Pump-and-dump scams are only one type of business crime or white-collar crime; there are many others. These business crimes frequently entail dishonesty, fraud, or misrepresentation. Ponzi schemes, embezzlement, and acts that knowingly break environmental rules and regulations are examples of high-profile crimes.

Types of Business Crimes

The first three categories of business crimes will be discussed, along with instances from the 2000s. Because of the complexity of the business sector, some business crimes go unreported or get less media attention.

1. Ponzi Plans

 Ponzi Plans
Ponzi scheme vector illustration. Business investment scam concept

Ponzi schemes, called pyramid schemes, are investment frauds that lure victims with claims of huge returns on low-risk investments. Old investors are paid high rates using funds obtained from acquiring new investors. The market’s success has no bearing on the rate of return for investors.

Through his business, Bernie Madoff ran a Ponzi scam for 20 years. He used the money of new clients (investors) to pay out substantial returns (above average). Investors attempted to withdraw money in 2008, but the Madoff organisation could not reimburse them. Madoff has been imprisoned for more than 100 years.

2. Stealing and Larceny

Two types of theft can happen in a business: larceny and embezzlement. Larceny is the illegal taking of another person’s or a company’s property. For instance, an employee may be charged with larceny if they remove another employee’s computer with the intent to steal it.

business crimes

In contrast, embezzlement happens when a person is given a valuable object and refuses to return it or fails to do so. For instance, embezzlement might occur if a worker responsible for managing the office’s petty cash knowingly took some money for personal use.

One such instance of embezzlement happened at the Milwaukee, Wisconsin-based Koss Corporation. At Koss Corporation, Sujata “Sue” Sachdeva worked as vice president of finance and principal accounting officer. Sachdeva received a sentence of 11 years in federal prison and restitution to Koss Corporation after being found guilty of embezzling $34 million over five years. The company’s money was given to Sachdeva, who did not use it.

3. Ecological Crimes

Numerous federal laws regulate the environment. There are both civil and criminal repercussions for breaking several of these laws.

The following federal laws are punishable by law:

  • The Endangered Species Act
  • The Clean Air and Water Acts
  • The Resource Conservation and Recovery Act
  • The Comprehensive Environmental Response, Compensation, and Liability Act.

Restitution is being paid by the International Petroleum Corporation of Delaware (IPC) for environmental offences, including a plan to break the Clean Water Act. IPC processed oil and wastewater from 1992 to 2012. Before dumping the garbage into the city’s sewer system, the corporation acknowledged changing the needed water test samples to ensure they complied with the permit’s limitations. The corporation also acknowledged breaking environmental regulations by transporting waste for disposal in South Carolina that contains benzene, barium, chromium, cadmium, lead, PCE, and trichloroethene without disclosing the information as required.

4. Laws Against Antitrust Violations

Antitrust laws prohibit activities that restrict trade or encourage market dominance. These rules were implemented to offer direction and oversight for corporate mergers and acquisitions to stop market misuse. Monopolies, or the dominance of one company over a specific market, are to be avoided. Monopolies lessen competition, which can have a negative effect on consumer prices. Since the United States was built on capitalist ideals, it is illegal to engage in anti-competitive business practices, and some of these laws, like the Sherman Antitrust Act, contain provisions that could result in criminal penalties.

5. Racketeering

Blackmailing, money laundering, and loan sharking are all examples of racketeering operations. The phrase has previously been used to refer to organised criminality. Other entities are now included in the term’s usage. A federal statute known as RICO, or the Racketeer Influenced and Corrupt Organisations Act, aims to deter and prosecute corporations and organised crime groups. RICO is now used against banks, insurance companies, stock brokerages, tobacco companies, and other large business enterprises. Organised crime is no longer the only source of racketeering. It’s said that health insurance providers and other respectable enterprises utilise pressure techniques akin to racketeering by organised crime.

