Famous White-Collar Crimes

White-collar crimes are nonviolent crimes committed primarily for financial gain. They typically involve fraud, deceit, concealment, and other means of scamming businesses and professionals.

The impact of white-collar crimes runs a lot deeper than what is often seen on the surface. When companies go bankrupt due to fraudulent activities, thousands of employees, their families, and stakeholders can lose their life savings.

In this article we’re looking at five of the most famous white-collar crimes that shocked the world and total billions of dollars:

5 Famous White-Collar Crimes

Bernie Madoff – Ponzi Scheme

Bernie Madoff is famous for committing one of the most famous white-collar crimes this century. It’s certainly one of the largest in terms of monetary value.

Bernie ran a Ponzi scheme from around 1991 until he was finally arrested in December 2008 after a lengthy investigation. During this time it’s estimated he scammed around $65 billion from thousands of investors.

A Ponzi scheme is essentially a form of fraud whereby the person creating the scheme lures investors to hand over money on the promise of receiving high returns.

They are able to pay money out to investors that complain or want their money back early on using the funds from other investors. In the long run, however, they do not invest the money and end up in a position where they can’t pay everyone back.

It’s a fairly common white-collar crime. What was unusual in Berne’s case was how long he’d been running his scheme, and how much he’d conned.

Bernie Madoff received the maximum sentence of 150-years in federal prison to reflect the severity of his crimes.

Enron – Accounting Fraud

Enron was a Texas-based energy-trading company. Things started out great for Enron as they were named “America’s Most Innovative Company” for several years and growing at a rapid pace.

Despite claiming revenues of almost $101 billion during 2000, by the end of 2001 Enron had filed for bankruptcy.

It wasn’t the usual bankruptcy a company goes through as a result of economic downturn, loss of business, or any of the other common reasons though.

The reason Enron went bankrupt was due to internal accounting malpractices.

Enron lied about how much profit they were making. They hid large debts and took part in numerous other shady dealings spanning decades.

They were involved in so much corruption, that some of the illegal things Enron did are still not fully understood to this day.

What we do know is that more than 4,500 people lost their jobs. In addition, when Enron filed for bankruptcy with estimated losses of $74 billion it was the largest in American history at the time.

Wells Fargo – Account Fraud

Wells Fargo is the fourth-largest bank in the U.S. They are currently going through a number of civil and criminal lawsuits relating to fraudulent sales practices.

Under pressure to sell products and meet sales targets, staff at multiple branches created millions of fake savings and checking accounts.

Not only did they set up fictitious accounts, they used real customer data to open more accounts. This started to unravel as customers noticed transactions and new accounts attached to their names and the complaints started coming in.

It’s estimated this account fraud started in 2011. By 2016, regulatory agencies started investigating due to the volume of customer complaints.

The fallout has put an estimated 20,000 employees jobs at risk. Wells Fargo has also been ordered to pay $3 billion in settlements, and the future looks bleak as its reputation is irreversibly damaged.

WorldCom – Accounting Fraud

In the 1990s WorldCom was the fastest growing telecom company in the United States. They bought more than sixty other telecom businesses and was handling more than 50% of internet traffic worldwide.

Towards the end of the 90s, revenue growth started to slow. As a result, WorldCom’s stock price started to fall. Their expenses to profit ratio also started to fall, and the company started to unwind financially.

To counter this drop in share price, Bernie Ebbers, the CEO at WorldCom decided to reduce the amount of money held on reserve. He also started to classify operating expenses as long-term capital investment.

These are fraudulent accounting practices that effectively turned WorldCom’s losses into profits.

The Securities and Exchange Commission (SEC), which is a U.S. government agency responsible for regulating the securities markets and protecting investors became suspicious and performed an audit on WorldCom.

They found the accounting errors and WorldCom was forced to file for bankruptcy. Bernie Ebbers and Scott Sullivan, the CFO at WorldCom at the time, were both given prison sentences.

Tyco International – Fraud

Tyco International Ltd was one of the world’s largest makers of electronic components; fire protection systems, undersea telecommunications systems, and some other products.

The white-collar crimes taking place behind the scenes at this multi-million dollar corporation has been labeled as stock fraud, securities fraud, and unauthorized bonus.

In essence, three of the company’s directors; Dennis Koslowski, CEO, Mark Swartz, former CFO, and former General Counsel Mark Belnick were found to have unlawfully given themselves more than $600 million.

Their fraud traces back to 1995. The company directors set up very deliberate and careful systems to spend millions of the company’s money on personal expenses.

It wasn’t until 2002 that they were finally charged after an investigation by the SEC. Koslowski and Swartz are serving prison time, and Belnick had to pay a $100,000 civil penalty.

Experienced and Professional Legal Representation

Have you been charged with a white-collar crime? If you’re facing criminal charges of any kind, we can help.

At Arora Law, we have a team of lawyers with decades of experience covering a wide range of practice areas. We’ve represented clients accused of white-collar crimes, as well as DUIs, drug offenses, appeals, and more.

If you’d like to find out more, please give us a call on (404) 609-4664 or contact us here. We’d be happy to book an appointment at a time that’s convenient for you to evaluate your case.