The distinction between occupational crime and organizational crime is subtle. Occupational crime is committed by those in all walks of life, using their legitimate employment as an opportunity for crime. Though the term "White-Collar Crime" is sometimes used to describe this type of illegal activity. Researchers interested in occupational crime focused on individuals, and researchers interested in corporate crime focused on organizations.
The factors identified as contributing to organizational crime may also contribute to occupational crime. And with aging baby boomers retiring at an unprecedented rate, there is a steady need for replacing outgoing officers with new ones who have the right education and background. Nevertheless, what you earn as a police officer straight out of college may vary greatly depending on where you are located and whether you are willing to relocate to another part of the nation where salaries may be higher.
By contrast, police salaries are often significantly lower than the mean in places such as the rural South. And if you find that you want to move over from beat officer to detective, chances are the department is going to choose someone with courses in criminology, sociology, forensics and statistics over a graduate of the local high school. Over the years, this can represent a huge advantage over employment in the private sector, where annual salary increases and even cost of living allowances may be tiny or nonexistent.
But college graduates with a criminal justice degree are finding satisfying work in diverse areas of law enforcement that go far beyond the ubiquitous patrol officer. Departments of Justice and Homeland Security. These public servants provide such vital services as protecting our borders, ensuring the safety of air travel and even serving on hostage rescue teams and intercepting coded messages. If you are excited by the prospect of working to fight terrorism, cybercrime, human trafficking, public corruption and organized crime, then a career with our federal government may be for you.
Many criminal justice graduates choose employment in the specialized branch of law enforcement that staffs our prisons, jails and federal, state and county probation agencies. In colleges across the country, criminal justice classes study patterns of deviance, shifting community norms and legal theory. Whether you believe that our laws established criminal penalties primarily for deterrence, retribution or correction and reintegration of offenders into society, corrections staff and probation officers are on the front lines of the criminal justice system every day. The corrections system is at a crossroads today.
While some states are revisiting criminal penalties for increasingly acceptable social behaviors such as possession of marijuana, our state and federal prison populations have never been higher. The media blares out dire warnings about prisoners who are being granted early release due to overcrowding or speedy trial concerns. Inmates are suing departments of corrections civilly for alleged constitutional violations. You may be conducting a parole hearing, writing an incident report, holding a pre-release counseling session with an inmate, participating in a cell extraction or testifying in court.
A career as a corrections officer or probation officer offers unparalleled variety and can represent the culmination of your years of college study in the field of criminal justice. Opportunities for entry level correction and probation officers have been increasing in recent years due to the construction of new prisons and as a result of hiring by private companies that are taking over facility contracts from municipal governments.
You may think of a teacher as someone who has to control unruly elementary, middle school or high school kids all day. Such a prospect may seem about as far as one can get from a criminal justice degree. And yet, each year many undergraduates studying criminal justice also complete their state teaching credential.
Edited by Michael Tonry
Among skills gained by criminal justice majors that are valuable to teachers are the ability to make coherent presentations, decision making skills, appreciation of diversity and multiculturalism, an understanding of ethics and moral values, and computer literacy. Opportunities to combine teaching with law enforcement exist in many state and federal government agencies. For example, among the careers listed by the federal Transportation Security Administration TSA on its website are instructor, curriculum specialist and program analyst.
It happens every day at a court near you: A thick packet arrives in the mail; it turns out to be a writ of habeas corpus handwritten on lined paper torn out of a spiral notebook by an inmate who has already served years at a state prison and now claims that there is new evidence to exonerate him. A woman walks into the courthouse in tears her two young children in tow and explains to the clerk in broken English that her boyfriend has just beaten her up, stolen her car and threatened to take her kids away if she tells anyone.
For most Americans, failure to pay the correct amount of taxes to the Internal Revenue Service IRS results in agreement to pay off the taxes in some manner. However, when the IRS believes it has found a pattern of deception designed to avoid paying taxes, criminal charges can be brought. In the Criminal Investigations Division of the IRS initiated 1, cases, slightly lower than 1, in but higher than 1, cases in Of cases investigated in , the IRS recommended prosecution in 1, cases, and in cases criminal charges were filed or brought by indictment.