These charges allege lying about the actual cost of care, hurting doctors’ businesses, intimidating patients, and trying to manipulate the doctor-patient relationship through deceit and coercion.

6. Bribery

Bribery occurs when valuable items such as money, gifts, favours, favouritism, information, or services are exchanged for desired or favourable behaviour. Offering or accepting a bribe might result in charges of bribery against you. Both inside and outside the United States, bribery is forbidden. The Foreign Corrupt Practices Act prohibits American businesses from paying bribes to foreign officials to influence overseas business outcomes. A scenario in which a pharmaceutical corporation gives unique rewards to people who agree to prescribe its products is an example of bribery.

7. Money Laundering

The term “money laundering” describes the process of transferring “dirty” money, or money earned via criminal activity, through otherwise lawful businesses to make it appear “clean.” It is impossible to connect the money to the wrongdoing. Clean money is cash that has been acquired through proper business operations.

8. Spamming

Spam, or the transmission of unsolicited business email, is forbidden. While it is the user’s responsibility to use any programs available to them to block spam, rules are in place to make it more difficult to send spam. The Washington state anti-spam law has the following elements, which are also found in other laws:

  1. No one may start or plan to send an email that misrepresents the sender as someone they are not, shows the sender as affiliated with a group with which they are not affiliated, or otherwise conceals the sender’s identity or the email’s origin. The subject line of emails must not contain any erroneous or deceptive information.
  2. The recipient must know that the email is from a business source, and business communications must include the sender’s contact information.

States like Washington are passing laws to limit spam and urging users to become involved in the fight against it. Legislators are increasingly seeking methods to hold businesses accountable for spreading spam because they recognise it as an annoyance.

How To Prevent Business Crimes 

Your company’s reputation is established on the dependability of your team and the way you handle customers. Being a business owner means diligently preventing business crimes and safeguarding your data, customers, and employees. By taking the following precautions, you can lessen the likelihood that you or your clients will become victims of crime. These strategies will also prevent the unauthorized use of business credit cards.

Perform Security Checks on Employees

It is now standard hiring procedure to perform a security check on possible new hires. An individual looking to perpetrate fraud would frequently provide glowing references and a spotless CV to come out as reliable and honest.

Several companies and human resource agencies offer this service for a fair price, including extras like reference checks and resume experience verification.

Limit Who Has Access to the Credit and Debit Card Readers

Keep your credit card terminals out of easy reach if you own a restaurant or retail space. Don’t, for instance, place a hostess station with credit card machines right in front of the restaurant’s entrance. When not in use, lock them up.

Install a Reliable Inventory Management System

The less probable it is that you’ll discover a product inexplicably leaving through the back door, the more stringent your inventory control methods are.

Online Customer Protection

Online financial transactions and client information can be secured in many ways. Protect yourself and your clients from credit card data leaks to preserve the credibility of your business. You can also go about securing networks with IP whitelisting, which means only approved devices and end users have permission to interact with mission-critical resources, limiting your exposure to cyber threats.

Internet Safety

Technology advancements can make your organisation work more smoothly, but there is always a risk that cybercriminals will compromise your data. This risk management advice can assist you and your workers in being aware of the risks and taking precautions to stop cyber incidents from harming your company. Want improved security that is targeted to your company?

Put Security Systems in Place

Install security measures to monitor your business while you’re away. People are less inclined to steal if they know they are being monitored.

Business Crimes Statistics

Statistics on business crimes differ by nation or location, but some broad trends can be seen.

  • The most frequent sort of business crime is shoplifting. For instance, there were reported shoplifting offences totalling approximately 374,000 in the UK in 2021–22.
  • Another prevalent form of business crime is burglary. Over 2.1 million business burglaries were reported in the US in 2020.
  • The threat posed by cybercrime to businesses of all sizes is increasing. A US company’s average loss from a data breach in 2022 was $4.35 million.

You are the first line of defence against crime for your company as the owner or manager of a firm. Together, business insurance and prevention may safeguard your company against potential loss.

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