Non-violent crimes committed, directly or indirectly, for financial gain generally fall under the category of “white collar crime.” This is particularly true when the person or persons accused of illegal activity are professionals in business, particularly finance, or government. Financial crimes and the government’s prosecution of them are not limited to Wall Street and corporate boardrooms. The category also includes offenses that could be the work of individuals or small groups. The federal and state governments have enacted an enormous body of law regarding financial crimes, and it can be relatively easy for people to run afoul of these laws without even realizing it.

White Collar Crime

No single definition of “white collar crime” exists in the law. Sociologist Edwin Sutherland is credited with coining the term, using it for the first time in a speech to the American Sociological Society in Philadelphia on December 27, 1939. He noted that police seemed to focus their attention on crime among the “lower class,” while ignoring crimes committed among “business and professional men,” people he described as “merchant princes and captains of finance and industry.” The “robber barons” of the late nineteenth century, he stated, were white collar criminals, but they were not as “suave and deceptive” as those of the Great Depression era.

Sutherland’s ideas have informed the laws regarding white collar and financial crime ever since. The Federal Bureau of Investigation (FBI) offers a simplified definition of white collar crime: “lying, cheating, and stealing.” The Wall Street crisis that began in 2008 brought prosecutions for fraud and other financial offenses, although many critics might say that far too few prosecutions have occurred. Before that, financial upheavals like the savings and loan scandal of the early 1980s and the Enron scandal of the early 2000s also saw prosecutions for various white collar offenses.

Theft Offenses

Offenses that involve theft of money or something else of value, but that do not involve the threat or use of force, may be considered financial or white collar crimes. They are also commonly associated with organized crime.

Extortion, for example, might involve a threat to cause harm to a person’s business or property, while blackmail generally involves threats to expose sensitive or damaging information. Embezzlement might involve misuse or abuse of a position of trust to obtain money without legal authority, often from an employer.

Fraud Offenses

A fraud offense consists of a scheme to obtain something of value from another person through false pretenses or misrepresentation. Unlike theft, by which a person either directly takes something of value or compels someone to give it to them, fraud involves deceptively convincing a person to give up something voluntarily. Fraud schemes might involve:

• Identity theft or forged documents, such as bank fraud or credit card fraud;
• Direct solicitation of money from individuals, such as in a Ponzi scheme or other investment scam; or
• Fraud against the government, such as welfare fraud or tax fraud.

Financial Crimes

Some financial crimes do not target a specific person or business, but they are considered criminal because they have an overall negative public impact. Insider trading, for example, is considered an unfair advantage in the market, which is damaging to investors who do not have access to inside information. Money counterfeiting may harm merchants who accept counterfeit bills, believing they are genuine. It also potentially harms the economy by destabilizing the currency.

Corruption

Public corruption, by which public officials misuse their authority for financial gain, is also considered a financial crime. Bribery is a common example, such as when a business offers financial payments to an official in exchange for favorable treatment, or an organized crime outfit pays law enforcement officials to look the other way.

Organized Crime

Any of the offenses described above, when committed by or on behalf of an organization established to carry out illegal activity, are known as racketeering or “organized crime.” Organized crime is usually not considered a type of “white collar crime,” but it often involves many of the same criminal statutes. The federal Racketeer Influenced and Corrupt Organizations (RICO) Act allows federal prosecutors to pursue individuals who might conceal their own involvement in criminal activity behind subordinates and shell companies, and who might try to hide the proceeds of criminal activity through money laundering and tax evasion.

Last updated April 2018