White Collar Crimes in India

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1. INTRODUCTION

The worst enemies of our society are those who do wickedness, hoard, profit, black market, and speculate. Tough treatment is required for them. If we condone wrongdoing, people will lose trust in us, no matter how powerful, well-placed, and influential they may be. -Prof. S. Radhakrishnan.

The first time white collar crimes were defined as “crimes committed by people who enjoy the high social status, great repute, and respectability in their occupation” was in 1939. Edwin Hardin Sutherland was a sociologist and the most well-known criminologist of the 20th century. The definition provided has the following five attributes:

• That is illegal.
• It is the fault of a significant individual within the organization.
• Who is well-regarded in the organization on a social level.
• He carried it out while working at his job or career.
• A breach of trust could have occurred.

This type of crime is more common in third-world nations due to economic factors. In India, for example, the ease of doing business has increased by nearly 37 places in the last two years (2018–2020), which attracts more businesses and investment but also exposes consumers and their rights, resulting in a sharp rise in cases—more than 80% in just 2019—in the country.

The origins of white-collar crime may be traced to the 15th century in the United Kingdom and the American Civil War, when powerful monopolies gained control and antitrust laws were put in place to safeguard consumers and promote fair competition. According to Edwin Sutherland, white crime has the potential to bring greater harm to society than other common transgressions because of the monetary losses that the general people would experience. Given how quickly things are changing throughout the world and how quickly technology and commerce are developing, it’s reasonable to argue that India is ill-equipped to handle the kind of unprecedented growth that is rapidly expanding and giving rise to white-collar crimes like cybercrimes.

Additionally, this implies that criminal activity can occur outside national borders. Given how simple it is to commit these crimes, con artists have also grown more avaricious, which has also led to a decrease in their average age. Additionally, because technology is so easily accessible to them, the number of white-collar crimes is rising, which further emphasizes how our nation’s future is becoming more and more sinister. Additionally, this implies that criminal activity can occur outside national borders.

Given how simple it is to commit these crimes, con artists have also grown more avaricious, which has also led to a decrease in their average age. Additionally, because technology is so easily accessible to them, the number of white-collar crimes is rising, which further emphasizes how our nation’s future is becoming more and more sinister.

White-collar crimes are defined as non-violent crimes committed in the corporate sector, and they are frequently committed by business people and government officials. Stated differently, white-collar crimes are defined as offenses carried out by individuals who hold significant positions inside an organization.

2. WHITE COLLAR CRIME IN INDIA

Corruption, fraud, and bribery are some of the most common white-collar crimes in India and across the world. According to a report titled “The changing dynamics of white collar crime in India,” which was released on November 22, 2016, the Central Bureau of Investigation (CBI) had found 6,533 cases of corruption over the previous ten years, 517 of which had been reported in the preceding two years. The report was published by The Business Standard.

Using fictitious or duplicate PAN cards, transactions worth Rs. 4,000 crore were carried out, according to statistics. With the registration of 999 instances, Maharashtra demonstrated a sharp rise in the number of online cases. A little over 3.2 million consumers lost money as a result of their card credentials being stolen from YES Bank ATMs that were run by Hitachi Payment Services, according to the article.

The development of technology and trade has led to an unparalleled surge in cybercrime, a subset of white-collar crime. There is minimal chance of being discovered or caught, which contributes to the rise of cybercrime. The corruption perception index (CPI) maintained by Transparency International shows an improvement in India’s ranking over time.

After implementing several steps to address white-collar crimes, India’s ranking from 85th in 2014 to 76th in 2015 was achieved. India improved its ranking from three points in 2017 to 78th place out of 180 nations in 2018, according to a survey published in The Economic Times.

White-collar crime is becoming a significant factor in India’s underdevelopment, contributing to issues like poverty, poor health, and other issues. India is a developing nation. White-collar crime is on the rise in India, which is dangerous for the nation’s economic growth. Government engagement in the form of severe legislation and oversight of its appropriate execution is vital in response to these crimes.

