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Fearing fraudsters isn’t on anyone’s bucket list. Unfortunately, white-collar crimes are on the rise. Although these crimes aren’t violent, they can cause their victim's extreme financial distress, insolvency, and even bankruptcy.
There are many types of white-collar crimes. They come in all shapes and forms, such as:
White-collar fraudsters don’t look like your typical criminal. In fact, many of them are in corporate offices holding positions of power and prestige. Here are some not-so-fun facts about these financial crimes.
Recently, white-collar crime incidents have received more attention. Especially with the sensational attention Hollywood has brought by accused big-time fraudsters such as:
Despite that, white-collar crime prosecutions continue to drop. In 2022, it hit an all-time low in a continuous decade-long decline. 62% of reports for white-collar offenses were closed in the same year.
Here are some general white-collar crime statistics:
(Trac Reports, Oxygen True Crime)
Data from the Justice Department show that the US government reported 254 new white-collar crime prosecutions as of February 2023. The Transactional Records Access Clearinghouse (TRAC) research shows that this number has dropped 24.9% from the previous month.
Charges for white-collar crime are also notoriously low. Despite resulting in job losses, salary cuts, and other misfortunes, only 1% of these crimes result in charges.
As of May 2023, there are 159,357 inmates in federal prisons. Many of these inmates are white-collar criminals.
Of the white-collar crime reported cases in February 2023, Florida (Tampa) and Georgia (Atlanta) were the highest. Florida and Georgia recorded 13 prosecutions each in February 2023; Connecticut, Kansas, Montana, and North Carolina were the least prolific, recording 6 cases each.
The federal attorneys prosecuted 7 out of every 10 (70%) criminal referrals they received in 2022. However, the odds of prosecution for white-collar offenses were 38%, translating to 5% for prosecuting a business engaging in white-collar crimes.
The changes in the policy on charging and sentencing were announced on January 29, 2021, mere days after Biden took the role of president. While it is not explicitly stated that white-collar crimes will take a more central role, it’s easy to assume based on two factors:
With tougher enforcement policies, accountability for corporate wrongdoings is strengthened by expansions into previously unknown territories. These updated policies now include provisions for no-poach agreements, cryptocurrency fraud, and international enforcement actions.
In February 2023, the United States Attorney General announced he would vehemently fight fraud. To help the efforts, the Department of Justice plans to hire more prosecutors and FBI agents to conduct investigations, with 680 federal district court judges to help achieve this aim.
Fighting fraud is especially difficult for many law enforcement agencies. Many white-collar offenses are difficult to prosecute since many perpetrators are rich people with connections. Moreover, perpetrators of this crime conceal their activities through sophisticated means.
(Intrado, Sanction Scanner)
Anti-money laundering is a pressing issue in the finance industry. With more accessible digital means to move money around with little to no traces, the anti-money laundering market is predicted to reach new heights by 2036.
Anti-money laundering (AML) actions include imposing rules, procedures, and legislation to stop illegal activities such as:
However, AML faces many challenges. For one, money laundering methods are now more complex than ever. On top of that, financial institutions and regulatory authorities also lack cooperation and intelligence sharing.
White-collar statistics for 2022 show financial investment crime in the UK has gone up 42% year over year. That’s mainly due to increased numbers of pyramid schemes (59%) and bond sale scams (57%).
However, Ponzi schemes aren’t unique to the UK. Ponzi schemes abound on the other side of the Atlantic, with financial tycoons leading them. The mastermind of the most infamous Ponzi Scheme in history scammed investors of $64.8 billion worth of investments.
Formerly a chairman of the Nasdaq stock exchange, Bernie Madoff and his relatives orchestrated Wall Street’s largest money heist. They recruited employees with barely any experience in the finance industry and instructed them to create fake trading records and account statements.
White-collar crimes are unique because an unlikely demographic usually does them. Typically committed by well-educated upper-class men, white-collar criminals include:
Many of those charged with this crime are well-connected. Investigations and prosecutions also take longer due to the complex nature of white-collar crimes. Many of these crimes also go unreported because many victims don’t even realize a crime has been committed.
What does a typical white-collar criminal look like? Here is a breakdown of what these financial fraudsters look like.
(Bajoka, The Guardian)
The popular TV image of scrawny young boys who are secretly master hackers couldn’t be any further from the truth.
White men in their 30s or 40s are the primary perpetrators of white-collar offenses. More often than not, they are married. They typically don't have a criminal record. They likely turned 30 before committing their first crime.
🎉 Fun Fact:
One of the most notorious alleged white-collar fellon of the 21st century fits this profile almost perfectly. Samuel Bankman-Fried was an MIT alumna and CEO of FTX, a cryptocurrency exchange. In 2021, he was named to the coveted Forbes 30 Under 30 list.
He was arrested in the Bahamas and extradited to the US through charges of wire and securities fraud, money laundering, and others. An estimated $8 billion was lost due to the FTX crypto scandal.
