What are the Types of White Collar Crimes?

Houston criminal defense lawyer, Neal Davis

What are the Types of White Collar Crimes?

So-called “white collar” crimes are typically criminal acts committed by workers in an office or other professional environment in business or government which are non-violent in nature but nonetheless are crimes with clear victims. Such crimes can take many forms, but largely are financially motivated and involve handling money.

Also known as “paper crimes,” white collar crimes can affect a large number of people indirectly.

For example, in the investment scandal perpetrated by Bernard Madoff, he conducted a massive Ponzi scheme through his wealth management company, costing many people millions of dollars. In fact, the total cost of Madoff’s scheme is estimated at $50 billion.

White Collar vs. Blue Collar Crimes

The term “white collar” does not necessarily refer to criminal activity, but rather to someone of a higher professional and social status who may wear a suit, tie and white-collared shirt to work. Using such status for illegal gain is a white-collar crime.

By contrast, so-called “blue collar” crimes are more individualized and direct when perpetrated by persons of a lower social rank and without vast business power. Such crimes include burglary, theft and are more likely to employ physical force or even be violent in nature. They also may be motivated by rage or passion, such as assault or sex crimes.

Blue collar crimes are apt to draw police attention readily. White collar crimes, on the other hand, are more quietly conducted and may not even be discovered or reported. Such crimes are secretive, such as tax evasion - or hiding money from government authorities to avoid paying taxes on it.

Many Different Kinds of White Collar Crimes

The Federal Bureau of Investigation (FBI) amasses yearly statistics on three main types of white collar crimes: counterfeiting/forgery, embezzlement and fraud. Other types of white collar crime are noted as "miscellaneous.”

There are many forms of white collar crimes, including the following:

  • Ponzi schemes: This white collar crime involves investment operations which illegally pay returns to some investors with capital provided by other investors, and not with funds earned legitimately as investments.

    Those who run Ponzi schemes entice investors by promising great profits and steady returns, when in fact they do not gain new capital from effective investments but rather steal from their customers to pay other investors.

  • Money laundering: This white collar crime involves the process of legitimizing “dirty” money which was gained illegally into “clean” assets that appear legitimate and thus will be handled by financial institutions such as banks.

    The problem with money laundering is the corrupt source of the money, which can be criminal, such as illegal gambling and drug trafficking. Recent money laundering laws have also taken into account terrorism financing in order to combat money being “laundered” between nations in order to support terrorist activities.

    Sometimes money laundering is achieved by moving funds to different countries, where laws may vary and the illegitimate source of some money cannot be detected.

  • Bribery: This form of white collar crime involves providing money or other enticements to persuade persons with a legal duty to show undue favoritism to the provider. Often, this involves influencing officials in government or business.

  • Fraud: This kind of white collar crime involves deception resulting in financial gain. Fraud can take many forms, including false claims of status or accomplishments to gain leverage in business dealings. Essentially, fraud is lying to gain an advantage. Fraud can be a civil offense or a criminal offense, depending on the circumstances.

  • Identity theft: This type of white collar crime involves using another person’s identity or status to gain an advantage - usually financial - in that person’s name.

    Also known as identity fraud, identity theft has become widespread in the Internet age, with sophisticated means used to snatch persons’ sensitive information or personal data in order to wrest money away from them. That also may be known as “cybercrime.”

  • Insider trading: This kind of white collar crime involves trading on the stock exchange while benefiting from knowledge which is confidential and not known to the public. Such investors can make much more money trading stocks than legitimate investors who aren’t privy to the secret information.

  • Embezzlement: This form of white collar crime involves misappropriating funds, to which a person was entrusted, from an employer. That may be done on a gradual basis over an extended period of time, or quickly, such as sudden embezzlement or theft of funds from a bank account. Embezzlement may be a state or a federal offense.

  • Copyright infringement: This kind of white collar crime involves using works protected by copyright law without permission. The copyright holder is customarily the creator or publisher of the works, who has sole legal right to duplicate or distribute them.

  • Labor racketeering: This type of white collar crime involves using illegal means - perhaps fraud or violence - to control or exploit a labor union or other workforce entity.

  • Fraud: While not always a white collar crime in nature, fraud involves employing deception for illegal gain. White collar fraud can include varied elements such as theft by forgery, false pretense or counterfeiting.

White Collar Crime Punishments

Punishments for white collar crimes, as with other crimes, can involve prison time, fines, community service, probation, restitution and giving up illegal profits, which also is known as “disgorgement.”

White collar punishments are often seen as lighter punishments than for violent crimes. The latter, such as armed robbery, may affect only a single person but can lead to many years in prison, compared to a white collar crime of swindling many people, which may lead to a lesser sentence - despite having many more victims.

The infamous Houston-based Enron scandal of 2001 led to passage of the Sarbanes-Oxley Act the following year, providing harsher penalties for wire fraud, mail fraud and other white collar crimes.

types of white-collar crimes

Even so, sentencing disparity remains a hot topic when it comes to white collar crime - at least, in the United States. In China, a person can be sentenced to death for certain white collar crimes.

Get a White Collar Crime Defense Lawyer

If you have been charged with a white collar crime, get legal help by notifying veteran Houston criminal defense lawyer Neal Davis. He has extensive experience defending people accused of white collar crimes. Contact the Neal Davis Law Firm today for a confidential legal review of your case.

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