Financial Crimes - Module 4 of 5

Financial crimes are crimes that are committed to enable the perpetrator to convert money or property for his own use and personal gain. Financial crimes include theft, robbery, burglary and forgery. Sometimes financial crimes also involve additional crimes such as computer crimes or even violent crimes.

Theft Crimes

Theft is the unlawful taking of the property of another. The Model Penal Code provides several categories of theft including theft by taking, theft by deception, theft by extortion and receiving stolen property.[1] State laws vary widely in how they define and punish theft crimes. Georgia, for example, defines theft by taking as the unlawful taking, possession, or appropriation of the property of another with the intent of depriving him of the property.[2] It is not enough to take the property of another; a defendant must also have intent to take that property and deprive the owner of it, as theft is a specific intent crime. For example, if a person steals a car that contains a hidden bag of money, the person has stolen the car, but has not committed theft with regards to the bag of money because he did not know of its existence. If he later finds and keeps the bag of money, that is a new and separate act of theft.[3]

Maine defines theft by deception as obtaining or exercising control over the property of another as a result of deception and with intent to deprive the other of the property.[4] Thus, in order to obtain a conviction of theft by deception, the prosecution must prove: (1) the defendant obtained the property, (2) the defendant made false statements, (3) the victim relied upon those false statements, and (4) the defendant acted with intent to deprive the owner of the property. If the victim does not rely upon the false statements, theft by deception has not occurred. For example, in a 1985 Alabama case, Ex Parte Day, an undercover FBI agent purchased a purported 1.3-carat diamond for $3,300 from the defendant. The diamond was later determined to be a zirconia stone. The defendant was convicted of theft by deception. The Supreme Court of Alabama reversed the conviction because the agent was not actually deceived and did not purchase the stone because she relied upon the defendant’s false statements. The court noted that the more appropriate charge would have been attempted theft by deception.[5]

Theft by extortion occurs when someone compels a victim to deliver property or services by instilling fear through threats of physical injury, property damage, engaging in other criminal acts or otherwise causing financial, reputational, legal or physical harm.[6] The threatened action does not necessarily need to be illegal, but does need to be immoral or wrongful in some way. For example, demanding money for silence about a marital affair is classic criminal extortion even though disclosing the affair is not inherently illegal. But it is self-evident that threatening to leave a job unless one receives a raise is not extortion or illegal.

For extortion to apply, the fear of the defendant’s threats does not need to be the sole motivating force, but it must be a motivating factor in the victim’s decision to turn over the money, property or services.

For example, in an Idaho case, State v. Oar, the defendant was in jail when he and a fellow inmate instructed a woman on the outside to deliver a threatening letter to a third party who owed the inmate several thousand dollars. The woman delivered the letter. The victim contacted the police and the police provided surveillance while the money was delivered. The woman and the defendant were arrested, charged with theft by extortion and found guilty at trial. On appeal, the defendant argued that his threat was not a compelling force behind the delivery of the money. He claimed that the informant delivered the money only because the police conducting the surveillance instructed her to do so, not because of the defendant’s threats. The Court upheld the conviction, ruling that extortion only requires that fear be a motivating force; it does not require that fear be the primary or sole force behind the victim’s delivery of the property.[7]

Theft by receiving stolen property occurs when someone receives the property of another and knows the property has been stolen or believes the property has probably been stolen (unless, of course, he receives it with the intent to restore it to the owner).[8] It is not necessary to prove from whom the defendant received the stolen property, only that he received it. So, for example, if someone runs a “chop shop” recycling stolen car parts, he can be guilty of receiving stolen property even if he knows almost nothing about how or when or where the cars were stolen.[9]

Robbery

Robbery is the crime of taking the property of another from his immediate vicinity by means of force or threat of force. In this way, it is a combination of theft and assault. The Model Penal Code defines robbery as a theft that occurs by inflicting serious bodily injury or subjects the victim to the threat of such injury.[10] States generally define robbery similarly, but also usually divide robbery in degrees based on factors such as degree of force used, weapon usage and amount taken.

