July 8, 2020 Last updated July 21st, 2020 119 Reads share

5 Most Common Types of White Collar Crimes

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While “white-collar crimes” are not violent by nature, these crimes are still extremely serious because of the massive financial damage and ruin victims suffer from these crimes. Almost every American has heard of Bernie Madoff.  He is currently serving a vast 150-year prison sentence. This sentence was given to him by a federal court when he was convicted of running a Ponzi scheme that cost numerous people vast amounts of money. Bernie Madoff pled guilty to five white-collar crimes: securities fraud, perjury, filing a false report with the SEC, and money laundering. White-collar crimes almost always deal with some kind of financial fraud. Let’s take a look at the most common white-collar crimes.

Ponzi Schemes

Ponzi schemes were named after Charles Ponzi. Mr. Ponzi made $250,000 a day in 1920. He pulled this off by running a scam coupon business by mail. The scheme promised people high monetary returns to the customer with little or no risk. Mr. Ponzi paid for the investment of old investors with money from new clients. This allowed him to keep his older investors thinking they were getting a great deal on their investment. The scheme fell apart after new customers stopped investing their money with Charles Ponzi, and the cash flow needed to keep up the scheme vanished. Because of his white-collar crime. Mr. Ponzi was sentenced to five years in federal prison.  Depending on how much money is fraudulently lost because of this criminal activity, a person convicted of running a Ponzi scheme can face decades in prison.

Corporate Fraud

The FBI has the power to investigate corporate fraud cases. The FBI has a list of other fraudulent crimes it will investigate:

  • Public corruption
  • Money laundering
  • Falsification of financial information
  • Corporate fraud
  • Mortgage fraud
  • Financial institution fraud and
  • Fraud against the government.

The Securities and Exchange Commission, along with the IRS, the Treasury Department, and the FBI, all work together on these types of fraud cases. These crimes cause investors to lose massive amounts of money and shake public confidence in the stock market. A conviction of these types of crimes can cause a person to be locked up in prison for twenty years.

Bankruptcy Fraud

This fraud is lesser-known than most white-collar crimes. A person or company that files for bankruptcy is asking for relief of debts that are owed. A person or company that successfully files for bankruptcy can avoid paying back their creditors. The creditors are then no longer allowed to collect money that is owed to them. If the creditors are allowed to collect some part of the debt, it is often just a tiny amount of what is owed.

Bankruptcy fraud happens when a debtor who files for bankruptcy covers up their assets from the bankruptcy court. When filing for bankruptcy, a person or company is required to list their assets as part of the paperwork they must file with the court. If a debtor deliberately hides assets by not disclosing it on their paperwork, a serious felony crime has happened. This can lead to a person facing over ten years in prison.

Embezzlement

Embezzlement happens at all levels of income and in all types of industries. This crime happens when a person has won the trust of their employer, and they are legally allowed to handle financial transactions. A person violates the trust of their employer and commits a crime by pocketing the money or misappropriating the funds for their personal gain. Examples of embezzlement include stealing cash, complex Ponzi schemes, and fraudulent accounting transactions. The punishment for this type of crime depends on how much money was embezzled. A person can face up to 20 years in prison for these types of crimes.  

Extortion

The white-collar crime of extortion happens when a person uses force (coerces) another human being or company to give up services, property, or money. A classic example of extortion would be found by examining the actions of the mafia in the 1930s. Gangsters such as Al Capone would extort money from individuals and store owners. Capone would do this by coercing people to pay for protection from his gang. Blackmail is another common white-collar crime. This crime deals with a person asking for money or some other type of compensation. Once the blackmailer receives their payment, they will refrain from posting embarrassing information to the public, an individual, or an institution.

Over the last few years, there has been an explosion in a new area of extortion. Crypto extortion is the use of bots to extort ransom from individuals. Hackers will find information that is embarrassing or humiliating photos and then demand the owner pay them money to make sure the images or information is not released online. Many people have paid large sums of money to keep this from happening. In some cases, the images or information are still published.

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Shawn Haff

Shawn Haff

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