Money Laundering
As depicted in the television program Ozark, money laundering is another common white-collar scheme. Money laundering involves the use of any sort of financial transaction to disguise the source of illegally obtained money, such as from drug trafficking or from terrorist organizations. One of the most infamous money launderers is Jordan Belfort—the so-called Wolf of Wall Street. Belfort created fictitious corporations to create the illusion that the millions he generated came from legal avenues. He took advantage of the Swiss banking system, which made it easier to mask massive sums of money. (For many years, Switzerland was notorious for its loose anti–money laundering regulations and for not cooperating with foreign governments regarding its banking system.)
Insider Trading
Insider trading refers to the buying or selling of a publicly traded company’s securities by someone who possesses material, nonpublic information about the company. This charge focuses on the unfair advantage derived from possessing confidential knowledge about a publicly traded entity—information often obtained through one’s position within the company or via a breach of fiduciary duty. Primarily prosecuted by the Securities and Exchange Commission (SEC), insider trading cases can be high-profile, involving large corporations and high-ranking officers privy to confidential information. Both the “tipper” (the individual disclosing confidential information) and the “tippee” (the one receiving the information and acting on it) can be criminally charged for their roles.
The federal government has prioritized pursuing insider trading violations, utilizing the SEC and Department of Justice (DOJ) to conduct parallel investigations, freezing assets of those charged, and threatening harsh penalties to deter abuse of market integrity and public trust.
Cybercrimes
Today, cybercrime takes on many forms, such as phishing emails or text messages from impersonated authoritative sources, identity theft, hacking, and distribution and solicitation of child pornography. The U.S. Internet Crime Complaint Center reported that in 2023, nearly 300,000 Americans fell victim to phishing attacks, making it that year’s most prevalent cybercrime. During the last decade, scammers have become more sophisticated with their attacks. Today, spear phishing is common; this type of scam involves a more targeted approach and entails fraudsters sending a phishing email to just one individual or company. Although this method limits the number of potential victims, spear phishing has higher success rates because the hacker can tailor the emails to make them seem more legitimate. The goal of spear phishing attacks can be to obtain sensitive information, such as a credit card or Social Security number, or to have the victim click on a dangerous link that infects their device with malware.
Embezzlement
Embezzlement is defined as the “fraudulent appropriation of property by a person to whom such property has been entrusted, or into whose hands it has lawfully come.” While this person may have a legal right to money, they are using the funds differently than how the person who entrusted the money to them intended. Embezzlers are commonly financial advisors, bookkeepers, or employees mishandling their employer’s money. Bernie Madoff, who defrauded thousands of victims out of more than $65 billion, is America’s—and perhaps even the world’s—most notorious embezzler. In 2009, Madoff’s Ponzi scheme came toppling down, and he was sentenced to 150 years in prison.
Defending White-Collar Crime: Practice Tips and Tricks
State or Federal Court?
Most white-collar cases are prosecuted in federal court. However, state prosecutors also charge these matters. There is more leeway in state court for favorable dispositions as local prosecutors usually have fewer resources and training on how to properly prosecute a white-collar case.
Preindictment Representation vs. Post Indictment
The earlier in the process you get retained on a white-collar case, the greater the chance for a positive outcome. Prior to the filing of an indictment, a person or company may learn about the investigation. This knowledge may come from a target letter, a search warrant, a grand jury subpoena, a whistleblower complaint, or even the press. Representing the accused preindictment gives the attorney an opportunity to potentially engage with the prosecution. In some investigations, prosecutors are forthcoming and may be willing to do a reverse proffer (by which the government presents evidence that supports its case).