3. REAL-LIFE EXAMPLES OF WHITE-COLLAR CRIMES

• False Accounts Scandal at Wells Fargo (2016): Millions of fraudulent bank and credit card accounts were discovered to have been established in customers’ names by staff members at Wells Fargo, one of the biggest banks in the country. Employees engaged in fraudulent activity without the knowledge or agreement of clients due to strong sales objectives and incentives that drove this deceitful conduct. The controversy caused the bank to be fined $185 million, forced the retirement of key executives, and tarnished the firm’s brand.
• VW Emissions Scandal (2015): Volkswagen purposefully put software in its cars to rig emissions testing and provide inaccurate information regarding the environmental effects of its automobiles. The company’s brand was harmed for breaking environmental regulations, and billions of dollars were lost in penalties and legal proceedings as a result of this covert crime.
• 2008 saw the creation of one of the biggest Ponzi schemes in history, run by Bernie Madoff, who defrauded investors out of billions of dollars. He put up a front of a successful investment company by promising large returns but used the money from new investors to pay off the debts of previous ones. When the plan came to an end in 2008, many people and organizations suffered large financial losses.

4. REASONS FOR THE GROWTH OF WHITE-COLLAR CRIMES IN INDIA

The economic gap between India’s affluent and poor social strata is quite visible. A significant portion of the population lacks the formal education and lives in poverty, which makes them less aware of the world and makes them more vulnerable to white-collar crimes. In addition, there are other elements at play, such as the improper application of the law and individual traits like envy and peer competitiveness.

4.1 GREED

The creator of modern political theory, Niccol Machiavelli, was adamant that mankind is inherently selfish. It is easier for a guy to forget his father’s passing than the loss of his inheritance, according to him. When white-collar crimes are committed, the same holds. If not out of greed, then why would a guy of his social standing and prominence, who is well-off monetarily, commit such crimes?

4.2 EASY, SWIFT, AND PROLONGED EFFECT

White-collar crime is being committed in new and inventive ways by criminals because of the rapid advancements in technology, business, and political pressure. Additionally, technology has sped up and simplified the process of harming or losing something to another person. It would also take longer for the victim to recover from such crimes because they are far more expensive than other crimes like murder, robbery, or burglary. This would reduce the level of competitiveness.

4.3 COMPETITION

Evolution is the “survival of the fittest,” according to Herbert Spencer, who invented the term after reading Darwin’s “On the Origin of Species.” This suggests that there will always be competition among the species and that the individual who is most adept at adapting to his environment will likely survive.

4.4 LACK OF STRINGENT LAWS

Lawmakers don’t appear eager to pursue these cases as the majority of these crimes are made possible by the internet and digital payment methods, making the process of monitoring and investigating them more challenging. Since they are typically committed in the quiet of a home or workplace, there are typically no eyewitnesses, making it more difficult to hunt them down. While financial fraud is already prohibited by law in India, more strict enforcement of these rules is necessary to punish perpetrators. It is common for offenders to take advantage of legal gaps to get away with their crimes. Cybercrimes, a subset of white-collar crimes, have surged in popularity due to the government’s promotion of Digital India and the Internet’s status as the primary medium for financial transactions. Cybersecurity regulations in India are yet not fully established.

4.5 MODERN TECHNOLOGY

Ease of business is one of the expectations of contemporary technology; in a way, this also applies to white-collar crimes, which have made it possible for them to reach a wider audience and carry out significant crimes without drawing the attention of the authorities. Numerous people have fallen prey to various scams, like the credit card scam. In addition, the pandemic created a new market for them by taking advantage of the medical industry and establishing a black market for Covid medications like “Remdesivir.” More than a hundred cases were filed against the illegal use and sale of this medication, with doctors and hospital staff being implicated in the majority of them. People have become so desperate and greedy that they would take advantage of every opportunity to exploit it. Not only that, but technology is developing so quickly that anybody may purchase nuclear weapons with the push of a button. This was the situation in Mumbai when authorities apprehended two individuals who were purchasing 7 kg of naturally occurring uranium, which is very radioactive and harmful to human life. This raises concerns about the harm that these cartels and organizations offer to the country as well as the complexity with which these crimes have advanced to benefit their interests.

4.6 LACK OF AWARENESS

White-collar crimes are not the same as traditional crimes in nature. The majority of people are the worst victims of crime because they are ignorant of this and do not comprehend it. Because most crimes involve large corporations and there may be little to no evidence to produce a criminal, victims of these crimes often are unable to understand the concept of the crime, the specific offense that has been committed, and whom to approach or file a complaint against. In some cases, such as scams and fraud, victims may not even be aware that they have been the victim of a crime, such as bank fraud, of which over a thousand cases are reported annually. Furthermore, because the victim’s information is saved and shared with another scammer, the victim of a scam, like a double-dip scam, may fall victim to it again. These cases are on the rise, particularly in urban areas, but we are not aware that we could become victims of them. The government needs to reach a wider audience, and awareness campaigns could educate the public about the seriousness of these crimes and the tactics used by criminals, potentially lowering the incidence of white-collar crime in the future.

