These 10 Crimes Result in White Collar Litigation

white collar litigation

When most of us hear the term “white collar crime,” it may conjure up the image of business people stealing petty cash from a multi-million dollar company that will never be missed. We may believe that they’re low-level, relatively benign crimes that are of little concern to the average citizen. The truth is that white-collar crime can be severe and affects average, unsuspecting people every day.

Often, the most innocent and vulnerable of our society, like the elderly, are made the targets of these crimes. White-collar crime uses deceit, scams, forgery, and concealment of facts to gain money or to keep from losing it. It’s given the seemingly innocent name because the deeds are typically non-violent and often use a business format to perpetrate illegal activity. In this blog, we’ll take a look at 10 of the most common white-collar crimes that result in litigation.

1. Insider Trading

We often hear this term on the news peppered with images of people being led out in handcuffs from fancy office buildings. It doesn’t sound that bad, so what warrants them being arrested? Insider trading occurs when an individual is given an unfair advantage or opportunity to buy or trade stock based on reliable information that has yet to be made public. This could include anyone from stockbrokers and politicians to business owners and celebrities.

For example, if a CEO of a company tells a friend at a party that their company will soon be acquired by a major Fortune 500 company, but the information has yet to be published anywhere. When the friend buys stocks based on that information, it can result in white-collar litigation. It can be challenging to uncover this crime, and many times it goes unnoticed unless someone blows the whistle.

Sometimes, if a company suspects this activity they will hire a team of private investigators to prove the activity. One of the most well-known insider trading cases was when everyone’s favorite homemaker Martha Stewart, received advance notice about stocks sinking in her company and quickly sold them. She was forced to resign and spent 5 months in prison. Typically, if convicted, people can spend up to 20 years in jail.

white collar litigation

2. Corporate Fraud

Corporate fraud can be any number of activities in which a company or individuals at a company use dishonest or unethical practices for financial gain. This can include false accounting information, misrepresenting what services or products the company offers, hiding information from investors to make the company appear more profitable than it really is, falsifying documents, and using unauthorized data to attract investors and keep stocks from falling. One of the most famous examples of corporate fraud was the ENRON scandal in the early 2000s.

The gas company admitted after an investigation by the SEC (Security Exchange Commission), that it had overstated its profits by $600 million. A high-powered team of criminal lawyers did their best, but it did no good. The people at the heart of the scheme were sentenced to up to 25 years in prison, fined millions of dollars, and ENRON went bankrupt.

3. Securities Fraud

This crime is one of the most common in this category. Though it sounds fancy, it’s likely you’ve been exposed to it. Securities fraud is an umbrella term for a wide range of illegal activity that can result in white-collar litigation and require the need of a team of felony lawyers. Typically, the crime is perpetrated against innocent people who believe they are investing in a business or an “opportunity.” Tactics like deception and manipulation are used to convince people to give up their money.

Investors are promised a lot of money in return for a small investment. It’s your basic “too good to be true” scheme. Victims are usually contacted through unsolicited emails, texts, phone calls, and postal mail. An example of one popular securities fraud scheme is the foreign currency grift. A person receives an email from someone in a foreign country stating they need help converting their multi-million dollar inheritance (or some other nonsense).

All they need from you is banking information. Yikes! Another one is where you are offered an expensive gift like a gaming system or a fancy television and all you need to do is pay for the shipping up front. Higher-level securities fraud can include Pyramid schemes and Ponzi schemes, which we’ll explore later in the article.

4. Cybercrime

This white-collar crime gained popularity with the onset of the Internet. Just like cars made it easier to rob banks, the World Wide Web has made it easier to commit everything from extortion to stalking. Cybercrimes are particularly disturbing because they are borderless crimes and can be committed anywhere in the world. They’re so severe that almost every 4- year college offers a degree in cybersecurity to train people to combat these computer crimes.

In short, a cybercrime can be any offense that uses a computer and computer network to obtain data, make money illegally, or do damage to a business or individual. One common crime in this category involves the use of ransomware for extortion purposes. The criminal will infiltrate a computer system with a virus and threaten to release it unless a ransom is paid (hence the term ransomware).

Other crimes of this sort that can result in white-collar litigation and the need for an attorney service include the distribution of illegal items, identity theft, credit card or bank fraud, bullying, and money laundering. It’s not just big companies that are at risk either. It’s critical to never click on strange links or answer emails where you don’t know the sender. These are often phishing schemes that are after your data. An individual who participates in a cybercrime can face anywhere from 20 years to life in prison, depending on the severity.

5. Racketeering

If you’ve ever watched The Sopranos or seen the film Goodfellas, you’re probably familiar with racketeering. It’s organized crime where illegal activities are performed under the disguise of a legitimate business. These crimes, often ending in white-collar litigation, can include a combination of fraud, bribery, extortion, drug trafficking, arson, kidnapping, loan sharking, murder for hire, illegal gambling, and fencing stolen goods.