The IRS reported convictions for tax fraud, and defendants were incarcerated in As technology advances, forgers can use sophisticated computers, scanners, and laser printers to make copies of more and more documents, including counterfeit checks, identification badges, driver's licenses, and money. Making counterfeit U. Possession of counterfeit U. Counterfeiting is not limited to paper money.
Manufacturing counterfeit U. Anyone who alters a real coin to increase its value to collectors can be punished by a fine, imprisonment for up to five years, or both. The level of counterfeit bills in circulation worldwide is estimated to be less than 0. In response to the growing use of computer-generated counterfeit money, the U.
These bills contain a watermark making them harder to accurately copy. A blue eagle and metallic green eagle and shield have also been added to the bill's design. On June 29, , the U. The Secret Service explains that many counterfeiters have abandoned the "traditional" method of offset printing, which requires specialized skills and machinery. Instead counterfeiters produce fake currency with basic computer training and typical office equipment. Although the number of counterfeit bills in circulation is likely to increase because more people have access to the machines and methods required to produce them, the security features added to the design and manufacture of U.
Money laundering involves transferring illegally received monies into legal accounts so that when money is withdrawn from those accounts, it appears to the police or other government authorities to be legal earnings of the account or the business. When a money-laundering scheme is successful, the criminals can spend their illegally acquired money with little fear of being caught. Many of the techniques that launderers use would be perfectly legal business transactions if the source of the cash were not illegal activities.
Over the years the federal government has enacted a number of laws to prevent money laundering. This section addresses correspondent accounts for foreign financial institutions as well as accounts opened in the United States by noncitizens. According to the new regulations, financial institutions are required to establish and implement policies to detect and report suspicious money-laundering activities.
In addition to tighter controls at U. As of March the U. MLATs facilitate evidence gathering in international criminal cases, and make it possible to access banking and other financial records from foreign institutions in money-laundering cases. Department of the Treasury. The number of money-laundering investigations initiated by the IRS has declined in recent years, from 1, in FY to 1, in FY Although the number of prosecutions has also decreased, from 1, in to 1, in , the number of defendants sentenced has increased from in FY to in FY Similarly, the average number of months that those convicted serve in prison has increased from 63 months in FY to 74 months in FY Attorney's office in Seattle , Washington, reported the conclusion of one money laundering case in October The attorney did not document his receipt of this money, kept in a safe in his office, and failed to submit the required IRS forms recording large money transfers.
Admitting this transaction was part of a pattern of similar unlawful actions. The attorney faced a sentence of ten years in prison. The survey analyzed data from of the largest U. The survey found that retail shrinkage — a combination of employee theft, shoplifting, vendor fraud, and administrative error — represented about 1. Shrinkage rates were highest 4. According to the survey, employee theft accounts for more losses from retail theft than any other cause. This is probably due to increased use of surveillance technology by retailers. Nationwide these retailers apprehended more than , corrupt employees and shoplifters in Furthermore, the companies reported one out of every Abuse of public trust may be found wherever the interest of individuals or businesses overlaps with government interest.
It ranges from the health inspector who accepts a bribe from a restaurant owner or the police officer who "shakes down" the drug dealer, to the council member or legislator who accepts money to vote a certain way. These crimes are often difficult to uncover, as often few willing witnesses are available. In , 1, people were indicted and 1, were convicted in public corruption cases.
Of those indicted, were elected or appointed federal officials, 96 were state officials, were local officials, and the remaining were private citizens not employed by the government. In one of the most notable cases involving bribery and kickbacks, Jack Abramoff, a prominent lobbyist in Washington, D. Abramoff received kickbacks from his former business partner, Michael Scanlon, in a conspiracy to defraud Native American tribes who sought government approval to operate casinos.
The tribes hired Abramoff to represent their interests, and he then recommended Scanlon's public relations firm to the tribes. Abramoff received a kickback from Scanlon for the referral. Abramoff and Scanlon supplied financial incentives, trips, and entertainment expenses to public officials whose support was needed for the projects they represented. Abramoff was also listed as a co-conspirator in the charges against former Rep. Robert W. Ney R-OH , who was sentenced in January to thirty months in prison and two years of supervised release.
