The term “white-collar crime” was coined in 1939 and is synonymous with fraud in all its iterations. Today’s scams often use the Internet and other technology to put a new face on old tricks to separate people from their money. In this guide, we will look at what types of dirty deeds are considered white-collar crimes and the penalties they can incur.
Types of White-Collar Crime
- A conspiracy is an agreement between two or more people to commit an unlawful act or to use unlawful means to achieve an otherwise lawful result. In most cases, the crime is the actual agreement. Some statutes will require that some act in support of the agreement be taken before the parties commit conspiracy.
- Money laundering occurs when parties knowingly participate in a financial transaction which is designed to hide the origins of those funds. This often occurs with drug money and other profits made from crimes. The Money Laundering and Control Act also covers a broader range of accounts. Those include securities and money market accounts. Banks have additional reporting requirements and must assign one person to follow up on law enforcement information regarding suspicious activity and individuals. To avoid longer sentences if a violation occurs, these institutions should create training programs that teach employees how to identify suspicious customers and transactions.
- Bribery occurs when an individual or business gives money, property, or any other benefit to a particular person for the purpose of influencing that person’s actions and judgment in their favor. Giving a bribe is one crime. Receiving a bribe is also a crime. And if a person tries to coerce a person or entity into giving him or her a bribe, that is also a crime.
- Racketeering is a broadly defined crime consisting of kidnapping, gambling, murder, arson, and much more. To have the Racketeer Influenced and Corrupt Organizations (RICO) Act apply, the plaintiff or prosecutor must show there is a pattern of racketeering activity—at least two racketeering activities must be committed within two years. Under RICO, a guilty defendant can be fined $25,000 and sentenced to up to 20 years in jail. Any property used in the racketeering can also be forfeited.
- Extortion is the illegal demand by a public officer acting with apparent authority. The person demanding money demands it in exchange to either buy his action or prevent him from acting.
- Blackmail is a similar demand to extortion, made by a private official. Blackmail is usually a threat to make something public if not paid.
- Counterfeiting occurs when a person knowingly makes a document or coin that looks genuine but is not. Traditionally, this crime applies to the creation of what looks like U.S. money, but has expanded to include foreign securities and foreign bank notes.
- Forgery is the crime of fraudulently making or altering an instrument that in turn creates or alters the legal liability of another. The easiest way to think of this is forging a check. By forging a check, the forger acts without authority to create a legal obligation on the part of the account holder and bank to pay money to a third party.
- Perjury is the crime of knowingly giving false testimony in judicial proceedings after swearing to tell the truth. This crime occurs if a witness lies on the stand. But to be prosecuted the person must first swear to tell the truth.
- Under Sarbanes-Oxley, obstruction of justice occurs when anyone alters, destroys, conceals, covers up, falsifies, or makes a false entry with intent to impede, obstruct, or influence an investigation of a department or agency of the United States. Sarbanes-Oxley also created a new element of mail and wire fraud, broadening it from the original crime of using the mail or telephone to defraud another.
- Embezzlement occurs when someone fraudulently coverts another’s property or money that has been entrusted to him or her. If an employee takes property or funds for personal use that belong to his or her employer, he or she has embezzled those items. An agent, like a property manager, embezzles when he or she keeps payments from third parties that were intended for the principle.
Other White-Collar Crimes
Here are additional white-collar crimes whose titles explain the crime:
- Making false claims to an insurance company, government office, or relief agency
- Obtaining goods by false pretenses
- Unauthorized use of ATMs
- Submitting false information to banks
- Writing bad checks
- Stealing credit cards and possessing a credit card without the owner’s consent
There are several different types of penalties that can be enforced against the defendant. First, the defendant can forfeit any property that was used to commit the crime. Forfeiture is rare in white-collar crimes, but is an option for the court. The more common punishments are fines and jail time. Recently, fines have been adjusted to recognize that what is a significant penalty to an individual may not affect a business. Since the fines are designed to deter criminal behavior this had to be adjusted.
There are also mandatory sentences now for the officers and directors who were in positions of authority at the time of the crime. The U.S. Sentencing Guidelines allow reductions in sentences if the managers were actively engaged in trying to prohibit the crime. Under the November 2003 amendments, the court can take the following factors into consideration when determining sentences:
- The seriousness of the offense
- The company’s history of violations
- Its cooperation in the investigation
- The effectiveness of its compliance program
- The role of its senior management in the wrongdoing
The effect is to encourage companies to take an active role in the investigation to minimize the amount of the penalty for any wrongdoing.
With the advent of the internet, white-collar crimes are not just for businessmen anymore!