Follow the Money

Some of the world’s most malignant criminals never pulled a trigger or detonated an explosive, but they have ruined countless lives. By the most conservative estimates, white-collar crime costs the U.S. $300 billion per year—more than four times the annual budget of the Department of Education. However, in 2017, the prosecution of white-collar crime was at a 20-year low. So why do crimes such as insider trading, embezzlement, predatory lending, Ponzi schemes, and threat financing often go unpunished?

Armed with elite legal teams and well-heeled lobbyists, many white-collar criminals seem untouchable or “too big to jail.” But are they really? The Follow the Money series explores various types of financial crimes and interviews experts in the field on how to bring these robber barons to justice.

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The criminal justice system has systemic flaws that disproportionately punish the poor and reward the rich. A bevy of factors play into this disparity, but mainly manifest themselves in discrepancies in bail, discrepancies in sentencing, and discrepancies in incarceration.

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In a hypothetical Dante’s Inferno scenario where all of the world’s white collar criminals were arranged in a descending order of wickedness, healthcare fraudsters would sit somewhere between hell’s eighth and ninth concentric rings.

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There’s no algorithm for justice, and thus there’s still a strong need for investigators to perform their due diligence and apply many of the same tactics used to bring down Al Capone: comparing records, subpoenaing documents, interviewing possible witnesses, and following the money.

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The mortgage crisis of 2008, when investigated by the Financial Crisis Inquiry Commission, was found to have been precipitated by an industry full of predatory and fraudulent practices. The commission referred dozens of cases to prosecutors. Although fines were paid, no one was indicted, no one was put on trial, and no one was jailed.

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Identity theft doesn’t have a typical crime scene. There is no blood, and there are no fingerprints. But there are still forensic traces if an investigator knows where to look.

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Everything in a Ponzi scheme is designed to take advantage of the blinding aspect of greed and divert attention away from the details. But the details are exactly where forensic investigators are trained to look.

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In the past, the mantra of many white-collar crime investigators was to follow the money, and that mantra still holds true, but in this new world of cybercrime, today’s forensic professionals understand that it’s often more important, and more effective, to follow the data.

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If two corporate executives know that their company is about to be acquired—but the public does not know yet—those executives would be guilty of insider trading if they made trades based on their private knowledge.

Barry Franklin
Editor

Barry Franklin

Barry is Managing Editor of ForensicsColleges.com, operated by educational web publisher Sechel Ventures Partners LLC, which he co-founded. Barry was previously VP for a financial software company, and currently sits on the board of a K-8 school and lives with his wife and daughters in the San Francisco Bay Area.