White-collar crimes are not dependent on the application or threat of violence. Instead, they are characterized by concealment, deceit, or violation of trust.
The main culprit behind these well-planned and complex fraudulent schemes are business professionals whose main motive is to gain a financial advantage.
These criminals rob people of billions and billions of dollars, and their cunning techniques make it very hard for the victims to anticipate and avoid their crimes.
White-collar crimes are sometimes extremely difficult to prove. Historically, a crime of this nature was even more confusing – white-collar crime in the 1970s even revolved around illegal acts of prostitution and welfare fraud.
For now, let’s take a look at 4 of the most infamous white-collar crimes.
- Charles Ponzi — A Ponzi Scheme
You might have heard about “Ponzi Schemes” but may not know the founder of this cunning crime — Charles Ponzi.
Ponzi was a poor immigrant who lived a rough life in Boston. He did decently until one day he came across an international reply coupon. He was quick to realize that he can buy some of these in one country and trade them for more expensive stamps in another.
Although his endeavor turned out to be a lucrative one and he started making good money, he wasn’t satisfied because he thought he could make a lot more. In pursuit of more money, he started finding investors, promising them almost a hundred percent return in only 90 days.
The catch in his story is that he didn’t invest the amount he received from the investors anywhere. Instead, he began executing a manipulative scheme, which worked something like this.
He first promised the investors a high return and convinced them to invest. Instead of investing this money in a business, he spent it on mansions and a luxurious life.
When the time came to pay the promised profit to the investors, he went to another bunch of people and convinced them to also invest in his “successful” business. He then used this money to pay the profit to the first batch of investors and siphoned the rest.
This went on until he was arrested and charged with mail fraud, leading to 14 years of imprisonment.
- Bernie Madoff — Another Ponzi Scheme
Bernie Madoff was another conman who pulled off one of the biggest Ponzi schemes in history.
Bernie was a former chairman of NASDAQ and his Ponzi scheme began with him establishing a false multi-billion dollar investment firm. The workings of his fraud were similar to that of Charle’s.
His investment firm did nothing more than create an illusion of hefty returns for investors. Then came the stock market crash of 2008, which Bernie wasn’t able to manage well. He confessed his Ponzi scheme to one of his kids, who turned Bernie in the very next day.
After the arrest, Bernie accepted his crimes and was sentenced to 150 years in prison and fined around $170 billion.
- Enron Corporation — An Accounting Fraud
Enron, once America’s most innovative energy trading company, defrauded its investors of billions of dollars.
What Enron did was very different from the Ponzi schemes we’ve seen. This company used to immediately claim profits from their projects, even before they were realized. Later, if some of the projects didn’t meet the projections, the losses were simply transferred to one of Enron’s subsidiaries.
This accounting malpractice allowed Enron to show crazy profit levels by simply hiding any losses and debt that they incurred. It is estimated that by the end of the year 2000, Enron almost had $591 million in losses and $600 million in debt.
Although rumors about Enron’s corruption began to surface in the 1990s, it wasn’t until 2001 that Enron finally filed for bankruptcy.
Several executives were found guilty of conspiracy, security fraud, and more. It was also found out that Enron wasn’t alone in this fraud. They were aided by Arthur Anderson, one of the biggest accounting firms at that time.
One takeaway from this incident is that if you ever find your business in a weak financial position, never try to fix it through illegal accounting practices. Instead, try some of these legal and organic ways to improve your company’s financials.
- Jack Abramoff — A Lobbying Scandal
It wouldn’t be wrong to say that this is the most notorious white-collar crime on our list.
Jack Abramoff was a powerful and successful lobbyist for the native American tribes. These tribes were seeking permission to develop gambling casinos on their reservations. Although casino gambling on already established and recognized tribal lands was allowed, the lobbying aimed to create new tribal lands via federal law.
In return for his lobbying services, Jack Abramoss grossly overbilled his clients. According to an estimate, he and his colleagues charged the tribes around $80 million as fees. On one occasion, Abramoff also falsely lobbied against his own client so that he could charge them more for his services.
Investigative newspapers were quick to bring Abramoff’s illegal activities to public attention. He was eventually caught and charged for fraud, tax evasion, and conspiracy to bribe public officials.