White Collar Crimes: An Overview

There are many different crimes in the world today. Some of the overlooked crimes fall into the white collar crime category. This category is made up of crimes that do not necessarily “hurt” someone. They often happen in professional settings and include things such as embezzlement, pyramid schemes, and fraud. Many times when people see some sort of corporate scandal on the news, it is about a white collar crime. It has been found that the public as a whole is more willing to forgive people who commit these crimes. It is important to remember that they can result in just as much jail time as any other type of illegal activity.

White collar crimes are frequently committed by people in government or business positions. Many of them are felonies and typically involve some sort of fraudulent activity. There is a long list of crimes including:

  • Forgery
  • Money laundering
  • Insider trading
  • Bribery
  • Copyright infringement
  • Identity theft
  • Commodities and securities fraud
  • Embezzlement
  • Any and every type of fraud such as bankruptcy fraud and insurance fraud

The biggest difference between blue collar crimes and white collar crimes is that violence is normally not a factor in white collar offenses. The perpetrators are normally financially privileged, especially in comparison to blue collar offenders. Money is often the main motivation of these crimes and while it causes no physical harm to others, businesses and individuals can lose hundreds of thousands of dollars. Any office where financial transactions take place and sensitive information is accessed on a daily basis is at risk for crime. Whether it is a corporate, business, or government office, no environment is immune.

The news is often full of corruption and large corporation scandals. These are perfect examples of the magnitude that white collar crimes can reach. One positive side of handling white collar crimes is that the offense can be committed by an entire agency and not just a single person. Civil law suits against companies can occur because of this type of crime. Common crimes that can be committed by the institute and not the individual include price fixing, false advertising, and company overcharges.

While it would stand to reason that technology improvements would provide better security for businesses, technology is actually making it easier for money to be stolen especially by a savvy person. The crimes are facilitated with computers, paperwork, and any other type of electronic device. These crimes result in some sort of benefit from the company or employee. The goal is normally to make money whether it is through stealing or insider trading.

Unlike other crimes, people are not arrested and charged. An extensive investigation normally takes place so that the right people are accused and charged. If you have been indicted, contacted by an investigator, or fear for your freedom in any way, shape, or form, you need to get in touch with a reliable criminal defense attorney. A lawyer will be at your side through every step of the proceedings. The facts will be evaluated so that you can get a good deal.

White Collar Crimes

White collar crime tends to refer to crimes committed at a business by a businessman or woman. Criminology expert and sociologist, Edwin Sutherland, in a 1939 speech, coined the term. A white collar criminal is considered less likely to commit another crime, and punishment may be softer than for crimes involving violence. Evidence in a white collar crime usually involves a “paper trail,” of evidence that investigators use to prosecute the case.

Types of White Collar Crimes

  • Embezzlement – the taking of someone’s property by a person with whom it is entrusted.
  • Bribery – occurs when someone gives or takes a bribe.
  • Larceny – involves taking someone’s property without paying for or returning it.
  • Extortion – also known as blackmail.
  • Fraud – this often includes but is not limited to health care fraud and tax fraud.
  • Price Fixing – an agreement between two parties to set prices for a certain product, thereby violating free market operations.
  • Racketeering – the extortion of money by force or a pattern of criminal activity committed to further the interests of a criminal syndicate.
  • Computer Fraud – using a computer to commit a crime.
  • Obstruction of Justice – interfering with the criminal process by impeding an investigation.
  • Perjury – lying while under oath in a judicial proceeding.
  • Securities and Commodities Law Violations
  • Environmental Law Violations

White collar crimes can be prosecuted at the state or federal level, depending on whether a state or federal law was broken. If convicted, these crimes usually result in jail time, large fines, and restitution to the victims of the crime. For people who have been victimized by white collar crime, hiring a criminal attorney is often helpful when attempting to recover monies lost.

