White collar crimes have changed a lot over the years, with more offenses being added and a wider variety of offenders.  But there are still many being committed that fully meet the original definition – financially motivated nonviolent crimes committed by people in business, government professionals or people in positions of power.  When we talk about old school white collar offenders, we are referring to people of higher socio-economic status than the average person, who commit illegal acts of fraud with clear intent for financial gain.

Within this subset of white collar crimes, we see things like using deception in order to gain a financial, business or professional advantage as well as illegal acts committed people, who because of their position, are able to gain access to large amounts of money that doesn’t rightfully belong to them.

Let’s take a look some of the most common white collar crimes that fall within this category.

EMBEZZLEMENT – California Penal Code § 503

Embezzlement is a type of financial fraud in which a person takes money (or property), often by means of misappropriation, from someone who has entrusted them with the care of said money.  Embezzlement is a form of stealing, but unlike violent charges of theft, there exists a fiduciary relationship between the offender and the victimized party, such that the offender has legitimate access to the funds (or property) as part of the relationship. Also the theft is typically carried out in a premeditated, systematic and/or methodical way, usually a little at a time and over a period of time.  Embezzlement often includes deceptive or fraudulent paperwork.

There are two degrees of embezzlement charges.  It’s petty theft when the value of what is embezzled is less than $950.  In contrast, a felony or grand theft charge will apply if it’s over $950.

Some possible legal defenses to charges of embezzlement include:

  • Claim of Good Faith – You believed you acted in good faith and had a right to the money or property.
  • Claim of Authority – You can show that the money or property was taken during the scope of duties through a power-of-attorney or trust instrument, or through another arrangement requiring the acts of an agent.
  • Claim of No Criminal Intent – You can demonstrate that your actions lacked criminal intent.  As part of this defense, the Court may take in to consideration whether or not there was a demand by the owner for the return of the funds or property.
  • Claim of Innocence – You can show that you did not commit the crime and were falsely accused.

SECURITIES FRAUD

The term Securities Fraud covers a wide range of offenses such as stock manipulation, insider trading (US Penal Code § 240.10b5-1), manipulation of stocks, providing false or deceptive information on company financial reports, lying on SEC filings, high yield investment fraud, selling unqualified securities, embezzlement by stock brokers as well as other illegal behaviors that occur on the commodity exchange or stock trading floor.   The thing that all of these crimes have in common is that there is either a misrepresentation of the information used by investors to make financial decisions, pure deception of investors and/or manipulation of financial markets.

Allegations of securities fraud are investigated by the Securities and Exchange Commission (SEC) and National Association of Securities Dealers (NASD) and can carry both criminal and civil penalties, resulting in imprisonment and/or fines, or both.  Depending upon the severity of the crime, in California they can be prosecuted at either the State or Federal level and can be considered either a misdemeanor or a felony. Many of the offenses that fall in the category of securities fraud can/will be prosecuted under California Corporation Codes 25500 – 25510 and 25540 – 25542).  At the federal level, the actual charge(s) will depend upon the details of the offense but they could be prosecuted under US Penal Code Section 32, Offenses Against Property, which includes things such as fraud and forgery; U.S. Penal Code § 408, Using a False Statement in the Sale of a Security; the Securities Exchange Act of 1934 and/or the Insider Trading Sanctions Act of1984.

Some possible legal defenses to charges of securities fraud include:

  • 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 – According to the California Corporate Securities Law of 1968, criminal penalties cannot be assessed unless the law was broken willfully, meaning that the defendant knew what he was doing was wrong and intentionally acted with criminal intent.
  • Claim of Innocence – You can show that you did not commit the crime and were falsely accused.

ANTITRUST VIOLATIONS

Antitrust violations are offenses that go against laws that were designed to protect trade and commerce from abusive practices such as price-fixing, bid-rigging, restraints, price discrimination, improper (unfair) mergers, and monopolization.  The principal federal antitrust laws are the Sherman Act (15 U.S.C. §§ 1-7) and the Clayton Act (15 U.S.C. §§ 12-27).  At the state level, in California, The California Unfair Competition Law (Civil Code § 3369) may apply.

Antitrust laws exist for the benefit of consumers to ensure an economy with free and open markets.  These laws are enforced by the Federal Trade Commission (FTC) and Antitrust division of the U.S. Department of Justice (DOJ).  Offenses can be prosecuted at the State and/or Federal level. The California Attorney General can bring federal antitrust suits on behalf of individuals (“parens patriae” suits) or on behalf of the State as a purchaser.  Lawsuits can also be filed by private parties, such as a business or individual, in order to seek damages for violations.

Some possible legal defenses to charges of antitrust violations include:

  • Claim of Good Faith – You believed in good faith that your actions were not conducted in order to set up a situation of unfair competition.
  • Claim of No Criminal Intent – You can demonstrate that your actions lacked criminal intent and were not done to intentionally violate either state or federal antitrust laws.
  • Claim of Innocence – You can show that you did not commit the crime and were falsely accused.

BRIBERY AND KICKBACKS

In California, Penal Code Section 7 defines a bribe as “anything of value or advantage, present or prospective, or any promise or undertaking to give any, asked, given, or accepted, with a corrupt intent to influence, unlawfully, the person to whom it is given, in his or her action, vote, or opinion, in any public or official capacity.”  In simple terms, there is an illicit or corrupt exchange of money (or something of value) in order to influence the behavior of a person who is in a position of power or trust.  Bribery is one offense that can be prosecuted on two sides – both the person giving and the person receiving the bribe can be charged.  Prosecution can occur based solely upon intent, even if there has been no actual exchange completed.  Also, the person offering the bribe can be charged with even if the receiver declines the offer.

In California, there are several different bribery laws based upon the position of the person(s) involved:

  • Bribery by or of Executive Officers or Public Employee (Penal Code 67 & 68)
  • Bribery of Legislators (Penal Code 85 & 86)
  • Bribery of Judges or Jurors (Penal Code 92 & 93)
  • Bribery of Supervisors & Public Corporations (Penal Code 165)
  • Bribery of Witnesses (Penal Code 137 & 138)
  • Commercial Bribery (Penal Code 641.3)

Kickbacks are a form of bribery that has been negotiated as a “quid pro quo” in which money (or something of value) is given in exchange for services or a specific behavior that is illegal.  Kickbacks involve collusion between two or more parties, where as straight bribery can either be a willing act or one in which the receiver has been extorted.

Some possible legal defenses to charges of bribery include:

  • Claim of Good Faith – You can demonstrate that you believed in good faith that exchange was not illegal in nature.
  • Claim of No Criminal Intent – Because bribery is a crime of specific intent, according to California bribery laws, you can not be convicted unless it can be proven that the actions were taken with corrupt intent.
  • Claim of Innocence – You can show that you did not commit the crime and were falsely accused.

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