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White collar crime is a broad term that refers to a variety of criminal activities carried out for financial gain through sophisticated means, without the use or threat of violence. The actors involved in white collar crime are, as evident in the name, usually people of high status, respectability, or those with considerable resources. The most pervasive and diverse kind of white collar crime is fraud.
Fraud is essentially a misrepresentation of fact, with the intent to deceive, that causes legal or financial injury to the person(s) deceived or some third party. From such a broad definition, it should come as no surprise that fraud is a diverse category of crime with many different applications, victims, and perpetrators. To a large extent, simple fraud is dealt with by state law, including minor credit card fraud, issuing bad checks, identity theft, and insurance fraud. However, larger cases of fraud require a depth of resources that are not usually allocated by states to combat fraud. Resources include numerous investigators, forensic accountants, records, and anti-fraud lawyers. In such cases, federal agencies often step in to investigate and prosecute those suspected of perpetrating large fraud crimes. Such agencies include the Federal Bureau of Investigations (FBI), the Internal Revenue Service (IRS), the Department of Justice (DOJ) Fraud Section, the Secret Service, the Postal Inspection Service, and the Securities & Exchange Commission (SEC).
A very important aspect of fraud and fraud cases is that the perpetrator can be either a person or a business (e.g., corporation, partnership, etc.). Furthermore, the penalties for fraud include incarceration and hefty fines. Listed below are several types of federal fraud that are frequently targeted by federal agencies and prosecuted by the attorney general’s office.
Bankruptcy proceedings are a helpful recourse for individuals or businesses that are overwhelmed by debt and have no resources with which such debt could be resolved. There are a number of costs involved with filing for bankruptcy, but for individuals or companies who legitimately lack the money and/or assets to deal with their debt, it can also prove to be a boon– giving individuals a chance to move on and allowing businesses to close up shop in a relatively clean manner.
By allowing individuals or businesses to wipe out debt, the prospect for abusing bankruptcy proceedings can be tempting and, indeed, leads many individuals, small business owners, and CEOs to attempt bankruptcy fraud. The Federal Bureau of Investigations (FBI) is the primary investigative agency involved in examining bankruptcy fraud. The Department of Justice’s U.S. Trustees Program oversees bankruptcy proceedings and refers suspected cases of fraud to the FBI and the U.S. Attorney’s office. The FBI works with the U.S. Attorney’s office and the Internal Revenue Service to investigate and prosecute perpetrators of bankruptcy fraud. The FBI site on bankruptcy fraud can be found here.
Bankruptcy fraud occurs usually when a person or business filing for bankruptcy lies, produces false documents, or otherwise tries to hide financial assets– typically with the objective of preserving such assets from the bankruptcy process. However, as with all criminal investigations, many of the individuals who are investigated, accused, and charged with bankruptcy fraud are not the guilty perpetrators the federal agencies make them out to be. It can be very scary for an individual to face the vast resources and relentless tactics of federal investigative agencies, backed by federal prosecutors, when the stakes are the individual’s freedom and reputation.
Mortgage fraud is a new focus of federal agencies, one that has attracted a lot of attention since the housing market crash and the economic crisis around 2007-2008. The FBI’s Financial Institution Fraud Unit (FIFU) defines mortgage fraud as “schemes [that] employ some type of material misstatement, misrepresentation, or omission relating to a real estate transaction which is relied upon by one or more parties to the transaction.” There are a number of schemes that the FIFU targets, the most egregious being loan origination fraud but the most prominent threat to the public being distressed homeowner fraud.
Since the housing market crash the number of loan originations has substantially decreased (a result of better underwriting standards), whereas the number of foreclosures, delinquencies, and underwater mortgages has skyrocketed. Distressed homeowner fraud exploits the frighteningly high number of mortgage defaults by targeting schemes at homeowners who are already on the brink of losing their home. Loan origination fraud, conversely, takes place on the other end of the mortgage process, and is considered more egregious simply because the financial losses are much higher for the victims.
Mortgage fraud schemes investigated by the FBI’s FIFU include:
Healthcare fraud is another type of white collar crime where the FBI is the primary investigative agency responsible for addressing the practices. The FBI has jurisdiction over both federal and private insurance programs. Healthcare fraud is also a top priority for the fraud sections of the FBI because of the effect it has on nation’s economy– costing an estimated $80 billion a year.
With cases such as healthcare fraud, the FBI works closely with federal, state, and local law enforcement, as well as the Centers for Medicare and Medicaid Services (CMS). Although the FBI has jurisdiction over private insurance programs and all healthcare programs are subject to fraud, the most glaring losses are exhibited by healthcare fraud involving Medicare and Medicaid.
The term insurance fraud typically excludes health insurance fraud, and is defined by the FBI as fraud involving casualty, property, disability, and life insurance. This is another federal crime that falls under the purview of the FBI. It is also a high-priority white collar crime for the agency, costing an estimated $30 billion in losses a year. Worse yet, these losses are internalized by the insurance industry and then passed off to consumers in the form of higher premiums, with the National Insurance Crime Bureau estimating the cost at approximately $200 – $300 a year per family.
Insurance fraud is a category that is well-suited to be investigated by a myriad of state and federal agencies. As a result, large federal investigative agencies like the FBI only target “the most prevalent schemes and the top-echelon criminals and criminal organizations” involved.
Facing fraud charges is always a very stressful ordeal because of the complex law and the resourceful government prosecution involved. However, the stress and hardship that accompanies a federal prosecution and the investigation by a federal agency is much worse. Federal agencies have vast resources and personnel working on their cases, and federal prosecutors are both resourceful and highly trained. If you are facing a federal fraud charge or investigation, contact a federal criminal attorney today. With a federal criminal lawyer at your side, you can be confident that you will have legal representation competent and experienced enough to oppose the federal prosecutors. Initial consultations are free. Please contact us today so you can see what options are available to you and discuss the best course of action for you.
More information on federal fraud can be found by viewing our attorney video here.