What are Some Examples of Charges that are Called White-Collar Crimes?

White-collar or fraud-related crimes are financial crimes, whereby no one is hurt physically, but someone’s money or identity is stolen. In contrast, there are crimes of violence, such as physical or sexual assault, and murder.

Is Intent Important in a White-Collar Criminal Case?

Intent is important in any criminal case. Under the American Anglo-Saxon system of jurisprudence, the government must prove two things in order to prove someone’s guilt: actus reus and mens reus. These are Latin terms that mean the person did the act (actus reus), and the person had intent to commit the act (mens reus). For example, in a murder case, the government would have to show that the defendant actually pulled the trigger and killed the victim and that they formed intent and reflected on the crime before committing it.

In criminal law, there are some exceptions where intent is not required, such as with strict liability crimes. Usually, strict liability crimes involve statutory rape. For example, if an adult had sexual intercourse with a 14-year-old, under normal circumstances the government wouldn’t have to show intent. This means that if the minor lied to the adult and showed a fake ID, under strict liability theory, the adult could be charged and prosecuted despite having had no intent to have sex with a minor.

The idea behind this is that adults should go the extra mile and take all sorts of precautions to ensure that they do not have sexual intercourse with a minor. Unfortunately, this law may lead to the prosecution of people who never intended to commit the crime of having sex with a minor. Those people will have to register as sex offenders and deal with all of the associated consequences. The theory of strict liability has been criticized by pundits and experts in the field of criminal law.

What Happens When Authorities Begin Investigating a Federal Fraud or White-Collar Crime?

As with any crime, there are a few ways that a government can start a fraud or white-collar investigation. Very often the government has a cooperator or an informant, or someone who is involved in a pending criminal case and is providing some incriminating information. Other times, fraud victims report crimes to authorities. Once investigators have this initial information, or once they have some other reason to believe that there is probable cause that a crime was committed, an investigation will commence. Courts usually find probable cause when there is a reasonable basis for believing that a crime may have been committed (for an arrest) or when evidence of the crime is present in the place to be searched (for a search). Under exigent circumstances, probable cause can also justify a warrantless search or seizure. Persons arrested without a warrant are required to be brought before a competent authority shortly after the arrest for a prompt judicial determination of the probable cause.

Do the Authorities Need Some Sort of Warrant to Conduct an Investigation?

The government does not need a warrant to start an investigation. Law enforcement agents are allowed to follow and watch anyone they wish on a public street. However, the government almost always needs a warrant to search private residences or to listen to private communications.

There are different types of warrants, including arrest warrants, search warrants, and wiretap warrants:

  • Arrest Warrants – All warrants are issued by a judge upon request of a prosecutor, who must provide some basis to the court before a warrant is issued. An arrest warrant is usually required in order to arrest someone inside their residence, to arrest someone for a crime that was committed not in the presence of a police officer or witnesses, or to arrest someone when the police officer making the arrest has no reason to believe that a crime has been committed. A search warrant is required to search someone’s residence or private property, even with an arrest warrant.
  • Search Warrants – In general, before a police officer can search a person or a private home, the officer needs to possess a valid search warrant. Like arrest warrants, search warrants must be issued by a judge or magistrate based upon a finding that probable cause exists to believe that evidence of a crime, proceeds of a crime, or contraband will be found. Search warrants must be specific as to what location is to be searched and what items are being searched for. However, there are important exceptions to this general rule that do not require an officer to have a search warrant:
    • If a police officer feels they are in danger while questioning someone, they may conduct a “pat down” search on the exterior of the person’s clothing to determine if that person has a weapon. Anything the officer discovers as a result may be used against the individual in a court of law.
    • If someone is lawfully arrested, an officer may conduct a full search of the person and the immediate area around them as part of the arrest.
    • If an officer lawfully arrested someone inside a private residence without an arrest warrant, the officer may only search the immediate area around where the person has been arrested.
  • Wiretap Warrants – Wiretapping laws apply to any wire, oral, or electronic communication that is intercepted. Wiretap warrants also require a judge’s approval, which will be based on probable cause and can be used for any crime that is “dangerous to life, limb, or property” and punishable by more than one year’s imprisonment. However, on a federal level, wire or oral intercepts are limited to investigations of certain specific crimes enumerated in 18 U.S.C. § 2516.

