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Financial Crimes

Financial Crimes: An Overview for the Common Person

What Exactly Are Financial Crimes?

Let’s start with defining some of the main types of financial crimes:

Fraud – This covers stuff like identity theft, forgery, embezzlement, and Ponzi schemes. Basically any kind of lying, cheating, or stealing to get money.

Money laundering – This is when criminals try to hide where illegal money came from. They funnel it through legitimate businesses and investments to make it look clean.

Tax evasion – Not paying taxes that you legally owe, usually by hiding income and assets.

Insider trading – Using non-public info to make stock trades that are unfair to other investors.

Accounting fraud – Cooking the books of a company to make finances look better than they are.

So in short, financial crimes are about people being shady to get, hide, or keep money. White collar stuff, but still illegal.

Why Do People Commit Financial Crimes?

There’s a few common motives behind financial crimes:

Greed – Some folks just want more money than they can get honestly. Think corporate execs committing accounting fraud to boost profits.

Necessity – Sometimes financial trouble leads people to do illegal stuff to stay afloat. Not an excuse, but it happens.

Opportunity – When people have access to money or accounts, temptation can lead to theft. That’s why embezzlement is so common.

Cover-up – Criminals often commit more crimes to hide earlier ones. Like laundering money from drug deals.

Ignorance – Some financial crimes are done by accident cuz people don’t understand laws. But it’s still illegal!

So while motives vary, it often comes down to a lack of integrity. But peer pressure and slippery slopes can suck people in too.

What Are the Consequences of Financial Crimes?

Committing financial crimes can completely ruin someone’s life, including:

Fines – Most financial crimes involve big fines based on how much money was involved. These can be hundreds of thousands or even millions!

Lawsuits – Victims often sue for additional civil damages on top of fines.

Jail time – Financial crimes can lead to years in federal or state prison.

Asset seizure – Authorities often seize property and assets purchased with illegal funds.

Loss of career – Being convicted of a financial crime makes someone unemployable in business and finance.

Reputation destruction – No one wants to associate with convicted financial criminals. Families are even torn apart over it.

So while greed can motivate these crimes, they rarely pay off in the long run after getting caught. It’s just not worth it.

What Are Some Well-Known Financial Crime Cases?

Some big name financial crime cases include:

Bernie Madoff – His Ponzi scheme defrauded thousands of investors out of an estimated $65 billion over decades. He got 150 years in prison.

Enron – Execs cooked the energy company’s books and misled investors, eventually causing its bankruptcy. Several went to prison.

Paul Manafort – Trump’s former campaign manager was convicted of bank fraud and tax evasion. He got 7.5 years in federal prison.

Martha Stewart – The lifestyle mogul got 5 months in prison for lying to investigators about an insider stock trade.

Al Capone – The iconic gangster was never convicted of violent crimes, but tax evasion is what finally sent him to Alcatraz for 8 years.

So even the rich and powerful often face hard times when caught committing financial crimes. Some even consider Martha Stewart’s incarceration a miscarriage of justice though[1].

What Are Some Typical Defenses Against Financial Crime Charges?

When accused of financial crimes, some defenses used are:

I didn’t know it was illegal – Claiming ignorance of the law. Risky strategy that rarely works though.

It was an accident – Arguing it was just an error and not intentional deception. Hard to prove without evidence.

Someone else did it – Blaming an accountant, spouse, employee, or hacker. Prosecutors won’t buy it without proof.

Addiction made me do it – Attributing crimes to gambling, drugs, or medical issues. Juries may empathize but it doesn’t excuse the acts.

I was just doing what I was told – Passing the buck to superiors who demanded illegal acts. Not easy when you’re the one who directly benefited.

So in reality, defenses against financial crimes rarely work. But skilled lawyers use them to plea bargain or reduce sentences. Still, there are usually consequences.

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