Federal White Collar Crimes: An Overview for the Average Person
White collar crime is a big problem in America. Lots of regular folks like you and me don’t really understand what it is or how it affects us. This article aims to explain federal white collar crimes in simple terms so anyone can understand.
What is White Collar Crime?
White collar crime is non-violent crime committed by business people or government professionals. It usually involves fraud, deception, or taking advantage of a position of power or trust. Common examples include embezzlement, bribery, insider trading, money laundering, and identity theft.
While these crimes don’t involve violence, they can still cause a lot of harm. White collar criminals often target regular hardworking folks and steal our money or identities. Their crimes can destroy companies, wipe out life savings, and cost investors billions. So while they aren’t violent, white collar crimes definitely have victims!
Why Does the Federal Government Get Involved?
Most white collar crimes fall under federal jurisdiction because they:
- Involve interstate commerce (crimes crossing state borders)
- Violate federal laws or regulations
- Target the federal government directly
Some specific federal laws used to prosecute white collar crime include:
- Securities Exchange Act – covers insider trading
- Foreign Corrupt Practices Act – prohibits bribery of foreign officials
- False Claims Act – imposes liability for defrauding the government
- Anti-Money Laundering laws – criminalize money laundering
Multiple federal agencies like the FBI, IRS, SEC, and DOJ investigate these crimes and enforce the laws. They often work together on complex cases.
Common Federal White Collar Crimes
Here are some of the most common types of federal white collar crimes:
Securities and Investment Fraud
This includes insider trading, Ponzi schemes, and other fraud related to investing and the securities markets. The targets are often shareholders, pension funds, or other investors.
- Insider trading is trading stock based on confidential information that isn’t available to the public. Corporate executives or their tippers often commit this crime.
- Ponzi schemes promise investors high returns through fake businesses or investment programs. In reality, earlier investors are paid off using money from newer victims.
- The Bernie Madoff case was a massive Ponzi scheme that cost victims $65 billion.
Government and Contract Fraud
This category includes defrauding the government or misusing federal funds/contracts. Common schemes include overbilling, kickbacks, and misrepresenting eligibility.
- Medicare/Medicaid fraud costs taxpayers billions each year through fraudulent billing, kickbacks for referrals, and scams targeting beneficiaries.
- Defense contractors are prosecuted for overcharging on government projects or failing to deliver on contract requirements.
- Small business programs like the Paycheck Protection Program are common targets for fraud.
Financial Institution Fraud
These crimes use or target banks, credit unions, or other financial companies. They undermine trust in vital financial institutions.
- Embezzlement involves stealing or misusing funds entrusted to someone through their job. Bank tellers or accountants commonly commit embezzlement.
- Check kiting exploits the float time between deposits and withdrawals to artificially inflate balances. This lets criminals temporarily access more cash than they have.
- Mortgage fraud tricks lenders into approving loans for buyers who can’t repay them. Tactics like inflating income or assets are used to qualify for bigger mortgages.
This involves using illegal methods to avoid paying taxes owed. Common schemes include concealing income, overstating deductions, smuggling cash, and using offshore accounts to hide assets.
- Tax evasion costs the U.S. over $40 billion annually.
- The IRS investigates tax crimes, while the DOJ prosecutes offenders criminally.
- Even Al Capone was brought down by tax evasion charges!
- Criminals open credit cards or bank accounts, file tax returns, or get medical services using victims’ names and SSNs.
- Major data breaches at retailers, credit bureaus, and healthcare providers have enabled large-scale identity theft.
- Consumers can reduce risk using credit freezes, strong passwords, and monitoring credit reports.
Investigating White Collar Crime
White collar crime investigations differ from probes into violent crime:
- They begin with extensive document review instead of physical evidence like DNA or fingerprints. Financial records, emails, tax returns and more are scrutinized.
- Undercover operations are common to directly observe criminal activity. Informants may secretly record conversations or gather evidence.
- Unlike street criminals, white collar defendants often have the means to hire top defense lawyers who aggressively challenge the prosecution.
- Investigations and trials often involve complicated financial concepts that must be explained to judges and juries. Expert witnesses are used extensively.
- Cooperation deals are common. Prosecutors offer lighter sentences in exchange for informants testifying against higher-ups.
- Parallel civil cases frequently accompany criminal probes. Regulators like the SEC may extract monetary settlements from defendants.
Penalties for Federal White Collar Crimes
While public perception often views white collar crime as treated leniently, penalties can be severe:
- Most federal white collar crimes are felonies with multi-year prison sentences. Depending on the crime, sentences of 5, 10, 20 years or more are common.
- Fines up to $250,000 for individuals or $500,000 for organizations may be imposed for each count. Costly restitution is also required.
- Asset forfeiture laws let prosecutors seize property connected to certain crimes. Criminals are stripped of homes, cars, cash, and bank accounts.
- Convicted defendants are banned from working in their industries again. Occupational license revocation is common.
- Reputational harm from criminal conviction causes loss of social status and career prospects.
- Civil lawsuits frequently follow on the heels of convictions, seeking additional monetary damages from defendants.
White collar crime may not be violent, but it causes real harm and victims. Federal authorities aggressively prosecute these offenses under a variety of fraud, corruption, and financial laws. Penalties are severe, with long prison terms and massive financial consequences being common.
While complex, white collar crime matters for the average person. Our tax dollars, retirement accounts, and even identities are frequent targets. Staying informed about these crimes helps citizens recognize risks and advocate for rigorous enforcement. With vigilance and cooperation between the public and private sectors, we can work together to detect and deter these troubling crimes.