Q: What’s the difference between tax avoidance and tax evasion?
A: A good lawyer.
I love that joke for two reasons: it assumes we win our cases, and it shows exactly how difficult a white-collar criminal case can be. It’s a popular myth that all white-collar defendants are like Bernie Madoff, engaging in egregious acts of criminal deception and theft. In most cases, though, white-collar criminal cases are far more nuanced, and involve many more people than the person accused of committing the crime.
So today, we’re going to look at some common white-collar crimes.
Tax evasion is the deliberate avoidance of paying taxes. And I’m not talking about claiming you donated 10 bags of clothes to the poor without getting a receipt; I’m talking about the type of evasion that you need a team to commit. Individuals and companies may use different methods such as sketchy accounting methods, creating improper tax shelters, hiding assets in trusts and overseas accounts, and taking more deductions than the law allows. You may or may not be surprised to learn that there are many very rich individuals that don’t pay any income taxes.
Embezzlement is the improper uses of assets that have been entrusted to a person. The embezzler does originally obtain possession of the assets legitimately, but then uses the assets for purposes that weren’t intended.
An example includes when an official of an organization (such as a treasurer) who has access to organization funds uses the funds for his/her personal needs. Embezzlement can also include billing for unnecessary services to make an illegitimate transfer of funds seem legitimate.
Generally, the embezzler is a person who has a fiduciary responsibility to handle the assets in a certain way, and then breaches that fiduciary duty.
Theft of intellectual property
Individuals and companies invest a lot of time and money into developing and obtaining copyrights, trademarks, and patents for their innovations. Competitors may use those innovations without permission from the inventors. Competitors may also work to steal the ideas before the copyrights, trademarks, or patents are obtained.
Theft of intellectual property requires some ability to understand the innovations, their practical uses, and how to make money from the use of the innovations.
So, white-collar crimes are “rich people” crimes?
It seems that way, but it’s not always the case. The County Clerk who steals money form the petty cash tin to get a weekly manicure is embezzling that money. And what looks like tax evasion can often just be the result of a slick accountant and some well-placed loopholes in the tax code.
The real mark of a white-collar crime is that it’s financial in nature, not violent. This is why charges like insider trading or bank fraud are considered white-collar crimes, but drug-trafficking – which requires a boatload of accessible cash – is not.
It’s also one of the reasons why people convicted of white-collar crimes tend to end up at Club Fed instead of Riker’s Island or ADX Florence in Colorado: the justice system, more often than not, punishes a white-collar crime through the seizure of assets, rather than “hard time.”
At Drew Cochran, Attorney at Law, you work with an experienced Annapolis and Ellicott City criminal defense lawyer at every turn. If you’re facing white-collar criminal charges, I will use every legal, factual, and practical argument possible to help you obtain an acquittal, a plea bargain, or outright dismissal. If you’ve been arrested, call us at 410-271-1892 or complete our contact form.
And remember: Keep Calm – and Call Drew.