White Collar History
By: Eli "Cookie" Cook
What are White-Collar Crimes
The term white-collar crime was coined in 1939 by Edwin Sutherland, who defined it as a "crime committed by a person of respectability and high social status in the course of his occupation.”A, 1 White Collar crimes can by any sort of crime that involves lying, cheating, or stealing. There many cases that would be called white collar crimes. Some that people have heard around the news are, hedge frauds, health care fraud, and social security fraud. These times of crimes usually deal with big companies but there are some white collar crimes that deal with forgers and counterfeiters, like sports memorabilia. The criminals that have been associated with these times are crimes have been known for taking huge amounts of money from companies, the government, or even hard-working people.
Hedge frauds are crimes that can be separated into three different categories B. The first category is called an advance fee 9; this is many deals with lying to investors. An advanced fee is when the hedge fund manager tells investors that there is a big product to be coming up so the investor gives the money to the hedge fund manager and he is then free to do what he wants with the money 12. The investor would then be told that the product that he or she bought was unsuccessful and the hedge fund manager makes out with all of the money 7. The second category is called an insider trade 9. An insider trade is an act where a person receives information about a product before it is released into the public 8. This information can be obtained by means of a family member or friend. The last type of hedge fund fraud is called hidden losses 9. Hidden losses are when the investor is getting lied to about the status of the investments they put money into. So their investments could be tanking but the hedge fund manager is telling them that everything is fine, so they put more money into it.
Health Care Fraud
Health care frauds are one of the leading causes to the lack of money in government spending. In the fiscal year of 2011 the government lost up to $4.1 billion dollars 11. This is a 24% increase of money in the fiscal year of 2010. There are many cases filed each year for crimes that involve health care. In the year of 2007 it was 2,493 cases, in 2008 it was 2,434 cases, in 2009 it was 2,494 cases, in 2010 it was 2,573 cases, and in 2011 it was 2,690 cases C, 6. Health care Frauds are rising every year and it is harder to identify the crime 17.
Social Security Card Fraud
Social security card frauds are mainly convicted by foreigners to have a legal residence in the United States 14. People use these cards to help find jobs or declare a permanent residence in the U.S. These cards can also help comment other crimes like credit and bank fraud, tax fraud, identity theft, and pharmaceutical diversion.
Sports Memorabilia Fraud
A type of white collar crime that deals with forgeries is the crimes of counterfeited or forgeries of sports memorabilia that people buy F, 13. This crime can be done by anyone with a pen and have any piece of sportswear that looks famous. The counterfeiters that use this scam search for people who look dumb that way they wouldn’t know the difference until after the payment. Now that there is the ability use the internet counterfeiters could receive a lot more income by saying that a bat was signed by a famous baseball player without the buyer knowing if it is true or not.
If you can’t picture a white collar criminal then you should picture Bernard Madoff as your guy. This man represents any big name white collar crimes. Prosecutors estimated the size of the fraud to be $64.8 billion, based on the amounts in the accounts of Madoff's 4,800 clients E, 2. The sentence he received was 150 years in prison and a restitution of $170 billion. Madoff’s business asset was frozen that in return caused a chain reaction of foundations to temporally close like the Robert I. Lappin Charitable Foundation and the Picower Foundation 3.
How Bernard Madoff became so successful in his white color was the use of a Ponzi scheme. The Ponzi scheme was named after Charles Ponzi, a clerk in Boston who first orchestrated such a scheme in 1919 15. The Ponzi scheme works in a way where early investors pay off later investors. In this way no one is actually getting paid. The Ponzi scheme usually fails when it reaches to the end where there are no new investors paying off the old D. For the Ponzi scheme to become a success the person who received all of the money from the investors disappear from the world.
A major company was actually involved in a white collar crime. This company was called Enron, and what the company did was overvaluing assets to boost cash flow and earnings statements. This caused the company to receive more investors because they thought that the company was racking up more money. When Enron declared bankruptcy this caused millions of investors to lose a lot of money that they put into the company. After that happen the FBI declared a task force with the finest officers to induct an investigation for the company. 3,000 boxes of evidence were recovered from the investigation causing $164 million to be seized from the company 1. Only $90 million of that money was used to compensate the ones who were affected by the crime. The people to be convicted for their actions related to the fraud, including Enron’s chief executive officer, the president/chief operating officer, the chief financial officer, the chief accounting officer, and others G, 16.
One of the most growing crimes that the U.S. faces today would be the crime of identity theft. Identity theft is when a person steals important information about another person and lives out his/her life as that one person. The thief could steal thousands of dollars without that person knowing anything had happened. The thief could also clean out his or hers who savings account with a blink of an eye. The information that the thief needs would be your Social Security number, credit card number, or some other piece of personal identification.
A famous criminal that used identity theft and used forgeries to his advantage was the criminal known as Frank Abagnale. Frank was low time crook at the beginning of his career but later in life he stole $300,000 from the country of France. Frank did a little of everything he was a pilot for Pan Am, then was a lawyer, and served as a doctor for awhile and all of this before the age of 26. After away the law caught up to Frank and was sentence to jail. When the police ask Frank if he could help them in spotting forgeries like the ones he used, Frank quickly said yes and he is criminal fighting with the law.