Due to New York’s status as a business and financial hub, white-collar crime – meaning financial crimes, such as fraud, embezzlement, or insider trading – is a major concern in New York. In recent years, authorities have ramped up efforts to combat white-collar crime, particularly in response to evolving financial technologies like cryptocurrencies. Two recent cases, one against former President Donald Trump and one against Sam Bankman-Fried, shed light on New York state’s current attitudes on white-collar crime.
What is White-Collar Crime?
White-collar crime refers to non-violent financial crimes, typically committed by individuals or businesses in professional or corporate settings. White-collar crime encompasses a broad spectrum of offenses, including fraud, embezzlement, insider trading, bribery, identity theft, and money laundering.
The Trump Case – Civil Fraud
New York Attorney General Letitia James filed a civil litigation against former President Donald Trump, his two adult sons, the Trump Organization, and several of its executives. The case was built on claims that Trump and the other defendants engaged in a years-long scheme to defraud banks, insurance companies, and tax agencies, in violation of New York Executive Law § 63(12). In February 2024, the defendants were found guilty, and Trump was ordered to pay $355 million, plus interest.
The Bankman-Fried Case – Criminal Fraud
Sam Bankman-Fried, founder of the FTX cryptocurrency exchange, was charged by the United States Attorney in the Southern District of New York with wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and money laundering. He was found guilty in November 2023. Bankman-Fried also faced six additional charges, including campaign finance violations, conspiracy to commit bribery, and conspiracy to operate an unlicensed money transmitting business, but the prosecutors decided not to move forward after the guilty verdict in the Southern District of New York case.
What’s the difference between Civil and Criminal Fraud?
The main distinctions between civil and criminal fraud hinge on the level of proof required. The burden of proof is higher (“beyond a reasonable doubt”) in criminal cases, offering more protection to defendants in a criminal fraud case. Conversely, the plaintiff in a civil case generally has to show less evidence (a “preponderance of the evidence”) of fraud to convince a court that the defendant should be held liable.
Also, there is a distinction in the repercussions of an adverse outcome. While a criminal conviction may lead to imprisonment, a loss in a civil trial may compel the defendant to pay money damages and endure other business-related penalties. These civil consequences can still be substantial, as seen with the verdict in Trump’s case. In addition to the monetary penalty, Trump also had to immediately dissolve of all his New York-based business entities.
Conclusion
Prosecuting white-collar crimes can be complex, often involving extensive financial records and legal proceedings. The potential for investigation and prosecution at both the state and federal level can further complicate defending against white-collar crimes. Therefore, it is essential for those accused of such crimes—as well as those who may have been victims of such crimes—to seek experienced legal counsel to navigate the legal process effectively. For further guidance, reach out to a member of our team for next steps.
Contributions to this blog by Ryan Whyte