White-Collar Crime: A Rich Mans World

What Exactly Is White-Collar Crime?

These are not violent crimes, but they are not without victims. White-collar crime has the potential to destroy a company, deplete a person's life savings, cost investors billions of dollars, and erode public trust in institutions. White-collar crime is a type of nonviolent crime that involves deception or concealment in order to obtain or avoid losing money or property, or to gain a personal or business advantage.

Recognising White-Collar Crime

"White-collar crime" was coined in 1949 by sociologist Edwin Sutherland, who defined it as a crime committed by a person of respectability and high social status while working. Historically, white-collar workers held non-laboring office positions, whereas blue-collar workers wore blue shirts and worked in plants, mills, and factories.

Ivan Boesky, Bernard Ebbers, Michael Milken, and Bernie Madoff are among those who have been convicted of white-collar crimes. Insider trading, accounting scandals, securities fraud, and Ponzi schemes have all been committed by them.

The internet has facilitated a flood of new white-collar crimes, such as so-called Nigerian scams, in which fraudulent emails request assistance in forwarding a large sum of money to a criminal ring. Insurance fraud and identity theft are two other common white-collar crimes.

White Collar Crime Offences

Offences that fall under the term white collar crime include money laundering, fraud, fraudulent trading, conspiracy to defraud and false accounting.

Money laundering is the practise of accepting cash earned from illegal activities such as drug trafficking and disguising it as earnings from legal business activity. Criminals frequently use a three-step process to extract money from crimes such as human and narcotics trafficking, public corruption, and terrorism:

• The initial entry of a criminal's financial proceeds into the financial system is referred to as placement.

• Layering separates the criminal's financial proceeds from their source, resulting in a purposefully complex audit trail through a series of financial transactions.

• Integration occurs when a criminal's financial proceeds are returned to him after being "laundered" from what appear to be legitimate sources.

A cash-based business, such as a restaurant owned by a criminal organisation, is a common way for illegal money to be laundered. Daily cash receipts may be inflated in order to funnel illegal cash through the restaurant and into the bank, where it will be distributed to the owners.

The Fraud Act of 2006 defines the general offence of fraud. According to this, fraud can be committed in three ways: false representation, failure to disclose information in violation of a legal duty, and abuse of position. The prosecution must demonstrate that the defendant was dishonest and intended to gain or cause loss to another.

Fraudulent trading is defined in Section 993 of the Companies Act 2006 as the conduct of a business with the intent to defraud creditors. This only applies to businesses. However, section 9 of the Finance Act of 2006 contains a similar provision that applies to sole traders, partnerships, and so on.

A common-law offence is conspiring to defraud. One example is when two or more directors of a company agree to conceal hidden profits.

False accounting includes making false applications, supplying false documents or bills, and destroying a document important for accounting purposes with the intent to gain or cause loss to another. The relevant statute is Section 17 of the Theft Act of 1968.

Examples of Famous White Collar Crimes

The term 'Ponzi Scheme' is probably familiar to most of you. Con artist Charles Ponzi used money obta8ined from original investors by duping them into purchasing discounted coupons during the 1920s.

Meanwhile, he repaid them with funds obtained from other investors, who in turn were repaid by a third group, and so on. He was able to defraud many people out of millions of dollars in this manner. He was eventually caught and sentenced to 14 years in prison. His name has since become synonymous with pyramid schemes.

Leonardo DiCaprio portrayed another famous white collar criminal in 2013's Wolf of Wall Street. Jordan Belfort, a stockbroker, caused $200 million in investor losses through market manipulation and illegal trading. Belfort was sentenced to two years in prison and had to repay at least half of his losses after the authorities obtained evidence.

However, such criminals are not limited to the United States. In the early 1990s, British banker Nick Leeson engaged in a series of unauthorised trades, earning huge bonuses from his Barings Bank bosses.

His luck did, however, run out. After an earthquake struck Japan, the stock market crashed, leaving Leeson unable to conceal his $1.4 billion losses. While he initially fled to Singapore and left an apology note, he was later declared bankrupt and sentenced to 6.5 years in prison.