Three Common White Collar Crimes

What does white collar crime refer to? It refers to crimes which are performed as a way of producing some sort of financial gain with the use of some kind of deception. Oftentimes white collar crimes are committed by people in the world of business, those who are able to access very large amounts of other people’s money. There are quite a few popular films in which white collar crimes are displayed, for example, The Wolf of Wall Street, Boiler Room and Catch Me If You Can.

White collar crimes are quite pervasive, here are few examples of some of the most common white collar crimes which are committed:

1. Fraud

The term fraud is quite a broad one which covers various crimes such as insurance fraud, forgery, bank fraud, and more. Fraud is when a crime is intentionally deceived by false pretense or representations with the intent of persuading an individual to part with their property. The “Nigerian prince” scam is a common form of fraud which is occurring in this modern age of the Internet.

The way that the “Nigerian prince” scam works is that an individual will receive an email from a “Nigerian prince” in which the “prince” claims to be in need of assistance. A small sum of money will be requested by the “prince” and in return, they promise that upon making it to the Unites States, they will provide the person with riches they could never have even dreamed of. Of course, the person who sent the email never had the intention of reciprocating any “loan.”

2. Ponzi Scheme

Although this scheme may not be as common as the other ones we mention, it is probably the most damaging one. In 2008, Bernie Madoff made the headlines when he operated an enormous Ponzi scheme that as a result defrauded investors out of millions of their dollars. A Ponzi scheme is an investment which is fraudulent where the perpetrator will pay returns to their to their investors not from profits which the operator has earned, but instead from new investors.

Basically, Madoff did not earn a single penny, he simply took the new investors money in order to report high earnings to the old investors. All of the money was simply pocketed by Madoff and when the time came for the investors to pull their money, unfortunately, they discovered that their money was nowhere to be found.

3. Insider Trading

In 2005, after having made trades in stock by using information which was not available to the general public, Martha Stewart landed herself in jail. Insider trading is when a public company’s stock and/or other securities are traded by the individual with access to information on the company that is not available to the public.

There are many ways and forms in which this information can come, it can refer to information on the company that is either negative or positive. For example, if the individual knows that tomorrow, ACME corp. will be making an announcement that will undoubtedly improve the ACME stock´s value, and that individual purchases large amounts of stock at today’s price so that tomorrow they can sell it, then they have just committed insider trading.

For more examples of white collar crimes, feel free to watch the video below: