Types of Business Crimes
Business crimes or white collar crimes are not limited to pump-and-dump schemes; they come in many
different forms. Business crimes come in many different forms. As previously stated, these crimes often
involve deceit, fraud, or misinformation. The types of high-profile crimes include Ponzi schemes,
embezzlement, and crimes that intentionally violate environmental laws and regulations. This section will
explore these three types of crimes and provide examples from the 2000s.
Ponzi Schemes
Ponzi schemes (also known as pyramid schemes) are investing scams that promise investors low-risk
investment opportunities with a high rate of return. The high rates are paid to old investors with money
acquired from the acquisition of new investors. The performance of the market is not a factor in the investors'
rate of return.
Bernie Madoff operated a 20-year Ponzi scheme through his company. He paid high returns (above average)
using the investments of new clients (investors). In 2008, investors attempted to withdraw funds, but the
Madoff organization was not able to provide the reimbursement. Madoff is currently serving a more than
100-year sentence in prison.
Larceny and Embezzlement
Larceny and embezzlement are two forms of theft that can occur within a business. Larceny occurs when a
person unlawfully takes the personal property of another person or a business. For example, if an employee
takes another employee’s computer with the intent of stealing it, he or she may be guilty of larceny. In
contrast, embezzlement occurs when a person has been entrusted with an item of value and then refuses to
return it or does not return the item. For example, if an employee is entrusted with the petty cash at his or her
office and that person purposefully takes some of the money for himself or herself, this would be
embezzlement.
One high-profile example of embezzlement occurred at Koss Corporation in Milwaukee, Wisconsin. Sujata
“Sue” Sachdeva was a Vice President of Finance and Principal Accounting Officer at Koss Corporation.
Sachdeva was convicted of embezzling $34 million over a 5-year period and sentenced to 11 years in federal
prison, as well as restitution to Koss Corporation. Sachdeva was entrusted with the company’s funds and did
not utilize the funds as intended.
Environmental Crimes
Many federal statutes regulate the environment. Many of these laws carry both civil and criminal penalties for
violations.
The following federal laws can carry criminal penalties:
•
Clean Air Act
•
Clean Water Act
•
Resource Conservation and Recovery Act
•
Comprehensive Environmental Response, Compensation and Liability Act
•
Endangered Species Act
The International Petroleum Corporation of Delaware (IPC) is paying restitution for environmental crimes,
which included a scheme to violate the Clean Water Act. From 1992 to 2012, IPC processed oil and wastewater.
Chapter 5 Criminal Liability
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