4.7 COMPETITION

Only the fittest can survive in our fast-paced world, and this has led to an increase in crime committed for survival, particularly by members of lower socioeconomic classes whose work environments are poorly designed and they are frequently underpaid. As a result, these members of society may compromise their moral and ethnic values to earn more money and make a decent living, and their actions, which are frequently motivated by greed that knows no bounds, cannot be justified. This rivalry is also leading to the growth and technological advancement of criminal groups and cartels.

4.8 NECESSITY

White-collar crime is also committed by people to support their families and themselves. However, feeding one’s ego is the most crucial thing that individuals in high social positions desire.

The following are the reasons why white-collar offenders escape punishment:

• The same class of persons that these professional criminals belong to also includes legislators and those who carry out laws.
• Because they find the inquiry to be difficult and draining, the police put in less effort, and these perplexing searches frequently yield unsatisfactory outcomes.
• The way laws are written, only professional offenders are favored.
• The legal system has long faced criticism for its protracted decision-making. Occasionally, the accused has already passed away by the time the court renders its ruling. This allows criminals to operate freely and commit crimes. The court system has to provide rulings more quickly even while white-collar crime is growing at a quicker rate.

4.9 BASED LAW

Since most white-collar offenders are people in positions of responsibility inside organizations, they frequently avoid punishment by cultivating close ties with politicians and government figures who have sway over the nation’s judicial system. Another evil that undermines the system is corruption, which leads to rulings that favor the powerful even when they are the ones who commit the crimes. At every stage of the inquiry, bribes are employed, and the culprits escape punishment. Because they no longer have trust in law and order, victims often do not report offenses.

5. CHRONOLOGICAL BACKGROUND

Often referred to as the “Carrier’s case,” it was the first instance of white-collar crime to be recorded in England in 1473. In this instance, the agent was given the authority to carry out the principal’s duty of moving wool between locations. A portion of this wool was determined to have been stolen by the agent. Following this decision, the English Court established the theory of “breaking the buck,” which states that the person granted custody of the goods attempted to open it and take anything of its contents.

However, crime has escalated due to the rise of industrial capitalism. The bourgeois establishment is driven by greed and suffering to acquire and be able to obtain greater things, which leads them to perpetrate such atrocities. Monopolistic activities were outlawed in America in 1890 with the passage of the Sherman Antitrust Act. Other nations’ adoption of antitrust or competition laws was not as comprehensive as the Sherman Act, nor were the punishments meted out to white-collar crime offenders in Great Britain.

A group of journalists elevated the views of the masses demanding changes in the late 18th and early 19th century. When the Sherman Act was passed in 1914, Congress was working hard to solidify its positions. As far as dealing with monopolistic unlawful actions goes, this Act turned out to be more strict than the Sherman Act.

5.1 HISTORICAL BACKGROUND

An explanation by Edwin Sutherland. The original definition of white-collar crimes was provided by American sociologist Edwin Sutherland in 1939. According to his description, these are the kinds of crimes carried out by respectable, well-off people as part of their job.

5.2 CRITICISM

Edwin Sutherland’s definition had certain unclear terms, as Coleman and Moynihan noted. These terms included:

• It does not specify the qualifications required of these “persons of responsibility and status.”
• “Person of high social status” is also ambiguous. The meaning of the phrase in law may differ from its common sense, which makes it confusing.
• The socioeconomic status of the individual was not taken into account in Sutherland’s definition. It merely demonstrated how white-collar crimes vary depending on their nature and the environment in which they are committed.
• Men’s rea, or having a guilty mentality, and actus reus, or engaging in unlawful behavior, are two prerequisites for crimes. Sutherland’s definition, however, seems to imply that mens rea is not always necessary for white-collar offenses.

Remarks from Morris. Albert Morris proposed in 1934 that individuals of high social rank should be held accountable for the criminal offense that corresponds to the illicit actions they engage in as part of their employment. In addition, he said that it ought to be illegal.

The delineation of EH Sutherland. Once more entering the picture, Sutherland explained that crimes committed by members of upper socioeconomic categories while they were employed would be classified as “white collar crimes.” He went on to say that “blue-collar crime” will be the term used to describe conventional crimes.

He therefore distinguished between blue-collar crimes, or more conventional crimes like theft, robbery, and the like, and white-collar crimes, or corruption, bribery, and fraud. After that, the term “white collar crimes” was eventually acknowledged by criminology in 1941.

