Common White-Collar Crimes | Defenses to Charges Alleging White-Collar Crimes
Though the crimes now commonly referred to as “white-collar” crimes were first prosecuted in the late 1400s in England, the term “white-collar crime” did not come into common usage until the middle of the 20th century. With increased focus on investing, financial planning, and other financial matters, more Americans have become familiar with the term, though much confusion remains as to exactly what can be prosecuted as a “white-collar crime” and what types of defenses can be raised to such a charge.
What Is White Collar Criminal Defense?
The term “white-collar crime” was first coined in 1949 by Edwin Sutherland, a sociologist. Sutherland used the term to refer to any crime “committed by a person of respectability and high social status in the course of his occupation.” White-collar crimes are non-violent offenses committed primarily or entirely for financial gain, generally involving deception or subterfuge. The term “white-collar crime” refers to clothing typically worn by professional men—bankers, lawyers, accountants, and business executives—in the mid-20th century.
What Are Common White-Collar Crimes?
The types of cases most commonly prosecuted as white-collar crimes include allegations of fraud, embezzlement, money laundering, and tax evasion:
- What Is Fraud? — Fraud involves an intentional misstatement, misrepresentation, or withholding of facts/information on which the victim reasonably relies to their detriment. Some common forms of fraud include:
- Insurance fraud—Filing false or intentionally inaccurate insurance claims
- Bank fraud—Providing false information to obtain a loan or other financial benefit from a financial institution
- Bankruptcy fraud—Providing false information in a bankruptcy filing
- Securities fraud—Insider trading, Ponzi schemes, and pyramid schemes
- Mail or wire fraud—Using the U.S. Postal Service or electronic transmissions to commit fraud
- Healthcare fraud—Filing bogus health insurance claims or seeking reimbursement for services not rendered
- What Is Embezzlement? — Embezzlement involves the taking of money or property by someone to whom it is entrusted, such as a bookkeeper, accountant, or financial officer within a company. Embezzlement is prevalent in businesses where workers can simply “skim” cash, including restaurants, bars, and delivery services. Other embezzlement schemes involve the creation of false financial reports, the creation of bogus vendors, and the use of Ponzi schemes.
- What Is Money Laundering?—Money laundering involves the conversion of revenue obtained through criminal efforts into revenue from a legitimate source, thereby concealing its illegal origins. For example, a person might take money obtained from the sale of controlled substances and report it as revenue of a restaurant or other cash-based business.
- What Is Tax Evasion? —Tax evasion involves the use of illegal actions to reduce or avoid paying taxes. Understating income and overstating deductions or exemptions are the most common forms of tax evasion.
What Are Common White-Collar Crime Defenses?
Lack of Intent: Because all white-collar crimes require intent, showing that the defendant’s actions were unintentional can be an effective defense. For example, if a person is charged with pocketing cash, they might be able to obtain an acquittal by producing evidence that they did not intend to keep the cash or did not realize they were putting cash in their pocket, or that the action was otherwise a simple mistake. Additionally, evidence that the defendant did not know about the fraud, embezzlement, or tax evasion may be a sufficient defense. If the defendant lacked knowledge, that in and of itself may be evidence that the defendant lacked intent.
Coercion: A defendant may argue coercion as a defense against a white-collar crime. For example, if a person embezzles from their employer because of threats to themself, their family, or their loved ones, that may be a sufficient defense.
Entrapment: In addition, when prosecutors are investigating a potential white-collar crime, they often cross a fine line and engage in actions that constitute entrapment, where they encourage or entice a person to commit a crime he or she would not have considered otherwise.
What Are the Potential Penalties for Conviction of a White-Collar Crime?
White-collar crimes may be prosecuted as state or federal criminal offenses and may involve felony or misdemeanor charges. The laws vary from state to state, but, as a general rule, felonies are punished by more than one year in prison, whereas misdemeanors generally lead to less than one year of incarceration. Both types of charges can involve substantial fines.
White-collar crimes involve intentional acts committed by persons of authority or responsibility primarily for financial gain. Effective defenses to a white-collar crime charge include lack of intent, entrapment, and coercion.