Why Every Professional & Businessperson Needs to Fear & Guard Against White Collar Crime Allegations

American criminologist Edwin Sutherland coined the term “White Collar Crime” in 1939, which he defined as “crime committed by a person of respectability and high social status in the course of their employment.” Eighty years later, respectability and social status may not be what they once were, but the term still encompasses those with education working in a business or professional environment pursuing offences usually for financial gain motives. The reason for the fear is that although “accidental crimes” might sound like an oxymoron, it’s a lot easier than you might think to accidentally become ensnared in a white collar crime scheme that puts you under investigation or even leads to you being charged with a criminal offence.

Because white collar crimes are mostly “paper” cases (even though the paper is now digital), there are no smoking guns to seize, and rarely any eyewitnesses to all aspects of the events. Instead, investigators draw circumstantial inferences from the paper: who signed the documents, who authorized the money transfers, who was copied on the emails or text messages, and who said what during compelled or voluntary statements. Sometimes advanced investigative techniques are used to determine what incriminating evidence was found where (if there are search warrants) or who spoke to who on the phone about what (if there are wiretaps).

While you might be thinking: “hey, I’ve got nothing to fear if I did nothing wrong!” think again. Your name could be linked into a white collar crime case without you ever knowing about the transactions being investigated. You could even wind up being charged as a co-conspirator without any direct involvement in the offences, or any benefit received, because an investigator decided that that a piece of paper, or a phone call, or a signature, or an email, links you to facilitating the offences in some way.

So what kinds of white collar crimes do you need to worry about?

During my service as a Federal Crown Prosecutor focussing on white collar crime, I observed a long list of ways to get in trouble with the law, so here’s my top eleven list (because I just couldn’t stop at ten):

a. tax evasion & other tax fraud;

b. corporate misconduct & corporate fraud;

c. securities insider trading & securities fraud;

d. real estate fraud including fraudulent conveyances;

e. price fixing, big rigging & other competition offences;

f. bribery & corruption of public officials;

g. money laundering;

h. bank & insurance fraud.

i. accounting fraud including financial misstatements;

j. customs & trade fraud including smuggling;

k. employee theft.

Many of these offences are facilitated by other offences, like forgery or uttering false documents. Pretty much all of them ultimately qualify as financial offences, as motivation is usually financial gain by at least some of the players in the scheme.

So what kinds of punishments should you be afraid of?

Many find it odd (me included at times) that some of these white collar offences attract much greater penalties than crimes of serious violence like sexual assault. Penalties seem motivated at least in part by deterrence, because some of the crimes are so difficult to detect, and many could be considered “victimless” (like tax evasion) in that it’s the public who ultimately pays the price, rather than having a live victim available to report the crime to the police. Some more cynically suggest it’s because laws are written by the rich for the rich, and these crimes risk making the rich less rich; even though ironically it’s the relatively rich often committing them.

Whatever the reason, you risk getting walloped on a first offence conviction for anything on the above list. How walloped? Try a four year stretch in a federal penitentiary and up for a major financial fraud. Sentences of 5, 6 or 7 years aren’t uncommon. Together with a fine in lieu of forfeiture and a restitution order in the millions that you’ll likely have hanging over you for the rest of your life.

But it gets even worse if the Canada Revenue Agency then comes after you to tax you on all your supposedly ill gotten gains, at 52% tax, even though there might be no proof that you actually received anything. And unlike the criminal fine or restitution, that civil tax assessment will immediately and retrospectively start accumulating interest, so that you probably won’t even be able to keep ahead of interest only payments, far less pay down the principle.

And don’t get to thinking that bankruptcy will let you escape all these debts - it doesn’t work that way, otherwise everyone would do it. Oh, and did I mention the bonus criminal record for life (unless you manage to eventually get a pardon which they refuse to now call a pardon) which will restrict your employability and ability to travel, thus crimping chances you might have of paying things off?

So what can you do to protect yourself?

1. Preserve Documentary Evidence. Anytime you do get a premonition that things are perhaps not as they should be in your profession or business, even though you’ve got no involvement, and aren’t even sure anything improper is happening, you should save whatever evidence you can to later protect yourself. Emails, documents, financial records. They might mysteriously disappear later.

Because you may have professional or business obligations concerning those records, you definitely shouldn’t leak them, or be careless about saving them, or essentially misappropriate them, or you could get accused of a civil or criminal offence yourself. But if you’ve lawfully come into possession of the records, there may be nothing stopping you from at least saving and segregating what could later be life saving documents.

2. Don’t Make Secret Audio Recordings. Technology has now sufficiently advanced that pretty much anyone anywhere can secretly record the conversations of others, be they on the phone or in person. But don’t do it. As smart as you might think such recordings are in protecting yourself, you might even be committing an offence if you secretly record conversations you’re not a party to, and at the very least you’ll come off looking like the bad guy or gal.

The reason such strong wiretapping laws exist in the Western world (special judges, special authorizations) is to protect everyone’s verbal privacy. Yes, I know this is a long way from now typical practice of everyone saving and later producing compromising text or social media messages where according to the courts there appears to be little in the way of privacy protections. But that’s just the way the law currently is. Essentially, wiretap laws were not invented until almost 50 years after the popularization of the telephone. So who knows where things will go in the long term with Internet communications protections.

3. Get Early Legal Advice. Just as it’s much easier and cheaper for a plumber to fix a dripping faucet than a burst pipe, so too with lawyers giving a little early advice on potential professional or business liability exposure, rather than immediately needing to wade into court to defend you on criminal charges. Early legal advice will help guide you on what to do and not do with your continuing professional and business obligations. Early advice will teach you when to talk or not to investigators, including when you might be legally obligated to spill the beans, as compared to when it’s truly a voluntary statement.

I’m not suggesting you need to pass every waking hour of your work day in total paranoia that there’s going to be a knock on your overly thin office door or cubicle wall to haul you off to jail. Rather, I’m suggesting that in 24 years of doing this, just when I think I’ve seen every way people can secretly rip each other or the government off, I see something new.

Most of the schemes are surprisingly simple. Many are way more profitable than I could ever imagine such simplicity would generate. And some lives get destroyed in the wake of their undoing even though they didn’t originate or benefit from the schemes. Be proactive, and don’t let yourself be one of those unlucky people.

Gordon Scott Campbell served as a Federal Crown Prosecutor with the Department of Justice Canada, is author of The Investigator’s Legal Handbook (Carswell/Les Editions Yvon Blais) series of books, and defends professional and business clients against criminal and regulatory allegations - including allegations of professional misconduct - throughout Canada. Learn more at www.acmlawfirm.ca, www.proconductlaw.com, and www.defenceeast.com.