White collar crime

Posted by Winnie Melda on April 23rd, 2019

Introduction

White collar crime is a non-violent crime committed by businesses, government professionals or individuals. The perpetrators of the crime have a financial motivation. In the field of criminology, Edwin Sutherland, a sociologist, first defined it in 1939 (Payne, 2012). The common white collar crimes include bribery, fraud, insider trading, cybercrime, copyright infringement, embezzlement, forgery and identity theft. Other types of white collar crimes are tax evasions, Ponzi schemes, money laundering and other types of scams. Fraud composes most of the white collar crimes. Fraud is a crime in which someone deceives another party for monetary gains. The types of fraud include security frauds, mortgage frauds, Ponzi schemes, insurance fraud and other related business scams that deceive people to take their money. Embezzlement is another common type of white collar crime. Embezzlement involves taking some money from someone who has entrusted you with the funds. Embezzlement takes different forms such as an employee siphoning his employer money to his or her accounts (Payne, 2012). Similarly, money laundering is a type of white collar crime. It involves filtering of illegitimate money or money obtained illegally via a number of transactions in order to make the money appear legal. Tax evasion where a person avoids paying tax is also a type of white collar crime. One can avoid paying tax by transferring product illegally or filing tax forms with force financial information.

White collar crime is punishable by law in the United States. The Congress in 2002 passed the Sarbanes-Oxley Act that defined new white collar crimes and put into place harsh punishments for crimes white collar crimes.

Winifred Jiau’s white collar crime

Jiau worked as a technology consultant to financial analyst and as a contract employee at NVIDIA. Her work as a technology consultant was to provide information on the semiconductor industry to her employer. Between September 2006 and December 2008, Jiau involved herself in an insider trading scheme (Stempel, 2013). She operated with a pair of two tippers who were employees of publicly-traded companies. One of her accomplishes, Son Ngoc Nguyen worked at NVIDIA Corporation while Stanley Ng worked at Marvel Technology Group. Her scheme also involved two tepees who worked as hedge fund manager. These tepees were Samir Barai, the hedge manager of Tribeca Capital Management, who later started Barai Capital Management (BCM) and Noah Freeman, who worked for Sonar Capital Management and SAC Capital.

Jiau developed a scheme in which she could get information from her tippers (Nguyen and Ng) about the earnings data of their employer companies and give this data to her tippees (Stempel, 2013). The tippees would then compare this data with the Wall Street analyst’ expectations before the companies would publicly release their quarterly financial results. The tippees would sell their stock positions in these companies if the data had an indication of earnings failing to meet the expectations. On the other hand, the tippees bought more of the stock if the data showed that the earnings would exceed the Wall Street expectations.

The tippers got live lobsters and other gifts in exchange for the data (Stempel, 2013). On the other hand, the hedge funds made an approximation of three million dollars of illegal profit while Jiau received 208,000 dollars in exchange for her tips. The court found Jiau guilty and sentenced her to four years in jail and a forfeiture of .12 million. Jiau appealed to the U.S circuit court of appeal.

Evidence of the state and the defense

Motion to suppress

The first motion discussed was the suppression of recordings of telephone conversations that were made by Barai and that Jiau moved to suppress. The defense argued that the recordings and the transcriptions were not admissible under Title III since they made them in furtherance of illegal insider trading. However, the state argued that Title III terms it illegal to intercept electronic communications by individuals not authorized by the court of law. But an exception allows interception of communication without the authority for recordings made in a normal course of business. The state argued that since Barai was deaf, he consented for the recordings of his conversations for his benefit. Thus, the recordings and transcriptions were made in an ordinary business course; for this reason, it was admissible under § 2510(5).

Evidence insufficiency motion

The other motion was about whether the evidence was sufficient for the trial. Jiau argued that the evidence was not sufficient enough at the trial to prove that:

a) Nguyen and Ng had any personal benefits from the tips they gave her to their companies’ earnings.

b) Barai’s company used her information to do trades of Marvel stock.

c) The information she conveyed to her tepees was a material requirement security laws.

The state argued that Jiau treated Nguyen to dinner and also gave him other gifts including iPhone, jar of honey and live lobsters. Jiau also gives him insider information about other stocks forming an investment club. On the other hand, Ng entered in quid quo pro relationship with her. For this reason, Ng was able to access information that could use in the future. For the second argument, the state confirmed that Marvel placed its orders right after she made the May 23 phone call, and Barai expressed gratitude to Jiau on 29th May.

For the third argument, she was of the opinion that the government should have invited an expert to determine whether the information was useful to any reasonable investor. The state argued that the issue was a `lay matter', and the jury could understand it without the help of an expert.

The verdict

The jury rejected her arguments and upheld her four-year sentence but order a lower court to recalculate the 3.12 million dollars forfeiture.

Case related issues leading to the verdict

Jiau had committed a crime of security fraud. She offered gifts to Nguyen and Ng in exchange of tips that she conveyed to hedge managers who made million illegal profits. On her side, she received 8000in exchange of the information she offered.

References

Payne k (2012) white-collar crime: the essentials, SAGE Publications, USA.

Stempel j (2013) U.S. Court upholds ex-consultant Jiau's insider trading conviction, Reuters, 23rd Oct

Carolyn Morgan is the author of this paper. A senior editor at MeldaResearch.Com in custom research paper services. If you need a similar paper you can place your order from urgent essay writing service.

Winnie Melda

About the Author

Winnie Melda
Joined: December 7th, 2017
Articles Posted: 364

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