Big businesses come with big money and big egos, and sometimes these come with criminal consequences. As COVID-19 hits businesses and industries across the world, some predict the rise of something else: white-collar cases.
Many lawyers and solicitors in New York, London, Tokyo and Berlin say that the volatility of the markets combined with the increasing number of companies going bankrupt often indicate a future rise in criminal and civil cases, from fraud to false claims.
Many governments, including the United States and the United Kingdom, have given billions to support small businesses during the pandemic. If these companies use the money to pay workers, then it would be enough to support their businesses for several months. But sometimes, “free money” from the government could attract abuse. Some business owners might be tempted to create a fake company and funnel the funds to themselves or family members.
For many small businesses, taking money from the government is an opportunity. But an opportunity fraught with danger, as a minute error could lead to a mistake. To government auditors, a coverup for a small mistake is still fraud. Business owners should think twice before receiving any loan from the government: any error about eligibility or spending can be seen as fraud.
Inevitably, some entrepreneurs would knowingly misrepresent their business and financial situation to receive funds from the government. They might seek damages and claims that would amount to several thousands of dollars. In the past, such as during Hurricane Katrina, many filed claims and damages that were revealed to be false. So lawyers will be very particular these days, and any information will be reviewed and undergo enhanced compliance risks.
Hoarding and Price-gouging
A good business owner sees an advantage in every weakness, and some of them find that the global pandemic is the best time to make big money. Many businesses have started hoarding personal protective equipment (PPE) and increased the price to soaring rates that people find it unconscionable.
As many markets remain closed, many stockbrokers are considering the effects of the worldwide disruption to the stock market. For example, the U.S. Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) have implied that insider trading could be a possibility. They have issued regulations to make sure stockbrokers and business insiders do not abuse trading information when markets open.
Cases Filed, but Slow Progress Seen
But even as prosecutors say that the wave of white-collar crime is indicative of more cases in the next few weeks, they also warn that the progress for these cases could be slow. The main reason? COVID-19. Most lawyers are still at home enduring city quarantines and lockdowns, and trials and sentencings are currently on hold.
World markets are preparing for the worst in the next few months. People need to go back to work to make the economy run, but government prosecutors and agencies are preparing for something else, too. They need to make sure that white-collar crime will have no place in the new normal.