Many people think of white collar crimes as being committed by people in positions of power or high socio-economic status, but the reality is that these offenses have crossed over to people of all backgrounds and walks of life. While many of these offenders act with clear criminal intent to manipulate the “system” for financial gain, there are also offenders who, because of difficult financial situations, commit these offenses out of desperation. There are also people being charged with committing white collar crimes because they didn’t realize what they were doing was illegal and/or didn’t know better.

At one end of the spectrum we have the “little white lies” and at the opposite extreme we have the clear cut, often methodical, attempts to defraud.

INSURANCE FRAUD

A growing white collar crime, both nationwide and in California, involves the act of providing falsified information on insurance claims in order to receive money or services that one is not legally entitled to.  Criminal charges of insurance fraud are prosecuted by both the District Attorney and the fraud division of the California Department of Insurance (CDI) under the California Insurance Code Sections 1871-1871.9, commonly known as the “Insurance Frauds Prevention Act,” California Penal Code Sections 549-550 and California Labor Code Section 3700.5.

Regardless of the specific type of insurance fraud, there are two main charges that can be applied to Suspected Fraudulent Claims (SFCs):  Filing a Fraudulent Insurance Claim (CPC § 550(a)) and Presenting False or Misleading Information on an Insurance Claim (CPC § 550(b)).

Some of the most common attempts to defraud insurance companies include:

  • Automobile Insurance Fraud (548-551) – includes a variety of acts intended to illegally receive money from an insurance company including providing false information on a claim, faking an accident or injuries, intentionally destroying a vehicle, padding of bills by an auto repair shop and lying about the theft of a vehicle.  These acts could also result in being charged with filing a false police report under Penal Code § 148.5.
  • Health Care Insurance Fraud (CPC § 550(a) ) – intentional attempts to receive unauthorized payments or benefits from a medical insurance company.  Also known as insurance billing fraud, HMO fraud, Medicare fraud or Medi-Cal Fraud this includes actions such as submitting claims for services never received, submitting a claim for a more expensive service than the patient actually received and submission of duplicate claims for a single service.
  • Unemployment Insurance Fraud (Unemployment Insurance Code 2101 -2129) – this includes any actions in which a person receives (or attempts to receive) payment through the unemployment program through fraudulent methods.
  • Welfare Fraud (Welfare and Institutions Code 14014 WIC) – this category includes any attempt to gain social service (or welfare) benefits through fraudulent means.  This includes providing falsified information upon applications and re-certification, allowing someone else to utilize your social service benefits (for example your Medi-Cal card), selling your benefits for cash (for example your food and nutrition benefits) and/or accepting money from a Medi-Cal provider in exchange for using his services.
  • Workers’ Compensation Fraud (Workers’ Compensation Insurance Fraud Reporting Act) – this is a broad term that includes a wide variety of fraudulent offenses directly related to worker’s compensation including things such as faking an injury, providing falsified information about a work related injury as well as the offense of employers not carrying worker’s compensation insurance when they are legally obligated to do so (California Labor Code § 3700).

BANK FRAUD

Bank fraud is the use of illegal means to obtain money, assets, or other property owned or held by a financial institution, or to obtain money from depositors by fraudulently posing as a bank or other financial institution. Bank fraud can be prosecuted at the State level as well as the federal level under 18 U.S. Code § 1344.

In many cases these actions, depending upon severity and intent, constitute a criminal offense and includes things such as:

      • Check Fraud (CPC § 476) – One of the most frequent types of forgery charges in California, this refers to using a fraudulent (or fake) check to purchase goods or services.
      • Bad Checks (CPC § 476A) – Refers to offenses in which a legitimate check is used to purchase goods or pay for services when there are insufficient funds in the bank account.  If a person writes a bad check accidentally, he or she will typically be given a chance to repay the money received.
      • Credit & Debit Card Fraud (CPC § 484e – 484i) – Refers to criminal offenses involving the use of credit and/or debit cards such as using a stolen credit card to make a purchase, forgery, counterfeiting, fraudulent usage, fraud by a retailer when he/she accepts a credit card that is knowingly stolen, expired, revoked or fake or presents falsified information to receive payment for goods that were not sold, and/or publishing private credit card information with the intent to defraud.
      • Bankruptcy Fraud (18 U.S.C. § 151) – Usually considered a federal crime, there are three main types of bankruptcy fraud: concealment of assets, multiple filings in more than one state and petition mill schemes committed by a third party {this last one will be linked to the 4th article}.  Bankruptcy fraud may also include charges of fraudulent conveyance.

