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Understand these common white-collar crimes

White-collar crimes, named for the collar color of people in business in the early- to mid- 20th century, refer to financial crimes typically in the corporate sector. There are many kinds of white-collar crimes, but nearly all are motivated by the potential for financial gain.

Some of the most common kinds of white-collar crimes include:

  • Tax evasion
  • Money laundering
  • Fraud
  • Embezzlement
  • Ponzi schemes
  • Insider trading

What is a pump and dump scheme?

When you work in the financial markets, you quickly become familiar with just how volatile they can be. Communicating that to investors in New York can be a challenge, as they are often not acquainted with the subtle nuances that can lead to market fluctuations. Often all they understand is that you have invested their money for them based on what they may view as "a promise" of strong returns, when in actuality, while informing them of the potential benefits, you did indeed explain to them the risks. 

It is often this misinterpreting of "promises" and "potential" that leads to accusations of fraudulent activity. Take a "pump and dump" scheme. Per the U.S. Securities and Exchange Commission, such a scheme involves people pumping up the value of a stock to drive new investment. As new investments are made, the price of the stock rises. When that happens, the schemers then sell their own shares at a profit, knowing that doing so will drive the value of the stock down and cause new investors to lose money. 

Accidental embezzlement and other missteps

Whether you have a small business in New York or are an executive in a large corporation, the world of finance is complex, and missteps can be devastating. Unless you are a finance expert, small decisions that seem inconsequential at the time can result in an illegal action. At Sapone & Petrillo, LLP, our experienced attorneys often defend clients from embezzlement charges.

According to Entrepreneur Resources, mishandling corporate funds is incredibly easy. Even if you are a finance-savvy entrepreneur, you can stumble, accidentally committing fraud and opening yourself up to a lawsuit. Unfortunately, it is not only your mistakes that can drastically affect the company. Sometimes, an error by those working for you can result in embezzlement or fraud.

  • Giving a gift to an employee or another business owner/director may be misconstrued as a bribe, under specific circumstances.
  • Misusing a company credit card by purchasing something for yourself, unrelated to the business, is embezzlement.
  • Your attorney improperly registering a trade falls under trade fraud.
  • Claiming the full mortgage amount as a business expense if you work from home is tax fraud.
  • Telling friends or family about how well your company is doing before releasing the news to the public is insider trading.

How do adjusters identify insurance fraud?

Insurance fraud is a big deal. Because this type of white-collar crime happens so often, insurance companies take very specific steps to identify fraud in all its forms to ensure the person responsible is caught and brought to justice. HowStuffWorks.com explains some of the ways insurance adjusters look for fraud. 

The National Insurance Crime Bureau has compiled a list of red flags to help adjusters recognize a fraudulent claim. When claiming damage to property, you'll probably need to show a receipt to establish the value of an item. Submitting a handwritten receipt is an obvious red flag since there is no way to determine whether the number you've listed is accurate. Behavior can also be suspicious. For instance, a recent increase to your insurance coverage looks highly suspect when a claim follows shortly after. 

Examples of tax avoidance

You have likely heard how serious the federal government treats cases where people have not paid their taxes. At the same time, you have probably also seen advertisements detailing programs that teach you how to avoid having to pay tax. You might hear these and immediately dismiss them as scams aimed to take advantage of the general public's collective unfamiliarity with the tax code (some indeed are). Yet many come to us here at Sapone & Pertrillo LLP questioning whether the actions they have taken to avoid paying taxes are indeed legal. You may be surprised to hear that some actually are. 

The first thing to remember is that a distinction exists between tax evasion and tax avoidance. Tax evasion is knowingly not paying your takes. However, according to the Internal Revenue Service, tax avoidance is defined as any action aimed at limiting your tax liability. Tax avoidance strategies are perfectly legal, yet like many, you simply might not be familiar with them. Indeed, it is estimated that many overpay in tax when several options are available to help them lower their tax liabilities. 

Do you have any options after a conviction?

You get arrested on fraud charges, and you find yourself in court. Even from the beginning, you cannot imagine they're going to convict you. Maybe you think you did nothing wrong. Maybe, regardless of what happened, you do not think they have any evidence against you. It feels like you should get through the case and put all of this behind you quickly.

Then, stunningly, you get convicted. You can't believe it. You feel like your whole world just came crashing down around you. For the first time since you got arrested, it begins to feel like a bad dream, and you just can't escape.

Understanding campaign contribution limits

With activities related to the next presidential election already underway, it is not uncommon for many people in New York to be giving consideration to which candidate they would like to support. In addition to voting for a particular candidate, many people opt to provide financial support to assist with their preferred candidate's campaign. Before jumping in to donate money to someone running for political office, however, it is important to learn a bit about the laws that govern political campaign contributions.

As explained by OpenSecrets.org, since the Bipartisan Campaign Reform Act was passed in 2002, the amount of money that could be donated as a campaign contribution has increased every other year. In addition, a 2014 Supreme Court ruling eliminated the cap on how much money an individual or entity could give overall while retaining limits on single donations.

Credit union executive's conviction leads to state takeover

People who live in New York and who are involved in the financial services industry know that theirs is a highly watched and regulated sector of business. While this is certainly understandable, given that professionals are in charge of other people's money, it can also provide unique challenges for banking financial services professionals as their every move may be under scrutiny.

The line between smart financial choices and criminal action can be very thin and even blurry. In some cases, people may find themselves accused of offenses that they are surprised about. One man who was the head of a credit union based in Manhattan for 11 years may well be one of these people.

MTA investigation centers around overtime pay

Residents in New York know how essential the public transit system is to make things work in and around New York City. Keeping on top of maintenance, repair and modernization needs certainly is no small task. This task, in fact, is exactly why union officials and some others are asserting that the Metropolitan Transportation Authority saw a major spike in the amount of money paid out in overtime to employees in 2018.

That assertion, however, is not necessarily one that some other entities agree with. According to Newsweek, a report from The New York Times indicates that an investigation has been launched into the overtime payments of several MTA employees. This investigation comes on the heels of reporting from a watchdog group that is responsible for collecting public employee data. The report indicates that in 2018, MTA's overtime payments increased by nearly $420 million.

Mail fraud and the internet

When a crime of deceit crosses New York borders through the use of a private interstate carrier or the U.S. Postal Service, it becomes mail fraud. One of the most common federal criminal charges, it includes a variety of schemes intended to defraud victims.

According to FindLaw, mail fraud typically involves sending a physical item, such as a receipt, contract or other communication associated with the scam, across state borders. Deceits of this nature often include exchanging, distributing, selling, supplying or using counterfeits. They may also focus on obtaining money or property under false pretenses.

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