Why is Bankruptcy Fraud a White-Collar Crime?

Why is Bankruptcy Fraud a White-Collar Crime?

Money is one such factor that decides the fidelity of an organization. There are several reasons why an employee or an organization participates in bankruptcy fraud. When an organization and its administration commit fraud is dedicate in a non-violent manner. When it financially benefits the organization, or its owners, it is called a white-collar fraud.

Most Bankruptcy fraud crimes are financial. The people involved in a white-collar crime come from prominent positions in the organizations. They even have thorough knowledge about their trade. 

During the 1930s that sociologist and criminologist Edwin Sutherland coined the term “White-collar crime.’. The book “White Collar Crime” sold like hot pancakes to a society. Engulfed in a notion that the upper-class would not indulge in any malpractice. However, the book’s popularity helped me understand how crime such as bankruptcy cannot be differentiated between a white or blue-collar.

What are the two types of white-Collar Crime?

White-collar crimes are of two types violent and non-violent.

Crimes that only involve embezzlement, bankruptcy frauds, Insider trade cause no physical harm to a person can get categorized in the Non-violent White Collar crime. At the same time, White collar crimes that lead to violence, such as murders, trafficking, and more dangerous crimes, can give White Collar Crimes a violent face.

When a person commits bankruptcy fraud, he or she may do this to hide high-valued assets overseas or transfer funds to a shell account through an illegal channel. Such a crime can not be easily traced and hence is the work of one or more experts involved. This represents the income statement of the person lower than it is, and therefore, they can apply for bankruptcy. 

There are cases where people have filed for bankruptcy but are enjoying the lush and posh lifestyle in a different country, where no one can trace them or even have a clue of the hidden assets.

Bankruptcy is a getaway for businesses that were once operational and making good money but can no longer sustain themselves. Such companies are given a chance to present themselves bankrupt. So that the government can intervene and take care and distribute the assets accordingly to clear off their debts. Since many businesses leverage their finances, they get into troubled waters when they cannot pay back their dues to the respective banks or partners.

Some of the examples of white-collar crimes are as follows:

Bankruptcy fraud

When a business owner turns self-fish and this nothing more than finding his way out from a failing business, there is a motive to commit Bankruptcy fraud. The business owner/s may falsify the financials and even personal assets to present that they are no longer in a state to provide salaries to their employees or even pay back their debts. Read more about bankruptcy fraud right here.

Loan Fraud

Loan fraud is when a loan officer charges excessive amounts to clear the loan application. People running a business, purchasing homes, or any other investments seek loans from financial institutions such as banks. The fraudulent loan officers charge under the table money for such loan applications to process. It is a fraud and is to be bought to the attention of the institution.

Admissions Fraud

The infamous story of William Rick Singer committed the white-collar crime of getting the rich and famous children to Ivy League colleges. Where hard-working and studious applicants were left in tears that couldn’t make it into the top colleges, low scorers, but children of the rich made their way into Ivy college classrooms through the backdoor. For an amount of more than $25Million is what is on paper was a white-collar crime committed not just by Rick Singer but also by the fraudulent authorities of the college.

Ponzi Schemes

Many people want to live their dreams and have a life of ease. This need gives birth to a criminal sense in the mind of fraudsters who dupe people with their money but offering them a Ponzi scheme.

Charles Ponzi’s “Ponzi Scheme”, is a scam offering people huge returns on minimal investments. The saying, “it’s too good to be true,’ is believed in a true sense.

Whenever you find such a person selling you a deal that you feel is not right, you can check for the collateral they are asking for. Whether or not your investment is secured and is it on verified legal papers. 


It is a white-collar crime for the smart and cunning. Every financial department has various checkpoints where there is a person responsible for approving a financial transaction. However, if they’re even one weak link in this chain, a possibility of developing various channels where the embellishment of money can occur. There are several such people, not just the ones handling finance ut also from other departments of an organization who make themselves money just by embezzlement. 

For Example:

Betty, the admin of a renowned company, submitted her petty cash receipts every week for $500. Since she handed over her original receipts without scanning them. The person responsible for returning her cash float used the identical bills to extract $500 as and when it was feasible. The fraud was only bought to light years after a qualified and legitimate person looked in the accounts.

Corporate Espionage

Companies spend millions on developing technology. Unless they provide the knowledge to a selected few, Competitors can easily replicate the technology through knowledge sharing. Several blue-chip companies have faced such problems where their employees, for some bribe, will provide the companies code for specific applications, and the duplicates of the same become readily available in the market for a lower price. Such a white-collar crime is Corporate Espionage. 

Money Laundering

Making illegal cash legitimate through various channels by booking it into the financial books of an excellent running business where no one bats an eye for the source of money is called money laundering. People use money laundering to save on taxes, foreign exchange rates, and illegal funds transfer.


The easiest way to get rich is by printing your money. Counterfeiting is a crime and a serious offense that can keep the offender in jail for years. The government spends the latest technology to recover as much as counterfeit notes are available in the market. Still, with technology, even on the criminal’s side, it has become increasingly challenging to differentiate between two similar-looking bills.

Cyber Crimes

Identity theft is when an imposter uses another person’s data, financial information, or even online details to gain benefits from it. One such example is when there is a security breach for a credit card company. Hackers bug the bank system, letting you lose thousands of Personal details, Identification numbers, pin codes, etc. It caused a massive loss to the bank. To repaired back the breach does take time, and hence IT systems need to protect against such venerable threats.

Legal or Medical Assistance Crime

People such as lawyers and doctors are licensed professionals who ought to provide their best services. However, the market is not immune to professionals who have corrupt practices. Taking bribes from medical companies to write prescriptions, a commission from pharmacies to send referrals, organ stealing are crimes that doctors are arrested and stripped of their licenses. Lawyers and notaries, on the other hand, have to abide by the laws. Learn more about the two types of white-collar crimes by clicking here.


Bankruptcy fraud is one of the many types of white-collar crimes. Increasing technology and added sophistication in daily lives make people venerable to information provided. Hence it is advisable to not accept any offer at face value but instead conduct research of your own.

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