Taking The Stress Out Of Financial Management

A lack of understanding about the numbers side of your business can cause you tremendous headaches. For a case in point, let me introduce you to one of my new clients who I’ll call John. John is a contractor who has been in business for more than twenty years. He hired me to come in and clean up a mess caused by 1) his lack of knowledge about small business finances and 2) his reliance on marginally competent bookkeepers.

It’s a classic small business scenario. A business owner who doesn’t understand the financial side of his business hires a bookkeeper to handle “all that”. But, because he doesn’t understand the financial side of his business, he doesn’t know what to look for in a bookkeeper and he has no way of knowing whether the bookkeeper is doing a good job.

This is the perfect set up for all sorts of unpleasant consequences including inaccurate financial records and tax returns, missed or inaccurate filings of mandatory forms and payments, useless financial statements, lack of information about how the business is really doing, and a potential for fraud and embezzlement. Scary, huh?

So, what’s a business owner to do? Here are some tips to help you stay out of trouble.

1. Understand that the numbers side of your business is a critical factor in your quest for a successful and prosperous business. You can hire someone else to do the work but you still need a basic understanding in order to run your business.

2. Know the difference between hiring a bookkeeper and hiring a financial professional. A good bookkeeper will understand how to accurately enter information like payables and receivables, process a payroll, make collection calls, and reconcile a checking account. All those are important and necessary tasks. Notice I call them tasks. Bookkeepers are task oriented. A professional finance professional may also perform these tasks but their real value is in taking the information that has been entered and translating it into knowledge about your business and then communicating it to you in a way you will understand. Financial managers are analysis and knowledge oriented. Two different ways of looking at your financial information by two different professionals.

3. Sometimes you can find someone who can perform both sets of competencies but individuals like that are few. Generally, it is more cost effective to have a competent bookkeeper perform the task oriented pieces of the financial puzzle–entering vendor and customer invoices, receiving payments, processing payroll, etc. and then use a financial manager to help you understand what the numbers mean.

4. A financial manager can be someone like your CPA (certified public accountant–they’re not just for taxes anymore) or you can use a CFO (chief financial officer) who specializes in working with a number of different smaller businesses. Usually you can get the information you need by hiring someone to look over your financials once a month, do some analysis and report back to you on trends and operating efficiency, and give you solid advice on how to improve your business. Be sure to find someone who understands the ins and outs of managing cash flow since this is such a critical challenge for small business owners.

5. When you set up your accounting system, get professional help. Again call your CPA or CFO to help with this. How you set it up is directly related to how useful the information is. Part of the problem my client is dealing with is a very poorly set up QuickBooks company. The set up was done in such a way that all the useful features like bank reconciliation and job costing have been rendered un-useable. Getting it set up right in the first place costs a pittance compared to having someone come in and spend hours or days fixing it later.

6. Make sure you have internal controls to protect your business from theft and fraud. Some examples: never have the same person who signs checks also reconcile the bank statement, always scan through cancelled checks or your bank’s check copies for any checks that look out of the ordinary, protect your passwords, keep checks (including the ones from your credit card company) in a secure place, know the basics of navigating your accounting system so you can at least appear knowledgeable, have a trained professional looking over your books regularly to deter fraud and to pick up on any clues that fraud may be happening.

7. When you hire a finance person for your business whether it’s a bookkeeper, a CPA, or a CFO, find one with experience in a business like yours. If you are a contractor like my client, find professionals who have worked with other contracting businesses. If you are a lawyer, find one who has worked for a law office or other professional service office. Check references. Ask for a few customers/employers you can contact to find out more about how the person is to work with. Red flag–an unwillingness to provide any information demonstrating their ability to do the job.

My client John now has a plan to move beyond the days of chaos and stress. He will use a bookkeeper to enter his invoices, receive payments, and keep his job folders under control. He will use my CFO service on a monthly basis to help him learn about the numbers side of his business, to get the information he needs to run his business, and to provide oversight and professional input for his bookkeeper. My involvement brings the stability and consistency that his business has needed for years. With a big sigh of relief he is able to say, “Goodbye Chaos! Hello smoother sailing.”

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