During the preindictment phase of the investigation, the attorney has an opportunity to determine what strategy is in the best interest of the client. Are you going to fight the case, or is it the right time to get the best outcome available? This is when the decision to cooperate arises. In a white-collar case, it is common for individuals to come forward and assist the government in exchange for non-prosecution, diversion, or a reduced sentence. Immunity agreements, commonly referred to as “queen-for-a-day” agreements, are prevalent in white-collar cases. In this scenario, clients talk openly with the government about their role in the alleged crime. Most white-collar crimes involve conspiracies where different individuals have various roles in the enterprise, with the goal of obtaining as much money as possible. A cooperating witness who assists the government in putting together the various pieces of the puzzle does so with the hope of staying out of prison or at least mitigating their exposure to significant jail time.
Post-Indictment Representation
If you come into a white-collar case after your client has been charged, you are usually talking to a prosecutor who is well-versed in the facts of the case. In complex white-collar matters, there can be terabytes of information that will need to be organized and analyzed. You can undertake this task yourself, through your staff, or by utilizing the services of outside electronic discovery vendors. Whatever choice you make, understanding all this evidence is critical in these cases.
Once you have a grasp of the facts and have thoroughly debriefed your client, you will begin to analyze the strength of the government’s case against your client. Has the government mischaracterized facts, and would a clarification change the status of your client? Does the evidence seem overwhelming? Does this case look like a trial, and does your client have the stomach and resources for it? Does your client want you to get them the best deal possible? The answers to these questions do not all arise at the same time, but at some point, you and your client will decide between damage control and fighting.
Plea Agreements and Sentencing
In federal white-collar cases, all plea agreements are based on the U.S. Federal Sentencing Guidelines. The single fact that typically drives the sentencing range is the amount of loss. Mitigating the loss that the plea agreement attributes to your client is the first step in these cases. The court then considers both aggravating and mitigating circumstances, which creates a sentencing range. Judges do have the discretion to deviate up or down; however, most judges stay within the guidelines range. The probation department generates a report and makes a recommendation to the judge. This includes an interview with your client. Preparing your client for this interview can make a significant difference in the recommendation. It is also important to maintain a dialogue with the probation officer to communicate your narrative of the case and why your client’s significant mitigating circumstances must reduce their recommended sentencing level under the guidelines. Having a strong familiarity with the guidelines allows you to begin thinking about potential sentencing as soon as you get retained on a new matter. You must become aware of the details of your client’s life, including but not limited to medical issues, psychological issues, family support, financial issues, post-offense rehabilitation, and any other relevant facts that may make your client eligible for a lower sentence.
As the client moves toward the decision to plead guilty, the attorney’s work is just beginning. Negotiating the plea agreement is key to a successful outcome. Determining what facts and sentencing factors to agree to versus factors to be argued before a judge are critical decisions that will greatly affect the outcome. For example, in a complicated fraud case, it may be difficult to determine the true amount of the loss. Sometimes, it is in the client’s best interest to agree to a specific amount or a specific range; other times, litigating the issue can be advantageous. Each case is unique, and these vital decisions need to be contemplated early in your representation.
Trial
Trying a complex white-collar case requires a great deal of resources. It is common to have a team to handle different aspects of the defense. For example, forensic experts, investigators, and paralegals can all assist in understanding the evidence and developing a successful defense. In multidefendant cases, joint defense agreements are often utilized. The government will have multiple attorneys on a white-collar case, along with multiple agents from the various agencies that participated in the investigation of the matter. A joint defense is a great tool to take on the seemingly unlimited resources of the government.
Developing a narrative for your case is extremely important. White-collar cases are generally complex, and having a theme that resonates throughout the trial will assist the jury in understanding your defense. Simplifying the issues so jurors can follow your case is essential to a defense that leads to an acquittal.
An Ever-Changing Field
White-collar cases are complex and multifaceted but are also fascinating and exciting to defend. Each case presents an opportunity to learn something new as you become an expert on whatever business your client was engaged in. Whether it is medical billing, stock market manipulation, public corruption, or cybercrimes, each case presents its own unique legal defenses, and very little is formulaic, making the work interesting each step of the way.
