What Constitutes a White Collar Crime?

If you have been accused of committing unlawful financial activity, you will likely face a white collar crime charge. There are a few different categories of white collar crimes, and the consequences could be quite severe depending on the value of the financial crime in question. Keep reading to learn more about what constitutes a white collar crime and the penalties for different types of white collar crimes.

What Is a White Collar Crime?

White collar crime encompasses non-violent criminal activity in the commercial or business realm, typically committed for financial gain. The most common white collar crimes are various types of fraud, embezzlement, tax evasion, and money laundering. The consequences for each crime vary depending on the amount of money involved, but a usual sentence involves significant jail time and fines at the minimum.

Securities Fraud

A common type of securities fraud is “insider trading,” in which someone with inside information about a company or investment trades on that information in violation of their duty or obligation. For example, a case of insider trading might be if an executive knows confidential information about an upcoming company’s earnings report and decides to sell a chunk of their stock in the company based on that knowledge.

Another type of securities fraud occurs when someone seeks investment in a company by knowingly misstating the company’s prospects, health, or finances. By luring an investor to contribute money based on false or misleading information, the company and individuals have committed securities fraud. False or misleading statements in public reports from publicly traded companies also constitute securities fraud.

Note that to commit securities fraud, those making the false statements must:

• make the statements with knowledge that they’re false, or
• should have reasonably known them to be false.

Ponzi schemes and pyramid schemes that fraudulently take money from investors have been some of the most famous white collar crimes.

The penalties for securities fraud could be:

• Fines – up to $10,000 or more; up to $5 million for severe insider trading cases.
• Restitution – repayment to the injured parties, such as investors, employees, clients, or others who suffered monetary loss as a result of your fraud.
• Prison – a 5-year federal prison sentence per offense.
• Probation – a probation period of up to 5 years when there is only a single instance of fraud or it involves offenses that didn’t result in financial loss, where you must regularly meet with your probation officer and comply with any conditions imposed by the court, such as submitting to drug testing and paying all fines.

Embezzlement

The crime of embezzlement involves improperly taking money from someone to whom you owe some type of duty. For example, a company employee commits an embezzlement crime when they siphon money entrusted to them by their employer into their own personal account. Embezzlement can take other forms as well, such as improperly using clients’ funds they’ve been entrusted to protect.

The sentencing for embezzlement calls for either fines, prison time, or both:

• Fines – between $50-$600 if the embezzled property was worth $250 or less and for a first-time offense; up to $25,000 if the property was worth more than $250 or involved any value of firearms.
• Prison – between 6 months and 2.5 years if the embezzled property was worth $250 or less and for a first-time offense; up to 5 years if the property was worth more than $250 or involved firearms.

Tax Evasion

Criminal tax evasion occurs when someone attempts to avoid taxes they legally owe. Examples of tax evasion activities include:

• filing tax forms with false information
• collecting money without reporting it to the IRS
• illegally transferring property to avoid tax obligations

The penalties for tax evasion could be any combination of the following:

• Prison – up to 5 years for a single count of tax evasion, enhanced sentencing for multiple violations.
• Fines – $100,000-$250,000 for individuals and $250,000-$500,000 for corporations.
• Restitution – repayment of the amount of taxes you failed to pay to the state or federal government.
• Costs of prosecution – costs of prosecuting your tax fraud case, which can easily reach $5,000 or more.
• Probation – usually a period of 1-3 years, where you will regularly report to a probation officer.

Money Laundering

Money laundering is the criminal act of filtering illegally obtained (“dirty”) money through a series of transactions designed to make the money appear legitimate (“clean”). Money laundering often involves the following three steps:

1. The money is deposited into a financial institution such as a bank or brokerage.
2. The money is separated from its illegal origin by layers of complex transactions, making it more difficult to trace the “dirty” money.
3. The integration stage, where the freshly “cleaned” money is mixed with legally obtained money, often through the purchase or sale of assets.

A money laundering conviction could include the following penalties:

• Prison – up to 1 year for a misdemeanor; more than 1 year for felony; 35 years or more for repeat or more serious offenses.
• Fines – up to a few thousand dollars for a misdemeanor; up to $500,000 or double the amount of money that was laundered (whichever is greater) for a felony.
• Probation – typically at least 1 year, sometimes 3 years or more, where you will regularly report to a probation officer and allow them to conduct random home checks or take random drug tests.

The penalties for a white collar crime conviction can be severe, ranging from steep fines to significant jail time. If you are facing a financial or white collar crime charge, you should speak to an experienced attorney immediately. Martin G. Weinberg, Attorney at Law has handled numerous cases of financial litigation throughout his legal career, and you can trust him to craft an aggressive defense against your white collar crime charge.

Contact Martin G. Weinberg, Attorney at Law immediately for more information.