5.3 DIFFERENCE BETWEEN WHITE-COLLAR CRIME AND BLUE-COLLAR CRIME

Sometime in the 1920s, the phrase “blue-collar crime” was coined. Later, Americans who engaged in manual work were referred to by this name. To hide stains better, they frequently favored wearing darker clothing. There were formerly some who wore blue collared shirts. These were hourly workers with poor pay. White-collar crime has been a problem for generations and is not exclusive to any one industry, profession, or business.

In the case of State of Gujarat v. Mohanlal Jitamalji Porwal and Anr[2], the Supreme Court of India established the distinction between “blue collar crimes,” which are crimes of a general character, and “white collar crimes.” Someone can kill someone in the heat of the moment, but Justice Thakker clarified that economic offenses or creating financial damage need to be planned for. Making estimates and developing strategies is what it entails to benefit oneself.

White-collar crimes are distinguished from other types of crimes by the following features:

5.3.1 MEANING

White-collar crimes are those committed by knowledgeable workers who use their expertise to conduct crimes, while blue-collar crimes are committed by those who labor physically with their hands.

5.3.2 NEW VERSUS TRADITIONAL

The idea of white-collar crimes is relatively new, while blue-collar crimes are classic crimes that have been perpetrated for historical reasons. Crime has taken on a new form.

5.3.3 MEN’S REA

Mens rea and actus reus are prerequisites for a crime to be considered criminal. Men’s rea is not required in white-collar crimes, but it is in blue-collar crimes where it is a crucial component.

5.3.4 INDEPENDENT OF SOCIAL AND PERSONAL CONNECTIONS

Although it matters in the usual sense of crimes, white-collar crimes have nothing to do with the offender’s circumstances or societal conditions, such as poverty.

5.3.5 DIRECT ACCESS TO THE TARGETS

White-collar criminals have easy, direct, and legitimate access to their targets since they are individuals in higher positions inside a firm. With blue-collar crimes, the situation is different. For example, if Jhethalal desires to steal from Babitaji, he must first smash down the door or create an opening to enter Babitaji’s home and then steal.

Jhethalal will thus need to gain entry to Babitaji’s home before he can truly steal something. In contrast, white-collar crimes allow for direct access to the victim through the use of a higher position and influence.

5.3.6 VEILED OFFENDERS

White-collar crimes don’t need victim identification to be revealed in person, therefore the identity of the victim is kept hidden. In contrast, to harm another person in a blue-collar crime, one must confront the victim directly.

5.3.7 INVOLVEMENT OF POLITICIANS

The victims find it challenging to pursue legal action against these offenders because, in many cases, it is discovered that the criminals have close ties to politicians and that politicians are occasionally complicit in the crime.

5.3.8 GREATER HARM

The damage imposed by white-collar crimes is far harder to endure than that caused by blue-collar crimes. Furthermore, white-collar crimes have the potential to do significant harm to other institutions and organizations in addition to the general population.

6. EFFECTS OF WHITE COLLAR CRIME

6.1 EFFECT ON THE COMPANY

Companies suffer enormous losses as a result of white-collar crime. At some point, these businesses increase the price of their product to make up for the loss, which makes fewer people buy it. The law of demand, which asserts that all things being equal, a commodity’s demand will rise in response to a rise in price and fall in response to a decrease in price, explains how this works.

To put it briefly, the relationship between the price and demand of a commodity is inverse. Employee pay is being reduced due to the company’s financial difficulties. Occasionally, the firm lets go of multiple personnel. Both the company’s employees and investors struggle to make their loan repayments. Additionally, getting credit becomes more difficult for people.

An IT company in the United States, for instance, had to pay 178 crore rupees to resolve accusations made against it by the Securities and Exchange Commission under the Foreign Corrupt Practices Act. To get permission to establish a 2.7 million square foot campus in Chennai, the business bought off a Tamil Nadu government official. The corporation not only lost out on paying the $2 million bribe, but it also had to pay an additional $25 million in fees to be cleared of the allegations.

6.2 EFFECT ON THE EMPLOYEES

Employees are at risk from white-collar crimes. They start to notice if their working environment is still safe or not. People begin to question if they are safe and whether they can continue to put their confidence in the business.

6.3 EFFECT ON CUSTOMERS

Whether the items they use are safe is what customers are most concerned about. Given the rate at which white-collar crimes have been rising, doubts have grown.

