Dishing the Dirt on White Collar Crime

Dishing the Dirt on White Collar Crimes

A subject which is very interesting to me is white collar crimes. There are so many white collar crimes, and we will look at various cases such as larceny, forgery, computer fraud, credit card fraud, identity theft, embezzlement, welfare fraud, and extortion just name a few. Some of these crimes are very well known, while some are not though it still remains that the crime was committed. Some would say that they were not wrong for committing the crime because of their situations and feeling that they were doing what was best for them or their business. Even though people are persecuted for white collar crime it is still on the rise because sometimes the penalty is not as strong as some other crimes.

White collar crime is defined as a non-violent crime that is committed by someone, typically for financial gain. Typically white-collar criminal is an office worker, business manager, fund manager, or executive. Those known to report and identify white collar crimes are Forensic accountants, auditors, and whistle blowers. Those that are known to investigate white collar crimes are the Federal Bureau of Investigation, Securities and Exchange Commission and the National Association of Securities Dealers. (Investopedia, 2011). It is said that Sutherland was the first to begin property using the term "white collar crime" in 1939. He defined this crime as one committed by a person of respectability and high social status in the course of his occupation.

Larceny is a type of white collar crime. Larceny is a crime which is mostly nonviolent. It involves taking another's personal property, with the intent to permanently deprive the owner of his or her rightful possession. Most states consider this as general theft, though some consider it larceny. The penalties for this crime also vary pending on what is stolen and the regional laws. Most legal systems distinguish petty larceny and grand larceny pending on the value of the items stolen. (WiseGEEK, 2011) A well known larceny case was the Tyco grand larceny. Tyco had operations in over 100 countries and claimed to be the largest maker and servicer of electrical and electronic components; the largest designer and designer and maker of undersea telecommunications systems; the larger maker of fire protection systems and electronic security services; the largest maker of specialty valves; and a major player in the disposable medical products, plastics, and adhesives markets. According to Tyco Fraud information Center, it was concluded that there were accounting errors, but there was no systematic fraud problem at Tyco. So what happened was the former CEO Dennis Koslowski, former CFO Mark Swartz, and former General Counsel Mark Belnick were accused of giving themselves interest-free or very low interest loans(sometimes disguised as bonuses) that were never approved by the Tyco board or repaid. Some of these "loans" were part of a "Key Employee Loan" program the company offered. They were also accused of selling their company stock without telling investors, which is a requirement under SEC rules. Koslowski, Swartz, and Belnick stole $600 million dollars from Tyco International through their unapproved bonuses, loans, and extravagant "company" spending. Rumors of a $6,000 shower curtain, $2,000 trash can, and a $2 million dollar birthday parties for Koslowski's wife in Italy are just a few examples of the misuse of company funds. As many as 40 Tyco executives took loans that were later "forgiven" as part of Tyco's loan-forgiveness program, although it was said that many did not know they were doing anything wrong. Hush money was also paid to those the company feared would "rat out" Kozlowski. They concealed their illegal actions by keeping them out of the accounting books and away from the eyes of shareholders and board members. In 1999 the SEC began an investigation after an analyst reported questionable accounting practices. This investigation took place from 1999 to 2000 and centered on accounting practices for the company's many acquisitions, including a practice known as "spring-loading." In "spring-loading," the pre-acquisition earnings of an acquired company are underreported, giving the merged company the appearance of an earnings boost afterwards. The investigation ended with the SEC deciding to take no action. In January 2002, the accuracy of Tyco's bookkeeping and accounting again came under question after a tip drew attention to a $20 million payment made to Tyco director Frank Walsh, Jr. That payment was later explained as a finder's fee for the Tyco acquisition of CIT. In June 2002, Kozlowski was being investigated for tax evasion because he failed to pay sales tax on $13 million in artwork that he had purchased in New York with company funds. At the same time, Kozlowski resigned from Tyco "for personal reasons" and was replaced by John Fort. By September of 2002, all three (Kozlowski, Swartz, and Belnick) were gone and charges were filed against them for failure to disclose information on their multimillion dollar loans to shareholders. The SEC asked Kozlowski, Swartz, and Belnick to restore the funds that they took from Tyco in the form of undisclosed loans and compensations. Currently, Kozlowski and Swartz were found guilty in 2005 of taking bonuses worth more than $120 million without the approval of Tyco's directors, abusing an employee loan program, and misrepresenting the company's financial condition to investors to boost the stock price, while selling $575 million in stock. Both are serving 8 1/3-to-25-year prison sentences. Belnick paid a $100,000 civil penalty for his role. (Obringer, 2005)

Forgery is another type of white collar crime. Forgery is a crime when there is an illegal modification or reproduction of a instrument, document, signature, or legal tender, or any other means of recording information. An item is also considered forged if it is claimed that it was made by someone who did not make it. (investorwords, 2011) A famous case of known forgery is the Hitler diaries forger which took place in 1983 with the discovery of the Hitler diaries. The diaries were known to supposedly contain passages written by Adolf Hitler between 1932 and 1945. Gerd Heidemann, a German reporter claimed the writings were genuine and sold them. He obtained them from Konrad Kujau, a Stuttgart dealer in military memorabilia and documents. Newsweek and Paris Mach along with other media paid more than $5 million for the documents. Later experts conducted a forensic examination on the diary and found the documents to be falsified. Kujau then admitted to forging the diaries. Kujau and Heidemann were sentenced to four and a half years in a German prison. During the trial Kujau forged