White-collar crime refers to any nonviolent crime involving fraud or dishonesty in commercial matters. White-collar crime does not inflict physical harm but leads to financial losses; that is, they are financial rather than physical crimes. The details and circumstances surrounding the crimes may vary; however, the prosecutor must prove that the defendant had a deliberate deception for unlawful financial gain. No matter the type of white-collar crime, the associated punishment is severe. At The Los Angeles Criminal Defense Attorney, we handle all white-collar crimes cases in Los Angeles and surrounding areas.
Overview of White-Collar Crimes
Under California law, white-collar crime encompasses numerous illegal but nonviolent acts committed for financial gain. The crime may involve concealment, deceit, or an abuse of trust. Most white-collar crimes are federal crimes. The crimes are illegal under the federal criminal code, and offenders may face federal charges. In some crimes such as tax fraud, it is only a federal court that has legal authority over the matter. In other instances, either a state or a federal court may prosecute an offense. Federal crimes are more serious than state crimes and often carry harsher consequences, including long prison times.
White-collar crimes range from forgery to computer crimes, embezzlement, insurance fraud, mortgage fraud, Medi-Cal fraud, and worker's compensation fraud, as explained below.
The California state's Penal Code Section 503 PC defines embezzlement as unlawfully taking property or money entrusted to you. You may be guilty of embezzlement if you transfer money to yourself, permanently depriving the true owner. Embezzlement is also referred to as employee theft. Most embezzlement cases occur in an employment situation and involve employees who have permission to access items of value but the employee abuses this freedom.
If you are convicted of embezzlement in California, the results may be harsh. With the stigma associated with the fraud, it may be hard for the offender to find meaningful employment in the future. When employing, employers always run background checks on the employees. If you have a history of embezzlement, it may be hard for employers to trust you.
Under Penal Code Section 503 PC, for the court to convict you of embezzlement, there has to be proof that:
- There is a form of relationship between the victim and the In most cases, the relationship between a victim and the defendant is an employer-employee relationship.
- The defendant was entrusted with money or property or any other valuable item within the scope of the relationship.
- The defendant took the money, property, or another item of value with the intention of depriving the true owner of the property.
Embezzlement by a public official is also a white-collar crime, and it is defined under California's Penal Code Section 504 PC. As a public official in a state, county, municipal, or city office, you should not fraudulently take any property entrusted to you in a manner that is not in line with your employment terms. The prosecution can charge this fraud as either felony embezzlement or misdemeanor embezzlement depending on the value of the item embezzled.
There are many forms of securities fraud, but the most common is insider trading. This fraud takes place when someone with inside information about an investment or a company trades on such information. An insider can either be a high-level employee in a company, a person in the financial department within a company, or a family member of one of the employees with inside information. This trading would be a violation of obligation or duty. For example, as an employee, you may have insider information about upcoming earnings reports for your company, and you decide to sell a majority of your stock in the company. This action would be a form of insider trading, and it is a serious offense.
In addition, an employee may be aware of an upcoming merger; he/she may be able to predict an increase in share prices. If he/she buys a stock based on this inside information, the action will translate into securities fraud.
A company and individuals within it may commit securities fraud by luring investors through false information. For instance, a company may issue misleading information regarding the company's prospects, finances, and health.
If publicly-traded companies release false and misleading statements in their public reports, they may mislead prospective investors, resulting in securities fraud. For securities fraud charges, there has to be proof that people speaking on behalf of a company were aware that their statements were false.
Real Estate and Mortgage Fraud
With the current crisis in the housing market and rising foreclosure rates, there is a massive initiative by state and federal authorities to uncover and prosecute individuals who execute real estate and mortgage frauds. Authorities unearth these frauds through intensive investigations into fraudulent loan modification and mortgage refinancing.
The main parties that are charged with real estate or mortgage frauds include lenders, builders, real estate agents, mortgage brokers, adjusters, and title companies, among others. A homeowner may also be subject to fraud charges if he/she uses false or misleading information to secure a home loan or refinancing.
Insurance fraud mainly involves individuals who intentionally file false claims to acquire insurance benefits and compensation. The fraud may also involve insurance companies who unlawfully withhold benefits from deserving policyholders. One person or a group of people may perform insurance fraud. Fraud may occur under any insurance policies, such as auto insurance, life insurance, health insurance, and homeowner's insurance, among others.
The most common forms of insurance frauds involve auto insurance policies. It is common for people to fabricate vehicle accidents with vehicles that had already been damaged to get insurance compensation. An individual may also claim that his/her vehicle was stolen and seek compensation from the insurance companies. Auto insurance frauds may also involve false claims that some property was stolen from a vehicle, yet there was no property in the vehicle at all, or the property did not even belong to the insurance policyholder.