Ney pleaded guilty on October 13, , to honest services fraud, lobbying violations, and making false statements to the U. House of Representatives. Ney represented the 18th District of Ohio from through He admitted that he accepted international and domestic trips, meals, sports and concert tickets, and other incentives from Abramoff and others in exchange for his support on matters before the House of Representatives. In addition to Abram-off and Scanlon, a foreign businessman also provided financial incentives to Ney in return for his support in obtaining a travel visa and an exemption from legal restrictions against foreign nationals selling U.
Because senior citizens are often retired and living on fixed incomes and savings, the promise of economic security can be very alluring. As a consequence, the elderly can be particularly vulnerable to economic crimes such as fraud and confidence schemes. Seniors are particularly vulnerable to con artists. Often, they are lonely, isolated from their families, and sometimes more willing than in earlier years to believe what they are told. Some suffer mental or physical frailties that leave them less able to defend themselves against high-pressure tactics. In addition, they may be financially insecure and may want to believe the con artist's promises of future wealth and security.
Since many elderly are too embarrassed to admit that they have been fooled, many of these crimes are not reported. Statistics on fraud against the elderly, sometimes called elder scams, are not collected by the major crime reporting agencies. Surveys conducted by the AARP formerly the American Association of Retired Persons indicated that most victims of telemarketing fraud were fifty years of age or older. One popular scam involves con artists calling or mailing information to elderly people announcing that they have won a free prize, but must pay postage and handling to receive it.
They are told a credit card number is needed to pay these costs. The thieves then use the credit card number to buy items and to get cash. The elderly are also susceptible to repairmen who stop by and say they can fix their homes. The workers may do the repair work, but it is shoddy and overpriced.
If the elderly try to complain, the repairmen are no longer in the area, possibly not even in the state. A more elaborate scam involves a con artist, acting as a bank official, telling the elderly person that a particular bank teller is giving out counterfeit bills and that the bank needs help in catching the teller. The elderly person goes to the teller's window and withdraws a large sum of money. The victim then gives the money to the "bank official" to be examined. The "bank official" assures the customer that the money will be redeposited in his or her account; of course, it never is.
Environmental crime involves illegally polluting the air, water, or ground. Sometimes firms dump hazardous materials and waste. To investigate properly, local, state, national, and international agencies often need to cooperate. It is not unusual for environmental criminals to transport hazardous waste across state or international borders for disposal in places with less stringent environmental enforcement. Even when a problem is known to exist, environmental crime cases are often difficult to prosecute due to their complex nature.
The ramifications of pollution may take years to realize as pollutants become dispersed in the environment. In addition, financial penalties are often low enough to make it worth the risk for companies to flout the regulations. The more common means of enforcing environmental laws is through regulatory action by government agencies and the application of civil penalties to those who violate the regulations.
Cite this article Pick a style below, and copy the text for your bibliography. September 24, Retrieved September 24, from Encyclopedia. Then, copy and paste the text into your bibliography or works cited list. Because each style has its own formatting nuances that evolve over time and not all information is available for every reference entry or article, Encyclopedia. The Dictionary of Criminal Justice Data Terminology Bureau of Justice Statistics defines white-collar crime as "nonviolent crime for financial gain committed by means of deception by persons … having professional status or specialized technical skills.
The following is a list of the specific crimes that the Bureau of Justice includes in white-collar crime :. Although the above crimes are not part of the Crime Index total, the FBI keeps statistics on forgery and counterfeiting, fraud, and embezzlement. Fraud offenses comprised most of the white-collar crimes reported to the FBI between and , followed by forgery and counterfeiting, embezzlement, and bribery. Between and arrests for forgery and counterfeiting increased by 8. Despite the low percentage of white-collar crime out of all crimes, it is speculated that white-collar crime can cost far more than street crimes due to the large financial losses incurred by corporate crimes against the government, environment, and society as a whole.
Welfare fraud and wire fraud accounted for 1, and reported offenses, respectively, between and The FBI reports that between April 1, and September 30, , they received , Suspicious Activity Reports SAR from banks for crimes involving check fraud, check kiting, and counterfeit checks and negotiable instruments. In a study of the UCR was completed and a recommendation was made to redesign the system to provide more comprehensive and detailed crime statistics.
