These types of crimes are gainful without involving violence. Howwer, they have life-changing consequences once a crime is traced to you. Sometimes you may be caught up in the rush of transactions and be accused of fraud while you are innocent to the best of your knowledge. You have the opportunity of beating these allegations using the expert defense of criminal lawyers from The Law Offices of Fountain & Hattersley. We diligently defend white-collar crime clients in Pasadena to help them out of court successfully.
Definition of White Collar Crimes
These are types of crimes that involve no physical violence or threats but rather lies. The perpetrator violates the requirements of official conduct and hides the facts to carry out the crime. White-collar crimes are common in businesses and government agencies. The main motive behind these crimes is always financial gain. The following are examples of economic benefits from those crimes:
- Avoiding loss of property, money or services
- Obtaining property, money or services
- Securing personal gains
- Obtaining a business advantage
The following are some of the white-collar crimes:
It is a type of white-collar crime committed by a person who owes a duty to another person or organization. It involves stealing money or depriving them of their property. Business employees and partners alike commit this crime. They secretly possess another party’s property or use it while they legally have the responsibility of advancing the party’s best interest. They could be tasked with managing an organization, monitoring its growth, and using the properties to serve the party’s clients.
Some embezzlers steal small amounts at regular intervals. In contrast, others obtain large quantities by means, such as underreporting the income of the business to their supervisors and keeping the difference in amount.
The employees of a firm commit an embezzlement crime in the following ways:
- Presenting an inflated cost of the product to the customers, selling at that price and pocketing the difference
- Including false details of their expense account to falsify their expenditure and earn more of the companies fund at the time of refund
- Depositing the cheques from clients in their bank accounts after a sale proceeds
- Recruiting a ghost employee using falsified documents to benefit from the stolen amounts
- Obtaining bribes and kickbacks to effect a transaction or serve the customers to the worst interest of the organization
- Getting cash for personal use in the cash register before its submission for accounting purposes
- Changing particulars of the time records of employees for personal gain
- Using office inventory or office machinery such as cars to perform individual tasks
- In the same way, the embezzlement of property held in trust is possible through misappropriation
In this crime, the following elements must be present:
- Existence of a trust relationship between the parties. The fraudster exploits their relationship to harm the other party.
- The link enabled the defendant to acquire the control of the property legally
- The defendant used the chance of relationship to transfer it to themselves or someone else
- The transfer to deprive the property of the rightful owner was intentional
The offender may embezzle the funds through:
- Using the property or money
- Deliberate destruction of property
- Selling the property for personal gain
- Changing their possession without the intention of handing them over to their real owners
The Internal Revenue Service requires individuals to declare the amounts of embezzled funds in their income so that they get eligibility for filing taxes. Failure to report stolen funds amounts to tax evasion.
- Corporate Fraud
It is a white-collar crime committed by many people through a government agency or a corporation to benefit themselves. Corporate fraud is a threat to investors’ confidence and can lead to the collapse of the whole financial system. The loss of trust can send panic, which spills down to all sectors of the economy.
- Misrepresentation of Financial Information
Some corporate fraud occurs through the falsification of financial information. The individuals involved commit accounting schemes to deceive the stakeholders of the corporation, such as investors, financial analysts, and auditors into not understanding the actual financial position of the business entity. Here they try changing variables such as share prices, asset valuation procedures, and other parameters of the economic data so that the corporation appears to be performing better or worse than it is doing. The direction of manipulation depends on what they want to gain. The misleading information deceives the investors into investing in the already collapsing firm.
In this type of corporate fraud, individuals act to enrich themselves through plotting in the execution of their formal duties. They commit these acts to enrich themselves at the expense of the business entity, other employees, or other stakeholders such as investors.
An instance of self-dealing is an insider trade in which individuals spread information that is not yet public, about the share prices. The goal of the securities exchange entity is to maintain a fair marketplace for shares. Hence an individual makes an illegal step by circulating information to a group of investors when such information should not be availed to the general public. In this case, the investors having the material information trades in a company’s stock with a substantial advantage compared to other investors. The investors with non-public information could make huge profits or avoid losses compared to other investors unaware of such information.
Insider trading becomes illegal when people such as company directors give tips to traders for their advantage.
Other instances of self dealings are the market timing schemes such as late-day trading. In this case, an insider places orders to redeem mutual fund shares after the calculation of the net asset value. The trader benefits from the trading tips between fixing mutual funds prices at the end of the day and its adjustment for the next day’s trade. The late-day business mostly affects the long term investor by eroding the share value of a mutual fund while the benefiting investor pays the insider issuing the tips. Late-day trading is a violation of the federal laws governing securities exchange.
- Money Laundering
It is the process of making the cash obtained from the illegal activities appear legitimately obtained from fair business deals. The financial proceeds from these illegal business deals are not tolerable. The offender tries all the means possible to make the money appear lawfully justifiable.
