White collar crimes involve criminal activities committed by people in the regular course of their business and involve bribery, extortion, fraud and embezzlement. These crimes usually end in financial gain for the perpetrator.
White Collar Crime
Not every crime involves a smoking gun. Some crimes are committed right under the victim’s nose without a single shot fired! White collar crimes are criminal acts that are performed by people in the course of business committed for financial gain. These types of crimes can cost citizens millions of dollars!
These crimes are difficult to prosecute because they often involve sophisticated systems and even many different people. Frauds typically committed are:
Government can prosecute both the individual committing the crime and the corporation for which he works.
Sometimes, not-so-virtuous business people fraud their clients by misrepresenting facts through words and actions for financial gain. The deceit is intentional and meant to cause the victim to take action upon the facts. The action usually results in a financial injury.
There are certain elements that must be present in a fraud case:
- A false statement of material fact occurred
- The defendant was aware that the statements made were false
- The defendant meant to make the false statements
- The victim relied on the statements to be true
- The victim lost something as a result of the false statements
It is important to understand that not every false statement of fact can be considered a fraudulent act. The statement must be considered a material fact, or a statement that is of such significance that the fact or facts alone were used by the victim to make an important decision.
Let’s say Ramona responded to a classified ad posted by Dwight for an apartment rental. After touring the new digs, Ramona signed on the dotted line and handed Dwight the sum of $1,000. That is one month’s rent and security deposit.
A few weeks later, Ramona arrived at the new apartment to find that tenants occupy the place. She discovered that the apartment was never really for rent. Dwight posed as the owner of the apartment and collected the deposit. As it turned out, he was never a party to the apartment at all. He happened to have a key to the unit from an old girlfriend. He owned nothing!
Dwight is a swindler, and Ramona is the victim of a fraud. The material facts in this case are Dwight’s actions. By showing Ramona the apartment using a key to access the unit and accepting her money, he acted like a landlord.
There are several types of crimes that are considered fraud:
- Insider trading
- False pretense
Insider trading is not entirely fraudulent. Companies can buy and sell stock to their partners and employees as long as the trades are reported to the governing authorities. It becomes illegal when stocks are bought and sold based on information received in violation of a fiduciary trust, meaning information was exchanged between parties where one party had a duty to keep the information private from the public.
Suppose you work for a pharmaceutical company that was working on a cure for cancer. In the course of your day, you receive an email unintended for your eyes that reads, ‘Cure for Cancer to be Announced Tomorrow.’ Armed with this information, you quickly get under your desk and begin secretly calling friends and family, urging them to buy stock in your company immediately. Within hours, all of the available stock shares have been bought – there wasn’t a share left for anyone. This is insider trading! You used confidential information that was not meant for the public for your own financial gain and that of your family and friends.
Another type of fraud is false pretense and involves defrauding someone by using false statements for financial gain. It generally involves the transfer of personal property. A fraud recently making news involved the selling of supposedly winning lottery tickets to unsuspecting victims. To elaborate, the defendant holds what he claims to be a winning lottery ticket in his possession. He approaches his victim and requests that the victim pay him a portion of the winning proceeds in exchange for the ticket.
While most people would run from a scammer with a story as full of holes as this, the defendant explains further that he cannot cash in the ticket because of an immigration issue or a tax lien. Once he gains the trust of the victim, money is exchanged. All along, the defendant knows the ticket is worthless. The victim, however, believes differently. By the time the victim reaches the lottery center to find out the ticket is worthless, the defendant is miles away!