White-collar crime was coined as a term in 1939, mainly referring to the attire of the perpetrators of such offenses, who were generally businesspeople, executives, and politicians. It now encompasses a broad range of activities related to fraud, deceit, and manipulation.
In general, white-collar crimes are challenging cases to prosecute due to the typical complexity of the schemes and transactions they involve. More often than not, these crimes are not exposed without the assistance of internal parties known as whistleblowers who inform the authorities or the public of suspicious or wrongful activities.
If you are facing accusations about illegal financial activity, you will possibly encounter a white-collar crime investigation. There are several classifications of white-collar crimes, and the outcomes of each can be grave if the financial offense in question is of high value. When facing such allegations, you should hire a white-collar crimes attorney who will be familiar with the nature and process of these investigations.
A white-collar crime incorporates non-violent illegal activity committed by persons in the commercial or business sphere who exploit their social or economic power for personal or corporate gain.
These include different kinds of fraud, embezzlement, tax crimes, and money laundering. However, developments in technology and commerce have broadened the scope of white-collar crimes to offenses like cybercrime and intellectual property crimes.
Types Of White-Collar Crimes
Fraud is a broad term that can relate to different types of schemes aimed at defrauding people of their money.
One example is securities fraud, which is a deceptive practice typically used to deceive investors into making a purchase or a sale based on false information, that violates securities law. This can include misrepresented or falsified financial statements, and transactions that are intended for avoiding regulatory oversight by agencies like the Securities and Exchange Commission.
Another type of security fraud is insider trading, which involves leaking or using confidential information about a company’s upcoming earnings report to inform the sale or purchase of stocks.
Embezzlement refers to unlawfully taking someone’s money or goods after you have been entrusted with them.
The most straightforward example of embezzlement is when a company’s employee transfers money into their personal account that should have otherwise gone to another employee or the employer. Other forms of embezzlement include instances where a businessperson uses their clients’ funds improperly when given the duty to protect them.
Tax evasion occurs when there is non-payment or underpayment of taxes that are legally owed by a person or company.
Tax evasion circumstances are determined by the IRS and involve proof that the absence of payments was willful. Although tax evasion is a federal offense, there are cases of tax avoidance where perpetrators find legal ways to reduce taxpayer obligations.
Activities that are categorized as tax evasion include:
- Using false information in tax forms;
- Collecting money without reporting it to the IRS;
- Illegally transferring property to escape tax obligations.
Money laundering refers to the filtering of illegally obtained money through numerous transactions to “clean” or launder them to make them appear legitimate.
The usual scheme for money laundering includes:
- Depositing money into a financial institution such as a bank.
- Separating the money from its illegal origin through complex transactions.
- Integrating the laundered money with legally obtained money, often through purchasing or selling assets.
Money laundering inherently involves tax evasion, as the money is not reported to the authorities.
Identity theft and computer “hacking” are two of the most widespread computer or cybercrimes, and they are both charged as federal offenses.
Identity theft occurs when someone uses another person’s identifying information, such as their name or credit card number, without their consent to commit fraud. There were around 1.4 million identity theft complaints in the US in 2020, and estimates show that 33% of adults in the US have fallen victim to this crime.
Other forms of cybercrimes occur when hackers access or retrieve data from private servers, such as those of companies or government institutions. Even though hackers do not always have criminal intent or do not collect the data for any purposes, the authorities usually classify hacking as a federal offense due to breaches in the security of companies or customers.
There is a range of financial and corporate activities that might constitute a white-collar crime, and the penalties for such convictions can range from costly fines to significant time behind bars.
If you face allegations that resemble a white-collar offense, you should contact a qualified attorney as soon as possible. Doing so will help you approach the issue properly and protect yourself from any avoidable mistakes in the process.