Some of the common ways of obtaining the money illegally are drug trafficking, corruption involving the theft of public resources, human and human organ trafficking, terrorism, and health care fraud.
Tricks such as virtual currency like bitcoin, falsified international trade transactions, inflated earnings from real estate as well as trading in precious metals play the role of making money appear legal.
To make money appear legitimate, the offenders inject it into the financial system during the placement stage. The layering step ,which is often the most complex, comes afterward. Since the aim is to hide the illicit source of the money, the series of complex financial transactions hides the auditing traces skillfully. In this stage, the money is moved across the financial institutions globally.
The last step in laundering the cash is integrating it so that the criminal receives it back in a way that appears legitimate. Sometimes the offenders may use inflated earnings from a false-legal business to cover the proceeds of the illegal business. From that pseudo business bank account, they obtain the money legitimately.
- Tax Evasion
In this type of white-collar crime, businesses or individuals try avoiding payment of taxes that they should have legally paid. Tax evasion is also related to illegal tax avoidance, where the perpetrator evades part of their taxes. The following are some of the instances considered as tax evasion:
- Deliberately underreporting your income. This practice is common in situations such as when one receives part of their income through means such as cash where an auditing trace is difficult to get
- Allocating your passive income to another person, especially one who is in the lower wage gap. This person is not bound to pay tax due to their little earnings
- Misrepresentation in asset declaration. Some people may not declare assets in their possession to tax authorities such as foreign bank accounts and properties. They hence try avoiding paying taxes on rents, royalties, and interests paid from such investments
- Intentionally over-reporting deductions to your income such as expenses
- Making false tax credits or exemptions claim such as falsifying legal dependents to receive income tax credits
- Keeping two sets of accounting books and only availing one to the taxation authorities or auditors
- Giving false information in the taxation forms
- Transferring of money or property to another entity to evade the tax obligations
Businesses with employees tend to avoid taxes in the following ways:
- Employment leasing. The firms engage an outside payroll service provider that does not submit the funds to the tax authorities
- Failing to withhold the income taxes amounts from their employees. Some employers also withhold taxes and fail to send them to the taxation authorities, a practice known as pyramiding
- Failure to file returns at the end of the financial period or giving falsified information on the tax returns forms
- Settling the employees’ incomes demands in cash and failing to declare the same when filing taxes
- Securities and Commodities Fraud
This type of white-collar crime is on the rise due to the merge of the capital markets globally. The merging makes accessing capital for businesses easy, and investors further diversify their portfolios. This willingness to invest in commodities markets and securities through brokerage accounts, retirement plans, and student savings plans has exposed many to the preying fraudsters.
Individuals use the complex investments in these capital markets to plan the possibilities of fraudulent investment. The schemers target the otherwise unsuspecting persons.
The common subtypes of white-collar crimes under this are:
- Investment Fraud
It is a type of allegedly high-yield investment targeted against people with a shared affinity or interest. The investment schemes are characterized by:
- Offers of low or no-risk investments
- Sophisticated strategies that the group cannot understand and part of the transactions have to be done by specialists
- Guaranteed returns which are overly exaggerated even with a little investment amount
- Promises of consistent returns on investment
- Unregistered securities
The fraudsters utilize the relationship created between them and the group to scheme them. Due to the trusted interactions, the schemes are successful as the perpetrators pose like investment advisors or one with an envisioned financial welfare for the group.
The following are the forms of crimes under investment fraud. They are tailored to appeal to the economic desire to achieve financial goals without straining.
- Ponzi Schemes
Ponzi scheme is a type of fraud where existing investors receive payment from the investment contributions paid by additional new investors. The latest lot of investors only come to find it is a scam after the scammer cannot recruit new investors, and all the investors lose their money.
- Pyramid Schemes
Pyramid schemes take the form of multi-level marketing programs where the individuals can purportedly continue progressing in their income ladder. As in the Ponzi scheme, the existing investors not only receive returns from the new investors’ funds but also get commissions for recruiting new members. The disguised system of quick earnings makes the multitude sheepishly enlisted only to find it a whole nightmare.
- Advance Fee Fraud
This investment fraud is too inoculated for the victim to realize the hidden plot. Here the investors have to pay upfront fees such as for covering taxes or as registration to participate and later realize high gains like in lotteries.
The perpetrator requests for additional funds from investors. Afterward, the fraudster fails to honor the business claims.
- Trading Investment Fraud
The trading investment fraud is also another of this sort where perpetrators, purporting to have access to the trading techniques of banks such as the Federal Reserve Bank and World Bank, mobilize people to invest. The fraud , disguised as trading programs, appears legitimate due to the use of legal-looking documents and assurance that their finances are insured. The deal collapses after the criminal has accumulated enough to disappear.
