Who Investigates White Collar Crimes?
The agencies responsible for investigating white-collar crime are the Internal Revenue Service, Securities and Exchange Commission, FBI and the Department of Homeland Security. In the 1970’s and 1980’s The U.S. Congress passed a wave of laws and statutes to help prevent white-collar-crime. Passed in 1970, the Racketeer Influenced and Corrupt Organizations Act (RICO) is a federal law designed to combat organized crime in the United States. RICO made it easier to prosecute corrupt organizations and seize related assets. In 2002, shortly after the Enron scandal, Congress passed the Sarbanes-Oxley Act (SOX) to improve the relationship and accountability between corporations and their stakeholders. Criminal penalties for white-collar crimes vary, but most laws will demand a (usually hefty) monetary fine, a prison sentence or both.
White Collar Vs Blue Collar Crimes
A term first used in 1911 by novelist Upton Sinclair to describe clerical and administrative work, “white-collar” workers are generally associated with jobs that don’t require strenuous physical labor. Conversely, “blue-collar” work refers to skilled and unskilled manual labor. White-collar workers are commonly paid a salary while blue-collar workers work for an hourly wage. There are disparities between the types of crimes that these contrasting classifications of workers typically commit.
People usually associate white-collar crime with social status, respectability, sophistication and wealth; however the Federal Bureau of Investigation’s definition takes none of these into consideration. The FBI has defined white-collar crime as “. . . those illegal acts which are characterized by deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force or violence. Individuals and organizations commit these acts to obtain money, property, or services; to avoid the payment or loss of money or services; or to secure personal or business advantage.” In more basic terms, white-collar crime is everything you were taught not to do as a child: lying, cheating and stealing. Examples of this type of crime include insider trading, securities fraud, bribery and embezzlement.
While white-collar crimes involve complex deceit used to gain capital, blue-collar crimes are generally crimes against others, and are usually thought to involve an element of violence. They can be crimes committed in the streets and include kidnapping, shoplifting, vandalism, murder and rape. Blue-collar crimes can also be victimless. Although it can be argued that the perpetrators are the victims in such cases, “victimless” crimes include drug abuse and prostitution.
What Are White Collar Crimes?
The term “white collar crime” was first used by sociologist Edwin Sutherland in 1939. He said that this type of crime was “committed by a person of respectability and high social status in the course of his occupation.” This was to distinguish white collar crimes from “blue collar crimes” that often involves physical force and violence. White collar crimes include:
· Identity theft
· Bank fraud
· Embezzlement
· Insurance fraud
· Counterfeiting
· Money laundering
· Computer crimes
· Healthcare fraud
· Government fraud
· Tax fraud
· Mortgage fraud
· Investment frauds
· Many others
White collar crimes are often committed because there is access to a steady stream of money, such as in banks, insurance offices and securities and trading environments. The FBI reports that white collar crimes are more sophisticated than ever before and they are increasing in number every year. Recent white collar crimes include the Enron case and the Bernard Madoff Ponzi scheme. In both of these cases, investors lost billions of dollars. It is estimated that white collar crime costs the government some $300 billion yearly.
The Difference Between White Collar Crimes and Blue Collar Crimes:
White collar crimes tend to be committed in office and corporate environments and usually do not include physical violence. Blue collar crimes, on the other hand, are crimes that are physical or violent in nature, and include:
· Robbery
· Burglary
· Breaking and entering
· Auto theft
· Assault
· Murder
· Rape
· Crimes against persons
· Crimes against property
· Prostitution
· Gambling
· Drug trafficking
Blue collar crimes are crimes that are committed “on the street,” as opposed to white collar crimes, which are often committed within the confines of corporate and government offices. Blue collar crimes are crimes that often involve weapons, force, violence, gangs and brutality. A white collar crime will tend to be committed using a computer, a phone and/or a pen.
Corporate and Individual White Collar Crimes:
White collar crimes may be committed by individuals and corporations. White collar crimes are often committed by altering accounting records and in many instances this makes them extremely difficult to prosecute. Other white collar crimes include:
· Antitrust violations
· Environmental law crimes
· Telemarketing fraud
· Insider trading
· Mail fraud
· Wire fraud
· Public corruption
· Price fixing
· Social security fraud
· Trade secret theft and sales
· Hedge fund fraud
· Frauds targeting senior citizens
Penalties for White Collar Crimes:
White collar crimes may result in extremely severe penalties. For example, Bernard Madoff was sentenced to 150 years in prison for his massive investment fraud. Penalties may include:
· Jail or prison, often up to 30 years
· Probation
· House arrest
· Fines – often in the millions of dollars
· Community service
· Asset forfeiture
· Restitution
· Paying for the cost of prosecuting the crime
White collar crimes are aggressively prosecuted in federal and state courts. The FBI investigates federal white collar crimes and the U.S. Department of Justice prosecutes them. State courts prosecute state white collar crimes. In some cases, both federal and state prosecution may be called for. If an individual is under investigation or has been arrested for a white collar crime, aggressive and experienced legal representation is of the utmost importance