Often, violence and intimidation tactics are used to achieve the goal, which is to make money. An example would be the popular protection scheme where small businesses are approached and told that for a weekly fee, they will be protected from harassment and robbery from thugs in the neighborhood. When, in fact, it’s the people offering the “protection” who are the thugs. If the business refuses, the owner may be assaulted, their vehicle damaged, or even have the building go up in flames.

These same criminals may rob trucks and resell the goods on the black market (fencing). If convicted under the Racketeering Influenced Corrupt Organizations (RICO) statute, an individual can spend up to 20 years in jail and must forfeit all property. They can also be subject to civil litigation by those they committed crimes against.

white collar litigation

6. Accounting Fraud

Accounting fraud occurs when an individual purposely manipulates financial documents to misdirect funds and uses them for purposes other than intended. It can also include over or under-reporting expenses or revenue to mislead investors, consumers, lenders, or the IRS. Some criminal defense lawyers may joke and call it creative accounting, but the legal system calls it fraud.

One of the most common types of accounting fraud is when a high-level employee does some fraudulent math and states funds went somewhere when, in reality, they went into the employee’s pocket. Another form of accounting fraud is when a company files false tax returns. Some pretty famous companies have been caught up in employees taking part in this crime, including AOL, Merck, Xerox, and Wells Cargo.

7. Environmental Schemes

This area of white collar crime is particularly offensive because it doesn’t just involve a few individuals being hoodwinked by some unethical business people or scam artists. Environmental schemes can involve the entire population, including animals, and can affect the health of our planet. These crimes can involve many different behaviors meant to save or make money at the expense of the environment.

One such popular scheme is called “greenwashing.” This is where companies or individuals sell products or goods under the guise of being green and environmentally friendly when they aren’t. For example, if a company advertises their goods are made from recycled materials when they aren’t, or a perfume uses all-natural ingredients when it doesn’t.

Another scheme involves raising money for an environmental organization that doesn’t really exist. On a larger scale, contractors and businesses may take part in the practice of “cutting corners” by illegal dumping of toxic chemicals or materials, which can poison waterways and cause the destruction of wildlife and protected areas. Any criminal law firm that takes these clients on has a tough time because nobody looks kindly upon those who sell out our environment for profit.

8. Identity Theft

This white-collar crime is one of the scariest because it’s so common and can happen to anyone. It can destroy a person’s life by devastating them financially and even causing them legal trouble, being arrested, and needing a bail bond to be released. The situation can get so bad that only a bail bond criminal lawyer can work with it. It can affect a person’s credit and get them sued. Identity theft is when a person has their name, social security number, and other information stolen.

They can use the data to access bank accounts, open new ones, obtain services, pay for loans, and even commit crimes. Identity theft can happen in several ways, from data breaches of large companies to scam calls and emails. It’s difficult to find these criminals and enforce the process of white collar litigation.

So it’s imperative that people are careful with whom they share any personal information with, especially online. Never give your social security number to anyone, no matter how convincing they may sound, or you may need a criminal lawyer.

9. Ponzi Schemes

If you’re familiar with the term “robbing Peter to pay Paul”, then you know the crux of the average Ponzi scheme. It’s when people are manipulated into investing in a company that doesn’t exist. The funds “invested” are spent by the criminal for their gain. When it comes time for the original investors to reap returns, the criminal finds new investors to pay back the original investors and skims off the top for themselves.

This format is repeated until the criminal is caught or the scheme simply collapses. A Ponzi scheme can be difficult to spot but some hints are high-pressure tactics, immediately asking for personal information, and promising a high return for a small investment. One of the most famous perpetrators of the Ponzi scheme was investment consultant Bernie Madoff who stole billions of dollars from famous clients like Steven Spielberg, Larry King, and Kevin Bacon. Madoff was in so deep that not even his high-powered team of federal criminal defense lawyers could save him from going to prison for the rest of his life.

10. Extortion

Though considered a white collar crime, extortion is particularly ugly in nature and can quickly turn violent. This criminal activity can involve several heinous acts such as blackmail, intimidation, threats of harm or destruction of property, and ransom. The goal is to scare people into parting with money, goods, or property.

Small businesses are particularly vulnerable to this type of shakedown, where guns may even be used in the process. Other times, the victim’s family may be threatened, or a kidnapping may occur to get the criminal what they want. Extortion is often carried out by organized crime groups or street gangs.

One famous case of extortion involved Amazon founder Jeff Bezos in 2019 when Bezos claimed the National Enquirer (a popular gossip publication) threatened to publish suggestive photos of him unless he dropped an investigation he was conducting against the magazine. Bezos, in a brilliant move, beat the magazine at its own game, when he came out voluntarily and told the story of the photos himself, thereby taking the interest out of the entire scandal.

White-collar crime litigation is a serious process that can not only land a person in prison but can take all of their assets as well. We may not give it the attention it deserves, but rest assured, white-collar crime is everywhere. It’s crucial that individuals be vigilant and on alert to protect themselves from the crimes of deception.

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