A white-collar crime is defined as a crime involving the theft of money from a place of business. The persons committing these crimes are usually those in influential positions, such as CEOs and management. Crimes of this type can cost citizens a great deal of money.
These crimes are different from other forms of crime because white-collar crimes are complex and challenging to take legal action against, entailing elaborate systems and encompass numerous people, making the case difficult to prosecute. Some white-collar crime examples are:
Sociologist Edwin Sutherland first coined the term white-collar in 1949; he defined white-collar crime as a crime committed against a company. The person committing this crime holds respect and high social status within the business and often the community.
These types of workers wear a shirt and tie to work, thus the white-collar reference. Criminals of this type often work in an office setting and do not get their hands dirty, so to speak.
The five types of white-collar crimes are fraud, bribery, extortion, embezzlement, and cyber-crime. Each type will be discussed in further detail below:
Fraud occurs when an employee lies about company facts to achieve financial gain and is told under pretense, which means a lie is told in the hopes the victim will act upon the false facts. If the victim does take action, the result is financial injury. Fraud is the most common white-collar crime because it covers many offenses. Types of white-collar fraud include:
Corporate fraud is usually committed on a large scale. Many people throughout the company are involved in this type of crime. The FBI names corporate fraud as its highest priority when it comes to prosecution because this crime brings significant loss to investors and harm to the U.S. economy and its citizens.
Money Laundering occurs when unclean cash is filtered through a legitimate business. Unclean cash is any money made through illicit means, such as drug trafficking and terrorist activities. The money needs to be clean or laundered through a legitimate business to make it look like it was earned lawfully.
Securities and commodities fraud is an umbrella term for investment fraud such as Ponzi and pyramid schemes. The perpetrators of this type of fraud are often stockbrokers, investment banks, or brokerage firms. The criminals falsify corporate information to con future investors into making a deal.
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Bribery occurs when a person gives, offers, obtains, or requests something of value to influence the decision process. Bribery is a crime, and all parties involved can be prosecuted. Types of bribery include active and passive bribery. Examples of each can be seen below:
Extortion is the coercion of someone by using threats of violence or intimidation. These tactics are used to pressure someone into handing over valuables such as money or property. Protection schemes, blackmail, and ransomware are forms of extortion.
The crime of embezzlement occurs when company money is used for anything other than its intended purpose. Embezzlers may create fake invoices, write a company check for the cost, and keep the money themselves. A person convicted of this crime can be held civilly and criminally liable.
Cybercrimes occurs over the internet and are often crimes that are motivated by money. Examples of cybercrimes are:
A list of a few famous white-collar criminals includes the following:
Bernie Madoff was the chairman of NASDAQ, and he created an investment firm. Madoff used false trading reports to generate billions of dollars for his investment firm. He was eventually convicted of theft, securities fraud, and money laundering. He was ordered to pay $170 billion in restitution and was sentenced to 150 years in prison.
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Martha Stewart served five months in prison for securities fraud and obstruction of justice. She used inside information to sell her 4,000 shares of ImClone stock the day before the company tanked. When questioned about her sale of the stock, she lied and was eventually caught in the lie. The Department of Justice began the investigation that led to her arrest.
Jeffrey Skilling, the former CEO of Enron, was convicted of securities fraud and insider trading. He used anticipated future profits to inflate Enron stock prices. The sale of the stock rose, with $27 billion being traded in one quarter. Skilling sold $60 million of his shares and then resigned from the company. A few months later, the company went bankrupt, prompting an investigation into Skilling and Enron. He was sentenced to 24 years and four months in prison. He must also pay $45 million in fines.
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White-collar crimes are committed frequently throughout the United States. Statics regarding white-collar crimes can be seen below:
A few real-life examples of white-collar crime include the following:
| Fraud | Kevin has a pair of fake sneakers. He needs to make some money to pay a bill. He tells his friend Earl he will sell the sneakers for $300. Kevin tells Earl the sneakers are authentic and valued at $1,000. Earl buys the sneakers and later finds out they are fake. The sneakers were sold under pretense. |
| Active bribery | Joseph works for a pharmaceutical company. He wants the doctor of a well-respected medical practice to prescribe his company's products. Joseph tells the doctor that he will pay the doctor's travel expenses for a year if he uses the products. The doctor agrees, and active bribery has taken place. |
| Passive bribery | Mason works as a security officer for a bank. His job is to protect the bank vault. Jason wants to steal the money from the vault and offers Mason $100,000 to access the vault. Mason agrees, and passive bribery has occurred. |
| Extortion | Mark found a video of his boss engaging in an illicit activity. Mark tells his boss that unless he pays him $10,000, he will take the video to the company president. Mark is trying to use the video to extort his boss out of money. |
| Embezzlement | Cassidy works as a bookkeeper for a well-known company. She creates an invoice stating that $1,000 was paid to an air-conditioning company for repairs. The invoice is fake. Cassidy writes a company check for the $1,000 and keeps the money. She has embezzled money from the company. |
| Cybercrime | Charlotte receives a fake email that appears to be from her bank. The email states that she needs to update her password by clicking on the link provided. Charlotte clicks the link and is taken to a website that looks like her bank. She follows the steps to change her password. Charlotte is a victim of the cybercrime of phishing because she has unknowingly given her bank information to a cyber-criminal. |
White-collar crimes are criminal acts performed by employees for monetary gain. These crimes are hard to prosecute because they are elaborate and usually involve numerous people. The United States loses about $300 billion yearly due to white-collar crimes. Examples of white-collar crimes are:
Fraud is a common white-collar crime because it covers many illegal activities. Fraud is based on pretense and is a misrepresentation of facts to achieve financial gain. Types of white-collar fraud are corporate fraud, money laundering, and securities and commodities fraud.
The crime of bribery is committed when a person gives, offers, obtains, or requests something of value in the hopes of swaying the victim's decision-making process. Bribery can be active or passive.
Extortion is the intimidation of someone by using threats of cruelty or coercion to sway the victim's decision-making process. These tactics are used in the hopes that money or property will be turned over to the criminal. Protection schemes, blackmail, and ransomware are types of extortion.
The crime of embezzlement happens when company money is used for personal gain. Cybercrimes happen over the internet, including identity theft, ransomware, and phishing emails or websites. In 2021, $6 trillion is estimated to be lost globally due to cybercrime. These crimes may carry jail sentences and restitution.
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A white-collar crime entails the theft of company money by persons with an important position in the company. These types of crimes are elaborate and hard to prosecute because they usually involve more than one person. White-collar crimes are for financial benefit of the criminal.
White-collar crimes are committed by high ranking employees in a company. The following are considered white-collar crimes: bribery, fraud, extortion, embezzlement, and cybercrime.
Fraud is the most common white-collar crime. Fraud covers an array of offenses including money laundering, corporate fraud, and securities and commodities fraud.
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