Blog Article 

 US White-Collar Crime 

Michael Santos

Michael Santos

Free Copy of Earning Freedom

White-collar crimes are a top law enforcement priority in the U.S. as they continue to rise. 

WHITE-COLLAR CRIME IN THE UNITED STATES (PART 1)

INTRODUCTION

White-collar crimes cover a variety of non-violent acts committed in commercial situations for financial gain. In the United States, white-collar crimes are a top law enforcement priority. 

Many people reach out to Prison Professors, an Earning Freedom company, for information and consulting on white-collar investigations, prosecutions, sentencing mitigation strategies, and post-sentencing avenues for relief. 

This blog post is the first in a series of upcoming articles discussing the full range of white-collar crimes and defenses, as well as related issues of interest to prosecutors and defense counsel alike. Check back frequently for our updates.

DISCUSSION

Although the “white-collar” label dates back to the late 1930s, the prosecution and investigation of white-collar crimes have been on the rise over the last several decades. 

According to the Federal Bureau of Investigations (FBI), white-collar crime refers to the full range of frauds committed by business and government professionals. For the FBI, the main characteristics of white-collar crimes include deceit, concealment, and violation of trust. White-collar defendants are typically nonviolent, as these crimes are not dependent on the application or threat of physical force or violence. 

White-collar crimes include misrepresentation of a corporation’s finances to deceive law enforcement. Other white-collar offenses involve fraudulent investment opportunities, for example, exaggerating potential returns and minimizing risks.

Federal and state laws regulate white-collar criminal conduct. For example, the Commerce Clause of the U.S. Constitution gives the federal government the authority to regulate white-collar crimes. Each state employs its own law enforcement agencies to investigate and prosecute white-collar crimes. The Attorney General plays a role in each state.

The Department of Justice (DOJ) is the lead prosecutor for federal crimes. Many federal agencies, including the FBI, the Internal Revenue Service (IRS), and the Securities and Exchange Commission (SEC), investigate and enforce federal criminal laws. 

GOVERNMENT STATISTICS

According to government statistics, white-collar crimes cost the United States hundreds of billions of dollars each year, with some recent estimates of the cost reaching one trillion. Many observers point to this economic impact of white-collar crime, noting that it is far greater than ordinary crime. In addition to the economic effects, white-collar crime is of high interest to law enforcement because of its societal impact. It often endangers employees and leads to unsafe working conditions, injures consumers because of dangerous products, and causes pollution for failure to follow regulations. 

Due to the societal impact, observers refer to the state of white-collar financial crimes in the United States as a “domestic and global epidemic.” TIME: Financial Crime Epidemic.

Last year, the internet facilitated so much criminal activity that it reached its highest level in two decades, according to the FBI. According to the Federal Trade Commission (FTC), 40 million Americans were victims of mass-market consumer fraud in 2017, and those numbers are only growing. 

Misconduct at financial institutions is also on the rise. PricewaterhouseCoopers released a survey of thousands of companies showing fraud and economic crime rates at record highs. SARS, or “suspicious activity reports” that banks file when they suspect financial misconduct, indicate that money laundering concerns are at an all-time high. TIME: Financial Crime Epidemic.

These statistics all point in a similar direction: law enforcement investigations and prosecutions of white-collar financial crimes will continue to grow.

CORPORATE DEFENDANTS

Generally, the government charges individuals for white-collar crimes, but the government can also charge corporations and will not hesitate to do so. For many companies, white-collar criminal investigations and prosecutions can be a death knell.

PENALTIES

In white-collar cases, penalties include imprisonment, fines, home detention, community confinement, costs of prosecution, forfeitures, restitution, supervised release, and imprisonment. The Federal Sentencing Guidelines recommend a longer prison sentence when at least one person suffers substantial financial harm. Frequently, a person accepting responsibility for a white-collar crime, or assisting in a government investigation, can help lessen the consequences. 

Corporate officers must be vigilant about the individual and corporate risks of  white-collar crimes. Prosecutors often seek to hold corporate officers responsible for white-collar crimes occurring under their watch. For example, prosecutors often presume that high-level corporate officers must be aware of wrongdoing at their companies. Therefore, prosecutors try to put the onus on corporate officers even when they deny knowing what underlings did and there is no actual evidence that they knew. 

