What Are Common Financial Crimes?

Financial crime is a category of “white-collar crime” that involves an individual, group of people, or corporation taking money or property from a victim, often with the intent to generate further wealth or receive some other benefit using the stolen commodities. 

Perpetrators of financial crime usually employ deceit as a tactic to gain access to the victim’s private information and financial accounts. Common examples of financial crimes include fraud, embezzlement, money laundering, identity theft, and Ponzi schemes.

Fraud

Fraud is a broad term that refers to any type of intentional criminal deception that is committed with the goal of achieving financial or personal gain. There are many different types of fraud. 

  • Credit or debit card fraud is the unauthorized use of another person’s credit or debit card information to make purchases or withdraw funds. 
  • Health care fraud is the falsification of insurance claims in order to swindle money out of health insurance companies or government programs like Medicare. 
  • Tax fraud includes inflating expenses or deductions on one’s tax return, underreporting the amount of taxable income one receives, or tax evasion (the intentional failure to pay taxes). 
  • Securities fraud is when an individual or corporation makes deceptive or false statements about the value of a company’s stock. 

The infamous Enron scandal, in which the company deceived investors by hiding large amounts of debt to appear more profitable than it actually was, is an example of securities fraud. Securities fraud also encompasses insider trading, which is when someone with privileged financial information about a company uses that knowledge to make decisions about buying or selling stock before the public has access to that information. 

Embezzlement

Embezzlement is when someone who is entrusted with assets for a specific purpose steals or converts those assets for their own use or monetary gain. For example, if an accountant has access to his company’s petty cash fund to reimburse other employees for business expenses but instead uses this money to purchase personal items unrelated to work, he is embezzling money from his employer.

Money Laundering

Money laundering refers to an individual or corporation concealing the source of their illegally obtained profits. “Dirty” money is typically laundered through multiple banking transfers, the development of shell companies, investing in cash-intensive businesses, gambling, or engaging in commercial transactions.

Identity Theft

Identity theft is a type of financial crime wherein someone wrongfully accesses another person’s sensitive information, such as their Social Security number, date of birth, tax or credit history, or debit card PIN number. The criminal uses this data to make purchases or open new credit cards under the victim’s name. 

Identity theft can happen on a small scale, like when the perpetrator rummages through trash to find identifying information that they can steal, or on a much larger scale, through massive security breaches at banks or businesses.

Ponzi Schemes 

A Ponzi scheme is a type of investment fraud that involves paying early investors with money obtained from a steady influx of new investors. Perpetrators of Ponzi schemes recruit new investors by promising them large returns with minimal risk, but instead of actually investing the money, they use some to pay earlier investors and keep the rest for themselves. 

A recent example of a Ponzi scheme is the GPB Capital lawsuit, in which brokers sold holdings to wealthy investors for high commissions and paid them using money received from other investors rather than actual business profits.

Financial crime is widespread and comes in many different forms. It can be committed by organized criminals, large corporations, heads of state, or even seemingly harmless individuals. If you are the victim of a financial crime, contact our office to learn how we can help.