LegalMatch Update on White Collar Crime in America

During economic recessions, many people keep better tabs on their money, and even try to recoup their investments.  This phenomenon has a way of bringing fraudulent schemes to the surface, as demonstrated by the Bernie Madoff scandal, which was unveiled after Madoff’s clients started asking to withdraw their long-gone investments.  Of course, fraud is not usually perpetrated on such a grand scale.

According to LegalMatch.com intake reports collected over the past five years, the most common “white collar” crime charge people sought legal help for was credit card fraud.  Ironically, it may have been Madoff’s greed that prevented him from experimenting with credit card crime.  Many criminals make fairly modest credit card transactions in order to avoid the harshest penalties:  according to one source, the Secret Service doesn’t prosecute cases involving less than $150,000, and the Federal Trade Commission doesn’t investigate fraud cases unless they involve at least $2,000.  Madoff, whose giant Ponzi scheme involved about $65 billion, may have considered credit card scams not worth his trouble. 

The second most common charges facing LegalMatch clients involved insurance and unemployment fraud.  It’s obvious why Madoff, who was wealthy before embarking on his scheme, couldn’t pull off unemployment fraud, but it’s less clear why he avoided insurance fraud.  

The third most common charge facing LegalMatch’s white collar crime clients involved check fraud.  This crime is usually committed on a smaller-than-Madoff scale, which most victims losing an average of $5,000.

Madoff’s case differs from the average LegalMatch client’s case in other ways too.  While Madoff did not have any prior arrests or convictions, 34% of LegalMatch.com white collar crime respondents had prior arrests, 26% had prior felony convictions, 24% had prior misdemeanor convictions, and 16% had prior juvenile convictions.  Madoff’s clean record could have helped him avoid detection by authorities:  Madoff planted the seeds of his scheme in the early 1990s, and although concerns were raised as early as 1999, serious inquiries were not made until December 2008, and formal charges were not brought until 2009 after Madoff’s sons reported him to federal authorities. 

Finally, while Madoff is 70, most LegalMatch.com white collar fraud cases involved persons in their 40s and 50s, and no LegalMatch cases involved defendants in their 70s.  Perhaps Madoff’s age worked to his advantage: he probably acquired significant financial and social skills over the years, and investors may have perceived him as more “trustworthy” because he was older.  Of course it also helped that he had inside connections which allowed him access to numerous investors, wealthy and middle class alike.