White Collar Crime and Defense

White Collar Crime is broad in its definition. It does not exist as a criminal category in any statute books. Instead, it is a generic category used to describe crimes that are often committed by professionals in positions of authority or trust. White collar crime encompasses business crimes, computer crimes (including hacking or cracking: the crime of breaking into a computer network), internet crimes, government crimes, graft, corruption and financial frauds. White collar crimes are usually felonies, the most serious category of criminal offenses. Felonies are crimes that may result in incarceration of more than one year and which may be state or federal offenses. Generally, such felonies carry with them severe penalties including lengthy incarcerations and fines.

Unlike many other criminal offenses, white collar crime generally does not involve the use of weapons or physical force. Instead, it is based on deceit, guile or extreme negligence and usually impacts government operations, business operations, industries and individuals.

Who are white collar criminals?

In most cases, large and small business owners are at greatest risk. Business by its nature often involves taking financial risks. This sometimes results in business owners cutting corners in times of crisis in order to survive and ultimately succeed. Faced new and ever changing legislation and governmental regulations, it is far to easy for even the an honest business person to run afoul of criminal laws. Each day, newspapers and national magazines are filled with reports of criminal investigations related to business activities. The current Enron fiasco may be the newest and most graphic example of business running afoul of the law. And even before Enron there were junk bond brokers.

To emphasize the seriousness of white collar offenses, the FBI has identified several areas it considers the most egregious and problematic examples of white collar crimes:

• Antitrust Violations. Antitrust violations involve conspiracies among competitors that fix prices, rig bids, or allocate markets or customers. Persons found in violation of certain aspects of the Sherman Antitrust Act -- the primary antitrust law -- can be fined or jailed. The antitrust laws affect most industries and apply to every phase of business including manufacturing, transportation, service, distribution, and marketing.


• Bankruptcy Fraud. Bankruptcy filings rose to a record high of approximately 1.4 million filings in 1997. Some sources estimate that at least 10 percent of bankruptcy filings involve fraud. Bankruptcy fraud includes schemes such as the concealment of assets, petition mills, multiple filings, false statements, trustee fraud, attorney fraud, forged filings, embezzlement, credit card fraud, and bust-outs.


• Computer Crime. The definition of computer crime is constantly evolving as technology advances. However, computer crimes may include:
  • Hacking (also known as Cracking): Knowingly accessing a computer without authorization or exceeding authorization of a government computer or intentionally accessing a computer without authorization or exceeding authorization to acquire financial information of a bank, business or consumer.
  • Theft of Technology. Knowingly accessing a computer without the intent to access or acquire technological information or secrets
  • Fraud. Knowingly, and with intent to defraud, accessing a federal interest computer without authorization or exceeding authorization to further a fraud or obtain anything of value.
  • Online Child Pornography. Knowingly accessing, possessing or making available pornographic material involving minors.
  
  
• Environmental crimes. Crimes regarding the environment include unauthorized disposal of hazardous waste. The FBI and the Environmental Protection Agency Criminal Investigative Division have formed a local task force consisting of various local, state, and federal agencies, to address environmental crimes in the state of Minnesota.


• Financial Institution Fraud. The federal government estimates that more than $3 billion in losses occur annually due to fraud committed against federally insured financial institutions. Fraud may include loan fraud including drafting and passing fraudulent negotiable instruments such as checks, money orders, currency, and debit and credit cards. Bank embezzlement may also fall under this category. Embezzlement means taking another's person or party's money and/or property through abuse of a job or position of trust.


• Government Fraud. The General Accounting Office estimates that as much as $19 billion is lost to fraud in the federal government's procurement and contracting process. A number of federal statutes also prohibit bribery and extortion. Bribery statutes make it unlawful to seek improper preferential treatment from public officials. They also prevent government officials including elected officials and agency heads from providing preferential treatment for personal gain. Both an official accepting a bribe and the person offering the bribe may be charged with a criminal act. Even aiding or allowing a fraud to be committed may subject a person to prosecution.


• Health Care Fraud. In 1997, over $1 trillion were spent on Health Care in the U.S. The federal government conservatively estimates that 10 percent is lost to fraud, which translates to $100 billion a year. This highly prioritized crime problem affects private insurance companies, as well as government-sponsored programs such as Medicare and Medicaid. The FBI remains proactive in its identification and investigation of unscrupulous health care providers who are national in scope, as well as those groups who are organized for the sole purpose of defrauding the Nation's health care system. The FBI investigates fraud schemes relating to suppliers of durable medical equipment, independently owned laboratories, home health agencies, and medical transport companies, to name just a few. The Health Care Fraud problem in Minnesota is being addressed by the Minnesota Health Care Fraud Task Force. Each investigative and prosecuting agency working Health Care Fraud matters meet quarterly to discuss and coordinate Health Care Fraud investigations. The FBI is a member of this task force.


• Insurance Fraud. The insurance industry is one of the largest industries in the U.S., consisting of over 5,000 companies with $1.8 trillion in assets. According to industry sources, losses due to insurance fraud amount to approximately $28 billion annually. Schemes include frauds perpetrated by third parties, such as false claim filings and fraudulent asset schemes utilizing offshore corporations. Frauds perpetrated by insiders include premium diversion schemes, as well as misrepresentations by officers and employees designed to prevent regulatory agencies from taking enforcement actions. The FBI works in concert with the insurance industry and various insurance associations to enhance investigative efforts.


• Intellectual Property Rights. The United States is the world leader in the development of creative, technical, and intellectual products. These valuable resources, known as intellectual property, have steadily grown as a portion of our domestic output. The copyright industry in the U.S. single-handedly contributed $433.9 billion to the economy in 1996, more than any single manufacturing sector. Because intellectual property has become such a valuable commodity, it has been targeted by unscrupulous criminal organizations throughout the world. The FBI combats intellectual property theft in the area of Economic Espionage, Theft of Trade Secrets, and Copyright and Trademark violations.


• Money Laundering. Money laundering is described as the investment or transfer of money generated from criminal activity. Illicit proceeds must be "laundered" to make it appear as thought the funds were generated through some legitimate means. Although difficult to quantify, sources estimate that as much as $500 billion in illegally obtained funds are laundered annually. In addition to developing national strategies to address the mechanisms and industries that are commonly used to launder funds, the FBI conducts multifaceted money laundering investigations in concert with other federal law enforcement agencies.