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4 Types Of Business Crimes You Should Be Aware Of

By | Ramran

If you ask many people about crimes, they will talk of the usual burglary, murder, or assault. Unfortunately, these aren’t the only crimes. If you own a business or you are involved with one, it’s good you know about business crimes.

From their name, these are crimes done in a business setting, and they are often white collar. Meaning they are non-violent. While this is the case, Riverside Criminal Defense lawyer make no mistake thinking that they have no consequences or cause no harm.

A single incident can destroy an organization. If you have investors in your business, they may lose their money, families get devastated, and even your business get heavily penalized.

Are you curious about these crimes? Here are 4 of the most common types of business crimes you should know about:

Tax evasion

You must have seen in the news countless companies being arraigned in court for evading tax. No one likes paying taxes, and businesses are no exception.

If you are a business owner, there are plenty of ways you can evade paying taxes: you can hide your company assets to create the impression you have fewer taxable assets, falsify your tax returns, or decide to stop paying taxes altogether.

You should avoid evading tax as besides attracting fines and penalties, tax evasion can become a criminal issue if the IRS determines that your business tried to evade tax through fraudulent means such as filing false tax returns, failing to accurately report the cash receipts, hiding income, creating fraudulent invoices, and falsifying deductions on the returns.

If you willfully fail to pay taxes and instead divert the money to personal projects, you can be aligned in court with a felony charge that is punishable by a fine of up to $10,000, five years in prison, or both.


Fraud is when you deceitfully obtain money in the business setting. There are many forms of business fraud. The most common ones being:

Insurance fraud

From its name, here you illicitly collect an insurance policy. In most cases, when you are committing insurance fraud, you commit other crimes along the way. For example, when you burn down your business premises to get an insurance payout, you also commit arson. 

Ponzi schemes

The first name that comes to mind when a Ponzi scheme is mentioned is Bernie Madoff. 

This business crime involves “briefcase” companies put together solely to attract investors. The fraudsters promise the investors a handsome payback that is often irresistible. 

While the fraudsters allege they are engaging in an investment program generating huge profits, it’s often not the case as they often take money from one investor and give it to another—they rob Peter to pay Paul.

While these schemes work initially, they often collapse in the long run, as they are unsustainable by design. So, to protect yourself, avoid engaging in any of these schemes as they tarnish your reputation and you risk serving many years in jail.

You also should avoid investing in these schemes as they always crumble. If the deal is too good and you are willing to risk it, make sure that you get in early and get out. This way, you will be paid from the money collected from the newer investors.

Securities fraud

The most popular form of securities fraud is insider trading. Here an individual uses confidential information to sell or buy stock from an unsuspecting individual or company. You should note that your business can be held liable for securities fraud if you knowingly issue false or misleading statements about your financial prospects.

Corporate fraud

Most people confuse this crime with securities fraud, but the two are different. Corporate fraud involves doctoring financial documents and making false statements to swell the profits to hide losses or cover up illegal business activities such as kickbacks.

This crime is often committed to give the impression that a company is making more than it does.

You should stay away from this crime as you might make your business unattractive to investors in the event they go back to the books and discover what you have been doing.

Business espionage

Also known as industrial espionage, business espionage involves the theft of ideas, knowledge, data, or technical know-how. Some of the ways you can do this include:

  • Posing as a competitor’s employee to learn the trade secrets and other confidential information.
  • Trespassing onto the competitor’s property or accessing their files without permission.
  • Wiretapping a competitor
  • Destroying a competitor’s website with malware
  • Hacking into a competitor’s computer
  • Wiretapping a competitor

Although it’s legal to send “secret shoppers” to a competitor’s store to see how they do business, acquiring trade secrets without the owner’s consent is illegal, and you can be arraigned in court for the criminal offense.

Would you like to learn more about this crime? You can find more information in the Economic Espionage Act of 1996.

Money laundering

Money laundering is the act of converting money earned from illegal activities into “clean” money. This is money that can be freely used in business operations without having to hide it from authorities.

Money laundering works in three phases:

  • Placement: Money moves from the illegal activity into a legitimate financial network or institution.
  • Layering: You move the money around through investments, forms, enterprises, and transactions to make it virtually impossible to trace it back to its illegal origin.
  • Final integration: You use the money freely without having to conceal it.

In addition to risking a jail term, engaging in money laundering tarnishes your business’ reputation. Sometimes the impact is so great that a business you have spent years building goes to the ground overnight.

Stay away from crime to save your business.

While the money got through a business crime is sweat-free and often a lot, it often leads to more harm. For your business to be a success, you should avoid any business crime related activities.

To learn more about this crime, consult an expert in criminal law. The professional will advise you on business crime matters and how to identify and avoid them.

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