WHITE COLLAR CRIMES Lying Cheating and Stealing WHITE

WHITE COLLAR CRIMES Lying, Cheating, and Stealing

WHITE COLLAR CRIME Term first used in 1939 Now synonymous with the full range of frauds committed by business and government to professionals It is NOT a victimless crime. A single scam can destroy a company, devastate families by wiping out their entire life savings, or cost investors billions of dollars

TYPES OF WC CRIMES Asset Forfeiture Bankruptcy fraud Corporate fraud Bank fraud Health care fraud Identity Theft Insurance fraud Market Manipulation fraud Mass Marketing fraud Money laundering Mortgage fraud Piracy/Intellectual Property theft Securities & Commodities fraud

OTHER FRAUD INFORMATION Disaster/Hurricane Katrina Fraud Internet Fraud/ E-scams & Warnings Public Corruption/Government Fraud

EVEN MORE SCAMS Adoption scams Illegal pharmacies Jury duty scams Social security fraud Staged car accidents Disability fraud Sports memorabilia fraud

FBI’S MOST RECENT EXAMPLES 10. 23. 15 - Former fugitive pleads guilty to embezzling $8. 7 million from employer 10. 23. 15 - florida man pleads guilty in $2. 1 million fraud scheme 10. 22. 15 -lake charles man sentenced to more than 19 years in prison for $5. 8 million ponzi scheme 10. 22. 15 - ok man pleads guilty to conspiring to distribute synthetic drugs & launder money 10. 22. 15 - local chiropractor and billing assistant plead guilty to health care fraud charges 10. 22. 15 - local businessman charged with charity fraud 10. 21. 15 - married couple & son indicted for defrauding medicare 10. 21. 15 - 19 alaska residents convicted of operating a ring to cash stolen U. S. Treasury checks and commit identity theft

PONZI SCHEME Scam in which gullible public is enticed with the promise of very high returns in a very short time, but is based on paying off the early “investors” from the cash from new “investors. ” the whole structure collapses when the cash outflow exceeds the cash inflow. The guilty usually disappear with large sums of $ a few days before the crash. (Business. Dictionary. com)

CHARLES PONZI Named after charles ponzi (1882 -1949), an italian immigrant to the us who, during 1919 -20, collected more than 15 million from 40, 000 eager people by promising to double their investment in 90 days

HOW PONZI SCHEMES WORK

2 MOST FAMOUS PONZI SCHEMES: 1. ENRON Enron- marketed electricity & natural gas, delivered energy & other physical commodities, and provided financial & risk management services to customers around the world Most of the top executives were tried for fraud after it was revealed in November 2001 that enron’s earnings had been overstated by several hundred million dollars Enron shares were worth $90. 75 at their peak in august 2000 and dropped to $0. 67 in january 2002. So top enron executives sold their company stock prior to the company’s downfall. Lower level employees were prevented from selling their stock due to 401 k restrictions and many lost their life savings. Enron paid the top 140 executives $680 million in 2001. In 2002 the u. s. department of justice opens a criminal investigation into enron’s collapse

ENRON SCANDAL The sec makes accusations of document shredding Nyse suspends trading of enron shares Enron ceo resigns along with other top enron executives Executives are indicted by u. s. justice department and found guilty of obstructing justice, conspiracy to commit wire fraud, money laundering, securities fraud, mail fraud, insider trading Most plead guilty One exec died of a heart attack; others were sentenced to 6 years, 24 years, 5 years, One executive appealed numerous times, and his sentence was reduced by more than 10 years. As part of the deal, he forfeits $42 million that will be distributed to victims of the enron fraud

VICTIMS OF ENRON 20, 000 enron employees lost their jobs Laurie mayor was one example & she lost all $100, 000 in her 401 k 20, 000 creditors are still trying to collect the more than $70 billion dollars they lost Charities suffered too: houston’s museum of fine arts would receive a million dollar donation yearly from enron Houston red cross had to slash its annual budgetby 25% from 12 million to 9 million and lay off many paid employees Diana peters, former employee, lost her $75, 000 retirement fund, lost her job with enron & now supports herself of social security & odd jobs Another employee bill peterson was battling cancer at the time enron collapsed and was forced to sell his home/cars & move in with his sister until his death. the enron’s employees’ 401 ks had $2. 1 billion

ENRON EMPLOYEES AFFECTED BY SCANDAL ken lay (one enron ceo) dies of heart attack Cliff Baxter (enron vice chair commits suicide Enron ceo’s 20 year old son John schilling commits suicide

#2 BERNIE MADOFF The madoff investment scandal broke in Dec 2008, when former nasdaq chairman bernard madoff and founder of the wall street firm bernard l. madoff investment securities llc, admitted the wealth management arem of his business was an elaborate ponzi scheme. He founded the firm in 1960 and was chairman the entire time His firm employed his brother, niece, sons. His own sons turned him into authorities & he was arrested on Dec. 11, 2008. in 2009 he pleaded guilty to 11 federal crimes and to operating the largest private ponzi scheme in history.

BERNIE MADOFF’S FAMILY On june 29, 2009, he was sentenced to 150 years in prison with restitution of $170 billion Others were involved in the scheme Madoff was charged with securities fraud, investment advisor trust fraud, mail fraud, wire fraud, money laundering, false statements, perjury, making false filings with the sec, theft from an employee benefit plan Andrew & Mark ruth madoff M M

MADOFF’S CELEBRITY VICTIMS INCLUDE ACTORS, ATHLETES, POLITICIANS Larry king Sandy koufax Zsa zsa gabor John malkovich Eliot spitzer Steven spielberg Kevin bacon & Kyra Sedgwick

MADOFF’S MOST IMPORTANT VICTIMS mark madoff committed Suicide andrew madoff died of cancer

MORE MADOFF VICTIMS Rene-Thiery Magon de la Villhudetcofounder of a firm that invested $1. 4 billion William Foxworth lost his family’s fortune and committed suicide

REGULAR PEOPLE WHO ARE VICTIMS OF MADOFF Neil friedman- lost $4 million dollars of savings; at age 79, sells makeshift items at a flea market & lives off social security His wife of 53 years was so devastated by this, she died…he speaks to her ashes every night To supplement his income, he applied for a job as a bag boy at a supermarket but wasn’t hired; had to get a reverse mortgage on his home, eats free meals offered by a local restaurant, has lost 30 pounds and is considering suicide; said “I don’t want to live with my children. It isn’t fair to load my burdens on them. ”

MORE CASES OF FRAUD 27 year old jamie lynn toler of phoenix, az lied to everyone in her life. She told her boss, her mother, and her grandparents that she had breast cancer and needed a mastectomy and breast reconstruction; however, she couldn’t afford the necessary treatments & surgery Her family and friends organized numerous fund raising opportunities and raised over $8000 for Jamie. She never had breast cancer…but paid $8000 in cash to a plastic surgeon for breast implants

ILLEGAL & IMMORAL New york bride jessica vega (25) faked having leukemia in order to receive free “wedding items”…the scam worked as local businesses donated a free wedding dress, a free caterer, and a free honeymoon to aruba. Once her lie was discovered, she was indicted and charged with fraud and grand larceny

FRAUD USING YOUR CHILD 40 year old Alicia kelly (of south carolina) lied and said her perfectly healthy 15 year old daughter was dying of cancer so she could scam the community out of thousands of dollars…she was discovered because authorities found the mummified body of her dead grandfather in the house. She hid his body for 2 years so she could continue cashing his social security checks. She plead guilty to abuse/neglect of a vulnerable adult, desecration of human remains, child abuse/neglect, three counts of contributing to the delinquency of a minor and two counts of swindling.