Missouri, for example, distinguishes between first- and second-degree robbery. In that state, a person commits first-degree robbery if he “forcibly steals property” and “causes serious physical injury,” “is armed with a deadly weapon,” “uses or threatens the immediate use of a dangerous instrument” or “displays or threatens the use of what appears to be a deadly weapon or dangerous instrument.”[11] Second-degree robbery is any other forcible theft that causes physical injury.[12] Other states, such as Arkansas, distinguish between robbery and aggravated robbery. There, a robbery occurs when someone employs or threatens to immediately employ physical force with the purpose of committing a theft.[13] The crime is aggravated if the defendant was armed with a deadly weapon, represents that he is armed or inflicts or attempts to inflict serious physical injury.[14] As in the case of theft crimes, robbery is a specific intent crime, requiring intent to deprive the owner of property.[15] Thus, a negligent or reckless mental state is insufficient.

Carjacking and mugging are classic examples of robbery and are typically punished as first-degree robbery or aggravated robbery when guns are used in the process.[16]

The crime of robbery is distinct from theft (and usually punished more severely) because the property is taken from the owner’s person or her immediate presence, which escalates the danger to the victim. The property must be close enough to the victim that he could have prevented the defendant from taking it but for the use of force or threat of force.[17] Robbery is considered a continuing offense because it does not end until the perpetrator has reached a place of safety.[18] Thus, if the force or threat does not occur when the property is taken, but occurs while the perpetrator is transporting the property to another location, a robbery has still occurred.

For example, in the California case, People v. Estes, after a Sears Department store security guard confronted a suspected shoplifter, the suspect pulled a knife on the guard and threatened to kill him. On appeal, the defendant argued that he could not be guilty of robbery because the assault was not contemporaneous with the taking of the merchandise from the store. The Court disagreed and held that robbery is a continuing offense that lasts from the time of the original taking until the robber reaches a place of relative safety. The fact that the defendant used force to prevent the guard from retaking the property and to facilitate his escape was sufficient for a conviction.[19]

Related to the idea that robbery is a continuous offense, is the idea that a robbery is not complete until the property is actually carried away. This element is known as asportation. However, the evidence required to prove asportation needs only show that the item was moved a slight distance. For example, asportation will be proven if a defendant drags a victim into the backseat of an automobile, grabs her purse, and rummages through the purse before dropping the purse and making his getaway. The fact that the defendant left the purse behind was irrelevant because he possessed the property for a short time.[20]

Considerable litigation has centered on the question of how much force is necessary to constitute a robbery. For example, in the Florida case, Owens v. State, a jury convicted the defendant of robbery after he came up behind a victim and pulled her purse from her shoulder. The victim testified that it hurt when the defendant snatched her purse and left a mark on her shoulder, but the defendant did not threaten her or attempt to injure her. The defendant argued that the charge should be reduced to theft because he did not use the amount of force required. The Court agreed and overturned the defendant’s conviction. However, the Court noted that there may be circumstances in which snatching does constitute sufficient force, such as when a victim resists the snatching and only lets go after being pushed to the ground.[21]

Burglary

A person commits the offense of burglary when, without authority and with the intent to commit a felony or theft, he enters the structure, building or dwelling house of another.[22] The purpose of entering is usually to commit a theft, but in most states, the intent to commit any felony will suffice. Thus, a crucial element of burglary is that the defendant intended to commit a theft or a felony.