My Company’s Management Want Me to Talk to Them First in a White-Collar Crime Investigation. If I May Have Helpful Information, Should I Alert Authorities that I Am Being Pressured by My Employer?

Fraud investigations are usually secret, so it is rare that anyone will know about an investigation before arrests are made. However, if there were to be a situation where a company may know or suspect that one of its employees is cooperating with the government in a criminal investigation, the company usually, for legal reasons, will not pressure or ask the employee to disclose any information related to that investigation. If somebody were to find themselves in this very rare situation and the company is pressuring them to provide such information, they definitely should go to their attorney and to law enforcement because it is something that the police need to know.

What Should I Do If I Have Incriminating Evidence on My Employer?

The first thing you should do is hire a criminal defense attorney who has specific experience in dealing with these issues and tell him everything that you know. There are laws called whistleblower statutes that allow private citizens to initiate civil lawsuits against private companies or government agencies for engaging in fraudulent or corrupt activities. If the government later takes over the case, the individual who initiated the lawsuit may share in any monetary recovery obtained by the government.

Should I Talk to Authorities If I’m Being Investigated for a White-Collar Crime? 

In some situations, it may make sense and will look good to the judge at sentencing if the defendant has decided to cooperate with the authorities. However, the very first step should be to speak with an attorney who has experience in the white-collar crime field before talking to the government. This way, the individual can develop a strategy for presenting their side of things and protecting their rights.

Everything a person says to law enforcement can be used against them. To avoid this, there are certain things that attorneys can do, one of which is a proffer agreement, or “Queen for a Day” letter. In essence, it means that whatever a person says during the proffer cannot be used against them in the prosecution or sentencing. If someone wants to come forward and speak with law enforcement, doing so wouldn’t necessarily be a bad idea. However, they should first hire a lawyer who can make sure that all of the legal pieces are in place and that they get full credit for the information they provide. In addition, proffer agreements have various exceptions, and an attorney will be able to explain those before the proffer.

If I Have Information on Fraud Within the Company I Work For, Should I Go to the Authorities?

If someone has information with regard to fraud within the company they work for, they might want to speak to an attorney prior to going to the authorities. They wouldn’t necessarily need to hire an attorney for the whole case, but they could schedule a one-hour consultation to discuss the issue and the options available to them. There are whistleblower statutes, which allow a person who identifies illegal behavior by a government agency or a private entity to file a lawsuit against that agency and be eligible for a portion of any fines collected by the Government as a result of the suit. This is a topic that can be further discussed with an attorney.

Can I Get Bonded Out if I Was Arrested on an Offense Related to Federal Fraud?

As the case with most crimes, defendants arrested for fraud are eligible for bail, and many people arrested for such crimes are released on bail pending trial. In major federal fraud cases, the defendant’s attorney usually does not make a bail application during the initial appearance, which is called an arraignment. The attorney will instead consent to detention without prejudice, meaning the attorney can make future applications for bail at any time. After that initial appearance, the attorney will try to work out a bail package with a prosecutor, which will almost certainly be granted by the court, since the bail will be on the consent of both parties, the defense, and the government. If a bail package cannot be worked out with a prosecutor, then the defense counsel will have an option of filing in court an application for bail, which will be opposed by the government. It is up to a judge to make the final decision after hearing arguments from both sides and reviewing all of the documents filed as part of the bail application.

The two main issues that a federal judge looks at before deciding on bail are whether the release of the defendant will place the community in danger and whether the defendant will return to court if released on bail. In many fraud cases, danger to the community is either not an issue or can be addressed in some way, such as confining the defendant to their residence or forbidding internet use. The issue of whether the person will return to court if released on bail will depend on the defendant’s ties to the community or to the United States, as well as how many and what type of guarantors (called suretors) are willing to guarantee the defendant’s return to court and under what conditions, or bond. Bond is the amount of money the defendant or their suretors promise to pay to the court if the defendant absconds. In a federal system, there is usually no need to bring any cash to court to secure the bond since, in most cases, bonds are secured by some property or guarantee of suretors to pay.