The United States Supreme Court has recognized this theory of corporate responsibility, sometimes referred to as the “responsible corporate officer” rule. Under this rule, even when high-level corporate officers delegate specific duties to others, they can still be held accountable for failure to prevent criminal conduct. 

Prosecutors appear to be relying on a version of the “responsible corporate officer” doctrine in the case of Elizabeth Holmes. According to news reports, Holmes will argue at trial that she cannot be criminally responsible for failures at Theranos’ blood-testing laboratories because those responsibilities belonged directly to others (delegated responsibility defense). We will keep an eye on this debate over corporate officer responsibility as it develops at Holmes’ trial.

GENERAL DEFENSES

Defenses available in ordinary criminal cases are also available to white-collar criminal defendants. For example, the accused’s mental capacity is a common area of defense in non-white-collar criminal cases. White-collar defendants can also rely on mental capacity issues to bolster their legal defense in appropriate circumstances. 

Indeed, it appears that mental capacity is part of the defense strategy for Elizabeth Holmes, former Theranos founder and CEO. As reported last week on our Prison Professors blog, the Holmes criminal fraud trial is now underway. Holmes’ mental capacity, in part as a result of an abusive relationship with her codefendant Sunny Balwani, will be introduced by the defense team. 

Follow the following links for our prior blog posts relating to the Elizabeth Holmes criminal fraud trial:

The Basics 

Holmes’ Defenses

The Judge & The Jury

Opening Statements

Our team at Prison Professors, an Earning Freedom company, assists clients in locating and vetting experienced legal counsel in all areas of white-collar criminal defense. We also help clients with all aspects of the journey through the criminal justice system.

LIST OF FEDERAL WHITE-COLLAR CRIMES

White-collar crimes include nonviolent crimes typically committed for financial gain in commercial situations. 

Here is a comprehensive list of federal white-collar criminal offenses : 

  • antitrust violations 
  • bankruptcy fraud
  •  bribery 
  • computer and internet fraud 
  • counterfeiting 
  • credit card fraud
  • economic espionage
  • trade secret theft 
  • embezzlement
  • environmental law violations
  • financial institution fraud
  •  government fraud
  •  healthcare fraud
  • identity theft/aggravated identity theft
  • insider trading
  • insurance fraud
  • intellectual property theft/piracy
  • kickbacks 
  • mail fraud
  • money laundering
  • securities fraud 
  • tax evasion 
  • phone and telemarketing fraud and
  • public corruption. 

In this White-Collar Crimes in the United States blog series, Prison Professors will publish upcoming blog posts focused on each of these areas.

WHISTLEBLOWERS

Many white-collar crimes involve whistleblowers. (Check out this article regarding the significant role whistleblowers play in white-collar crime cases.

https://prisonprofessors.com/whistleblowers-play-a-critical-role/

White-collar crime prosecutions often include complicated financial transactions. In such cases, prosecutors will allege that evidence of complex financial transactions is part of the accused’s attempts to conceal the criminal activity. People with inside information who blow the whistle on potential wrongdoing are beneficial to prosecutors. Whistleblowers report internal conduct that may be difficult for prosecutors to uncover. 

Whistleblower activity is rising, and thousands of cases each year result from many thousands of whistleblower reports.

CONCLUSION

The investigations and prosecution of white-collar crimes are on the rise and are a top law enforcement priority in the U.S. According to government statistics, white-collar crimes cost the United States hundreds of billions of dollars each year, with some recent estimates of the cost reaching one trillion. Many observers point to this economic impact of white-collar crime, noting that it is far greater than ordinary crime.

Follow the Prison Professors blog for upcoming articles in this series on white-collar crimes and defenses. The series also covers other related white-collar topics of interest to prosecutors and defense counsel.

Prison Professors, an Earning Freedom company, works alongside (not in place of) civil and criminal defense counsel to help clients proactively navigate through investigations and prosecutions. Our team also helps clients prepare mitigation and compliance strategies.

If you have any questions or are uncertain about any of the issues discussed in this post, schedule a call with our risk mitigation team to receive additional guidance.

Was this post helpful?

Leave a Comment

Your email address will not be published.