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When we talk about crime, people conjure up images of shady characters lurking in alleyways or a white chalk outline on the floor. While shows like CSI and Forensic Files perpetuate these types of scenarios, violent crime isn’t the only type of crime that occurs in society.

When Bernie Madoff bilks hapless investors out of hundreds of millions of dollars or Jordan Belfort peddles worthless penny stocks to unsuspecting clients, they’re committing white collar crimes.  Although financial crimes such as insider trading and Ponzi schemes may be nonviolent, they can be just as debilitating as the more newsworthy versions. Indeed, white collar crime’s impact on individuals and society is often more severe than the average street crime.

Coined by the sociologist and professor Edwin Sutherland back in 1939, white collar crime refers to acts committed for financial gain that involve some form of deception. Some of the more well-known types include embezzlement, money laundering, credit card fraud, and identity theft. Most scams and frauds fall under one of these categories. More recently, many scam operators have turned to the online world to work their schemes. For this reason, cybercrime has become one of the fastest growing areas of white collar crime in the 21st century.  

The following are some of the most common types of white collar crimes that we see today.

Ponzi Schemes

Named for Charles Ponzi, a man who allegedly made as much as $250,000 a day through mail coupon fraud in the 1920s, Ponzi schemes are investment scams that promise very high returns for very little risk. Ponzi scheme operators usually direct most of their efforts towards attracting new investors to pay for the older ones. Eventually, the scheme breaks down when the stream of new clients dries out, and there isn’t enough money to compensate earlier investors who want their money back.

No discussion of modern-day Ponzi schemes would be complete without mentioning history’s most notorious offender, Bernie Madoff. By perpetrating the largest securities fraud in U.S. history, Bernie Madoff etched his name in the books as the king of the Ponzi schemes. As a market maker and investment adviser, Madoff convinced unwary clients to invest their money with him by promising outsized gains along with minimal risk. In classic Ponzi scheme fashion, he kept the scam humming along by paying out his early investors with deposits from new investors disguised as profit dividends. Meanwhile, he siphoned off a major share of the money for himself without actually making any tangible investments. When this financial house of cards finally came tumbling down, investors had lost more than $65 billion.

Insider Trading

One of the most common types of securities fraud involves someone who trades on inside information about a company in breach of their fiduciary duty or obligation. For instance, if an executive with nonpublic information about a company’s earnings decides to sell a block of his company stock, then he has committed insider trading or securities fraud. Such violations also extend to “tipping” this kind of information to an outsider and subsequent trading by the person “tipped off.”

Ivan Boesky and the 1980s

During the 1980s, one of the most famous cases of insider trading made the Wall Street trader Ivan Boesky a symbol of corporate greed and excess run amok. Boesky was a stock market speculator who had the uncanny ability to spot potential takeover targets and invest in that company’s stock shortly before an offer was made. As soon as the offer happened, the stock would soar and Boesky would dump his shares for a healthy profit. Occasionally, Boesky would make his stock purchases only days prior to an unsolicited bid being made public.

However, this preternatural ability to pick companies just prior to their takeover turned out to be a standard case of fraud. In actuality, Boesky paid executives in the mergers and acquisition arms of major investment banks for pre-takeover information that he used to make stock buys. When he enjoyed an epic winning streak with some of the biggest takeover deals in the 1980s, the SEC began to take notice. Shortly thereafter, federal investigators uncovered evidence that he was working on insider information. It didn’t take long for Boesky to flip and provide information on his co-conspirators in exchange for a more lenient sentence. Indeed, he gave the investigators so much information on his insider trading network that some credit him with bringing the 1980s stock market boom era to a close.

Cybercrime

Unfortunately, advances in technology have made it even easier for many white collar criminals to ply their trade. As a result, many experts consider cybercrime to be the most dangerous criminal threat of the 21st century. What makes this type of crime different today is the ability of cybercriminals to hurt so many people with a single action such as a security breach or data hacking.

In one of the largest hacks of a financial institution in history, Capital One Bank admitted this past summer that tens of millions of credit card applicants’ information was stolen in a data breach. The pilfered data included clients’ banking information, transaction histories, balances, credit scores and addresses. Because skilled hackers can breach major corporations, large financial institutions and even government agencies, no organization is truly safe from their attacks. 

How to Mount a Defense Against Accusations of White-Collar Crime

If, however, you are accused of engaging in a white collar crime, it is important to consult a knowledgeable white collar attorney to understand your options and how he or she can help you.

What Does a White Collar Criminal Defense Attorney Do?

  • A white collar defense attorney will have experience handling cases involving a fiduciary crime such as money laundering, embezzlement, tax evasion, insider trading, cyber crimes and more.
  • Because these crimes are typically complex in nature, white collar attorneys often have to conduct internal or external investigations on clients’ behalf to counter a prosecutor’s evidence.
  • Since many white collar cases are prosecuted by the government, these attorney often appear in federal court. For this reason, a seasoned white-collar attorney would have a working knowledge of federal law in addition to a strong comfort level in this environment.

Due to the detrimental effects a white collar conviction can have on future employment, it is crucial to mount a proper defense against any criminal proceeding. If you are facing allegations of white collar crime or impropriety, you should speak with an experienced white collar lawyer in order to get the best possible outcome.

References

https://www.hg.org/legal-articles/most-common-types-of-white-collar-crimes-40448

https://study.com/academy/lesson/repercussions-of-white-collar-crime.html

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