For example, in Commonwealth v. Wilamowski, the defendant kicked in a garage door, but the crime was stopped before anything was stolen. The defendant argued that the evidence was insufficient to establish that he intended to commit a crime inside the structure. The Court reasoned that intent may be inferred from circumstantial evidence, but a forced opening, standing alone, is not sufficient for a finding of intent. The defendant’s conviction for attempted burglary was reversed.[23]

Burglary is often referred to as “breaking and entering,” and confusion has arisen over whether mere “entry” constitutes a breaking. A Pennsylvania court ruled that breaking could be “constructive” if permission for entry is gained by deceiving the homeowner. In that case, the defendant rang the doorbell and told the owner he was there to read a utility meter in her basement. The homeowner granted permission and the defendant entered the home. The defendant took a bucket of pennies and exited the home. The court affirmed the burglary conviction and found that the defendant’s deception vitiated any consent the homeowner gave him to enter, thus the defendant was not privileged to enter, and a constructive breaking had occurred.[24]

Litigation has also addressed what constitutes an entry for burglary purposes. Massachusetts courts have held that intrusion by any part of the defendant’s body is sufficient to establish entry. When only an instrument crosses the threshold of a structure, no entry has been established if the instrument was only used to accomplish the breaking. However, if the instrument is used to commit the felony, the entry of the instrument will suffice to establish the element of breaking. For example, if someone breaks a victim’s window and throws a bottle filled with gasoline inside and starts a fire, even though the defendant did not use the bottle to break the window, entry occurred when the bottle crossed the threshold of the structure.[25]

The law provides greater penalties for burglary of a home than for burglary of other structures. For example, Alaska defines first-degree burglary as entering or remaining in a building with the intent to commit a crime in the building if the building is a “dwelling,”[26] which means a building used as a person’s permanent or temporary home.[27]

In an Alaska case that tested that definition, Shoemaker v. State, the defendant was convicted of first-degree burglary after he boarded a fishing boat and gained entry into the cabin by sawing a door lock. The defendant lived aboard the boat for approximately a month before he was arrested. The defendant argued that the boat was not a “dwelling” or a “building” because no one was living in it or planning to live in it at the time he took possession. The court held that because the boat was designed to sleep two crew members, contained a galley, two bunks, and an indoor head, the boat was considered a “dwelling.”[28]

Forgery

Forgery occurs when someone, with the intent to defraud, knowingly alters a written document without permission.[29] Forgery is often committed by the use of a fraudulent check, but it includes other types of writings as well. Many states distinguish between degrees of forgery and assign greater penalties and sentences depending on the amount of the loss.[30] The purpose of a forgery is usually pecuniary gain, but consider the following Colorado case where the defendant’s purpose was to avoid criminal charges:

The defendant’s ex-wife filed a complaint against the defendant alleging domestic assault. The defendant contacted his ex-wife and requested that she recant. He sent her a prepared letter and asked her to sign and send it to the prosecutor, but she refused. The defendant signed the ex-wife’s name without her permission and mailed it to the prosecutor. The defendant was charged and convicted of forgery. The Supreme Court of Colorado sustained the conviction, ruling that forgery is not limited to forgery of writings affecting financial interests, but also includes forgery of writings having other legal effects.[31]

Forgery requires the defendant commit the act of forgery. It is not enough that the defendant conspired to profit after the act of forgery. For example, in the Oklahoma case, Vann v. State, multiple people conspired to have a girl impersonate another girl who was supposed to receive a plot of land, so that they could control the land instead. The agent overseeing the transfer became suspicious of the impersonator and asked the defendant to identify her. The defendant falsely told the agent that the impersonator was the person who was supposed to receive the property. There was also evidence that the defendant was paid for his fraudulent identification. The defendant was convicted of forgery. However, the Oklahoma court of appeals reversed his conviction because there was no evidence that the defendant joined in the act of forgery or conspired to perpetrate the forgery. His later participation and the fact that he profited from the forgery did not make him guilty of the original offense.[32]

A forgery has not occurred if someone signs another’s signature with permission. For example, if someone receives permission to sign a loan document secured by a mortgage in another’s name and does so, there has been no forgery because (1) he received permission and acted within that permission, and (2) there was no intent to defraud.[33]

In our final module, we will look at a series of possible defenses against criminal charges and discuss how they are applied.