White Collar Crimes: Financial Fraud and Embezzlement in California

The term “white collar crime” is used to describe a number of nonviolent crimes that are mostly motivated by money or the idea that financial gain will be the outcome. Financial fraud in white collar crimes is a common underlying characteristic of most offenses of this nature.

White collar crimes typically occur in business and corporate settings rather than on the streets or in residential environments, like the majority of violent crimes. They also usually involve an individual or a group who uses deceit, breach of trust, extortion, money laundering, and other criminal acts to achieve their goal of financial gain.

Financial Fraud

Financial fraud is often carried out through such acts as falsifying documents, withholding information, or illegally accessing and/or sharing sensitive data. Some examples of white collar crimes that involve financial fraud are embezzlement, insider trading, bribery, Ponzi schemes, racketeering, wage theft, and many others.

To prove financial fraud, the prosecution must establish five components to secure a conviction:

1. The defendant made a false claim, which they could have done through lying, submitting false documents, concealing facts, etc.
2. The defendant knew that the claim was not true and intentionally lied about its factuality.
3. The defendant purposely deceived or tricked the victim by presenting the false information.
4. The victim acted based on their belief in the false information.
5. The victim experienced a financial loss, such as a loss of property or money, due to the defendant’s fraud.

Embezzlement

Embezzlement is another type of white collar crime. Like fraud, for an embezzlement conviction, the prosecution must prove certain facts:

• The defendant was entrusted with assets.
• The defendant legally had access to those assets, usually because they were in a trusted or higher position, such as a managerial role.
• The defendant used or took the asset illegally for personal or unauthorized use, without the owner’s consent.
• The defendant purposely intended to deprive the owner of the asset indefinitely. In other words, borrowing an asset with the intention of returning it is not grounds for an embezzlement conviction.

The Critical Similarity

For a defendant to be found guilty of fraud or embezzlement crimes, the prosecution must prove that the defendant acted both intentionally and illegally beyond a reasonable doubt. A good criminal defense attorney, with lengthy experience with financial fraud and other white collar crimes, can find a defense strategy that prevents the prosecution from doing so.

Penalties for Financial Fraud and Embezzlement

Most fraud crimes and embezzlement crimes in California result in felony charges. There are a few instances when they can be misdemeanor charges. The amount of money involved in the crime can impact the penalties. Misdemeanors involving less than $950 can:

• Carry fines of up to $1,000.
• Result in up to one year of county jail time.
• Require restitution paid to the victim for losses they incurred from the fraudulent activity.

When fraud or embezzlement crimes involve more than $950 or there are aggravating factors, they will be charged as felonies. A conviction for these charges can bring:

• Fines of $10,000 or more
• 16 months to three years of confinement in state prison for fraud
• Two to three years of imprisonment for embezzlement
• Restitution payments

One California restaurant owner was caught operating a credit card bust-out scheme that resulted in more than $100,000 in losses for multiple credit card companies. The final judgment required the defendant to repay over $77,000 in restitution to the financial institutions that were victims of the scam. The defendant faces up to 10 years of probation and up to one year of confinement.

A white collar crime can be reported online by completing the White Collar Crime Complaint Form and mailing it to the address listed at the top of the form.

FAQs About White Collar Crimes: Financial Fraud and Embezzlement in California

Is Accounting Fraud a White Collar Crime?

Yes, accounting fraud is considered a white collar crime because it is a nonviolent crime and motivated by financial gain. Accounting fraud crimes are defined as illegal and deliberate manipulation of financial data or false representations of finances that elicit financial gain, such as omitting information, falsifying data, or altering accounting books to present misleading financial information.

What Is Financial Crime as a Form of White Collar Crime?

Financial crime, as a form of white collar crime, is a type of nonviolent crime involving money. It is committed against a business or commercial institution while motivated by a desire for financial gain. Financial white collar criminals often use fraud, deception, misappropriation of assets, embezzlement, money laundering, or one of many other illegal acts to steal money.

What Are the Top Three White Collar Crimes?

The top three white collar crimes are fraud, money laundering, and theft of intellectual property. Other common white collar crimes include:

• Embezzlement
• Ponzi schemes
• Credit card fraud
• Bribery
• Insider trading
• Cybercrimes
• Securities fraud
• Identity theft

All of these are serious crimes, and they usually result in felony charges and steep penalties when they lead to a conviction.

What Is the Fraud Triangle in White Collar Crime?

The fraud triangle is a model defined by Donald Cressey that attempts to quantify the conditions that motivate white collar crimes in a three-part cycle, which includes:

1. Motivation or incentive, such as pressure or desire to obtain assets illegally
2. Opportunity to commit fraud undetected
3. Rationalization of the acts, in that the perpetrator justifies the illegal behavior to themselves

Contact the Law Offices of James E. Silverstein

White collar crimes are serious charges. Anyone accused of fraud, embezzlement, or another crime should heed the potential consequences they are facing. The outcome of their case may be unknown, but they don’t have to be alone in their fight.

James E. Silverstein can protect his client’s rights while defending against the charges. Innocent or not, an attorney can potentially prove innocence or alleviate penalties for convictions. Contact our legal team to discuss the potential for your case. Your case can greatly benefit when you have a good lawyer on your side.