embezzlement

White-collar Crimes Every Business Owner Must Know

Integrity and honesty are important in business, and so is making sure that all of your day-to-day operations and comings and goings are above board. Not breaking the law is a crucial part of ensuring that you’re protecting not just yourself but also your assets, your employees, and not to mention your family, from the consequences of wrongdoing. If you are a business owner or thinking of starting one, here are some white-collar crimes you must know and avoid.

Extortion

Extortion is simply the process of obtaining money through pressure or threatened force. It’s when the perpetrator uses legally and morally reprehensible actions to gain money, property, wealth, and other assets from a business entity. The perpetrator will use any means necessary to threaten the victim. In cases like this, property damage and physical and other kinds of violence are employed to intimidate the victim.

Some form of blackmail can also be involved since reputational harm can also be used as a weapon against the victim and their family. This kind of crime occurs in businesses when reputable entrepreneurs or business owners pay, for example, local mobsters or gangsters for some form of protection. When business owners are accused of this crime, they would be smart to enlist the help of defense lawyers who can help them know all their options instead of giving way to those who would do them harm.

Embezzlement

Embezzlement is simply the act of misappropriating funds or property. This occurs when someone you trust (or even you) finds covert ways to funnel funds into their own bank accounts. Embezzlers usually get away with this white-collar crime by funneling small amounts of money at a time to avoid raising some concerns or red flags.

One famous example of an embezzler is Bernie Madoff, who is largely known as the biggest embezzler in modern history, with his total illegally accumulated funds amounting to $50 billion. He ran his scam by taking money from new investors who were none the wiser, then using that money to pay off his old investors’ “returns.” He was sentenced to 150 years in prison in 2009, and he died behind bars in 2021 at the age of 82.

Bribery

handing cash

Bribery is the process of providing or offering and receiving funds to influence or manipulate the decisions or actions of a person in authority, like a government official. This crime is not only illegal, but it’s also unethical because it’s all about using financial resources to achieve certain individual objectives or goals instead of for the good of others. This white-collar crime can take various forms: privilege, goods, land, preferment money, property, and others. Some industries usually affected by bribery include healthcare, sports, businesses, and even politics and government.

Income tax fraud

This type of white-collar crime is the process of intentionally lying or defrauding the IRS to avoid paying taxes. One example of this is not filing an income tax return (ITR) or not giving an accurate report of earnings and income. It’s an act that involves making fraudulent claims to save money instead of giving it back to the government. One famous example of this is lifestyle and homemaking guru Martha Stewart, who in 2004 was sentenced to a minimum amount of time in jail for lying about the sales of stock.

Insider trading

This illegal activity is all the practice of trading securities, shares, and bonds in certain stock exchange markets to utilize confidential data and information obtained through illegal or unethical means. It’s all about trading company secrets or information about a certain business that has not been made to the public for certain parties to benefit from it. There is, however, a thing called legal insider trading, which is reported to the Securities and Exchange Commission (SEC). It’s when certain actors have been given the right and permission to trade stocks, but if and only if they report to the SEC.

Fraud

Fraud is when a party uses deceit for financial gain. You might be surprised to know that business owners can unknowingly be victims of fraud or be the ones committing the crimes themselves. One example is when you as an investor misinterpret the facts of a certain stock and provide that information to potential investors—you could be guilty of something called security fraud. You can also be the victim if an employee uses your company name to deceive unsuspecting victims. This can be particularly bothersome because your company will be liable before the individual doing this is exposed.

Business owners would be smart to know and avoid these white-collar crimes. Stay in touch with your legal team to know exactly what you need to avoid.

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