Objectives:
- Understand what activities constitute “white collar crime”
- Compare and contrast the various schemes that are perpetrated by white collar criminals
- Acknowledge and evaluate the typical target victims for various fraudulent schemes
Introduction
There are numerous forms of white collar crime, and innumerable variations of each of these forms. Some general descriptions of these crimes are frequently used. This glossary lists such terms, defines them generally, and provides some comments on them which hopefully will be of assistance to investigators who must cope with them. The review avoids legal definitions, stressing instead the most frequent situations in which particular white collar crimes occur, the most frequent victims of particular abuses, the modi operandi, and the relationships between offenses and enforcement avenues. Where appropriate, references are made to a list of sources which follow this review and from which additional information on specific crimes may be obtained.
ABUSE OF TRUST
The misuse of one’s position and/or of privileged information gained by virtue of that position in order to acquire for oneself (or for another in whom has an interest) money, property, or some privilege to which one is not entitled. Abuse of trust often involves as well a violation of fiduciary duty.
The victims of such abuses are those who rely to their detriment, for example, an individual or group which misuses a trusted position. The abuse of trust can occur in many areas but is a situation which arises most frequently in the following four white collar crime areas:
- Banking – where abuse of trust can involve self-dealing in connection with loans or credit to oneself, one’s friends or business associates.
- Securities – where insider information may be used for personal benefit at the expense of clients, stockholders and others.
- Commercial bribery — where the procurement and competitive bidding processes may be manipulated
- Embezzlement &fiduciary violations — where trustees, attorneys, etc., may misuse property or funds in their custody.
Remedies for abuses of trust include criminal, civil, and regulatory remedies, enforceable under federal and state law.
ADVANCE FEE SCHEMES
Advance fee schemes are schemes in which assurances of some future benefit are made, with full compensation to the promisor/perpetrator to be deferred until final performance, but where the perpetrator has no intention of performing or in obtaining full compensation for performance but rather is interested only in obtaining the partial payment requested as a service fee or an advance good faith deposit (often called a “returnable” deposit).
Typical victims of advance fee schemes are businessmen who cannot obtain customary banking or credit sources to continue their business operations or to expand them. They thus pay deposits or fees to others to arrange loans or credit for them.
These frauds are customarily prosecuted under the federal mail fraud statute