White collar crimes involve criminal activities committed by people in the regular course of their business and involve bribery, extortion, fraud and embezzlement. These crimes usually end in financial gain for the perpetrator.
White Collar Crime
Not every crime involves a smoking gun. Some crimes are committed right under the victim’s nose without a single shot fired! White collar crimes are criminal acts that are performed by people in the course of business committed for financial gain. These types of crimes can cost citizens millions of dollars!These crimes are difficult to prosecute because they often involve sophisticated systems and even many different people. Frauds typically committed are:
Government can prosecute both the individual committing the crime and the corporation for which he works.
Sometimes, not-so-virtuous business people fraud their clients by misrepresenting facts through words and actions for financial gain. The deceit is intentional and meant to cause the victim to take action upon the facts. The action usually results in a financial injury.There are certain elements that must be present in a fraud case:
- A false statement of material fact occurred
- The defendant was aware that the statements made were false
- The defendant meant to make the false statements
- The victim relied on the statements to be true
- The victim lost something as a result of the false statements
It is important to understand that not every false statement of fact can be considered a fraudulent act. The statement must be considered a material fact, or a statement that is of such significance that the fact or facts alone were used by the victim to make an important decision.
Let’s say Ramona responded to a classified ad posted by Dwight for an apartment rental. After touring the new digs, Ramona signed on the dotted line and handed Dwight the sum of $1,000. That is one month’s rent and security deposit.
A few weeks later, Ramona arrived at the new apartment to find that tenants occupy the place. She discovered that the apartment was never really for rent. Dwight posed as the owner of the apartment and collected the deposit. As it turned out, he was never a party to the apartment at all. He happened to have a key to the unit from an old girlfriend. He owned nothing!Dwight is a swindler, and Ramona is the victim of a fraud.
The material facts in this case are Dwight’s actions. By showing Ramona the apartment using a key to access the unit and accepting her money, he acted like a landlord.There are several types of crimes that are considered fraud:
- Insider trading
- False pretense
Insider trading is not entirely fraudulent.
Companies can buy and sell stock to their partners and employees as long as the trades are reported to the governing authorities. It becomes illegal when stocks are bought and sold based on information received in violation of a fiduciary trust, meaning information was exchanged between parties where one party had a duty to keep the information private from the public.Suppose you work for a pharmaceutical company that was working on a cure for cancer. In the course of your day, you receive an email unintended for your eyes that reads, ‘Cure for Cancer to be Announced Tomorrow.’ Armed with this information, you quickly get under your desk and begin secretly calling friends and family, urging them to buy stock in your company immediately. Within hours, all of the available stock shares have been bought – there wasn’t a share left for anyone. This is insider trading! You used confidential information that was not meant for the public for your own financial gain and that of your family and friends.
Another type of fraud is false pretense and involves defrauding someone by using false statements for financial gain. It generally involves the transfer of personal property. A fraud recently making news involved the selling of supposedly winning lottery tickets to unsuspecting victims. To elaborate, the defendant holds what he claims to be a winning lottery ticket in his possession. He approaches his victim and requests that the victim pay him a portion of the winning proceeds in exchange for the ticket.While most people would run from a scammer with a story as full of holes as this, the defendant explains further that he cannot cash in the ticket because of an immigration issue or a tax lien. Once he gains the trust of the victim, money is exchanged.
All along, the defendant knows the ticket is worthless. The victim, however, believes differently. By the time the victim reaches the lottery center to find out the ticket is worthless, the defendant is miles away!Forgery is a crime in where someone falsely alters or changes a document or creates a document or signature that is not their own with the intent to fraud another person. This sounds confusing, but it is really as simple as signing a check with the name of someone else with the intent of cashing it.
We explored several ways to commit non-violent crimes for financial gain. Now we will investigate some other common ones. Bribery involves using something of value, like money, to influence the decisions of others, and this is common in deals that offer high stakes, like contracts for products or services.To understand this better, suppose a project manager is in charge of making major purchasing decisions for a building project. The proper procedure may involve soliciting several bids for parts of the project and choosing the lowest priced bid for services.
However, if one bidder offers the project manager a Caribbean cruise in exchange for the business, he is bribing the project manager in order to get the business. In most cases, it is illegal to accept such a favor in exchange for accepting a bid for services. This is especially true of government agencies.
In business dealings, it is illegal to take something from another person without their consent.
Extortion is just that. It is the seizing of property of another person by threat of force or even actual force. Force can be a violent act or even placing a person in fear of something terrible to come.Here is an example that may clear things up. Suppose Sonny borrowed a sum of money to pay off a gambling debt from Bruno, a local loan shark, but refused to pay him back.
Bruno wants his money and knows that the only way he can secure it is to make demands on Sonny. One thing Bruno may do is threaten to break Sonny’s knees. He may also threaten to talk to Sonny’s business partner to discuss the gambling debt and the loan. Either way, Bruno is attempting to extort Sonny by using violence or a threat of a terrible act to get his money back. And this is illegal!
Embezzlement is another way to commit a fraud against another person.
This crime involves a victim’s property or money being taken by a person whom the victim trusts. This generally applies to employers or business partners. If an employee is given the latitude to access bank accounts, it may be tempting to snag a few frog-skins. Transferring large sums of money from the corporate savings account into your personal account without permission is embezzlement.
Another crime that is reaching new lows is cybercrime, and it involves criminal activity over the Internet, like identity theft, fraud and email scams. Let’s face it! Many of us received an email telling us a deposit for $1,000,000 is waiting to be deposited into our bank account by a Nigerian national. While it is tempting to send over a bank account number and dream of ways to spend the financial windfall – it’s a scam! It is a cybercrime that involves an intricate string of people who seek out vulnerable people in an attempt to retain and access bank accounts with the intention of withdrawing money.Although most people do not report this type of crime because of shame and embarrassment, one Internet source explained that approximately 7% of people who are solicited through email actually respond and provide the scammers with their bank account information.
That is pretty shocking news!
White collar crimes are criminal acts that are performed by people in the course of business committed for financial gain. Crimes include bribery, extortion, fraud, embezzlement and even cybercrimes. Fraud is the act of misrepresenting facts through words or actions for financial gain and includes insider trading, false pretense and forgery. Fraud cases generally rely on material facts, which are statements that are of such significance that the fact or facts alone were used by the victim to make an important decision.Insider trading happens when stocks are bought and sold based on information received in violation of a fiduciary trust. False pretense involves defrauding someone by using false statements for financial gain and generally involves the transfer of personal property.The last type of fraud is forgery, and it is a crime in which someone falsely alters or changes a document or creates a document or signature that is not their own with the intent to fraud another person.
Other types of white collar crimes are bribery, embezzlement and extortion. Bribery involves using something of value, like money, to influence the decisions of others, and this is common in deals that offer high stakes, like contracts for products or services.Extortion is the seizing of property of another person by threat of force or even actual force. Force can be a violent act or placing a person in fear of something terrible to come. Embezzlement is another way to commit a fraud against another person. This crime involves a victim’s property or money being taken by a person whom the victim trusts.
This generally applies to employees or business partners.
After you’ve reviewed this video lesson, you will be able to:
- Define white collar crime
- Identify the elements that must be met to constitute fraud
- Summarize insider trading, false pretense and forgery
- Explain what bribery, extortion, embezzlement and cybercrime are