6.4 EFFECT ON SOCIETY

Because persons who commit white-collar crimes are those who ought to be held up as moral role models and who must conduct themselves properly, these crimes are detrimental to society. Thus, the society gets contaminated.

when the directors of Sterling Biotech, a pharmaceutical business with its headquarters in Gujarat, and the previous director of Andhra Bank were detained in connection with a fraud case of 5000 crores. Several benami firms’ bank accounts were utilized by them to take out cash. People were afraid since this was a large-scale hoax.

Additionally in 2018, the Punjab National Bank (PNB) discovered that its Mumbai branch had been the victim of fraudulent transactions of 11, 346 crore rupees. According to a Business World article, “The Staff There Used to Fake LoU (Letter of Understanding) for the Buyer’s Credit to the Company of Nirav Modi and Gitanjali Group.”

6.5 LOSS OF CONFIDENCE

A loss of confidence in the stock market is caused by stock fraud or trading scandals, such as those that occurred in the United States during the 1980s. A million-dollar company was founded in the 1980s by adolescent carpet cleaning proprietor Barry Minkow. But only by stealing and forging was he able to do this.
He was able to produce over 10,000 fake sales receipts and papers without anybody noticing. Despite being founded on deception, his business managed to reach a 200 million dollar market valuation and lease 4 million dollars worth of land. A 25-year jail sentence was then imposed against him.

Based on sales, Eron ranked as the seventh-largest energy trading corporation in the United States. They had to waive hundreds of millions of debts from their book due to forgery. The company’s performance was deemed consistent and excellent by the investors. However, it was eventually discovered that the astounding figures on the revenue records were made up. Following the well-known Eron crisis, in which all retirement savings were destroyed, it was discovered that people had lost their public trust, authority, and normalcy.

6.6 EFFECT ON OFFENDERS

Concerning the concept of white-collar crimes, the authorities have not demonstrated any unanimity. Since the government is unable to precisely avoid these crimes, it is unable to analyze the causes and consequences of such crimes using reliable statistics. These crimes are also becoming more common, although they are typically not recorded.

Since these crimes are done on camera, there are no eyewitnesses. This implies that the perpetrators carry out these crimes while utilizing their computers while seated in a confined place or in their area, where no one can spy on their activities.
This poses a challenge in locating the perpetrators. Because the punishment for these crimes is also just a brief period, unlike those involving blue-collar labor, all these loopholes serve as an incentive for the perpetrators to carry out these crimes with courage. Most offenders are perceived to be walking around freely, endangering society.

6.7 EFFECTS ON THE TEMPERAMENT OF THE AFFECTED PERSON

The victims of these crimes are typically older individuals who have limited access to cash assets and lower cognitive capacities than younger ones. As a result, the criminals find them to be an easy target. Because the loss they suffer can often be terrible, victims of such crimes frequently experience sadness and are seen to be suicidal.

Reputable startup entrepreneur Vijay Shekhar Sharma, the man behind the popular payment app Paytm, fell prey to blackmailing tactics employed by his assistant Sami Dhawan. To get money from him, she and others stole his private information and confidential company ideas. Sharma also kept getting calls warning him that if he didn’t give them the requisite money, their personal information would be made public. A lot of pressure was placed on Sharma.

7. PROJECT REPORT ON WHITE COLLAR CRIME IN INDIA

To investigate white-collar crimes and establish guidelines and policies to deter and eventually eradicate them, several committees were established.

7.1 THE REPORT ON THE COMMISSION ON THE PREVENTION OF CORRUPTION, 1964

The Central Vigilance Commission was established in 1964 based on the suggestions made by the Committee on Prevention of Corruption, which was chaired by Shri K. Santhanam. These days, the highest authority for vigilance is the Central Vigilance Commission, which operates independently of the governmental branches. Its duties include keeping an eye on all vigilance conducted by the Central Government and combating corruption in government agencies. This organization looks to you for guidance in organizing, carrying out, and assessing their vigilance work.

The Central Vigilance Commission is responsible for the following roles:

• To oversee the activities of the Delhi Special Police Establishment only about offenses registered under the 1988 Prevention of Corruption Act.
• To guide how the Delhi Special Police Establishment is to carry out the duties assigned to it under section 4 of the Delhi Special Police Establishment Act, 1964, subsection (1).