The system currently reports on cases of homicide, forcible rape, robbery, aggravated assault, burglary, larceny-theft, motor vehicle theft, and arson. Some information about offenses, victims, offenders, and reported arrests for 21 additional crime categories is included.
The NIBRS system also provides information on 46 different crimes and 11 lesser offenses, including white-collar crimes. The only information available for each of the categories is arrest information, which includes the age, sex, and race of the arrestee. For fraud offenses reported most often , the arrest rate was White-collar crime offenders were usually male, with the exception of embezzlers. Between and white-collar crimes were largely perpetrated by whites, who represented 70 percent or more of offenders across all categories of white-collar crime.
According to the FBI, between and , businesses, financial institutions, and government and religious organizations were more likely to be the victims of fraud, counterfeiting, and embezzlement, while individuals were more likely to be the victims of bribery. There were some incidents of bribery against individuals between and according to the FBI, compared to 36 against government organizations and 16 against businesses. The incidence of identity theft has risen significantly since , making it one of the fastest-growing and most difficult to prevent types of crime.
Thieves steal personal information from victims, such as their social security , driver's license, credit card, or other identification numbers, and then set up new bank or credit card accounts or otherwise misrepresent themselves as their victims to fraudulently obtain money. There is no central office keeping track of identity theft. There are, however, several different federal agencies—including the Federal Trade Commission FTC and the Social Security Administration's Office of the Inspector General—and three private consumer reporting agencies which compile figures. In there were calls per week to the Hotline.
By June of the number of callers to the hotline had increased to 1, per week, a rise of about percent. Total identity theft complaints received by the FTC rose from 86, in to , in , an increase of about percent in two years. Identity theft is the most common consumer fraud crime reported to the FTC, accounting for 42 percent of all such crimes.
In personal information stolen from identity theft victims was used to set up new or misuse existing credit card accounts in 33 percent of the cases. Other identity theft crimes include unauthorized use of telephone, utility, and other communications services 21 percent , bank fraud 17 percent , and employment-related fraud 11 percent. See Table 7. By , 8 percent of victims reported an identity theft that resulted in the forging of a government document, such as a driver's license or social security card.
About 19 percent of victims reported that they had experienced more than one type of identity theft. This accounts for the reported percentages exceeding percent. In 28 percent of identity theft victims were between 18 and 29 years old, 25 percent were 30 to 39 years old, and 21 percent were from 40 to 49 years old.
Those under the age of 18 and over 60 were the least likely to be targets of identity theft. See Figure 7. According to the FTC, about 21 percent of callers to the Identity Theft Hotline reported having a personal relationship with the suspected offender. Nearly 10 percent of identity theft victims reported a family member as the suspect. Roommates and co-habitants were identified as suspects by less than three percent of callers.
Most callers to the Identity Theft Hotline stated that they did not know how their identities were stolen, and most did not discover the theft until one year after their personal information began to be misused. Victims of identity theft were sometimes unable to obtain credit or financial services, telecommunication services, or utility. The Social Security Administration SSA reports that in some 11, complaints were received about misuse of social security numbers.
In the number of complaints had risen to about 65, An SSA review concluded that about 81 percent of these incidents of misuse involved identity theft. Identity theft is also used by illegal aliens. Each year thousands of aliens are stopped at the border for attempting to enter the country by using counterfeit or fraudulently obtained identity documents.
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The Immigration and Naturalization Service INS reports that 99, fraudulent documents were seized by their inspectors in , with , being seized in The most common documents are border crossing cards and alien registration cards. Tracking white-collar crime, and especially corporate crime , is generally much more complicated than tracking other crimes. There often is no one single offender or one victim to report the crime.
White-collar crime - Wikipedia
White-collar crime is often based on establishing trust between the victim and the offender before any crime is committed. Building trust expands the time frame of the crime, permitting repeated victimizations of an unsuspecting victim. Different types of ethical violations linked to corporate crime include misrepresentation in advertising, deceptive packaging, the lack of social responsibility in television commercials, the sale of harmful and unsafe products, the sale of virtually worthless products, polluting the environment, kickbacks and payoffs, unethical influences on government, unethical competitive practices, personal gain for management, unethical treatment of workers, stealing of trade secrets, and the victimization of local communities by corporations.
