Insider trading is perhaps the most well-known federal white-collar crime, but there are hundreds of additional white-collar crimes, including tax evasion, pyramid schemes, fraud, and more. There have been multiple well-known federal white-collar criminal cases throughout our nation’s history, including those listed below. 

Bernie Madoff’s Ponzi Scheme

The Bernie Madoff case is one of the most high-profile federal white-collar crime cases. Madoff created and managed one of the biggest corporate Ponzi schemes in history. His fall from glory was covered by nearly every media outlet in the United States. He encouraged wealthy individuals and businesses from around the world to keep investing in his schemes. 

Madoff was held in extremely high regard as the former chairman of the NASDAQ stock exchange. Wealthy elites actively sought him out to manage their savings accounts so they could begin acquiring the type of interest that Madoff falsely promised them. While some had doubted his schemes as early as 1999, the recession was his ultimate downfall. The recession dried up his sources of liquidity. When investors tried to withdraw $7 billion from the fund, they became aware of the scam and the FBI got involved. Federal prosecutors estimate that the total amount of fraud exceeded $64 billion, the largest white-collar Ponzi scheme ever. 

 

Martha Stewart’s Insider Trading

Martha Stewart is well-known around the world for her magazine, as well as her home and cooking show. In 2001, Martha Stewart sold shares of ImClone. The sale took place only a day before the FDA announced that they would not review the company’s latest drug. The refusal of the FDA to review the drug caused the company’s stock value to plummet.

Stewart stated that she was not aware of any insider information that led her to sell the stocks, but that she had merely received advice from her broker who told her to sell the shares. While prosecutors dropped the white-collar crime charges for insider trading, she ended up serving over five months in prison for four different counts of lying to investigators and obstruction of justice. 

 

Charles Ponzi’s Original Ponzi Scheme

Charles Ponzi lived between 1882 – 1949 and is best known for the white-collar crimes he committed in the early part of the 20th century. He became infamous for swindling his investors out of money. Investors gave him over $7 million, but they never saw their money again because Charles set up the original Ponzi scheme. He promised his investors returns of 50% of their investment in 45 days or a 100% return in a 90-day period. 

He paid old investors with money from new investors, rather than through with the profit from the original investment. At the height of his scheme, he was making a reported $250,000 per day, which allowed him to buy a mansion with a heated swimming pool and air conditioning. Eventually, the FBI discovered his scheme and charged him with 86 counts of mail fraud in 1920. He was convicted and spent 14 years in prison. 

 

Dennis Kozlowski’s Misappropriation of Corporate Funds

Dennis Kozlowski was well-regarded as a successful corporate businessman for most of his life. Nearly overnight, he fell from grace, and people across the country became aware of his significant white-collar crimes. He came from humble beginnings and rose to become a CEO over a 25-year career. He lived a lavish lifestyle paid for by the company, apparently spending $2 million on a birthday party for his second wife. He is currently serving a sentence of up to 25 years in prison for white-collar crimes, specifically for misappropriation of corporate funds.

 

Richard Scrushy’s Corporate Fraud

Richard Scrushy was charged with 36 of 85 counts of white-collar accounting fraud in 2004. While prosecutors ultimately acquitted Scrushy from the initial charges, they later indicted him with 30 white-collar crimes. He was convicted and released from prison in July of 2012. He was ultimately charged with all of the following federal white-collar crimes: 

• Obstruction of justice
• Extortion
• Racketeering
• Money laundering
• Bribery of the former governor of Alabama Don Siegelman

His was one of the first cases of its kind to receive significant media attention. He was the first CEO of a large company to face charges under the Sarbanes-Oxley law. The first verdict shows how challenging it is for federal prosecutors to prove corporate fraud. 

 

John Rusnak Hedges His Bets

In 1993, John Rusnak accepted a position with Allfirst Bank. They hired him to help their bank begin yielding a profit. When his business faced losses, he entered false options into the system, making it look like his possessions were hedged. He then went about doubling his bets on the rise of the Japanese currency. This allowed him to avoid realizing his losses for a period, while still betting more on the yen. He sustained losses of $691 million. 

While his losses were not easily detectable, he lost a staggering amount of capital that became increasingly inconvenient and obvious to the bank. The bank told Rusnak to release the capital to balance its sheets, and they discovered his scheme. While he never took any money above his salary, he later worked with the FBI to show them how he kept the scheme alive for so long. He ended up being convicted and served a seven-and-a-half-year prison sentence. He also had to pay a $1 million fine for his actions. 

Contact Our Experienced Lawyers

If you are facing federal white-collar crimes in Texas, you need to speak to an experienced lawyer as soon as possible. Attorney Kenneth N. Cutrer has over 20 years of experience representing clients for a variety of theories, including federal white-collar crimes. Contact us today to schedule your initial consultation.