FRAUDULENT CONVEYANCE

Fraudulent conveyance refers to any attempt by a debtor to conceal, move or transfer property or money in order to either avoid paying off a debt or to avoid paying damages owed as a result of a lawsuit.

Depending upon the severity and specific details, acts to conceal assets can be prosecuted at the state, federal and civil level under the following laws:

      • Fraudulent Conveyance by a Debtor – CPC § 154
      • Fraudulent Conveyance by a Judgment Debtor – CPC § 155
      • Party to a Fraudulent Conveyance – CPC § 531
      • Uniform Fraudulent Transfer Act – CPC § 3439
      • Fraudulent Transfers and Obligations – 11 U.S. Code § 548

TAX FRAUD AND EVASION

Although frequently used interchangeably, tax evasion is actually a subset of tax fraud, distinguished primarily by the intent of the offender. A person can “commit” tax fraud by accident through negligence, by human error or with the clear intent to evade paying taxes that are rightfully due.

      • Tax Negligence – when there is no clear intent to defraud the IRS, but rather the false information was a result of a mistake, it is considered negligence, which still has the potential of a penalty fine being assessed.
      • Tax Evasion – a willful attempt to evade tax law or defraud the IRS and includes acts such as intentionally failing to file income tax return, provides false information on a return, intentionally fails to report all income or willful lack of payment of taxes that are due.

Charges of tax evasion usually entail a deliberate act of misrepresentation of taxable income to the IRS and are considered serious a federal offense.

Tax fraud can be prosecuted at both the civil level under Title 26 of the USC and/or the criminal level under Title 18:

      • Attempt to evade or defeat tax – 26 USC § 7201
      • Willful failure to collect or pay over tax – 26 USC § 7202
      • Willful failure to file return, supply information, or pay tax – 26 USC § 7203
      • Fraud and false statements – 26 USC § 7206(1) & Title 26 USC § 7206(2)
      • Attempts to interfere with administration of Internal Revenue – 26 USC § 7212(A)
      • Imposition of fraud penalty – 26 U.S. Code § 6663
      • Conspiracy to commit offense or to defraud the United States – 18 USC § 371

PROSECUTION AND DEFENSES

With all of these crimes, whether or not they will be charged as a misdemeanor or a felony will depend upon the actual value of the money or property involved.  A charge of petty theft (CPC § 484) will apply if the value is under $950 but if it’s higher, the prosecution has the option to charge the person with grand theft (CPC § 487).

In addition to the actual offense committed, the prosecution has the option to include other charges based upon the acts involved in the crime, the severity of the offense as well as the degree of criminal intent.

If you have been charged with a white collar crime, there are several ways in which an attorney can build your defense including:

      • Claim of Good Faith – You believed in good faith that the information that you provided was, to the best of your knowledge, true.
      • Claim of No Criminal Intent – You can clearly demonstrate that although you may have “done the deed,” your actions were not taken with criminal intent to defraud.  In these cases there may still be a civil penalty or fine imposed for example in cases of tax fraud by negligence.
      • Claim of Innocence (False Accusations) – You can show that you did not commit the crime and were falsely accused.
      • Claim of Mistaken Identity (or Identity Theft) – You can demonstrate that you have been mistaken by someone else who committed the crime or by someone who actually stole your identity.
      • Claim of Insufficient Evidence – The burden of proof is on the prosecution and if there is not enough evidence, your attorney may pursue this defense and get the case against you dropped.
      • Plea Bargaining – If there is evidence against you, one possible defense is to work with the prosecution in an attempt to get the charges