Insurance fraud may either be hard fraud or soft fraud. Hard fraud involves deliberately faking arson, injury, accident, theft, or any other loss to collect money from insurance companies illegally. An individual may execute hard insurance fraud, but in most cases, gangs stage big schemes to steal millions of dollars from insurance companies.
A soft insurance fraud entails small white lies that people tell to increase their compensation from an insurance claim. Many people dismiss soft fraud as harmless. However, the seemingly minor offense is a crime.
If you deliberately underreport your taxable income or you fail to file your taxes, you may face tax evasion charges. Tax evasion is a form of white-collar crime. Individuals who deal largely with cash in businesses, such as retail stores, tend to underreport their income, as there is no clear evidence. Businesses may inflate their expenses to reduce their tax liability. Families may also evade tax by overstating the size of the household to claim large deductions.
Mistakes while filing tax do not qualify as tax fraud. Due to the complicated nature of the internal revenue code, it is common to make mistakes unless you are a tax professional or an accountant. You have a duty always to fill your tax forms correctly. However, you cannot face tax fraud charges for making an innocent error. While facing tax evasion charges, the prosecution will try to prove that your actions were deliberate. It is therefore always important to have a criminal attorney by your side to help argue your case.
To be charged with tax fraud, there must be proof that you made a deliberate attempt to underpay your taxes. If the prosecution proves that you simply made an error, you will still have to pay what you owe the state. You may have to pay an additional fine. However, you will avoid the expenses and penalties of a criminal charge.
Under the statutes of money laundering, it is a criminal activity to transfer money acquired through activities such as organized crime, drug transactions, or terrorist activities into legitimate channels to cleanse the money and conceal the true origin of the funds. Money laundering has three main processes:
- The money is first deposited into a financial institution such as a brokerage or a bank. This step is referred to as placing.
- The money is separate from its source through the process of layering. The money is layered through complex transactions that make it hard to trace the dirty money.
- The third process is integration that entails mixing dirty money with clean money to clean the contaminated money.
In California, the punishment for money laundering may include a fine of up to $250,000 or jail time of up to three years.
Different parties can be charged with Medi-Cal fraud, including individual doctors, health care providers, medical product providers, and hospitals. Most Medi-Cal frauds revolve around incorrect billing. Doctors may commit Medi-Cal fraud by billing for services they did not offer to patients. A doctor may up-code for more medical procedures with higher reimbursements, yet the patient may not have received such medical procedures. On the other hand, medical product providers may face fraud charges if they provide illegal kickbacks to patients for consenting to a "free" exam or testing a "free" medical product only to charge Medi-Cal for the services.
A Medi-Cal fraud may also involve the theft of Medi-Cal numbers. Sometimes, individuals may sell their Medi-Cal numbers to another person or allow another person to use the number. In some instances, the Medi-Cal numbers may be stolen and used in filing claims for healthcare services and products that were never provided.
Workers' Compensation Fraud
Workers' compensation fraud is among the most common insurance fraud in California. This fraud prompted the formation of the Workers' Compensation Fraud Task Force in 1991. The purpose of the task force is to investigate frauds relating to worker's compensation. The frauds may involve workers filing false claims to receive compensation. The frauds may also involve employers who deny injured workers their benefits. Workers' compensation acts may also involve medical practitioners who intentionally use incorrect medical codes for billing or inflate bills to accord injured workers higher compensation.
Employers may also commit workers' compensation fraud by misclassifying workers or under-reporting workers' wages to qualify for low insurance premiums.
People are always coming up with ways to defraud other people their hard-earned money. One such way is with Ponzi schemes and other unlawful pyramid schemes. A fraudulent scheme often requires other people to pay while joining and then proceed to recruit other people to join. Taking people's money through Ponzi schemes is a leading white-collar crime.
Bernie Madoff is currently serving a prison sentence for operating a Ponzi scheme. He inflated his earnings to entice more investors to inject money into his scheme. He would use the novice investors' money to pay off the earlier investors who sought to withdraw their funds. However, at some point, a majority of investors pulled their investments; it was then clear that he did not have money to repay the remaining investors.
In California, bribery involves giving a public officer a valuable item with a corrupt intent of influencing the person's opinion, votes, or actions in an official capacity. In most cases, bribery involves public employees, witnesses, jurors, judicial officers, executive officers, and legislative officers, among others. Bribery is a white-collar crime in California. Bribery is a serious crime and falls in the same category with serious crimes such as embezzlement.
Under California Penal Code 470, forgery involves signing in the name of another person or a fictitious person with the intent of defrauding the person. Actions such as falsifying, altering, or counterfeiting the handwriting of another person are a forgery. The punishment for forgery will depend on several factors such as the victim of forgery, the value of the fraud involved, and the defendant's criminal history.
