What Is White Collar Crime?
“Crime” is a broad term used to refer to any offense that’s eligible for punishment by the government. This includes everything from minor traffic infractions all the way up to homicides and other acts of violence.
Not all crimes have the same characteristics, however. Law enforcement professionals group similar offenses into broad categories. White-collar crime is one of those classifications.
White-collar crime is a type of crime committed by business professionals and government employees. In most cases, white-collar offenses are nonviolent in nature. Rather than committing assaults or homicides, white-collar criminals usually focus on enriching themselves at the expense of others.
The Federal Bureau of Investigation works with multiple agencies, including the Internal Revenue Service, the Securities and Exchange Commission and the U.S. Postal Inspection Service, to investigate white-collar crime in the United States.
Corporate fraud is one of the most common examples of white-collar crime. FBI agents focus on two types of corporate crime: self-dealing and falsification of financial information. Self-dealing is when a business professional makes decisions based on their personal interests, rather than the interests of their clients or shareholders.
For example, if someone sells stock after receiving nonpublic information from an insider, they're enriching themselves at someone else's expense. This is known as insider trading. Accepting kickbacks and misusing corporate property are also examples of self-dealing.
Falsification of financial information occurs when a business professional misrepresents a company's financial position. For example, Enron employees “cooked the books” by recording the fair market value of the company's assets instead of the book value of those assets. This made the company’s financial situation look better than it really was, misleading investors and causing Enron's stock price to plummet.
Healthcare fraud occurs when a person or business receives unlawful payments for services or supplies. For example, a doctor may bill Medicare for services that weren’t provided. White-collar criminals may also falsify claims to increase the amount of money they receive from health insurance companies.
If you’ve ever seen a mob movie, you've probably heard the term “money laundering.” This is the process of making it look like ill-gotten gains are from a legitimate source. For example, someone who earns thousands of dollars from illegal activities may start a cash-based business to make it look like the funds come from legal activities.
Some white-collar criminals launder money by structuring their bank deposits. Structuring refers to making several small deposits instead of one large deposit to avoid scrutiny by bank employees and IRS officials. Criminals may even purchase real estate or cryptocurrency to hide the true source of their funds.
The FBI investigates two types of mortgage fraud: fraud for housing and fraud for profit. In a fraud-for-housing scheme, a borrower lies on their mortgage application to increase their chances of approval. For example, they may give the bank fake pay stubs or lie about their assets.
Fraud for profit is the act of providing false information about a client’s financial situation during the mortgage application process. Industry professionals commit this type of fraud to increase the amount of money they make on each transaction. For example, a loan officer may tell an underwriter that an applicant makes $100,000 per year instead of $70,000.
More Related Articles:
- When Do You Need a Lawyer? Determine If You Need to Hire an Attorney
- What Is a Class-Action Lawsuit?
- What Is a Misdemeanor?
- What to Do After a Car Accident
- What Is Power of Attorney?
White-collar crimes get their name from the collared white shirts worn by many business professionals. Of course, you don’t need to wear a white shirt to commit fraud or some other type of white-collar crime, but it’s common for accountants, executives and other professionals to wear white shirts with their suit jackets — and these individuals are more often granted access to opportunities to commit these types of crimes.
Blue-collar crimes are offenses committed by members of lower socioeconomic groups. The name comes from the dark blue uniforms sometimes worn by manual laborers. The crimes may be violent or nonviolent in nature. According to UpCounsel, blue-collar crimes are “those that cause an immediate and highly visible injury to society.” Assault, homicide, burglary and battery are all examples of blue-collar crimes.
White-collar crime has wide-reaching effects, which is why it's such a priority for the FBI. When news of its financial scandal broke, Enron had to lay off thousands of employees. Many of those employees had invested heavily in the company's stock. When the stock price dropped, those employees lost their life savings. Enron investors also lost large sums of money, making it more difficult to reach their financial goals.
Healthcare fraud is especially concerning, as it drives up the overall cost of healthcare. When costs increase, insurance companies usually increase their premiums. That means you end up paying more for your health coverage. Businesses may even have to file bankruptcy or close their doors forever due to the financial losses associated with white-collar crime, leaving thousands of people out of work. Therefore, it's important to report any signs of criminal activity in your workplace.
Elocal Editorial Content is for educational and entertainment purposes only. The information provided on this site is not legal advice, and no attorney-client or confidential relationship is formed by use of the Editorial Content. We are not a law firm or a substitute for an attorney or law firm. We cannot provide advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options or strategies. The opinions, beliefs and viewpoints expressed by the eLocal Editorial Team and other third-party content providers do not necessarily reflect the opinions, beliefs and viewpoints of eLocal or its affiliate companies. Use of the Blog is subject to theWebsite Terms and Conditions.
The eLocal Editorial Team operates independently of eLocal USA's marketing and sales decisions.