White-Collar Crime

White-collar crime is a nonviolent crime committed for financial gain. Securities fraud, embezzlement, corporate fraud and money laundering are examples of white-collar crime, and these acts are usually investigated by the FBI, the Securities and Exchange Commission (SEC) and the National Association of Securities Dealers (NASD). Some high-profile individuals convicted of white-collar crimes include Kenneth Lay, Bernard Madoff and Bernard Ebbers.

White-collar crime gets its name from the types of individuals who typically commit financial fraud, including business managers, fund managers and executives. Individuals can face prison time and steep fines if they are convicted of white-collar crimes. The federal government can also pursue financial damages from corporations and banks that commit white-collar crime on an institution-wide level.

Corporate white-collar crime usually involves a large-scale fraud perpetrated throughout the institution. For instance, Credit Suisse pleaded guilty in 2014 to helping U.S. citizens avoid paying taxes by hiding income from the Internal Revenue Service. The bank agreed to pay penalties of $2.6 billion.

Also in 2014, Bank of America acknowledged it sold billions in mortgage-backed securities (MBS) tied to properties with inflated values. These loans, which did not have proper collateral, were among the types of financial misdeeds that led to the financial crash of 2008. Bank of America agreed to pay $16.65 billion in damages and admit to its wrongdoing.

Most states have agencies that investigate white-collar crimes that are limited to a single state, and several federal agencies investigate financial frauds that span multiple states. In a unique attempt to protect its citizens, the state of Utah established the nation’s first online registry for white-collar criminals in 2016. Photos of individuals who are convicted of a fraud-related felony rated as second-degree or higher are featured on the registry. The state initiated the registry because Ponzi-scheme perpetrators tend to target tight-knit cultural or religious communities, such as the Church of Jesus Christ of Latter-day Saints based in Salt Lake City, Utah.

One of the most well-known white-collar criminals is Bernard Madoff, who was convicted in 2009 of a massive fraud that cost investors $65 billion. Madoff, sentenced to 150 years in prison, ran an elaborate Ponzi scheme, which promised large returns on investments. For many years, Madoff used money from new investors to pay previous investors without actually investing the funds. Madoff’s scheme fell apart when a significant number of investors demanded their money back, and Madoff was unable to pay them.