Corporate crime is nothing new.
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In the article "Schemers and Scams: A Brief History of Bad Business" Fortune, March 18, , a brief chronology of corporate malfeasance is given, including some of the more well-known corporate crimes of the past 15 years:. In November , 46 states collectively settled lawsuits they had brought against cigarette manufacturers to recoup the tobacco-related costs of health care paid out by state Medicaid agencies. Although the sale of tobacco products was legal, the states alleged that tobacco firms knew of the highly addictive nature of smoking yet deliberately concealed their research findings from the general public for decades while promoting tobacco use.
Between and there were a number of verdicts in cases brought against tobacco companies, some of them resulting in million-dollar jury awards. Also in June of a New York jury found the U. Corporate crime can cost billions of dollars, but because these losses are frequently spread out over so many uninformed victims, it usually does not create the same initial public impact as, for example, an armed robbery of a few hundred dollars.
There often is no single person to take the blame. Corporations can be so complex and powerful that the rules of justice applied to individuals are often applied differently to business. A board of directors is not imprisoned for a corporate wrongdoing; instead, the corporation may be fined. Despite their potential to do extensive damage, corporate crimes are not regarded with the same fear as "street crime.
On the other hand, someone who has had a considerable part, or perhaps all, of their savings stolen as the result of fraud or embezzlement can face a painfully insecure future because they may no longer have the money intended to support their later years. Nonetheless, except in certain spectacular cases that receive extensive media coverage such as the savings and loan fraud of the s, the consequences of corporate misbehavior are generally ignored. Many corporations are becoming concerned about the potential espionage activities of competing corporations.
In a computerized global economy where a competitor's advantage can mean life or death for a company, trade secrets, copyrighted information, patents, and trademarks become very important. Most major companies have developed sophisticated security systems to protect their secrets. Stealing classified corporate information has become a major issue for national governments.
In a report by the U. Many governments have begun to use their national intelligence organizations to protect local companies from espionage by foreign companies or governments. In the United States , the Economic Espionage Act of PL made it a federal crime to steal trade secrets for another country. Department of Justice is continually looking for instances in which contractors have defrauded the government.
Normally, these investigations end in agreement by the defrauding company to pay a fine. In March of the U. The government also alleged that Pall had defrauded the Department of Defense on other contracts, but the settlement dismissed all allegations. On March 30, , the U.
Department of Justice announced that Alliant Techsystems, Inc. According to the complaint, "Managers at Alliant and Hercules regularly directed their employees to mischarge labor time to a number of military contracts even though management knew the employees did not devote as much time to the contract as was charged to the government. The Securities and Exchange Commission SEC reported that falsifying corporate data, especially on financial statements, increased in the s.
The falsified reports included statements inflating sales, hiding ownership of the corporation, and embezzlement. In July President George W. Bush created the Corporate Fraud Task Force to oversee investigation and prosecution of crimes involving corporate fraud. The collapse of the Enron corporation was one of the most glaring examples of corporate crime and falsification of corporate data in recent history. Enron was founded in in Houston as an oil pipeline company. As electrical power markets were deregulated in the lates, Enron expanded and became an energy broker trading in electricity and other energy commodities.
In effect, Enron became the middleman between power suppliers and power consumers. However, instead of simply brokering energy deals, Enron devised increasingly complex contracts with buyers and sellers that allowed Enron to profit from the difference in the selling price and the buying price of commodities such as electricity. In order to service these contracts, which were becoming increasingly speculative due to the instability of unregulated electricity prices, Enron executives created a number of so-called "partnerships"—in effect, "paper" companies whose sole function was to hide debt and make Enron appear to be much more profitable than it actually was.
Perhaps worse, many Enron employees—who had been encouraged by company executives to invest monies from their k retirement plans in Enron stock—had their retirement savings reduced to almost nothing as a result of the precipitous decline in value of Enron stock. Most chilling, Enron executives, who themselves reaped millions in profits from Enron stock, barred employees from cashing in their stock in late October when it still had some value. According to internal emails and other inter-office communications, warnings were given to Enron executives and to its accounting firm, Arthur Andersen, that Enron was heading for financial disaster as early as a year before Enron declared bankruptcy.
