WHITE-COLLAR CRIMES IN

CALIFORNIA

DOMENIC J. LOMBARDO

Although White-Collar Crimes are Non-Violent Offenses They are Criminal Offenses Nonetheless and Can be

Punished Just as Harshly as Other, More Well-Known, Crimes; a Basic Understanding of Some of the More

Common White-Collar Crimes Might Prevent You from Unknowingly Participating in One

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When people think of “crimes” they typically envision a violent offense

and/or a drug related offense. While these are certainly crimes, there is

another category of crimes that has nothing to do with drugs or violence –

white-collar crimes. Although white-collar crimes are non-violent offenses

they are criminal offenses nonetheless and can be punished just as harshly

as other, more well-known, crimes. In fact, many white-collar crimes are

charged as serious felonies at both the state and federal level. What does set

these crimes apart from their more well-known counterparts is that

otherwise law abiding citizens frequently find themselves unwittingly at the

center of a white-collar criminal investigation simply because of their

position within a company or because of their professional relationships.

Only an experienced California criminal defense attorney can provide you

with specific advice if you are under investigation for, or have already been

charged with, a white-collar crime; however, a basic understanding of some

of the more common white-collar crimes might prevent you from

unknowingly participating in one.

WHAT IS A WHITE-COLLAR CRIME?

The term “white-collar crime” has

been around since the 1940s. The

term was originally coined by a

sociologist in 1939 who defined it as

"a crime committed by a person of

respectability and high social status

in the course of his occupation."

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That basic definition still works today. White-collar crimes are non-violent

crimes that are typically perpetuated by educated, professional individuals

for financial gain. Although they are non-violent offenses that doesn’t mean

there are no victims in a white-collar crime. On the contrary, victims of

white-collar crimes can lose their entire life savings, causing financial

devastation for the victim and the victim’s family. According to the Federal

Bureau of Investigation, or FBI, white-collar crimes are estimated to cost

over $300 billion in the United States each year.

WHO INVESTIGATES AND PROSECUTES WHITE-COLLAR CRIMES?

In the United States we operate under a federalist form of government

which means we have a strong central government as well as smaller units

of government within the states. Power is shared between the federal and

state governments. As such, a criminal offense could be investigated at the

state level, the federal level, or both. At the federal level, agencies that often

investigate white-collar crimes include the Federal Bureau of Investigation,

the Securities and Exchange Commission, the Internal Revenue Service or

the United States Treasury. Just as a white-collar crime can be investigated

by state or federal authorities it can also be prosecuted by the State of

California or the United States Attorney’s Office. One way for the federal

government to have jurisdiction over a criminal offense is that the crime

crossed over state lines. Because many white-collar crimes are committed

using sophisticated computers that send information across the globe at the

speed of light, these crimes often fall under the jurisdiction of the U.S.

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Attorney’s Office, meaning they are often prosecuted in federal court. At the

state level, the San Diego County District Attorney’s office may also choose

to prosecute you for a white-collar crime if the crime was allegedly

committed in the San Diego area.

COMMON WHITE-COLLAR CRIMES

The list of criminal offenses that fall into the category of “white-collar”

crimes is long and ever-changing. A better understanding of white-collar

crimes can be gained by exploring some of the more common white-collar

crimes prosecuted at the state or federal level.

Insider trading – insider trading occurs when someone with

confidential, or non-public, information trades stocks or securities

based on that information. If you have knowledge about a company

that the public does not have you are clearly in a better position to

make an investment decision about that company’s stock than a

member of the public is. If you are in possession of that information

because you are employed by the company, or are an officer in the

company, you are also breaching your fiduciary duty by using that

privileged information for financial gain. It becomes more

complicated if you are not an actual insider yourself but received

privileged information from someone who is; however, you may still

be in violation of the law.

Embezzlement – embezzlement is a type of theft that is

distinguished from other types of theft by the fact that the perpetrator

was originally in lawful possession of the assets that were stolen.

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Typically, embezzlement occurs when funds or property are entrusted

to someone who later refuses to return the property or funds to the

rightful owner. For example, if you are a stock broker and you divert

client funds to a private account that would qualify as embezzlement.

Likewise, a corporate officer who co-mingles corporate funds with his

or her private funds could be charged with embezzlement.

Computer and internet fraud – in the 21st century computers are

used to do everything from store highly sensitive personal or

corporate information to chat with friends around the world.

Computers are also the newest, and arguably best, weapon in a

criminal’s arsenal. A skilled “hacker” is able to infiltrate a private

computer and gain access to passwords as well as personal

information that can be used to commit identity theft, fraud, or a long

list of other white-collar crimes. If you work in information

technology, be extremely careful. It is often tempting to see just how

skilled you are by trying to hack private computers or even hack into

government agencies. While your motive may be fairly innocent you

could be committing a very serious state or federal crime.

