conviction. The other case, the embezzlement, might require expert testimony from a forensic accountant to prove the wrongdoing. Of the two, the cashier is more likely to end up with a record of conviction and criminal consequences.
Embezzlement can take many forms. Lawyers who improperly use client funds can commit embezzlement, and investment advisors sometimes embezzle client funds that their clients trusted their advisor would invest in a specified way.
Criminal tax evasion is a white collar crime through which the perpetrator attempts to avoid taxes they would otherwise owe. Tax evasion can range from simply filing tax forms with false information to illegally transferring or concealing property to avoid tax obligations. Individuals, as well as businesses, can commit criminal tax evasion. Theauthorities who prosecute tax evasion sometimes use civil actions (lawsuits) to recover unpaid tax and penalties, but the threat of criminal prosecution for these crimes often encourages settlement and payment of overdue tax bills.
Need Legal Help With White Collar Crime Case?
Allegations of white collar crime can damage a person's reputation or business before a case is even made. Someone charged with a financial crime should seek legal support as soon as possible.
Depending on the charges in question, white collar crimes can involve a variety of state and federal laws. An experienced white collar defense attorney can help navigate potential criminal liability, as well as defenses that may be available.
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