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Most Common Types of White Collar Crime

November 4, 2016

Business professional getting his mug shot

White collar crime, which refers to nonviolent incidents in commercial settings that have a desired outcome of financial reward, is estimated to cost the United States more than $300 billion annually, according to Cornell University. Because the methods used to commit white collar crime are often sophisticated, identifying and prosecuting them is often difficult. Both individuals and corporations can be charged with white collar crimes.

Penalties include fines, house arrest, forfeitures, restitution, and imprisonment. There are several agencies involved in regulating instances of white collar crime, and the Commerce Clause of the U.S. Constitution gives the federal government the authority to do so. Some of the agencies involved in prosecuting these types of crimes include the FBI, the IRS, U.S. Customs and Border Protection, and more.

Criminals usually commit white collar crimes for financial gain, “to obtain or avoid losing money, property, or services or to secure a personal or business advantage,” the FBI says. The FBI also points out that these types of crimes are not victimless: “A single scam can destroy a company, devastate families by wiping out their life savings, or cost investors billions of dollars.” Despite its significant impact, few people understand what white collar crime is, why it is important, and how law enforcement is able to fight it. The following are some of the most common types of white collar crime.

Types of White Collar Crime

Corporate Fraud

Corporate fraud can damage the economy as well as investor confidence, the FBI points out. Many corporate fraud cases are committed in finance or accounting. The goal is to mislead investors, auditors, and other stakeholders about the financial success of a company. This is done through manipulation of data, share price, and other measures of financial health. Types of corporate fraud include:

  • Falsification of financial information
  • Self-dealing by corporate insiders
  • Fraud in connection with an otherwise legitimately operated mutual hedge fund

Because of the prevalence of corporate fraud along with its implications, this type of white collar crime is a top priority for law enforcement.

Securities and Commodities Fraud

More and more people are investing in the securities and commodities market through brokerage, college savings, and retirement accounts. “This growth has led to a corresponding rise in the amount of fraud and misconduct seen in these markets,” according to the FBI. One of the most common types of securities and commodities fraud is investment fraud, in which financial assets are illegally sold. Criminals commit this type of crime by offering low-risk investment opportunities, guaranteeing returns, and other tactics. Broker embezzlement, another category of securities and commodities fraud, involves “illicit and unauthorized actions by brokers to steal directly from their clients,” the FBI says. This is carried out through forging documents, altering account statements, illegal trading, and more.

Money Laundering

Criminals launder money by making illegal sources of income appear to come from legitimate sources. This allows them to accumulate wealth while avoiding law enforcement and evading taxes. Money laundering also enables criminals to fund illegal activities such as drug trafficking, healthcare fraud, international and domestic public corruption, and more. They might launder their money through real estate ventures, international trade, financial institutions, or other methods.

The FBI says that there are three different steps involved in the process of laundering money: placement, layering, and integration. “Placement represents the initial entry of the criminal’s proceeds into the financial system,” the FBI explains. “Layering is the most complex and often entails the international movement of funds. Layering separates the criminal’s proceeds from their original source and creates a complex audit trail through a series of financial transactions. And integration occurs when the criminal’s proceeds are returned to the criminal from what appear to be legitimate sources.”

Fighting White Collar Crime: Criminal Justice Education from King University

White collar crime negatively impacts both the economy and its unassuming victims. Law enforcement professionals play a vital role in lessening crime and protecting the public. For those interested in gaining the knowledge and skills required to keep their communities safe, earning a criminal justice degree is an ideal first step. King University’s online bachelor’s degree in Criminal Justice provides students with career-focused coursework in law enforcement, restorative justice, and other key topics.

This degree can be completed in as little as 16 months so that students at King University can finish faster. Graduates are prepared for careers in fields such as state and federal law enforcement and the court system.