Since many of my clients are foreign nationals, it is hard for them to establish ties to the community or to the United States. As a result, unless a bail package can be worked out with a prosecutor, the court usually will either deny bail outright or require the posting of a large amount of cash.

What Are Some Things to Review with My Federal Criminal Defense Attorney When Deciding If I Should Work with Authorities After Being Arrested and Charged in a Federal Case?

There is no general rule since each case is unique. However, if the government has strong evidence against someone and that person knows that it’s very likely that they will be convicted at trial, then perhaps in such situations, it makes sense to consider cooperation as an option. Nevertheless, I have learned that the government sometimes tends to exaggerate the strengths of its case. I have also learned that just because you do not cooperate immediately does not mean that cooperation will not be available later on. The government often wants defendants to think that cooperation can only happen at the beginning, and if the person wants to cooperate, he must choose to do so immediately. It is true that such a strategy may lead to a greatly reduced sentence, but it also comes with such conditions as giving up the right to full discovery.

In every criminal case, the defendant has a right to various types of discovery, including any incriminating evidence that the government has in its possession and that the government will use to prove the defendant’s guilt at trial. A defendant is also entitled to what is known as Brady material, which is any material in possession of the government that shows or tends to show that the defendant is innocent, also known as exculpatory evidence. All defendants are entitled to such material under the relevant statutory laws and under the U.S. Constitution. Sometimes, the government uses the lure of cooperation to convince the defendant to give up their right to this evidence. 

My advice is to think very carefully before giving up your right to such evidence since I have seen cases where the government’s case fell apart after a full review of discovery. Unless you are certain that you will lose a jury trial because the government has an extraordinarily strong case and evidence against you, it probably makes sense to wait to get discovery, see what is there, and then make a decision on whether to cooperate.

I have seen people afraid to push for discovery because they believe the government will walk away and take cooperation off the table—and that is exactly what the government wanted them to think. However, that is not usually how it works. I have had many cases where we got the discovery because we said no to cooperation, waited to see the strengths of the government’s case, and chose to cooperate only after determining that the government actually had something on my client.

What Elements Must the Prosecutor Prove an a Federal Fraud-Related Case?

Each criminal statute, including fraud-related statutes, contain all of the elements that the prosecutor must prove at trial beyond a reasonable doubt. There is no single fraud statute, and fraud is a very general term that describes many different types of forbidden activities. When someone is charged with fraud, they are actually charged with violating a specific statute, or the law. Once the statute that the person was charged with is known, it will be easy to look it up, and it will contain all of the elements that must be proven.

For example, one statute that the government often uses to charge people with fraud is called Fraud by Wire, Radio, or Television, codified as 18 U.S. Code § 1343: “Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both.” That prison sentence increases up to 30 years if the fraud was related to a financial institution. All of the elements of the statute are found in the statute, including that the government must prove beyond a reasonable doubt that the defendant devised a scheme to defraud using wires (Internet). This definition can include such activities as cybercrime, hacking, bank fraud, mail fraud, and many other types of fraud.

Can the Fact That Someone Was Not Aware of Their Involvement in a White-Collar Crime Serve as Their Defense?

Lack of awareness, intent, or knowledge can serve as a defense, and that is true not just for fraud crimes but for many crimes. The only exception to this rule relates to crimes of strict liability, where intent or knowledge does not have to be proven. A strict liability crime is any crime where someone can be found guilty even though that person had no intention of committing the crime. Strict liability crimes usually relate to having a sexual relationship with a minor. In such cases, even if the minor lied to the defendant and showed them a fake ID that gave the impression the victim was of age, the defendant can still be found guilty of statutory rape if the victim later turns out to be a minor. It is called a strict liability crime because, in a sense, there is strict liability for committing it, meaning even though you had no intention of committing the act, you are still guilty if you did.

