What is white-collar crime?
There is no Criminal Code offence called “white-collar crime” though it is generally recognized as offences committed by those in the financial or corporate world. The Canadian Encyclopedia states that it consists of occupational crime and corporate crime, explaining “occupational crime refers to offences committed against legitimate institutions (businesses or government) by those with ‘respectable’ social status,” while corporate crime refers to offences committed by “legitimate institutions to further their own interests and includes conspiring to fix the prices of goods or services, the dumping of pollutants, the payment of kickbacks by manufacturers to retailers, misleading advertising, selling unsafe drugs, etc.”
While there is no physical harm associated with white-collar crimes, victims can lose substantial amounts of money, or even their life savings. Courts take these offences seriously, which is why people charged with a white-collar crime need legal representation.
What does white-collar crime include?
White-collar crime encompasses many criminal actions, including:
Criminal embezzlement: Misappropriating or stealing from a business is usually prosecuted under the Criminal Code offences of fraud and theft.
Money laundering: Also known as laundering the proceeds of crime, this involves the transfer of money in order to conceal that it was obtained through a criminal act.
Tax fraud and evasion: This is regarded as one of the most serious revenue-related offences. Those convicted may face imprisonment, depending on such factors as the amount involved.
Manipulation of stocks and insider trading: There are specific Code provisions against the manipulation of stocks and insider trading. Insider trading is buying or selling stock by knowingly using information that you possess by virtue of your position and/or professional relationship. You can also be held liable for “tipping” or conveying inside information to a person who can use it to their benefit.
Falsifying documents: Sections 374 to 378 of the Code deal with this major branch of white-collar crime. According to a CBC story, “potentially criminal acts – like forging and photocopying customer signatures, adding initials to blank documents and using Wite-Out to conceal information – are more common than most people would think” within the financial services industry. The article also notes that the Mutual Fund Dealers Association of Canada says “signature falsification” was the primary allegation of wrongdoing in cases it deals with.
How common is white-collar crime?
According to a Globe & Mail article, more than one-third of Canadian organizations say they have been victims of white-collar crime. The perpetrator is usually someone inside the organization, with the article stating that the four most common white-collar crimes in Canada being: theft of assets, fraud in the procurement process, accounting fraud and cybercrime.
The article states that of the organizations reporting a crime, one in 10 said they lost more than $5-million, adding that the sectors most likely to experience crimes are financial services, retailing and communications.
According to a separate Globe & Mail article, the Ontario government has “quietly launched an initiative intended to solve a problem that has vexed Canadian law enforcement: the successful prosecution of complex, white-collar crimes … the Serious Fraud Office (SFO) brings together investigators and prosecutors, dedicating them to financial crimes that are too sprawling for any one municipal police force to handle.”
Penalties can be harsh
After successfully prosecuting a white-collar crime, the Crown will be asking for a sentence that includes incarceration. The courts want that person to understand the seriousness of their crime and show the public that this offence has been met with a weighty penalty to deter others.
As a Saskatchewan judge noted in 2001 in his ruling: “White-collar crime is an area where a term of imprisonment in a prison is the most likely to be an effective deterrent to others who might be tempted to commit similar crimes.”
That view was echoed by an Ontario judge in 2006, who noted: “The reality of the threat of jail sentences for general deterrence of individuals and corporate executives who commit white-collar crimes has become an effective and apparently necessary tool in the arsenal of law enforcement agencies.”
Judges denounce ‘white-collar crimes’
A number of judges have addressed the idea of “white-collar crimes” in their rulings. In a 1994 Newfoundland Supreme Court ruling, the judge wrote: “In order to protect the public against ‘white-collar’ criminals it is necessary to send a message to the people in the business community that ‘white-collar’ crime is a serious matter with serious consequences. The principle of general deterrence demands a lengthy term of imprisonment for the offender.”
A year later, that same court issued a ruling stating: “the court cannot treat persons convicted of so-called 'white-collar crime' with different standards than others who may come in contact with the law who do not have the same advantages … so-called 'white-collar crime' is not to be treated lightly.”
In 2008, a Court of Quebec ruling contained this phrasing: “In regard to the overriding matters of deterrence and denunciation: (1) This court takes notice of what appears to be a pernicious and alarming proliferation in what is termed ‘white-collar crime’ in this country; (2) people in the community who deliberately breach their obligations to others for their own personal gain must be prepared to suffer the consequences of their illegal action; (3) … the vast majority of honest taxpayers in this country are entitled to know that massive frauds of this nature will not be ignored nor treated lightly.”
Restitution is important
Large firms are more susceptible to white-collar crimes since it is easier to discreetly misappropriate money if the financial structure is complex. I represented a client who was able to siphon off more than $400,000 from her employer, a municipal government, before being arrested. After she was caught she expressed remorse and vowed she would pay back what she could.
The judicial system always strives for restitution, returning the victim to the position they would have been if the crime did not occur. The court granted my client extra time to pay back as much as she could, and when they could see she was sincere in her efforts, they agreed to my request that she be given a conditional sentence to be served at home.
Where did the term come from?
According to information from the Canadian Centre for Justice Statistics, the concept of white-collar crime was introduced by American sociologist Edwin Sutherland in 1939. He described these crimes as being “committed by a person of respectability and high social status in the course of his occupation."
Sutherland studied the conduct of 70 major American corporations and 15 utility companies, before developing the phrase “white-collar crime” as a way for people to understand that even well-educated, respected individuals can commit crimes. That attitude is in contrast to a time when aristocrats were considered to be above the law, as shown in the maxim, “The King can do no wrong.”
A crime that is ‘difficult to investigate’
In Nova Scotia, two executives referred to by a judge as the mastermind and enforcer of a multimillion-dollar stock market scheme were given five- and 4 ½- year sentences respectively after they were convicted of manipulating their firm’s share price and carrying out fraud in the securities market, according to a news story.
The Crown prosecutor had sought a lengthier prison team, but the appeal court ruled the sentences were sufficient to “serve the primary objectives of denunciation and deterrence in this case,” the story states.
The Crown had estimated the fraud was about $86 million, with one of the three prosecutors welcoming the sentence, according to the story. “White-collar crime is incredibly difficult to investigate and very, very expensive to prosecute. It’s one of the few large-scale stock market fraud cases we’ve successfully prosecuted in Canada.”
‘Life-altering’ loss for victims
According to a news story, a businesswoman in Regina was sentenced to more than seven years in prison and ordered to pay more than $5.5 million in restitution, after being convicted of defrauding investors of that amount during a two-year period.
The Crown prosecutor said commercial crime is "life-altering" for victims and perpetrators should be held accountable, before he read 18 victim impact statements detailing the anger and shame of those who lost thousands of dollars that would have gone to inheritance, retirement, or post-secondary education for their children, the news report stated.
After the trial, the prosecutor noted: “Today the court agreed with the Crown that white-collar crime in Saskatchewan is going to be treated severely, harshly for fraud that’s over a million dollars,” according to the story.
Why you need a lawyer
The stakes are high if you are being investigated for a white-collar crime. The penalties can be severe and may include fines, lengthy prison terms, forfeiture of assets and restitution. As your defence counsel, I will make every effort to tell your side of the story and to find flaws in the Crown’s evidence. Call me for a free consultation, in French or English, so we can start building your best defence.