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White Collar Crime - Investigations, Prevention and Defence

White-collar crime is the range of crimes that are committed by professionals who are either in business or government. It is a term that refers to crimes that involve deceit, concealment or some abuse of trust rather than the use or threat of physical violence.

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Overview

White-collar crime is a term that is used to cover a wide range of offences. There are similarities between some of these offences and they may be investigated by the same authorities. But they are far from identical. This article explains what white-collar crime is and details some of the main offences.

What is White-Collar Crime?

White-collar crime is the range of crimes that are committed by professionals who are either in business or government. It is a term that refers to crimes that involve deceit, concealment or some abuse of trust rather than the use or threat of physical violence.

The aim of those committing white-collar crime (commonly referred to as white-collar criminals) is to either gain (or avoid losing) assets such as money, property (also known as real estate) or services or to obtain some sort of personal advantage. The main examples of white-collar crime are contained below in the list of Rahman Ravelli’s investigations expertise. Money laundering, bribery and tax evasion are, to name a few, just some examples of white-collar crime.

Sociologist Edwin Sutherland came up with the term white-collar crime in 1939. He said it meant "a crime committed by a person of respectability and high social status in the course of their occupation".[1]

Some interpret the definition of white-collar crime as only applying to offences committed by an individual. But others, including the FBI, also consider white-collar crime to cover large-scale fraud carried out by a number of people in a company or government organisation.

White-collar crime that is part of an organised effort to boost a company is known as corporate crime. The FBI sees tackling corporate crime as one of its most important issues, due to the losses it can cause investors and the damage it can do to the US economy. Financial crimes such as manipulating financial data, the share price or other factors to deceive investors, auditors or analysts about the true financial position and viability of a company is a common corporate fraud practice.

Types of White-Collar Crime

Various types of white-collar crime have developed over the decades, as new opportunities have presented themselves. As a high-profile example, and before Sutherland had ever introduced the term white-collar crime, the early 1920’s saw Charles Ponzi running investment fraud schemes that led to the term “Ponzi scheme’’ still being used a century later.[2]

At present, developments in the digital business world have made cryptocurrency a popular means of carrying out white-collar fraud, whereas in previous years it was more likely to have been mail fraud or wire fraud. Similarly, the way the world’s financial markets are now closer to each other than in previous years has produced more opportunities for people to invest worldwide.

But this has also made it increasingly possible for people to commit investment fraud (also known as securities fraud), where they make gains by using false information to convince another person to buy or sell on the financial markets. Recent years have also seen developments in finance and technology that have prompted white-collar crime such as computer-based cybercrime, healthcare fraud and intellectual property crime, which relates to issues such as copyrights, patents and trade secrets.

Here are some of the types of white-collar crimes that have been around for many years:

  • Fraud: This covers situations where a person deceives another in order to make a financial gain. This could involve, to mention just two examples, persuading someone to invest in a bogus financial scheme or selling an item at a vastly inflated price by making false claims about its value. Learn more about Serious Fraud Office (SFO) Investigations.
  • Embezzlement: This is where money is taken from a person or organisation by someone who has a duty to act on their behalf. An example would be a financial adviser entrusted with a client’s funds who then spend them on himself or some other purpose they were not intended for.
  • Bribery: Bribery is the offering, giving, receiving or requesting of money or any other item of value to influence the actions of an official or another person who has a public or legal duty. Learn more about Bribery & Corruption Investigations.
  • Tax evasion: An individual or company can be guilty of tax evasion if they conceal their income or other information about their assets from the tax authorities so that they have to pay less tax. This is not to be confused with tax avoidance, which is using legal ways of reducing the amount that a person or company has to pay tax on. Learn more about HMRC - Tax and VAT Investigations.
  • Money laundering: If someone has earned money or gained other assets through criminal activity, they will not want the authorities to recognise this. Money laundering is the series of business transactions they create in order to disguise the fact that the wealth was gained through crime. Learn more about Anti-Money Laundering Investigations.

Investigation of White-Collar Crime

White-collar crime cases can be lengthy, complex and involve a number of countries. Those suspected of such crime can be investigated by law enforcement agencies. They may also be the subject of legal action (litigation) brought by people who say they have suffered losses as a result of such crimes.

Responding to either of these situations requires legal representation from those with extensive experience and expertise in this area. Those who do face the possibility of such action need to be seeking legal advice from specialist white collar crime lawyers who have a track record in representing major national and international companies and the senior figures within them.

Representation in white-collar crime cases must be conducted by those who have in-depth knowledge of the law, how an investigation or legal action may develop and the possible financial and reputational effects.

Legal advice can also be of immense proactive value regarding white-collar crime. Individuals, companies and organisations can be advised on introducing preventative measures to make it impossible to commit such offences and on compliance programmes to make sure they are meeting all their legal obligations. Such measures can reduce the possibility of them facing criminal or civil action in the future.

White Collar Crime Investigations

When a white-collar crime is suspected, it will be investigated by one or more law enforcement agencies.

In the UK, for example, the Serious Fraud Office (SFO), Financial Conduct Authority (FCA) and HM Revenue and Customs (HMRC) are among those that commence regulatory or criminal investigations into white-collar crime. Financial and business crimes such as fraud committed within the City of London financial districts may be investigated by The City of London Police. The City of London Police is the smallest territorial police force in England and Wales, responsible for law enforcement within the City of London, including the Middle and Inner Temples.[3]

In the US, it is investigated by the FBI, the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), Financial Industry Regulatory Authority, Internal Revenue Service, Department of Labor, Federal Energy Regulatory Commission, the U.S. Postal Inspection Service and other regulatory and/or law enforcement agencies.