By November 28, , Enron's debt instruments were downgraded to junk bond status, making it impossible for Enron to forestall its collapse by borrowing more money to service its debt. In the wake of Enron's collapse, some 10 committees in the U. The shredding of financial and inter-office documents by both Enron and its accounting firm, Arthur Andersen, was also under investigation.
Meanwhile, numerous lawsuits were filed against Enron, Arthur Andersen, and former Enron executives including former Chairman Kenneth L. Former Enron Vice Chairman, Clifford Baxter, was found shot to death in his car on January 15, , in an apparent suicide. News reports linked Baxter's death to his despondency over his role in the Enron scandal. Enron treasurer Ben Glisan, Jr. He was sentenced to five years in prison on September 10, Jeffrey Skilling turned himself in to authorities on February 19, to face nearly three dozen criminal charges.
After a six-week trial and 10 days of jury deliberations, Arthur Andersen was convicted of destroying Enron documents during an ongoing federal investigation of the company's accounting practices. During the trial, executives of Arthur Andersen testified that the documents were destroyed as the result of customary housekeeping duties, not as a means to prevent federal investigators from seeing them.
In the aftermath of the Enron scandal, the year-old accounting firm laid off some 7, employees and lost more than of its 2, clients. Other recent examples of alleged falsification of corporate data include the filing for bankruptcy in January of Global Crossing, a telecommunications company. In February the Securities and Exchange Commission SEC opened an investigation into Global Crossing and its auditor—again, the accounting firm of Arthur Andersen—for questionable accounting practices.
Dennis Kozlowski, the former chief executive of Tyco International Ltd. According to the indictment, Kozlowski allegedly directed New York gallery employees to ship empty cartons to the Tyco corporate headquarters in New Hampshire , where Tyco employees were instructed to sign for the "shipments. Kozlowski is accused of trying to evade the New York City taxes that would have been owed on paintings purchased by someone in-state paintings purchased from out-of-state are not subject to these taxes.
On June 26, , the Manhattan district attorney added a charge of evidence-tampering to the other charges against Kozlowski, claiming that he removed a shipping invoice from a crate of documents before it was sent to the district attorney's office. All told, Kozlowski faced 12 felony charges and one misdemeanor charge. Kozlowski's trial ended April 3, in a mistrial.
In July John Rigas, his two sons, and two other executives of the Adelphia Communications Corporation, one of the nation's largest cable television companies, were charged with wire fraud, bank fraud, and securities fraud for failing to disclose billions of dollars worth of company debt. Their deception defrauded investors, creditors, and the general public by making them believe the company was in better financial health than it was.
The deception ran from to May On November 4, , Richard Scrushy, former CEO of HealthSouth, the nation's largest provider of outpatient surgery, rehabilitative healthcare services, and diagnostic imaging, surrendered to FBI agents. Scrushy is one of 16 HealthSouth executives under indictment for fraud. According to Fortune Magazine March 18, , between and , the Securities and Exchange Commission SEC filed criminal charges in cases involving stock fraud or other corporate crime.
Of the referrals, U. Of those, defendants were found guilty and 87 went to jail or prison. From to the SEC filed some 3, civil cases. Of those, The remaining civil cases brought by the SEC were either for contempt or for other causes of action. The FBI investigates incidents of financial institution fraud FIF , including insider fraud, check fraud, mortgage and loan fraud, and financial institution failures. Department of Justice, Federal Bureau of Investigation , Washington, DC, , in the early s the FBI was heavily involved in investigating savings and loan failures due to insider fraud.
In there were financial institution failure investigations, the highest recorded. This number dropped throughout the s and in only 67 cases were under investigation. According to U. Department of Justice figures, the number of convictions in FIF cases declined from , when 2, convictions were reported, to , with.
With the decline of insider fraud cases, the FBI has turned its investigations to external fraud schemes involving criminals seeking to defraud financial institutions. Annually, thousands of cases are reported involving acts of fraud against insurance companies, such as faking a death to collect life insurance, setting fire to a house to collect property insurance, or claiming injuries not actually suffered.