7.2 THE REPORT ON THE COMMISSION OF INQUIRY ON THE ADMINISTRATION OF DALMIA JAIN COMPANIES, 1963

The Sahu Jain Family and the Dalmia Group, which was headed by the brothers Ramkrishna and Jaidayal Dalmia, combined to establish the Dalmia-Jain Group in the 1930s. In the end, this enterprise was divided between the two families, and in 1948, it was divided again between the two brothers. The Vivian Bose Commission of Inquiry into the Affairs of the Damila-Jain Corporation of Companies was established in 1963 in response to accusations of corruption leveled against the corporation.

According to the committee, the group’s acquisition of illicit funds, concealment of assets, and uncertainty surrounding income tax obligations made the dissolution or split so difficult that it was not possible to declare the organization’s formal separation. Under the leadership of Justice S.R. Tendulkar, the Commission was later led by Justice Vivian Bose. In 1962, Ramkrishna Damia was found guilty of tax evasion, perjury, and criminal misuse of money.

7.3 THE REPORT ON L.I.C MUNDRA AFFAIRS

A stock trader named Haridas Mundhra was detained and imprisoned in the 1950s as part of the first significant financial scandal in the history of the newly independent India. Jawaharlal Nehru was India’s prime minister at the time. A member of parliament named Feroze Gandhi was married to his daughter Indira Nehru. The anti-corruption movement spearheaded by Feroze Gandhi resulted in Ramkrishna Dalmia’s incarceration.

Following his eventual ascent to power, Feroze Gandhi questioned whether the recently formed Life Insurance Corporation had utilized policyholder premiums. Eventually, a commission led by former Bombay High Court judge Justice M.C. Chagla was formed, and it was determined that Mundhra should be imprisoned because he had been the subject of up to 124 prosecutions, 113 of which had resulted in convictions.

7.4 DAS COMMISSION REPORT, 1964

Pratap Singh Kairon, the Punjab Chief Minister, was accused in the R.P. Kapoor v. Pratap Singh Kairon [3] case of exploiting his fortune to flaunt his family’s high position and his own at the cost of the people. He was excused by the Commission because a parent could not be held accountable for the deeds of their adult children. The Commission made it clear that a son cannot be prevented from operating a company of his choosing, except being unable to make use of his father’s influence and position in politics. As a result, the court denied the petition.

7.5 ADMINISTRATIVE REFORMS COMMISSION ON REPORTS

Reducing the amount of white-collar crimes in India was the goal of the Administrative Reforms Commission’s fourth report, “Ethics in Governance,” which featured new regulations and revisions.

• To prevent political parties from making unauthorized and needless expenditures, the report put up a new clause allowing for partial state funding during elections.
• The Representation of the People Act, 1951, section 8 was proposed to be amended to prevent those accused of serious or egregious crimes and corruption from taking part in elections.
• A collegium was established to choose the Chief Election Commissioner and the other Election Commissioners based on the report on their election. The Law Minister, the Speaker of the Lok Sabha, the Deputy Chairman of the Rajya Sabha, and the Prime Minister of India will be the members of the collegium. As a result, there would be no abuse of authority or manipulation by the ruling class to maintain their domination.
• It was suggested that each House of Parliament create the position of “Ethics Commissioner.” The Speaker or Chairman would oversee the maintenance of office records, adherence to the code of ethics, and provision of advice to the body as needed.
• The Commission primarily requested that “collusive bribery” be recognized as a distinct offense by the government. The Commission said that to make “collusive bribery” an offense, section 7 of the Prevention of Corruption Act had to be amended. This would stop employees of the government from acting in a way that harms the public.
• The Commission further suggested that the Benami Transactions (Prohibition) Act, 1988 be put into effect right away.
• Based on confidentially, the Commission granted protection to informants. further made it illegal to harass or take revenge on them.
• According to the Commission, the government should be permitted to reveal corruption instances to the media to support their efforts to combat corruption in the nation. The media should also have a code of conduct and self-regulation system to assist them avoid wrongdoing.
• The Commission made a significant judgment when it decided that the office head should be tasked with exercising proactive oversight of corruption.                                                                                                                                                  Additionally, the Commission brought additional rules before the government, which will help the government combat corruption and other wrongdoing by those in positions of higher responsibility.

7.6 LAW COMMISSION 47 TH REPORT

The Law Commission stated in its 47th report that a business cannot be punished by suffering since it lacks a physical embodiment. Since corporations lack the mental capacity to be found guilty of any wrongdoing, new laws should be enacted to hold them accountable for their unlawful wrongdoings.

The Commission concluded that a reduction in the corporation’s reputation would be the true cost. And that others refer to them as a shame. The commission recommended that the company be held accountable in addition to the directors and management. The public needs to be able to connect the corporation’s name with the offense as well.

