White-collar crime is a type of crime that involves stealing money from a business. The main culprits behind this kind of theft are usually people who occupy influential positions in an organization, such as CEOs and management. These offenses may involve fraud, deceit, or illegal financial transactions for personal gain.
Depending on the specifics of the case, white-collar crimes can either be prosecuted at the state or federal level. White-collar crimes count as federal crimes when they involve the banking system, a federal agency, or any other activity that crosses state lines.
Keep reading to learn more about white-collar crimes, including the types and examples.
Blue Collar Vs. White Collar Crimes
Just like how jobs are classified as white-collar or blue-collar, the same also applies to criminal offenses. White-collar offenses are mainly associated with wealthier individuals working prestigious jobs, while blue-collar crimes are associated with those in poverty.
Common examples of blue-collar crimes include armed robbery, murder, drug offenses, rape, vandalism, and sexual assault. Because people committing these kinds of crimes are usually more desperate for money, blue-collar crimes tend to be more straightforward.
White-collar crimes, on the other hand, are more complex and may involve a long chain of people, making it challenging to investigate and prosecute.
Types of White-Collar Crime
Some of the most common types of white-collar crimes include:
Corporate Fraud
Fraud is the act of tricking or lying to people to gain money or financial benefits. In the corporate world, this may involve activities such as misinterpreting financial reports, issuing fraudulent loans, insider trading, and other illegal financial activities that deceive stakeholders.
A common example of corporate fraud is the Volkswagen emissions scandal, where the company violated the Clean Air Act by rigging diesel engine tests to meet U.S. standards for harmful emissions.
Corporate fraud has severe consequences for an organization. For instance, it can erode investor confidence, destabilize financial markets, and lead to huge economic losses. To prevent future occurrences, stakeholders must take strict measures, such as conducting regular audits and separating financial responsibilities.
Embezzlements
Embezzlement mostly happens when an employee misappropriates money or assets entrusted to them. An example is when an accountant or manager uses their access to steal a company’s money for personal gain.
Corporate embezzlements typically fall into two categories: direct and indirect embezzlement.
- Direct embezzlement: This is when a person in your company alters data to unlawfully access money. This is mostly common in departments that handle financial transactions like finance or IT.
- Indirect embezzlement: Indirect embezzlement isn’t quite straightforward. It might involve working with outsiders like vendors to make transactions seem legitimate even when they’re not. This type of embezzlement doesn’t usually involve direct theft of assets or money, making it difficult to spot.
Money Laundering
Money laundering is accepting money earned from illegal activities like drug trafficking, making it appear as if it’s earnings from a legal business activity. It typically involves three steps:
- Placement: This is when someone injects dirty money into a legitimate financial system.
- Layering: Layering conceals the source of the money by making it look like money earned from the business. This can be done through a series of transactions and bookkeeping tricks.
- Integration: After blending it into a legitimate business, the money is then disbursed into a legitimate account.
Most criminals launder money through cash-based businesses such as restaurants. With such businesses, it’s easy to inflate cash receipts and funnel illegal money into the bank.
Extortion
Extortion means forcing someone into giving you something through threats or manipulation. It’s a white-collar crime that’s mainly committed by people who hold powerful positions. An example of an extortion case is when a public official demands bribes in exchange for contracts.
Extortion is considered a serious white-collar offense and is usually charged as a felony criminal offense in most states. Its penalties can vary depending on the severity of the case and the jurisdiction.
Self-Dealing
Self-dealing happens when a financial advisor or any other financial professional acts in their own best interest rather than the best interest of their clients. It can happen in several different ways and, therefore, might not be easy to recognize. Here is what self-dealing can look like in different financial relationships:
- When a financial advisor encourages you to make an investment that would generate some kind of benefit for themselves
- When a trustee distributes assets from the trust to themselves or their relatives or friends
- In a self-directed IRA, self-dealing activities may include paying yourself for work done on the investment property or using the investment property as a vacation home.
File Charges for a White-Collar Crime
Despite not being violent in nature, white-collar crimes are serious offenses and can have negative consequences, such as financial losses, tarnished reputation, and destabilization of economies. You can always sue for such crimes to get rightfully compensated. Just make sure to hire an experienced attorney who will argue your case well.