(Gale Law Group, Eastern Michigan University)
Weirdly enough, most of them are people you’d expect to protect you from such occurrences. Professions include but are not limited to:
Especially for clergy members, white-collar crimes committed in religious organizations are notoriously difficult to prosecute due to secrecy within religious groups. Moreover, since most white-collar offenders can afford pricey legal representation, many are perceived as more socially acceptable than “street” criminals.
(Gender and Crime: Convenience for Pink-Collar Offenders, The Mercury News)
A few years ago, those studying the topic of pink collar, a.k.a. female criminals, ran an experiment.
Let’s say you want a permit for a summer mansion on a property the state seeks to recreate. There is a female and a male official. Who would you try to bribe to give you the permit?
Less than 5% chose the woman.
However, recent high-profile white-collar crime cases show that women are just as capable of defrauding millions of dollars from investors. A former biotech entrepreneur, Elizabeth Holmes, broke into the startup scene and convinced investors to invest in her company, Theranos.
Claiming to have revolutionized bloodwork testing, Holmes landed prime PR when Forbes hailed her as the US’ youngest and richest self-made billionaire. She reaped numerous awards even before her company released a working prototype.
However, the catch is that the tech needed for her company didn’t exist. Despite efforts from her company’s top engineers and scientists, her revolutionary blood-testing tech never materialized. 2018 she was indicted over fraud charges and convicted in January of 2022.
The white-collar crime rate recorded a 547 decrease in 2022 as annual white-collar prosecutions decreased from 4,727 cases in 2021 to 4,180 in 2022. Over half of white-collar criminals are between 41 and 50, and around 75.2% of offenders are white.
As expected of a financial crime, white-collar felons rake millions to billions of dollars. Some white-collar criminals start with a genuine interest in making clean money. However, greed, poor management, lack of ethics, and overpromising can lead to major financial losses.
Some of the biggest white-collar criminals are well-connected businesspeople or even financial tycoons. Due to their connections, many believe they are too big to fail. In many ways, their belief in their invincibility caused their downfall and their time in jail.
Here are some stats about the massive amounts of money involved in these crimes.
The worldwide digital payment industry raked in an astounding $1.97 trillion in 2021 alone. However, as more people are lured in by the convenience of easily accessible digital payments, scams also rose to unprecedented heights.
Thankfully, current innovations in tech focusing on AI and machine learning are evolving and becoming more efficient.
👍 Helpful Articles: Aside from that, cybercriminals have branched out to identity theft. The annual cost of identity theft is above $16 billion. With how connected people are to the digital world, more security is needed to ensure we are safe in our financial transactions.
Check out some of our articles to protect you from white-collar criminals:
The Golden State is hit the hardest in white-collar crimes, leading the list of fraud losses by a wide mile. 2022 saw an uptick in noteworthy white-collar trials in courts around the state. The Department of Justice and the Securities and Exchange Commission (SEC) committed to prioritizing regulatory and white-collar criminal enforcement.
Moreover, the state has renewed its efforts to make sure companies and other institutions comply with necessary programs to curb corporate crimes. The runner-ups for white-collar crime losses are:
While a relatively new type of white-collar crime, cybercrimes are extremely costly for individuals and businesses alike. Cybercrimes will cost businesses $10.5 trillion annually by 2025.
Among the most significant contributors is the rise of ransomware payouts. With one attack valued at $4.54 million on average, forecasts show ransomware will cost the globe $265 billion by 2031.
🎉 Fun Fact: What makes white-collar crimes different from blue-collar ones?
Blue ones constitute traditional legal crimes such as robberies, drug consumption, murder, violence, etc. In contrast, white ones don’t involve physical violence. They are primarily corporate or financial crimes involving the illegal theft or misappropriation of funds. Over 33% of bankruptcies are due to employee theft, often a white-collar crime.
This doesn’t mean physical violence doesn’t happen in the workplace, though. 23% of employees have experienced violence or harassment in the workplace.
However, white-collar crimes are often perceived as more socially acceptable than other crimes, primarily since they are non-physical in nature. Although not as brutal as blue-collar offenses, white-collar offenses cost much more.
While some victims of white-collar crimes are rich investors, many of those who suffer are regular people. Many don’t even realize they’ve been a victim until it’s too late. Thankfully, there are now more government policies to safeguard people from fraudsters.
“White collar” defines certain employees with higher-earning jobs who are highly skilled professionals. They don’t perform manual labor and have been characterized by “shirt and ties,” management, and office jobs. White-collar crimes are felonies that don’t involve violence, such as counterfeiting, identity theft, embezzlement, espionage, etc.
There are many types of white-collar crimes. The five common types of white-collar crimes include fraud, embezzlement, forgery, tax evasion, and money laundering.
White-collar crime facts show that most felons are white males. They’re usually between 30 and 40, married, and educated.
White-collar crimes are on the rise at a steady rate. This can be attributed to technological advances in our society that have resulted in a reliance on computers and phones to access financial and personal information.
The biggest corporate fraud in the history of the US was the $11 billion account fraud at WorldCom. The CEO of WorldCom, Bernard Ebbers, was sentenced for fraud in 2005. Other related sentences were also handed out to John Rigas (15 years) and Timothy Rigas (20 years).
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