Many have heard the term “white collar crime” but may not be sure what it means. Coined by sociologists Edwin Sutherland in 1939, the term applies to a wide range of financial crimes, including fraud, embezzlement, tax evasion, money laundering, insider trading, and other illegal actions. Rather than featuring violence or the threat of violence, these crimes involve deceit, a violation of trust, concealment, and other methods to take or avoid losing money, property or services. It may include an attempt to gain personal or business advantage through illegal actions.
The term refers to the illegal actions being conducted by those with at least a college education or an established professional career. There is a likelihood that they traditionally wear suits or dress clothes for their job.
Often a federal crime
The FBI often investigates white collar crimes and prosecutes them in the federal court system rather than the county or state courts. This is because the crimes’ scope is often regional, national or international, involving many jurisdictions. They are complex and may involve other federal agencies like the Securities and Exchange Commission, the Treasury Department, Internal Revenue Service, or other regulatory agencies.
There have been many high-profile cases over the years:
Enron: Once known as the smartest guys in the room in the early 2000s, Enron’s Chief Financial Officer hid billions in debt, so its balance sheet did not reflect its actual financial status. Company stock went from $90.75 per share to $0.26, and it soon declared bankruptcy.
Bernie Madoff: Responsible for reintroducing the phrase “Ponzi scheme,” into the popular lexicon, Madoff used new investors’ money to pay off previous investors. The snowballing effect amounted to a $65 billion scam. He was charged with 11 counts of money laundering and fraud with a sentence of 150 years. He was ordered to pay $170 billion in restitution.
Martha Stewart: The entrepreneur was famous for promoting and selling cooking and lifestyle products, but she sold her stock in an experimental biotech company after getting a tip that the Food and Drug Administration would not approve the company’s cancer drug. She sold the stock the day before the announcement, and she was subsequently convicted of the crime and obstruction of justice.
Al Capone: The Chicago mobster made a fortune while overseeing an organization involved in bootlegging, extortion, murder, gambling and other activities, but the federal government, led by Eliot Ness, finally convicted Capone for unpaid taxes.
These are complex cases
The above crimes involved more than just the infamous executive, so investigations will often look at the actions of others at the company to determine if they were in on the scam. It is often hard to determine who is responsible until sifting through all the information and investigating the complex and multilayered actions of one or many, so the accused need to protect themselves and their interests during an investigation.