- Promissory Note Fraud
A promissory note is a procedure used by a company to raise money to finance itself. The investor agrees to loan out the company that is seeking to expand its debt capital with a promise of returns on their loans and the principle after a set period of trading, tentatively short-term.
The fraudsters float the promissory notes to otherwise unsuspecting investors. They either use faked documentations of a non-existent company or unknown firms to entice the investors. The investors end up giving money to loan out a ghost company; hence they end up being scammed.
The promissory notes are mostly used to avoid scrutiny, yet they are securities. Registration of all securities under the Securities and Exchange Commission is compulsory unless they are in the exemption category. The listing enables the investors to legitimately transact without fear.
The intermediary SEC ensures fairness in transactions and solves the firm-investor disputes.
Before investing in promissory notes, you need to get various questions answered by the company official. Below are some of the tips you need to understand the patterns of the promissory notes fraudsters and how they scam the investors:
- The ghost or real company agents use unlicensed life insurance agents to sell the promissory notes to the investors. The information the insurance salespersons give to investors does not go beyond their coaching and turns out to be misleading. The salespersons fall into the trap of illegal businesses through baited promises of lucrative commissions such as 30 % and above
- The promised good returns of not less than 15% for their promissory notes investments lure the investors. Many are a little curious, while others just trust agents for having transacted with them in the past. The investors cannot doubt for they believe the claim that the promissory notes are guaranteed
- The fraudsters use a pseudo account to receive the money, pay the commissioners to the insurance agents, and afterward cut links with the agents. The investors hence lose their money
- The fraudsters use the investments of the new investors to pay interest to the old ones and convince them to roll over their investment for a specified period. This seemingly Ponzi scheme assures the new investors of interests but at long last none gets their full amount upon maturity
Before giving a consent to invest in a promissory note, always remember the following points, and you will have it safe:
- Legitimate promissory notes sales target private persons and not the general public. These notable persons do their diligence in researching about the company
- Find out whether the company offering the promissory notes exist. You should also enquire on the registration details of the promissory notes with the security regulator or whether they are exempt. If the company exists then check whether it is solvent
- Be inquisitive when the seller tells you that the promissory notes are not securities and research diligently
- The seller must be licensed to sell securities
- Compare the returns rates of the promissory notes with the current financial assets in the market
- There is no investment without the risk of losses. The alleged risk-free promissory notes are a mean of stealing from you
- Commodities Fraud
The commodities fraud consists of illegal exchange of goods such as gold and silver. The fraudsters use false claims to pressure the clients into investing. Some of the sales tactics employed in recruiting the investors are convincing them using false account statements of the earlier investors’ investments. The fraudsters instead divert the money for their use by trading with it to generate their commissions.
Like all other forms of scams, the promises of very high returns manipulation of the commodities exchange market and engaging in illegal trading practices characterize this type of crime. The main types of commodities exchange scams occur in two platforms:
(i) The Forex Trade
The offenders usually divert the clients’ funds to personal use while creating pseudo accounts reflecting the alleged investments to convince more investors.
(ii) Precious Metals exchange Market
Some fraudsters also use the most enticing sale pitches to convince customers to buy the earth- rare metals and stones. The criminals persuade the investors that the world currencies that the global trade will lead to appreciation in the value of units of such metals. The investors unsuspectingly buy the valuables which are allegedly held by the fraudster only to be deprived of the cash.
In those above cases, all evidence able to convince you into hurried investment is provided for you to believe the fraudster.
The following are the organizations in the United States that are actively involved in the fight against white-collar crimes:
- Federal Bureau of Investigation
- Securities and Exchange Commission
- Internal Revenue Service
Penalties for White Collar
Due to the numerous types of crimes, penalties vary depending on the specifics of the white-collar crime. The following is a list of penalties the judge may decide for your case when settling the verdict:
- Paying fines
- Limiting your movement through under house arrest and a monitored communication via electronics
- Confinement in a community facility such as rehabilitation center
- Meeting the costs of all trial sessions
- Imprisonment in a Californian prison
- Supervised release or mandatory parole where the offender spends the last portion of jail term under observation
- Forfeitures where the government seizes the illegal property from the perpetrator
- Restituting the victims of what you deprived them and compensating them for the financial damages you caused
Contact an Expert Criminal Defense Attorney Near Me
Unknowingly, you may be the perpetrator or the victim in white-collar crimes. Therefore, you need to be careful about what you do to increase your asset portfolio without resorting to illegal ventures. Additionally, you should take precaution lest you be scammed of your hard-earned cash. However, the pursuit of wealth can often land you into criminal activities unknowingly. If you have a case in Pasadena, you will need representation by attorneys who know the operation of the legal system as it pertains to white-collar crimes. Dial 626-793-4111 to call an expert criminal attorney from The Law Offices of Fountain & Hattersley and get the help you need in your case.