White Collar Crime

Corporate crime

Corporate crime may be considered a type of white collar crime. In Victoria, corporate crime usually refers to a corporation involved in illegal activity. Such offences typically refer to offences by directors, employees or agents of a company for the benefit of the company, which may be committed against members of the public, the environment, creditors, corporate competitors or investors.

Offences typically considered corporate crimes include cartel activity, tax fraud, market manipulation, environmental crimes, false advertising, restrictive trade practices, economic offences against employees and breaches of regulatory requirements (and many more).

The Corporate Veil

The ‘corporate veil’ is a legal concept that protects members, shareholders and directors from a company’s actions. Companies are considered separate ‘legal entities’ and have a separate legal existence from the owners, managers, operators, employees and agents (see s 1.5.1 Corporations Act 2001 (Cth)). The term ‘piercing the corporate veil’ arises when courts lift the protection that a company would ordinarily provide, opening up the possibility of personal liability and criminal responsibility by individuals within the corporations.

The ‘corporate veil’ can make white collar crime cases incredibly complex as the crimes are usually organised and sophisticated in nature, such that criminal activity can often go undetected for several years. These cases require experienced counsel and qualified experts such as accountants with specialised knowledge in complicated financial transactions.

Long and complex trials

While some financial, corporate or white collar cases can be relatively straightforward and may be resolved quickly by way of a guilty plea, many cases are contested and may not be resolved for some time. If we are instructed to contest a matter, it will be listed for trial. Trials of this nature are not only complicated (with large volumes of evidence) but are of a long duration, requiring many witnesses and experts to provide evidence. 

Law enforcement agencies and regulatory bodies

Corporate, financial and white collar crimes can be investigated and prosecuted by the police and the Office of Public Prosecutions (for state offences) or the Australian Federal Police or Director of Public Prosecutions (for commonwealth offences).

Offences can also be pursued by regulatory or government bodies, including:

• The Australian Tax Office (ATO) can impose and collect financial penalties in relation to crimes or offences under taxation or superannuation legislation. The ATO has the power to:

  • Impose civil penalties for breaches of applicable legislation.

  • Issue administrative penalties.

  • Pursue summary offences in relation to minor breaches of taxation law.

  • Pursue criminal prosecution and penalties for significant tax crimes.

• The Australian Transaction Reports and Analysis Centre (AUSTRAC) has a dual role as a national anti-money laundering and counter-terrorism financing (AML/CTF) regulator and financial intelligence unit.

• The Australian Securities and Investment Commission (ASIC) is Australia’s integrated corporate, markets, financial services and consumer credit regulator. Many white collar offences fall under ASIC’s purview, which has the power to:

  • Take administrative action, such as banning or disqualifying individuals from running companies or corporations or cancelling/suspending the terms of a financial services licence.

  • Pursue alleged offenders through federal courts by seeking to impose civil and criminal penalties, including imprisonment and community service orders.

  • Issue civil proceedings on behalf of those who have suffered a loss seeking to obtain compensation or compel compliance with the law.

• The Australian Competition and Consumer Commission (ACCC) is a Commonwealth body that can join civil actions as a plaintiff. The ACCC can also refer matters to the Commonwealth Director of Public Prosecutions (CDPP) for criminal prosecution.

• The Australian Criminal Intelligence Commission (ACIC).

• The Australian Crime Commission (ACC).

• The Victoria Police.

• Independent Broad-Based Anti-Corruption Commission (IBAC) investigates corrupt conduct by people in public office, such as police officers, judges, public sector employees and Government officials.

• Workcover.

Commonwealth prosecutorial agencies

The Commonwealth Director of Public Prosecutions (CDPP) is an independent authority established to prosecute alleged offences against Commonwealth law. The CDPP pursues a range of matters, such as criminal cartels, foreign bribery prosecution, child exploitation, financial crime and other transnational organised criminal activity. As organised crime is increasingly global, the CDPP partners with international law enforcement and investigative agencies to pursue prosecutions.

Most white collar crimes committed in Australia involve breaches of federal laws such as the Corporations Act 2001 (Cth), the Superannuation Industry (Supervision) Act 1993 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth). Police investigations are therefore run by the Australian Federal Police (AFP). The AFP has the power to recover proceeds of crime under provisions of the Proceeds of Crime Act 2002 (Cth). The Australian Transaction Reports and Analysis Centre (AUSTRAC) also investigates financial crime, passing relevant information to the AFP and prosecuting entities.

Once investigated, crimes committed under commonwealth law are prosecuted by the Attorney-General’s Department (AGD) and the CDPP. The AGD administers offences under the Criminal Code Act 1995, which includes forgery, money laundering, Commonwealth Government fraud and bribery. However, more minor regulatory matters may be prosecuted by ASIC directly. 

In addition to these agencies, there are multi-agency bodies, such as the ATO led Serious Financial Crime Taskforce (SFCT). The SFCT combines resources of the ATO, ASIC, AGD, AUSTRAC, CDPP and the Australian Border Force (among others) to pursue serious financial crime. The SFCT has the power to investigate international crimes such as phoenix activities, tax fraud and tax evasion while cooperating with international law enforcement entities.

Legal defences and expert legal representation

It is possible to defend white collar crime cases. The defence will depend on the nature of the charge and our client’s instructions. Very complex cases will require expert legal representation comprising of counsel who specialise in these types of matters and an experienced criminal defence lawyer.

See here for a 33.5 million fraud case defended by Dribbin & Brown Criminal Lawyers. In it, two co-offenders faced multiple charges of obtaining a financial advantage by deception and attempting to obtain a financial advantage by deception against major banks.

Penalties and sentences

The penalties and sentences for white collar crime can be very serious, including terms of imprisonment, substantial fines, and disqualification of relevant licences.

The case of Frank De Stefano

A famous white collar crime case in Victoria is the case of Frank De Stefano, who was the former Mayor of Geelong who operated a fraudulent accountancy business for 22 years. During his practice, he stole from his clients and later pleaded guilty to theft in the amount of $8.5 million. He was sentenced in 2003 by Justice Murray Kellam to 10 years imprisonment with a non-parole period of 7 years.

The offending was considered extremely serious and not only involved a significant amount of money but constituted a gross breach of trust to his clients. One of the clients that De Stefano stole from was a particularly vulnerable member of the community, a quadriplegic Tomislav Papic, who lost just under $5 million at the hands of De Stefano, money that he had been awarded following a negligence claim against the Geelong Hospital.

The court was told by De Stefano’s legal team that De Stefano had a gambling addiction and that some of the stolen funds were used at the Crown casino while the remainder of the funds were used on personal and business expenses.