“White collar crime” can describe a wide variety of crimes, but they all typically involve crime committed through deceit and motivated by financial gain. The most common white collar crimes are various types of fraud, embezzlement, tax evasion and money laundering. Many types of scams and frauds fall into the bucket of white collar crime, including Ponzi schemes and securities fraud such as insider trading. More common crimes, like insurance fraud and tax evasion, also constitute white collar crimes
Many white collar crimes are frauds. Fraud is a general type of crime – which generally involves deceiving someone for monetary gain. One common type of white collar fraud is securities fraud. Securities fraud is fraud around the trading of securities (stocks, for example).
Securities fraud comes in many flavors, but one common type is “insider trading,” in which someone with inside information about a company or investment trades on that information in violation of a duty or obligation. For example, an executive knows confidential information about an upcoming company earnings report decides to sell of a chunk of his stock in the company. That would be considered securities fraud, specifically, insider trading.
Another type of securities fraud is when someone seeks investment in a company by knowingly misstating the company’s prospects, health or finances. By luring an investor to put up money based on false or misleading information, the company and individuals within it commit securities fraud. False or misleading statements in public reports from publicly traded companies also can constitute securities fraud. To commit securities fraud, those speaking on behalf of the business must make these false statements with knowledge that they are false, or at least reasonably should know them to be false.
Other White Collar Frauds
Many types of fraudulent schemes, including mortgage fraud and insurance fraud, are amongst the more common white collar crimes. These can be as common as an individual embarking on an insurance scheme to improperly collect on an insurance policy after lying in application materials. 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.
Embezzlement is improperly taking money from someone to whom you owe some type of duty. The most common example is a company employee that embezzles money from his employer – for example by siphoning money into a personal account.
Embezzlement can take many forms, however. 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 through which the perpetrator attempts to avoid taxes they would otherwise owe. Tax evasion can range from simply filing tax forms with false information to illegally transferring property so as to avoid tax obligations. Individuals, as well as businesses can commit criminal tax evasion. As with fraud, there are perhaps infinite ways to commit tax evasion.
Money laundering is the criminal act of filtering illegally obtained (“dirty”) money through a series of transactions designed to make the money appear legitimate (“clean”). Money laundering often involves three steps. First, the money is deposited – typically into a financial institution such as a bank or brokerage. Next, the money is separated from its illegal origin by layers of often complex transactions, making it more difficult to trace the “dirty” money. The third step is integration. This is where the freshly “cleaned” money is mixed with legally obtained money, often through the purchase or sale of assets.
Depending on the charges in question, 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.