Fraud, A Blemmish on the White Collar of America

Edwin H. Sutherland, who is one of the most influential criminologists of the first half of the twentieth century defined white collar crime as “a crime committed by a person of respectability and high social status in the course of his occupation.”

According to the IRS website, fraud on the corporate level, encompasses violations of the Internal Revenue Code (meaning mostly taxes) and related statues committed by large, publicly or privately traded corporation and/or by the senior executives. There are incredibly strict laws governing such crimes, and high profile cases such as Wesley Snipes recent tax evasion case have grown in scope of late.

Just this week, a French Bank, Societe Generale, lost $7.1 Billion from fraud, all to one trader. Fraud affects not only employees at such major corporations as Enron, but the corporations themselves. In fact, current presidential candidate and former Mayor of New York City, Rudy Giuliani had a close friend, ally and employee of the City of New York Bernard B. Kerik indicted on federal charges of fraud and tax evasion. Cases like these, white collar crimes, are being more frequent and due to public pressure are being prosecuted with greater zeal than ever before.

President Bush established a Presidential Fraud Task Force in 2002, which includes the IRS Commissioner as a board member. The task force is intended to provide direction for the investigation and prosecutions of significant cases involving securities and accounting fraud.

Fraud is a major issue which has plagued American business institutions for many years. Sources show that in 1996, fraud cost businesses in America six percent of annual revenue, that’s $60 million out of every billion, meaning Microsoft (which grosses tens of billions annually) had an estimated loss greater than the value of many pro sports teams.

The IRS has even set up a website that informs citizens of not just laws, but potential penalties of tax and securities fraud.

Beyond just having to pay the money’s owed (in the case of tax fraud) or fines (in the case of securities fraud) penalties always include jail time.

In January of this year, a man in St. Louis was sentenced to 44 months in jail for defrauding lenders of more than $500,000. Also in January of this year, a man was sentenced to 18 months in prison and pay $185,000 to the IRS for income tax evasion.

The jail sentences tend to be major, and in fact Wesley Snipes is facing years in jail for evading his taxes. Al Capone, the famous mobster, was never throw in jail for murder or robbery, but for tax fraud. The IRS is a mean institution, and enforces their laws down to the T.

Post from the LA Criminal Defense Blog.