DALLAS CRIMINAL LAWYERS.: FEDERAL, STATE & APPEALS - BRODEN & MICKELSEN LLP

5 of the Most Infamous White Collar Crimes

5 of the Most Infamous White Collar Crimes

When many people hear “white collar crime,” they think of so-called “Club Fed” prisons, where prisoners serve lenient sentences and spend their time lounging around swimming pools and golf courses.

The reality is much different. While many white collar offenders do serve minimal time in low security prisons, recent white collar cases have shown that prosecutors and judges take white collar crimes very seriously.

In fact, five of the most infamous white collar crime cases demonstrate that just because a crime is non-violent and solely related to finances doesn’t mean an accused won’t serve years or even decades in prison. This is why it’s important for individuals charged with white collar crimes to work with an experienced white collar crime defense lawyer.  

Enron

The Enron case was so staggering it resulted in new federal legislation, the 2002 Sarbanes-Oxley Act. One of the largest companies in the world at the time, Enron was in the business of energy trade and supply. It also operated an electronic trading website at the dawn of the dot-com era.

Everything was going great for Enron — so great, in fact, that the company started to become too big and unwieldy. As Enron started to collapse, the company’s chief executive officer, Jeffrey Skilling, engaged in an illegal practice by which he hid financial losses by transferring underperforming assets to an off-the-books company it owned while claiming projected profits on its own books. This meant that investors couldn’t see that the company was losing money. There was also some flip flop among Enron’s top leadership, as Skilling was replaced with former CEO Kenneth Lay, who had previously served as CEO. Kenneth Lay died before he was sentenced. Jeffrey Skilling received a 24-year sentence that was later reduced to 14 years. Several other executives also received prison sentences.     

Charles Ponzi

Charles Ponzi is definitely known for his name, which describes a particular type of white collar crime, but many people don’t know what he actually did. An Italian immigrant, Ponzi came to the U.S. in 1903. His famous scheme involved purchasing a type of voucher that was common at the time. When people sent letters overseas, they could buy a coupon to save the person money on their response letter. Fluctuating currency rates among different countries meant you could sometimes make a profit if you exchanged one country’s stamp for another. Mental Floss describes it thus: “You only had to purchase postal reply coupons cheaply in some foreign country, send them back to the U.S. to swap them out for American stamps of a higher value, then sell these stamps.”

Ponzi perfected this system—which was legal—and he was able to attract investors. For a while, his investors received their returns, and many were so pleased that they chose to immediately reinvest their money with Ponzi. He was able to use this cash to keep his business afloat, and this is where he ran into trouble with the law. Eventually, investigators discovered that he’d lied about the success of his mail voucher system. Ponzi only served about 3.5 years in prison for his namesake scheme, but he was later convicted of a separate white collar crime and deported to Italy. He later moved to South America, where he died in poverty.  

Sholam Weiss

Sholam Weiss isn’t really a household name, but his case is noteworthy among white collar crime cases. The reason Weiss’ case stands out is because he received the longest prison sentence ever for a white collar criminal when the judge ordered him to serve 845 years in prison for racketeering, wire fraud, and money laundering. Weiss was also ordered to pay restitution for his role in an insurance fraud scheme that resulted in thousands of investors losing their life savings.

Bernie Madoff

Bernie Madoff is perhaps the most infamous white collar criminal of all time. Madoff’s white collar crime was a Ponzi scheme that cost many people, including a number of celebrities like Steven Spielberg and Kevin Bacon, to lose millions of dollars. Madoff’s scheme worked by using current investors’ money to pay off older investments. The problem is that Madoff’s investment company wasn’t turning a profit.

Madoff was sentenced to serve 150 years in prison. While about half of Madoff’s victims have been repaid, the other half have not recovered the money they lost. CNN reported in November 2017 that a fund set up to repay the victims announced it will begin distributing funds.    

Sources:

  1. https://www.washingtonpost.com/news/reliable-source/wp/2015/01/05/what-its-really-like-inside-club-fed-prisons/?utm_term=.67126afaba4b
  2. https://www.investopedia.com/updates/enron-scandal-summary/
  3. http://mentalfloss.com/article/20377/who-was-ponzi-what-was-his-scheme
  4. http://money.cnn.com/gallery/news/2015/10/14/biggest-corporate-scandals/2.html
  5. https://www.cnbc.com/id/100000065
  6. https://www.investopedia.com/terms/b/bernard-madoff.asp
  7. https://www.cnn.com/2013/03/11/us/bernard-madoff-fast-facts/index.html
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