White Collar Crime is defined as any type of illegal conduct is committed in a business setting. The term white collar implies that most of these types of crimes are committed by non-physical means as opposed through the use of force. Thus, white collar crimes typically involve such illegal methods as deceit, trickery, fraud, or guile to obtain monetary gains or property interests.
Since white collar crime is very broadly defined, prosecutors have a lot of discretion when deciding who to prosecute for the acts. In a small business setting, many persons can be held liable, including the corporation itself. Of course, a business organization cannot be sent to jail; however, white collar crimes can lead to stiff monetary penalties and/or injunctions that can devastate a person’s small business.
In the context of a small business, white collar crime most commonly takes the form of fraudulent record keeping, also known as “cooking the books”. What usually happens is that figures or receipts are altered in order to create a false impression that the business is more profitable than it really is.
Other examples of white collar crime include:
- Various types of fraud, such as pharmacy fraud and payroll fraud
- Tax evasion
There are many other types of white collar crimes that can occur in small businesses. However, the main underlying characteristic of such crimes is that the illegal conduct happens for the purpose of financial gain or for advancing the business’ interest. This is different from other types of work-related violations, such as discrimination, as these typically do not involve the motivation of monetary gain.
If authorities suspect that your business is engaged in illegal activity, an investigation into your business activities may be launched. If this happens, you should cooperate with them in a manner that is honest and forthcoming. However, you may wish to contact a lawyer first in order to avoid incriminating yourself. Also, remember that you do have a constitutional right to not make statements that would lead to self-incrimination.
Especially with small businesses, the potential for finding white collar crime is great. A single investigation can uncover many facts that can be used in a court of law. Also, even if no criminal activity is discovered, it is a crime to interfere with investigations (“obstruction of justice”). Therefore, it is always best to take preventative measures to avoid illegal conduct in the first place.
As a small business operator or owner, it is in your best interest to understand what types of conduct are appropriate in the business place. It can happen that illegal activity occurs without the owner or the workers being aware of what the law says. Ignorance of the law is never an excuse- your business could still be penalized for some conduct that occurred without your knowledge or approval.
In order to protect yourself and your small business, here are some tips to keep your bases covered:
- Learn the law: Understand what types of conduct are considered white collar crime and how these illegal activities could affect your business. Stay up to date with recent changes in the law. If you are unsure of any areas, consult with a lawyer for advice to make sure you are within the bounds of proper conduct.
- Monitor your employees well: Many small business owners feel that it is unnecessary or impractical to regularly monitor their employees. However, you should keep alert for any discrepancies or suspicious figures that do not match your business’ typical performance output.
- Institute solid policies and reporting mechanisms: Regardless of your company’s size, you should supply a handbook which clearly states policies and outlines procedures for reporting misconduct.
- Never make assumptions: Mistakes are often made because business operators assume that no one is “watching” their business. Bear in mind that authorities have much access to your data, and can obtain vital information if they have reasonable suspicion to do so.
If you have been implicated in criminal charges of white collar crime, you should contact a criminal lawyer immediately. Also, if one of your employees is acting unwisely, you should not hesitate to make a report, even if it may be uncomfortable to do so. The longevity of your small business could be at stake if you allow illegal activities to persist despite your knowledge of them.