The image of white-collar crime was traditionally a man in a business suit who worked in finance and stole from his clients or the company. Although this still applies, the category of white-collar crimes (sometimes also referred to as “corporate crimes”) is broad enough to include all those crimes committed in the corporate world to exploit others for financial gain. These crimes use concealment or deceit within a business relationship or enterprise to defraud others.

The term “white-collar crime” was coined in 1939 by sociologist Edwin Sutherland, who defined it as a “crime committed by a person of respectability and high social status in the course of his occupation” in a speech entitled “White Collar Criminality” delivered to the American Sociological Society. Comparatively, “blue collar” workers were considered the uniformed laborers who worked in plants, mills, and factories, not in a position to pull off corporate espionage. Sutherland also claimed it was the blue collar workers who got their hands dirty in crime, historically associated with the direct, more violent crimes of assault, homicide, robbery, and vandalism.

Much of Sutherland’s work was to separate and define the differences in blue-collar street crimes like arson, burglary, theft, assault, rape, and vandalism, which he blamed on differential association as we discussed in Chapter 4. Instead, Sutherland explained that white-collar criminals are opportunists, who learn to take advantage of their circumstances to accumulate financial gain. They are educated, intelligent, affluent, and confident individuals whose jobs involve unmonitored access to large sums of money (Sutherland, 1939).

In many ways, the distinction between “white” and “blue” collar crime is becoming less clear as technology and societal changes provide increasing access and opportunity for online entrepreneurship. However, white-collar crime is still largely considered a more sophisticated and higher esteemed type of crime committed by masterminds and strategic professionals rather than “criminals.” The intellectual sophistication attributed to white-collar crime is one of the greatest myths contributing to the characterization of white-collar criminals as not “real” criminals. Instead, white-collar criminals are often portrayed as savvy, misunderstood masterminds rather than serious threats.

Increasingly, however, the perception of white-collar crime has expanded beyond Wall Street and the boardrooms of corporate conglomerates. With technological advancements and the movement of business into the hands of citizens through investment and banking apps, cryptocurrency, online businesses, and internet sales, white-collar crime finds itself frequently alongside traditional blue-collar financial crimes like the physical thefts of robberies.

Because of the tendency for the larger-scale, widespread impact of corporate crime as part of a global economy, corporate crime in the United States is investigated and prosecuted more commonly at the federal level through agencies like the Securities and Exchange Commission (SEC), the National Association of Securities Dealers (NASD), and the Federal Bureau of Investigations (FBI). Common to all types of white-collar crimes is transactional depth, concealment of criminal exploits through often complex and convoluted financial bookkeeping, digital manipulation, and strategic maneuvering. These agencies are more likely to have the tools and personnel necessary to track components of crimes at this level of intensity.

9.3.1 Mens Rea in White-Collar Crime

Mens rea in white-collar crimes require that the offender have specific knowledge and intention to produce financial gain. This awareness is what demonstrates both the desire and motivation to do the actions necessary to facilitate the financial gain. This mens rea may seem a little confusing since it aligns with the mental state of almost everyone in business, which is to try to make money. When paired with the actus reus, however, it is quite different.

9.3.2 Actus Reus in White-Collar Crime

Actus reus in white-collar crimes requires that the offender act in a way that demonstrates concealment or exploitation against a victim who trusted or relied upon them and their actions. This violates the fiduciary relationship, which is one in which someone holds a legal or ethical relationship where they are trusted with managing the money or assets of another person. Showing concealment or exploitation by the offender is often accomplished by demonstrating the actions of lying, exaggerating, down-playing risk, breach of duty, misrepresentation, or misusing fiduciary responsibilities or authority.

9.3.3 Types of White-Collar Crimes

White-collar crimes traditionally include forgery, fraud, embezzlement, money laundering, extortion, and bribery. We will discuss each of these crimes in this section. Some additional white-collar crimes are tax evasion and insider trading. Simply put, tax evasion is trying to avoid paying your taxes and insider trading is buying or selling in the stock market using confidential information that gives you an unfair advantage (figure 9.2).

Figure 9.2 Photograph of Dennis Levine, a former investment banker convicted of insider trading in the 1980s.

9.3.3.1 Forgery

Forgery is the practice of producing or using a fake version of a real document to try to get some benefit. This could involve modifying part of a document (like trying to change the birthdate on a driver’s license) or creating a completely new fake document from scratch and trying to pass it off as the real version (such as a fake birth certificate).

When forgery involves money, it is called counterfeiting. When forgery involves personal data and documents, it is often accomplished by acquiring information through theft (actual theft of a wallet or mail), phishing (seeking data through email), skimming (stealing dating through ATMs or card swiping devices), or other forms of computer and data hacking we will discuss in the section on cybercrime.

The basic criminal components of forgery are the actus reus of making, altering, using, or possessing a fake version of a real document. The document does not have to be changed very much for it to still be considered forgery. The standard is a “material” alteration, changing the nature of the document to such an extent that it changes the legal or original purpose. The mens rea is the intent to assume a benefit through deceit. The presentation of the fake version with the intent to deceive is key to the crime of forgery.

Forgery can be treated as a felony or misdemeanor depending on the extent to which the fake version was altered and the purpose of the forgery.

9.3.3.2 Fraud

Fraud is a broad term that covers a wide variety of behaviors designed to deceive for the purposes of gaining some benefit, usually money. Fraud can take many forms, including:

• Medical fraud (faking an injury or illness to wrongfully obtain prescription medications)
• Tax fraud (lying about income or deductions to manipulate tax laws for financial gain)
• Voter fraud (assuming the identity of a legally registered voter to unlawfully cast a ballot in an election)
• Insurance fraud (making an insurance claim for property that was intentionally damaged or destroyed in order to get money)

The fundamental criminal components to fraud are the actus reus of deceit, paired with the mens rea of the offender of seeking a benefit.