Tax evasion – in the United States people use every loophole,

credit, and deduction available to get out of paying taxes. Using

loopholes, credits, and deductions is actually legal. Underreporting

income, inflating deductions, or hiding assets in an offshore account,

on the other hand, is tax evasion. Failing to report income from an

illegal enterprise can also amount to tax evasion. People make honest

mistakes when they prepare their personal or corporate income tax

returns each year. Making an honest mistake has consequences in the

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form of penalties and fees added to your tax bill; however, when the

“mistake” was intentional the consequences could include a lengthy

prison term. As with many other white-collar crimes it is very easy to

cross the line from creative accounting to tax evasion without even

realizing it or intending to do so.

Antitrust violations – anti-trust laws are intended to ensure fair

competition in the marketplace by prohibiting things such as

monopolies, price fixing, predatory pricing and exclusive dealing

agreements. If a single entity manages to gain a monopoly in the

marketplace the consumer has no choice but to purchase the goods or

services sold by that entity – at any cost. Many of the other anti-trust

laws are in place to ensure that large corporations don’t make it

impossible for smaller start-ups to enter the market. Because of the

complexity of anti-trust laws it can be easy to violate one of them

without the intention to do so.

Money laundering – the Department of Justice defines money

laundering as the “process by which criminals conceal or disguise the

proceeds of their crimes or convert those proceeds into goods and

services. It allows criminals to infuse their illegal money into the

stream of commerce, thus corrupting financial institutions and the

money supply, thereby giving criminals unwarranted economic

power.” The very nature of the crime of money laundering typically

requires several businesses to be involved, making it easy to become

part of a laundering scheme without realizing it.

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One common theme you may have noticed

in each of these descriptions is how easy it

can be to become entangled in a white collar

crime without the intention to do so. While

your lack of intent may provide a successful

defense should you be charged with a crime,

it is always better to avoid being charged in

the first place than to count on a defense to the crime after the fact.

HOW TO KNOW IF YOU ARE UNDER

INVESTIGATION FOR A WHITE-COLLAR CRIME

Unlike investigations for other types of crimes, an investigation for a white-

collar crime is usually fairly upfront and obvious. In fact, if you are being

investigated by a federal agency you may even receive a “target letter” that

informs you of the investigation. A target letter typically informs you of the

charges being investigated and informs you of your rights. As a general rule,

if you receive a target letter, a formal indictment will follow. Other

indications that you are under investigation for a white-collar crime

include:

You are contacted by a representative of the FBI, SEC, IRS, or any of

the other “alphabet” agencies.

You receive a subpoena to testify in front of a grand jury.

You are served with a grand jury subpoena to produce business

records and/or personal financial records.

You are presented with a warrant to search your home or office.

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You appear to be under surveillance and/or you find out your

telephones are being monitored.

If you believe that you are being investigated for a white-collar crime by a

state or federal agency you should consult with an experienced California

criminal defense attorney immediately. Likewise, if you are actually

contacted by an investigator from one of these agencies do not talk to them

without an attorney present. Something you say can easily be misconstrued

and used against you down the road. By the time an investigator makes

contact with you there is a high probability that an arrest is already

imminent. Talking your way out of it will not work. What can work is

exercising your right to remain silent as well as your right to counsel.

Although society tends to view white-collar crimes as less serious offenses,

the reality is that most of them are charged as felonies and carry with them

the possibility of a lengthy term of imprisonment if convicted. From the

moment you become a suspect you need legal representation.

If you are the target of a white-collar criminal investigation, or have been

charged with a white-collar crime, contact an experienced California

criminal defense attorney right away to discuss your legal options.

Federal Bureau of Investigation, White-collar Crime

Cornell University Law School, White-collar Crime: An Overview

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About the Author

Domenic J Lombardo

Domenic J. Lombardo, (Attorney at Law)

graduated from University of California,

Los Angeles (U.C.L.A.), earning a B.A. in

Economics-Business, before graduating

with his J.D. from University of California,

Hastings School of Law. He passed the

California Bar Examination on the first

try, and immediately began practicing as a

criminal defense attorney in San Diego,

California.

Mr. Lombardo worked as a defense lawyer at the San Diego Office of the Public

Defender from 1991 to early 1996.

Mr. Lombardo opened the Law office of Domenic Lombardo in 1996 as aa sole

practitioner dedicated entirely to the defense of individuals accused of crimes. And

while Mr. Lombardo works as the primary attorney for all his cases, he does have a

team of investigators, forensic consultants, and paralegals to call on to help achieve

the best possible result in every case.

When he is not working, Mr. Lombardo is an avid family man, triathlete, and world

traveler.

The Law Office of Domenic J Lombardo

The Executive Complex 1010 Second Ave., Ste. 1820

San Diego, CA 92101

www.AttorneyLombardo.com