It was suggested by the Commission that the Indian Penal Code, of 1860 incorporate the subsequent provisions:

• The court will have the authority to impose a fine only on these offenders in every instance when the company committed the offense and the punishment consists of either imprisonment or a fine and imprisonment.
• When a company commits an offense and the court has the authority to impose a fine alone on the offender, it means that the court has the authority to punish the corporation with jail or any other kind of punishment possible.
• A “corporation” or other body corporate shall be understood as an incorporated company for this provision. It would also cover businesses and other individual associations.
• The punishment that the offending firm or company would face is also indicated by the Commission in its report, similar to the previously described requirements.

7.7 THE REPORT BY SANTHANAM COMMITTEE

As confirmed by the 29th report of the Law Commission, which was published in 1972, the Santhanam Committee was the first organization to identify the seriousness of the crimes perpetrated by individuals with high social standing. In their report on the prevention of corruption, the Santhanam Committee discussed the factors contributing to the high incidence of white-collar crime in India.

The main cause of the rise in white-collar crimes has been attributed to scientific temperament and technical innovation. A small group of elite individuals who comprise the monopoly are in charge of regulating these vast numbers of people with advanced dispositions. In this highly technologically and scientifically evolved period, it is necessary to force these masses to follow the guidelines set forth by the elites to govern them. Those who don’t end up doing so wind up being the ones committing white-collar crimes.

Concerning the serious harm that these crimes can do to public morality, the committee expressed its worry. Due to the complexity of white-collar crimes and the general lack of public awareness of them, only professionals are qualified to identify them and take precautions to avoid becoming victims of them.

8. TYPES OF WHITE COLLAR CRIME IN INDIA

White-collar crimes have a wide range of scope. Following are a few examples of white-collar crimes that have been documented in India:

8.1 BLACKMAIL

Blackmailing or criminal intimidation is defined as making a demand for money or any other compensation by threatening to harm someone physically, destroy their property, accuse them of a crime, or reveal their secrets, according to Section 503 of the Indian Penal Code, 1860. The following methods can be used to create the threat:

• By divulging a personal detail about the victim that the perpetrator knew would make her feel extremely embarrassed. For instance, suppose B, a female employee of XYZ, is carrying a child not by her husband, and A, the managing director of the firm, is aware of this. A threatened that if B revealed her secret, it would be extremely embarrassing for both her and her family. Instead, A ordered B to falsify the account documents for him to steal 20 lakh rupees from the firm without anybody knowing about it.
• Via disclosing the victim’s affairs those details that are delicate enough to cost him money. As an illustration, suppose X is aware that Y’s parents had deceitfully signed off on the will, allowing X to falsely assume ownership of the property Y possesses. One of the company’s subordinate employees, Y, is asked by senior manager X to get a file holding the chief secretary’s personal information from the company’s storage facility. X says that if Y doesn’t comply, she will tell the police about her forgery secret. It is claimed that X is using B as a pawn.
• By doing actions that can lead to a wrongful accusation of a crime against the other person, which could have a significant impact on his life. For instance, when X, an officer in the senior most position, requests her secretary to wed his son, he threatens to falsely accuse her of embezzling 10 lakh rupees from the company—something X has done, in reality. This is a type of white-collar crime known as blackmail.
• By making public a report that documents that individual’s involvement in an offense. For instance, in a murder case, M, N’s attorney, and an old adversary that N is unaware of, demands twice as much from N or he will divulge to the court the recordings on which M admits to killing the victim and how he did it. This is extortion.

8.1.1 WHEN DOES BLACKMAILING BECOME A WHITE-COLLAR CRIME?

Blackmail must be perpetrated by or demonstrate involvement by a person with a higher social position in their line of work for it to fall under the purview of white-collar crime.

8.2 CREDIT CARD FRAUDS

When someone uses another person’s credit card without authorization to purchase valuable products, that person is said to have committed credit card fraud against them. For instance, in Mumbai in 2003, a 21-year-old engineering student named Amit Tiwari was arrested for using many identities, using multiple bank accounts, and having multiple clients. Through these fraudulent means, Tiwari was able to cheat CC Avenue, a credit card firm situated in Mumbai, of almost 9 lakh rupees.

The Information Technology Act of 2000 does not identify credit card fraud, as this case made clear to the authorities. The business has suffered significant losses as a result of the legal gap.

