CLEP Introductory Business Law Test Prep / Course / Chapter

What is a White Collar Crime?

Amanda Carpenter, Kat Kadian-Baumeyer
  • Author
    Amanda Carpenter

    Amanda Carpenter has taught multi-level subjects for over 18 years. She has a Masters in Curriculum and Instruction from Western Governors University. Amanda holds a K-6th teaching license from the state of Alabama as well as certification for TESOL and TEFL.

  • Instructor
    Kat Kadian-Baumeyer

    Kat has a Master of Science in Organizational Leadership and Management and teaches Business courses.

Learn the white-collar crime definition and understand the meaning of white-collar. Learn the different types of white-collar crime, know famous white-collar criminals, and see the most relevant statistics of white-collar crimes. Updated: 09/12/2021

Table of Contents


What is White-Collar Crime?

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:

  • Fraud
  • Bribery
  • Extortion
  • Embezzlement
  • Cybercrime

White-Collar Crime Meaning

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.

Types of White-Collar Crime

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
  • Money Laundering
  • Securities and Commodities Fraud

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.

Dennis Levine was a managing director at Drexel Burnham Lambert. He was found guilty of the white-collar crime of insider trading.

Dennis Levine was a managing director at Drexel Burnham Lambert. He was found guilty of the white-collar crime of insider trading.


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:

  • Active Bribery: Bribing a public official, offering employment to an individual to influence a contract, paying a bribe to customs to expedite delivery of goods
  • Passive Bribery: A manager demands a bribe to hire someone; a security officer takes a bribe from a thief to allow entrance to a building


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:

  • Identity theft: Occurs when someone steals personal information such as social security numbers
  • Ransomware: Holds sensitive information stored on the internet hostage until specific demands are met
  • Phishing: Tricks people into giving their private information to scammers

Famous White-Collar Criminals

A list of a few famous white-collar criminals includes the following:

Bernie Madoff

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.

Bernie Madoff was convicted to the white-collar crime of securities fraud and money laundering.

Bernie Madoff was convicted to the white-collar crime of securities fraud and money laundering.

Martha Stewart

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

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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  • 0:47 Fraud
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Frequently Asked Questions

What is considered white-collar crime?

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.

What are 5 white-collar crimes?

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.

What is the most common white-collar crime?

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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