man in a suit white collar crime
Sep 25, 2018 | Colin May

Recently, a number of people have asked me questions about the issues of white-collar crime; these are crimes that most people perceive as harmless but in reality are quite damaging. To correct some of these misconceptions, and to answer some other questions about financial crime in general, here are some Q&A’s that you may find interesting.

Who Investigates White Collar Crime?

There are numerous agencies who devote resources to investigating white collar crime; none are really in charge of monitoring and protecting against white collar crimes, but each has a role to play. Almost every federal agency has some role or unit that is dedicated to the enforcement of civil or criminal violations, from the Environmental Protection Agency (EPA) to the Securities and Exchange Commission (SEC) to the Federal Bureau of Investigation (FBI) and U.S. Attorneys Offices.

State and local police agencies, state regulatory agencies, and even private sector actors, also have a significant role. From investigating fraud in obtaining drivers licenses to the theft of thousands of dollars by an employee to identifying suspicious activity and reporting it, the issues of fraud and embezzlement across the globe are occurring every day in nearly every geographic location. The bottom line is that everyone has a role to play. Whether it is identification, prevention, investigation, prosecution, or recovery, it is all important because each part puts another piece of the puzzle together.

Is White Collar Crime a Victimless Crime?

White collar crime is a significant issue for everyone; it is not a victimless crime. It has a profound impact on everyone, not just the victims directly, but for all consumers and taxpayers in the form of higher costs, larger insurance premiums, payments, fees, taxes, etc. It also degrades the trust that is so essential in both the public arena and the marketplace.

The energy that anti-fraud and criminal justice professionals devote to the detection and prosecution of such deviant financial behavior can have wide-ranging and positive impacts, in terms of lessened losses, higher stop rates, and earlier detection. This also includes the ability to recover assets for victims sooner, before they disappear, are spent, or move off-shore. Since white-collar crime really hurts us all, especially in the loss of trust and confidence, it is important that this type of investigation is a priority.

What Can Be Done to Prevent White Collar Crime?

Education is probably the first and most important step. Knowing what signs to look for, and how to confront these issues, is the best defense. Internal controls are important, and having strong procedures in place can help too. Business owners can also take steps to conduct background investigations on employees, with their consent and in accordance with applicable legal standards, to ensure they are not hiring someone who has committed fraud in a prior employment. Unfortunately, this does happen and the consequences are incredibly harmful.

Other simple steps, like taking an active role in the business, or reviewing bank statements and canceled checks, or business credit card statements, all can be a good way to let employees know that the owner is actually looking at the books. This simple step, plus the owner setting the expectation that any fraud will be dealt with severely and legally, is a good first way to show people that they are serious about the responsibility to oversee employees.

Prevention entails a lot of possible means to ensure the crimes do not occur in the first place. Things like background investigations, audits, internal control mechanisms, frequent communication about expectations, ethics presentations, and many other types of ways can help to prevent these from happening. They are not a cure-all though and prevention is similar to culture; you can have the best strategy and execute it, but if it is not supported by the organization's culture and leadership, it will fail.

How Are White Collar Criminals Able to Get Away With It?

Trust often enables a fraudster to start their theft or embezzlement. Sometimes they work in small offices which require a lot of close relationships, sometimes they work for major corporations or public agencies, that bestow a great deal of trust in the position they hold. The breakdown of that trust when someone commits a fraud is often very troubling and leads to second- and third-order consequences. Businesses close, families break-apart, the public trust is eroded. All of these are problems and rip apart the fabric of the community that we all rely on.

What are the Obstacles that Prevent Catching These Offenders?

By their nature, white collar crimes are often hidden in business records and transactions that may not be transparent. They are not as visible as a robbery, arson, or murder. Occasionally, they turn into red collar crimes, as my friend and colleague Dr. Rich Brody, a professor at the University of New Mexico, explains in a short video. Regardless, investigations are difficult, expensive, time-consuming, and fraught with potential problems. Oftentimes, they are complex and involve multiple jurisdictions or sophisticated schemes to conceal the crimes. Additionally, many people are embarrassed that they have been ripped off or lied to and do not actually report the crimes to authorities or their insurance company. It is hard to admit when something catastrophic like this has happened and some people just want to move on.

Why are Most White Collar Criminals Employed and Making Decent Money?

This is a great question and goes to the psychology of fraud. Back in the thirties and forties, sociologist Donald Cressey completed research and interviewed multiple fraud offenders incarcerated for some type of white-collar crime. In his research, he discovered that there were some commonalities between them. Some had a non-sharable or secret problem that they could not otherwise solve like being behind on a mortgage or having an addiction to drugs, alcohol, or gambling. Some had personal failures, like financially-burdensome divorces or children with problems they were supporting. Some were involved in business reversals, meaning failures or loss of revenue. Others were physically or emotionally isolated, often the result of mental illness or depression, and this caused them to embezzle for the thrill. Occasionally they wanted to gain status, similar to the "Keeping up with the Neighbors" syndrome, where people live beyond their means to appear wealthier than they actually are. Finally, some have felt jilted or rejected by their employer and saw stealing as revenge, or at least getting even or getting what is owed to me. These are all very complicated and fact-intensive, but as you can tell, there is a lot going on with the psychology of fraud.

What Careers are Available in the White Collar Crime Prevention or Investigative Field?

White-collar crime has a host of different career opportunities, in both the public and the private sector. Ranging from intelligence analysts at state police agencies tracking different fraud schemes, to anti-money laundering specialists at banks, to the special agents across government agencies, white-collar crime investigators, analysts, auditors, and regulators are all great career choices. It is a high-paced world that often combines digital forensics, forensic accounting, complex investigative skills, psychology, and people skills. The stories are endless, and if the news is any indication, not going away any time soon.

There are a lot of careers out there that involve being a crafty searcher and a master inquisitor…what interests you? Stevenson University Online offers a Forensic Investigation master's and certificate program that prepares students and law enforcement professionals to effectively conduct interviews and collect physical evidence for the purpose of synthesizing the results into factually accurate and objective reports and court testimony. For more information, contact us at suo-inquiry@stevenson.edu or 1-877-531-7118.

Adjunct Professor Colin May, M.S., ’08, CFE teaches courses on Forensic Studies for Stevenson University Online. Professor May is a former federal criminal investigator and has worked on a wide array of fraud, money laundering, and other investigations for several federal agencies. He has written widely on fraud, forensic accounting, and investigation in Fraud Magazine, the FBI Law Enforcement Bulletin, and the Journal of Public Inquiry.

Forensics, Law, & Criminal Justice