Counterfeiting is a white-collar crime that involves reproducing or changing an item to make it appear legitimate. Counterfeit crimes may include making fake money or fake identity cards. In California, counterfeiting is a serious crime, and you may face up to four years in prison. Counterfeiting may also include federal crime charges depending on the type of counterfeiting involved.
Investigations for White-Collar Crimes
Before any arrests of criminal charges are made, investigations for white-collar crimes are conducted. The investigation process is often long and in-depth; it may extend to a long period. Investigation activities may include internal audits, federal law enforcement, or insurance investigators. It is always advisable to contact a criminal attorney if you believe that you are a suspect in a financial crime investigation. You should not wait until you face charges. You may have done nothing wrong, but you end up facing criminal charges for a financial crime you did not commit.
Punishment for White-Collar Crimes in California
The punishment of white-collar crime in California will depend on the specific crime you have committed. Punishment may range from jail time, fines, and restitution. White-collar crime may either be a misdemeanor or a felony. A misdemeanor is a serious crime punishable by law; you may go to jail for a period not exceeding one year. A felony white-collar is an extreme and a more serious crime than a misdemeanor and is punishable by a sentence at State Prison. The time spent at a state prison is not less than one year.
California Penal Code Section 186.11
In California, there is an additional white-collar crime law - aggravated white-collar crime enhancement. Under this law, a judge can add more prison time to your sentence, ranging from two to five years under certain conditions. If you are facing a very serious white-collar crime such as embezzlement, bribery, and fraud, the judge may apply the law of aggravated white-collar crime enhancement. Also, if you have two prior convictions involving fraud or embezzlement, you may face harsher punishments.
For extreme punishment to apply, the alleged victim must have lost more than $100,000 as a result of the white-collar crime. The amount of loss the alleged victim incurs will determine the time spent in prison by the offender. For example, if a victim loses money ranging between $100,000 and $500,000, the offender may face an additional one or two years in prison. If a victim loses more than $500,000, an offender may have three to five years added to their sentence. The additional prison terms are different from white-collar punishment. Therefore, you will have to serve both the particular white-collar punishment and the additional prison time.
What are the Fines for White-Collar Crimes?
If you are accused of white-collar crime, the judge may add a fine as well. This is a payment made to the court. The aim of paying a fine is to deter you from committing a crime again. The nature of the crime and its severity will determine the amount of money you pay. The fines for white-collar crimes often range from $1000 to $10,000.
Restitution to the Victim
The court may order you to pay the victim as part of your punishment for a white-collar crime; this payment is known as restitution payment. Judges often order white-collar crime offenders to pay restitution to victims for any financial losses. The punishment helps victims recover some of the money and the property lost in the course of the crime. Restitution and fines do not overlap, and you may have to pay both. Restitution is a payment made to the victim while fines are payments made to the court.
Additional Punishment for White-Collar Crimes
On top of the typical punishments for white-collar crimes, a judge may include some additional punishments. A judge may order forfeiture, which involves seizing the personal property of an offender by law enforcement officers. Property may be seized if it was used in executing the crime or if it was acquired through the crime, for example, through embezzlement.
An offender may face an alternative punishment to jail time, such as house arrest or home detention. For home detention, you are required to remain in your house for a specified period, such as six months instead of serving time in jail. You are not allowed to leave your home unless when going to see a doctor, school, or work. Violating the terms of home detention may have severe consequences such as jail time.
Legal Defense Strategies for White-Collar Crimes
There are several defenses and legal strategies available for white-collar crimes. Often, many federal prosecutions have many witnesses providing information about a case. An experienced criminal defense lawyer can critically cross-examine witnesses and question their credibility or recollection.
In most cases, federal prosecutors rely on financial records and physical exhibits while proving their case. This type of information may be too much for the jury. A competent criminal defense attorney can come up with concise and on-point information that will be very easy to convince the jury.
In some cases, a white-collar crime may be executed under duress. For example, a check fraud may be committed under duress whereby you are forced to transfer money from another person's account or else you would be threatened with bodily harm.
For a normal person, white-collar crimes are complex and very hard to understand. When facing an accusation for these crimes, you may not be able to develop a good defense on your own. An attorney may have handled similar cases before your case; he/she will be able to maneuver through the legal system in your defense.
If you face charges for white-collar crimes, The Los Angeles Criminal Defense Attorney can represent you. We will fight for your constitutional rights and ensure that we keep all the illegally obtained evidence out of court. We will prepare a defense, negotiate a plea bargain, and use any other possible strategy for a successful defense. Call us at 310-564-2605 and speak to one of our attorneys today!