Professional organisations and bodies that regulate the particular sector where white-collar crime is suspected may also carry out investigations into companies or particular individuals.

Prevention and Reporting of White-Collar Crime

While any white-collar crime that has been committed can be investigated, this will only happen if it is known.

There may be situations where the company has noticed a white-collar crime committed “under its roof’’ but does not notify the authorities. A company may decide not to report what has happened for a variety of reasons. It may, rightly or wrongly, believe it can deal with the matter internally.

The company may also be concerned about the damage to its standing in the marketplace if it became known that a crime had been committed. It may also fear the cost of having to pay financial penalties after any investigation.

But such a course of action can be dangerous. Not reporting a crime can create legal problems for the company if and when the authorities do eventually become aware of the wrongdoing. A company takes what can be a huge (and very costly) gamble by not reporting the crime.

Customer complaints, whistleblowers and other – sometimes completely unrelated – issues can lead to the authorities scrutinising the workings of a company. If they then detect the white-collar crime that the company had tried to hide, the repercussions could be serious.

While white-collar crime cases can be lengthy and complicated, the statistics indicate a willingness by the law enforcement agencies to open investigations.

In the year 2020-21, the SFO opened 60 new cases. It also completed two DPAs – where a company admits wrongdoing and agrees to meet certain conditions to avoid prosecution – that saw the companies involved paying a total of £47.4M in penalties and costs.[4] In the same year, the FCA imposed financial penalties totalling £189.8M and opened 134 new cases.[5] At the end of this period, the FCA had 593 cases ongoing.[6]

It would, therefore, be better for companies to be proactive in preventing white-collar crime rather than reacting to it when it happens. Such crimes involve an individual or a number of individuals taking advantage of a situation for their own benefit.

The scope for doing this can be greatly reduced if companies assess how they work and identify the potential for this to be exploited by either a staff member, representative, customer or third party. By then devising appropriate procedures to reduce (or ideally, remove) this potential, the risk of offences being committed is drastically reduced.

The value of such preventative measures can be huge, even if it may not always be obvious. Taking action that prevents a company, to give two examples, becoming embroiled in a huge, cross-border bribery and corruption probe or, finding its employees under investigation for large-scale securities fraud, can save it huge amounts of money (that would otherwise have been used to pay fines) and preserve its reputation. No company wants to pay massive financial penalties and become known as an organisation that allowed white-collar crime to flourish.

About Rahman Ravelli

Rahman Ravelli is a top white-collar crime law firm operating internationally from their London based offices. The firm has a reputation that is built on defending clients around the world. They are adept at advising clients and managing cases in one or a number of countries in matters of criminal defence, international investigations and proactive preventative legal advice. They are a top-ranking UK law firm in both the Legal 500[7] and Chambers UK[8].

Their investigations expertise includes:

  • Managing multi-agency and multi-jurisdictional investigations.
  • Serious Fraud Office (SFO) investigations.
  • Financial Conduct Authority (FCA) investigations.
  • Bribery and corruption investigations.
  • Deferred Prosecution Agreements (DPA).
  • Multilateral Development Bank (MDB) Audits, Sanctions and Investigations.
  • Market Abuse, Spoofing and Manipulation.
  • Cum-Ex Investigations.
  • HMRC Tax and VAT investigations.
  • Competition and cartels.
  • Anti-Money laundering.
  • Financial, Economic and Trade Sanctions.
  • Cybercrime.
  • SPACs - Special Purpose Acquisition Companies.
  • Cryptoassets and cryptocurrencies.
  • Extradition and INTERPOL Red Notices.

Their expertise also covers:

  • Civil Fraud.
  • Private Prosecutions.
  • Freezing Orders.
  • Asset Tracing & Recovery.
  • Civil Recovery.
  • Unexplained Wealth Orders (UWO).
  • Commercial Litigation.
  • Confiscation.
  • Restraint Orders.

 

Contact Us

If you would like to speak to us about these types of matters, for advice, prevention, help to conduct an internal investigation or self-reporting or, if you have been subject to an external investigation by an agency in the UK or overseas, then please feel free to contact us via our London switchboard on +44 (0)203 947 1539, send us a message online or send an email to: enquiries@rahmanravelli.co.uk.

 

References:

[1] Wikipedia - White Collar Crime: https://en.wikipedia.org/wiki/White-collar_crime
[2] Wikipedia - Charles Ponzi: https://en.wikipedia.org/wiki/Charles_Ponzi
[3] Wikipedia - City of London Police: https://en.wikipedia.org/wiki/City_of_London_Police
[4] Serious Fraud Office - Annual Report and Accounts 2020-2021: https://www.sfo.gov.uk/download/annual-report-and-accounts-2020-2021/
[5][6] Financial Conduct Authority - Enforcement Data Annual Report 2020-21: https://www.fca.org.uk/data/enforcement-data-annual-report-2020-21 
[7] The Legal 500 - https://www.legal500.com/firms/3482-rahman-ravelli/4990-halifax-england/
[8] Chambers UK - https://chambers.com/law-firm/rahman-ravelli-solicitors-uk-1:7917

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Nicola Sharp

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Nicola is known for her fraud, civil recovery and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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