The majority of crimes require a showing of intent to commit the crime. While crimes involving negligence (i.e., negligent homicide) do exist, when we are talking about fraud, proving intent will always be required to establish guilt. However, it is important to remember that not knowing the law is not a defense. A defendant cannot say, “I am not guilty because I did not know that this was illegal.” But having no intention to commit fraud usually can be a defense in a fraud case, as well as in many other cases.

What Are Some of the Penalties Associated with Federal Fraud-Related Convictions?

The potential recommended prison sentence will depend on the federal sentencing guidelines. When a person is charged and convicted with violating any statute, that statute usually will have a wide range in terms of the potential sentence that the defendant faces, very often from zero to ten years or zero to twenty years. In order to help judges decide on the exact sentence, Congress comes up with what is called the United States Sentencing Guidelines, which are renewed annually. Though these guidelines are extraordinarily complex and complicated and come in a book that is hundreds of pages long, they provide recommendations to judges regarding specific sentences that defendants face, and many judges follow those recommendations very closely.

There are different factors that Congress tells judges to consider in fashioning a fair and just sentence. In fraud and cybercrime cases, the usual factors that the judges consider pursuant to those guidelines are the intended or actual loss amounts, the number of victims, how the fraud was committed, whether the person used sophisticated means to commit the fraud, and the defendant’s role. For example, if somebody was convicted of wire fraud where the minimum sentence is zero and the maximum sentence is 30 years, they would likely get probation if there was only one victim and the loss amount was $50,000. If, in contrast, there were 100 victims and the loss amount was $100 million, the person would likely get a significant prison sentence.

It’s also important to remember that guidelines are advisory, although, until 2005, they were mandatory, which explains why many judges still closely adhere to them. In 2005, the United States Supreme Court found that making guidelines mandatory is unconstitutional because it took away too much discretion from the judges. Because of that case, called United States v Booker, the guidelines became advisory, which means that a judge can look toward the guidelines to get an idea as to what a fair sentence is, but ultimately, the judge may ignore the guidelines and give whatever sentence they feel is fair, as long as the sentence is within the minimum or maximum statutory requirements.

In addition to the factors listed in the guidelines, the judges also will often look to other things, such as whether the defendant was convicted at trial or took a plea and whether the person cooperated. Other factors can include the defendant’s personal characteristics, including life achievements, support from family and/or community, educational level, and their level of remorse, and their willingness and ability to rehabilitate.

Are There Possible Financial Penalties Involved in Federal Fraud Cases?

Commonly, there are three types of financial penalties that are ordered by the court in federal criminal cases after conviction, restitution, forfeiture, and a special assessment. The special assessment is usually $100 and is paid by the defendant not long after sentencing proceedings. Criminal forfeiture is an action brought as part of the criminal prosecution of a defendant and requires that the government establish that the property subject to forfeiture was derived from the crime. Restitution involves the court, as part of a sentence in a criminal case, ordering a defendant to compensate the victim for losses suffered as a result of the crime.

What this means is that if somebody becomes wealthy through fraud, they do not get to keep anything obtained as a result of it; they will have to compensate the victims and give up all of the property and money obtained through fraud.

Are Prosecutors Willing to Show Leniency to First-Time Federal Fraud Offenders?

Prosecutors are willing to show leniency even to second- or third-time offenders because making plea deals is how the American criminal system of jurisprudence works. The government will almost always offer a plea deal to a defendant, which will include a recommended sentence that is much lower than what the defendant is likely to get if they were convicted after a jury trial. The question then becomes, how good is the plea deal negotiated by the attorney?

That is why having a good attorney becomes crucial. If you are looking to get a plea deal, the government will offer one, but then your attorney has to make sure that it is the best plea possible, and that is not always easy. There are different strategies to secure the best plea under the circumstances, and that is why a good criminal defense attorney is a necessity.

Is It Possible to Have a Federal Criminal Conviction Expunged or Set Aside?