Like forgery, fraud can be treated as a felony or misdemeanor depending on the extent of the fraud, how much money was involved, what was done to accomplish the fraud, or the amount of deceit involved in committing the fraud.

9.3.3.3 Embezzlement

Embezzlement involves using officially obtained financial assets for purposes outside the scope of their intended use, usually for personal gain. In other words, when money is contributed toward a fund for a specific reason, but is used for a different purpose, that is embezzlement. Examples of this are when someone with access to a pension fund or charitable donations spends the money on something for themselves instead of the pensions or the charity for which it was intended.

Embezzlers can take funds in small amounts over time, can intend to pay the assets back, can borrow or manipulate assets, and can use assets transactionally that appear as legitimate. There are many different ways to skim funds off the top, but it eventually adds up and can cause great harm to those who were counting on that money.

The basic criminal components of embezzlement are the actus reus of misusing assets, paired with the mens rea that the offender was entrusted with the assets and that they used their position of trust to purposefully misuse the assets for their personal benefit. Embezzlement is a direct violation of fiduciary responsibility.

Embezzlement can be treated as a misdemeanor or felony, depending on the amount of the misused assets.

9.3.3.4 Money Laundering

Money laundering is taking illegally obtained, or “dirty” money and making the money appear “clean” by running the money through recognized channels and businesses to make the money appear legitimately earned and sourced.

The criminal components to money laundering are the actus reus of the steps in the laundering process which include placement, layering, and integration. Placement is putting the “dirty” money into the financial system (which could be a bank deposit or taking it into a legitimate business as supposed income). The next step, layering, is a complicated process of hiding the “dirty” money among the clean money by creating complicated transitions that make it hard to track. Finally, the “dirty” money is returned to the source but now appears to be legitimate income or profit instead of a gain from criminal activity.

The criminal act is paired with the mens rea of knowing the origin of the money and initiating the money laundering process to conceal that origin to further the criminal enterprise. Money laundering can be treated as a misdemeanor or a felony depending on the number of illicit transactions involved in the layering and the total of the assets being laundered.

9.3.3.4.1 Money Laundering with Drug Cartels

Figure 9.3 Photograph of Jason Bateman, who played Marty Byrde on Ozark.

Like the examples of shows, movies, and docu-series in the True Crime Stories discussed in the Chapter Overview, money laundering became more widely known thanks to a popular show, Ozark. In this wildly popular Netflix series, a fictional family becomes involved in a money laundering scheme with a Mexican drug cartel. Character Marty Byrde, who was simply a financial advisor, ultimately chooses to move his family to Lake of the Ozarks and get deeper involved with local crime and the drug cartel (figure 9.3).

Some real life examples also involve drug cartels, but it seems to be banks that have paid the biggest price. HSBC, the biggest bank in Europe, was fined $1.9 billion in 2012 because they allowed approximately $8 billion to be laundered through their banks over a seven year period by one Mexican drug cartel, one Columbian drug cartel, and possibly even terrorist organizations.

Similarly, Wachovia Bank, which is now part of Wells Fargo, was fined $160 million for allowing a Mexican drug cartel to launder roughly $390 million through their bank between 2004 and 2007.

9.3.3.5 Extortion

Extortion involves situations where a person is threatened with some kind of harm unless they do a specific action or provide a benefit to the offender. Because extortion involves the pursuit of a benefit and the offender taking the benefit through threatened harm, extortion is a type of theft. The offender uses fear to motivate the victim and facilitate the taking. In the case of extortion, the threatened harm can include a threat to inflict a personal injury, a threat to accuse someone of a crime, a threat to reveal a secret, or any threat to cause personal, reputational, financial, or physical harm. A new common example is occurring over the internet with someone setting up another person to send embarrassing or private photos or videos, then threatening to send those items out to all their social media contacts unless they pay a certain amount. The use of technology to commit this extortion makes it also fall under the umbrella of cybercrime, which we will discuss in this chapter as well.

The basic criminal components to extortion are the actus reus of making the threat, paired with the mens rea of the offender of seeking a benefit. Extortion is typically considered nonviolent in that the threat is of future harm to the victim. An immediate threat of harm would align the act more with robbery. Extortion is generally treated as a felony in most jurisdictions.

9.3.3.6 Bribery

Bribery is often compared to extortion, however, while extortion involves threatening harm to gain a benefit, bribery specifically involves financial incentive to gain a benefit. Typically, financial incentives are offered to people in positions of power who are capable of giving a benefit to the other. Interestingly, while extortion tends to characterize one person as a clear victim trying to avoid harm and another as the offender threatening the harm, bribery recognizes both the person offering the bribe and the one taking the bribe both as offenders.

The basic criminal component to bribery is the quid pro quo relationship, meaning each party engages in both the terms and benefits of the bribe agreement (“You scratch my back, I’ll scratch yours” agreements). Bribery consists of actus reus on both sides of the bribe by the person making the offer and the person making the choice to accept or negotiate the offer. Both parties accept the potential to benefit from the bribery agreement. This duality is also present in the mens rea in that each party makes an affirmative choice to engage in the bribe agreement, each intending to receive a benefit. Demonstrating that choice and intent to receive a benefit is often difficult to prove. Often one party claims they only accepted the bribe to avoid harm. Bribery is typically considered nonviolent in that the bribe is usually of financial origin. Bribery is generally treated as a felony in most jurisdictions.