“White-collar crime” can describe a wide range of crimes, but they involve crimes committed with deception and motivated by financial gain. The most famous white-collar crimes are various types of embezzlement, fraud, money laundering, and tax evasion. In addition, many types of scams and fraud come under white-collar crime, including securities fraud and Ponzi schemes such as insider trading. Finally, more common crimes, like insurance fraud and tax evasion, also constitute white-collar crimes.
Types of White Collar Crime
Many white-collar crimes are frauds. Fraud is a general type of crime that generally involves cheating someone for monetary gain. The most famous white-collar fraud is known as securities fraud. Securities fraud is fraud related to trading securities (for example, stocks).
Securities fraud comes in many forms, but a common type is “insider trading,” in which a person with inside information about a company or investment negotiates that information in violation of a duty or obligation.
For example, a senior manager who knows confidential information about a future business profit report decides to sell some of his shares in the business. This would be considered securities fraud, particularly insider trading.
Another type of securities fraud is when someone seeks to invest in a business by knowingly misrepresenting the outlook, health, or finances of the business. By inducing an investor to invest money based on false or misleading information, the company and its individuals commit securities fraud. To commit securities fraud, those who speak for the company must make these false statements knowing that they are untrue, or at least should reasonably be aware of them to be incorrect.
Embezzlement is the wrongful taking of money from someone you owe some kind of duty to. The most common example is a company employee who embezzles money from his employer by siphoning money into a personal account.
Embezzlement can take many forms, however. For example, lawyers who improperly use client funds commit embezzlement. So do investment advisors who improperly use client funds they have been entrusted to protect.
Criminal tax evasion is a white-collar crime whereby the attacker tries to avoid the taxes he otherwise would have had. Tax evasion can range from simply filing tax forms with false information to illegally transferring property to avoid tax obligations. In addition, individuals and businesses can commit tax fraud. As with fraud, there may be endless ways to commit tax fraud.
Money laundering is the criminal act of filtering out illegally obtained (“dirty”) money through a series of transactions aimed at making legitimate (“clean”) money appear. First, the money is usually deposited in a financial institution such as a bank or a brokerage. Second, the money is separated from its illegal origin by often complex layers of transactions, which makes it more difficult to trace “dirty” money. The third step is integration. This is where newly “cleaned up” money is mated with legally extracted money through the sale or purchase of assets.
Other White Collar Frauds
Many types of fraud schemes, including insurance fraud and mortgage fraud, are among the most famous white-collar crimes. These can be as common as a person entering into an insurance plan to improperly collect an insurance policy after lying in the application documents.
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.
Depending on the charges, 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.