There is no federal expungement statute, and federal courts do not have the authority to expunge records of a valid federal criminal conviction. Some states, including New York and New Jersey, allow state convictions to be expunged, though you have to meet certain requirements, such as having no new rearrests and waiting a certain amount of time after the conviction. It also will depend on the statute the person was convicted of as some statutes are not expungeable.

WHAT IS THE PPP LOAN PROGRAM?

The Payment Protection Program is a program created by Congress to help business owners financially survive the pandemic. A PPP loan is forgivable, but the funds could only be used to cover certain eligible expenses, such as paying salaries, rent, or other eligible business expenses.

What Are Some Things You Have Seen Related to PPP Loan Fraud Investigations?

PPP loan fraud investigations have been in the news a lot lately. Multiple individuals have been charged nationally with PPP fraud. The usual scenario is an applicant using forged documents or forged tax returns to establish their eligibility for the PPP loan. Though each case is unique, I have seen people receive millions of dollars to cover business expenses they did not have. Instead, they would use the money for personal expenses, like buying a Bentley or a mansion.

Is the U.S. Department of Justice Cracking Down on PPP Loan Applications and Other Fraudulent Activities?

The United States Department of Justice is investigating and prosecuting these cases. However, there are millions of applications, and the government does not have the capacity to double-check every single application. Therefore, to find more offenders, the government has started relying on computers and algorithms to flag suspicious applications. When the government gets a reason to believe that there was fraudulent activity, they will commence an investigation.

What Federal Charges Could Someone Be Facing When They Are Charged with PPP Loan Fraud?

PPP is a federal program; you are borrowing money from the Small Business Administration (SBA), which is a federal agency. When you apply for the program, you sign various statements attesting that the application you are signing is true and correct. If the government later catches you lying, you can be prosecuted. In addition, the government can charge all types of fraud crimes against the United States involving PPP loans, including engaging in wire fraud and bank fraud.

What Should Someone Expect If They Are Contacted by Authorities Regarding Their PPP Loan Application?

Do not say anything to the authorities if they reach out. Contact your attorney immediately.

What Are My Obligations to Comply with Investigators in a PPP Loan Fraud Investigation?

There is no obligation to provide the government with any information unless you get a subpoena to produce some documents or to testify at a grand jury, or unless government agents enter your home pursuant to a search warrant. If you want to give up information voluntarily, that is an option, though it’s probably not a good idea until you have spoken with a criminal defense attorney. My advice is to discuss your situation with your attorney before complying with any requests. Together, you and your attorney can develop a strategy to respond and limit your criminal exposure. Whether or not to comply with law enforcement demands is not a decision you should make on your own.

If I Unintentionally Committed an Error on the Application Form, Is That a Valid Defense in a PPP Loan Fraud Case?

The government is not looking to prosecute applicants who made innocent mistakes on their forms. The government and U.S. Attorney’s Office are looking to prosecute fraudsters who intentionally filed fraudulent applications with the intention of enriching themselves. Those are the people we see on the news being prosecuted. Those are the people whom the government alleges got millions of dollars and, instead of paying their employees, bought a house. I have not seen any case where someone was prosecuted for making an innocent mistake.

My Business Partner Applied for and Received a PPP Loan. Could I Be Charged with Fraud If They Did Something Illegal?

You can be charged but being charged with a crime does not mean being convicted. A charge is an accusation, and whether the government is going to be able to prove it is a separate issue. Depending on the circumstances, anybody can be charged with anything, but it doesn’t mean that the government will win. That’s why you need a good attorney who will fight for you and help you win your case.

Why Is It Important to Have an Experienced Federal Criminal Defense Attorney Represent Me in a Federal Criminal Case?

Federal courts are quite different from state courts. Many attorneys who do criminal defense never handle federal cases. Federal court is a lot more formal, and it takes a lot more work and time to resolve cases. In addition, lawyers who have done many federal cases know how to best advise their client on negotiating the best plea deal or how to cooperate with the government while getting the maximum credit for it. Therefore, it is especially important to hire an attorney with experience in federal court if you are charged with a federal crime.

For more information on White-Collar Crimes, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (718) 989-2908 today.