White-Collar Crime—What It Is and How It Differs From Other Crimes

Types of White-Collar Crimes | The Punishment for White-Collar Crime

Though crimes such as fraud, embezzlement, and forgery have been on the books for centuries, the trend for most of the past century has been to group such offenses under the general term “white-collar crime.” Initially, the distinction was largely intended to separate nonviolent crimes from those committed through the threat or use of force. With the advent of computers and the internet, though, the range of white-collar crimes has increased substantially.

What Is White-Collar Crime?

Generally speaking, a white-collar crime is one that involves no violence or threat of violence toward another person, typically perpetrated primarily or exclusively for financial gain. Often, the person committing the crime has the opportunity to do so because they occupy a position of authority or trust within an organization. Most types of white-collar crimes can be committed entirely privately, using external tools, such as computers, falsified financial records, and other documents to redirect or misappropriate funds or property.

What Are Common White-Collar Crimes?

Examples of white-collar crimes include:

• Fraud offenses—Most common white-collar crimes involve some form of fraud. Minor details vary from state to state, but the law generally defines criminal fraud to have the following elements:
  • The defendant (person being prosecuted) must make an intentional misrepresentation of a material fact. For the misrepresentation to be intentional, the person making the false assertion must know or have reason to know the statement is false and must act in disregard of that knowledge. A careless or negligent misrepresentation generally won’t support a charge of fraud.
  • In addition, a third party must reasonably rely on the misrepresentation to their financial detriment. If the statement would not be believed by a reasonable person, there is no fraud. Even if a person reasonably relies on the false assertion, there is no fraud if there is no financial loss.

Many different types of misrepresentation can be the basis for criminal fraud:

• Financial fraud—Financial fraud involves intentional misstatements of fact made for financial gain, primarily to financial institutions. Examples include forging checks or loan documents, making misrepresentations on applications for credit or loans, preparing and/or passing counterfeit bills or other currency, check-kiting, and mortgage fraud.
• Mail fraud—Mail fraud occurs when the federal postal system is used to initiate or perpetrate a fraud.
• Healthcare fraud—Committed by providers and patients alike, healthcare fraud involves any misrepresentation during efforts to seek medical attention or obtain reimbursements for medical services rendered. Patients commit healthcare fraud when they make false assertions of illness or injury. Providers do so when they bill for services not rendered or procedures not performed. The latter is a form of insurance fraud.
• Insurance fraud—Insurance fraud occurs when someone makes a false statement of fact in an attempt to secure insurance coverage or benefits for an uncovered loss or bogus claim.
• Computer fraud—A computer can be used to perpetrate financial fraud, such as the theft of personal financial information, the hacking of credit card or bank accounts, or the use of stolen information to make unauthorized purchases.
• Bankruptcy fraud—It’s a crime to make false statements about debt, income, assets, or other required information during a bankruptcy filing, or to otherwise withhold or hide relevant information from the bankruptcy trustee or court.
• Credit card fraud—It’s fraudulent to create bogus or clone credit cards or to otherwise use someone else’s credit card information for financial gain without consent.
• Securities fraud—Securities fraud involves making false statements of fact in order to manipulate a securities market or change the value of securities.
• Certain theft crimes—Often, persons within an organization, including bookkeepers, financial officers, and executives, have almost exclusive access to financial information and can manipulate it for financial gain. Employees may create false books, forge signatures on checks or other documents, manipulate inventories or purchases, or create bogus companies or expenses to redirect company funds for their own personal use. Charges for this type of offense include embezzlement, misappropriation of funds, and misappropriation of property.

What Is Identity Theft?

A relatively recent development in laws governing white-collar crime, identity theft occurs when a person intentionally and wrongfully either takes and uses the personal information of another for financial gain or represents themselves to be that person for financial gain. Often, it involves information wrongfully gathered online, but it can also include the theft of mail or other types of subterfuge.