According to "A Statistical Study of State Insurance Fraud Bureaus: A Quantitative Analysis , to " Coalition Against Insurance Fraud, May , insurance fraud bureaus in 41 states received nearly 89, referrals involving insurance fraud in , up by 5 percent from There were 21, more cases of fraud reported to insurance fraud bureaus in than in Referrals may come from insurance companies, consumers, and government and law enforcement agencies. In insurance fraud bureaus referred some 3, cases of insurance fraud for prosecution, resulting in 2, criminal convictions nationwide.
Florida reported criminal convictions for insurance fraud in , followed by New York , Pennsylvania , Arizona , and New Jersey In there were some 1, civil actions initiated by insurance bureaus for insurance fraud. This was down somewhat from the 1, civil actions brought by insurance bureaus in Still, the number of civil actions brought by insurance bureaus in was more than triple the civil actions brought in They fraudulently issued life insurance policies to people suffering from AIDS.
To dupe the insurance companies into insuring the AIDS victims, they arranged for the blood of healthy people to be submitted for testing instead of the blood of the actual applicants. In March one of the largest insurance frauds of recent times was unearthed in southern California. Following a month investigation by the FBI, dozens of outpatient-surgery clinics were charged with performing unnecessary surgeries on patients and then overcharging their insurance companies. The patients themselves were part of the fraud, being recruited to have surgeries performed with the promise of a share of the insurance money.
In addition to the criminal attempts to swindle insurance companies, insurance companies sometimes defraud their customers. On April 30, , a final settlement was reached in the class action brought against Principal Mutual Life Insurance Company by some , current and former life insurance policy holders who alleged that they were misled by false and misleading marketing materials when they purchased their policies.
Policyholders alleged that Allstate failed to provide payment for the loss of an automobile's market value after an accident when paying for the repair costs of automobiles involved in accidents. As in the Allstate action, automobile policyholders alleged that USAA failed to compensate them for the loss of value of vehicles after an accident. These regulations require corporations to be honest with their investors about the corporations, and stockbrokers to be forthcoming with their clients.
Despite these rules, both the corporate officials who release information about their companies and the stockbrokers who help people invest in securities may knowingly lie to or hide information from consumers in order to raise the stock level of a company for their own profit. Corporations may commit this type of fraud by releasing false information to the financial markets through news releases, quarterly and annual reports, SEC filings, market analyst conference calls, proxy statements, and prospectuses.
Brokers may commit this type of fraud by failure to follow clients' instructions when directed, misrepresentation or omission of information, unsuitable recommendations or investments, unauthorized trades, and excessive trading churning. Since brokerage analysts' recommendations to clients may affect the fees earned by the firms' investment banking operations, it may be profitable for the analysts to play up the value of certain stocks.
In the number filed was , an increase of over percent from the number of There were 53 filings in New York, 43 in California, and 22 in Delaware. Companies in the communications industry were most often filed against 58 , followed by those in the noncyclical consumer industry 47 and finance The most common allegations made were misrepresentation in financial documents and false forward-looking statements. In addition to the traditional securities class action filings, two new types of securities class filings have been introduced.
In there were IPO Allocation filings recorded. In "Analyst" filings were introduced. These filings allege that investment banks or individual securities analysts at such banks issued biased research reports or ratings on companies. These reports were not based on factual information and did not disclose conflicts of interest. Numbers for Analyst filings have not yet been tracked by the Clearinghouse. In May the stock brokerage company Merrill Lynch agreed to settle a case brought against it by the New York Attorney General Eliot Spitzer, for allegedly hyping certain stocks publicly in order to gain banking business while privately criticizing the stocks to others.
In addition to the monetary sum, Merrill Lynch must now include a warning on its stock recommendations to advise investors that it may be doing business with the companies whose stock it is rating. While many oil and gas investments are legitimate, this area is well-known for fraudulent offers. Oil- and gas-well deals are sometimes offered by "boiler rooms," or fly-by-night operations that consist of nothing more than bare office space and a dozen or so desks and telephones.