From April through September of 2018, over 900 instances of credit/debit cards and online banking were recorded, according to a study published by the Economic Times. One lakh rupees or more was at stake in each of these cases. S.S. Ahluwalia, Minister of State for Electronics and IT (2018), disclosed that as of September 30, 2018, the Reserve Bank of India has recorded 921 instances of credit/debit card fraud.

A Metropolitan Magistrate fell victim to credit/debit card fraud in 2017. The victim’s debit card was used for two transactions that were made overseas rather than in India, and the victim got two notifications for those transactions. According to the victim, he did not consent to those transactions. A section 420 of the Indian Penal Code, 21860, the cheating complaint was submitted.

8.3 CURRENCY SCHEMES

The process of estimating the value of the currency shortly is essentially what these methods allude to. However, there is no concrete evidence used to determine the value.

In January 2019, the Financial Express published a study titled “Trend and Progress of Banking in India,” which was issued by the Reserve Bank of India. The report said that the banks had lost 41,168 crore rupees in the 2018 fiscal year, a 72% increase over the losses in 2017. Fraudulent currency plan schemes are the cause of this increase. Fraud has become a significant issue, according to the research, with a 90% increase in incidents of this kind in bank credit portfolios. The majority of fraud is focused on deposit accounts, foreign currency transactions, off-balance sheet operations, and cyber security.

8.3.1 COMMON TYPES OF CURRENCY SCHEMES IN INDIA

8.3.1.1 SCHEMES INVOLVING ADVANCE PAYMENT OF FEES

These situations involve requests for the victims to pay the whole amount upfront. Just twice as much as they invested would be guaranteed to them. Nevertheless, the criminals are nowhere to be discovered once the money has been provided. In such situations, con artists prey on those who have already experienced significant financial loss. It is argued that their belief that their investment would double and they would be able to recoup the loss from their most recent transaction is persuasive.
This particular scam was committed with its origins in Nigeria. In August of 2003, Piyush Kankaria, a businessman located in Howrah, Kolkata, filed the first “Nigeria 419” case in India. The business filed a multi-million dollar fraud complaint under Section 420 of the Indian Penal Code, 1860. Due to a financial crisis, Piyush fell victim to a scam in which he was forced to withdraw 7.5 million dollars from an account in exchange for 3 million dollars, which he had previously paid for with a gift of a mobile phone.

8.3.1.2 SCAMS IN THE BOILER ROOM

An office that is routinely altered, or one that is unstable and shifts regularly, is referred to as a boiler room. Usually, the con artist builds a website with wholly fictitious or fraudulent content. All information will look correct on the screen, however, the address provided on the website is a temporary one, and the toll-free number is invalid. Before anybody knows they have been duped, the con artist has already moved on to another location and pulled off a similar ruse.

Recently, in 2019, a Rajasthani man named Rohit Soni, a B.com graduate made a spoof Amazon website that looked just like the real one. Providing the consumers with a link that allowed them to download the app “4Fun” allowed Rohit to benefit from it; he got paid six rupees for each download.

8.3.1.3 EXEMPT SECURITIES SCAM

Selling securities by a corporation without submitting a prospectus is known as an exemption securities fraud. Wealthy individuals who are convinced to invest in a business are the target of this offense. The scammers present a fake investment as “exempt” securities. The victim is given a false assurance that the company will go public. You run a huge danger of losing all of your assets when you fall for these frauds.

An Indian stockbroker named Harshad Mehta was found guilty in 1992 after up to 27 counts were brought against him for a variety of financial offenses related to the 1992 securities fraud. Harshad has been amassing enormous riches by significant manipulation of stocks, made possible by the use of fraudulent or worthless bank receipts.
He was found guilty by the Bombay High Court and the Indian Supreme Court of being involved in a massive financial scam that included 4999 crore rupees. The Bombay Stock Exchange (BSE), the largest stock exchange, was the target of this controversy. 2001 saw the death of Harshad Mehta, who had spent nine years in prison.

8.3.1.4 SCAMS IN THE FOREIGN EXCHANGE MARKET

Buying and selling of currencies is contingent upon the exchange rate in the foreign exchange market by investors. Large, established institutions with lots of resources at their disposal frequently control these markets. These companies employ highly experienced and qualified personnel who are proficient in employing cutting-edge technology, making it challenging to outperform them.

People falling victim to forex scams, which are fraudulent or unlawful schemes, is not a new occurrence in the foreign exchange industry. Since these scams are frequently run online from other countries, there is a good risk that you will lose money since you will probably purchase services from businesses that are not legally established and can advertise their services aggressively. Online, things may be easily faked. These schemes may have the effect of stealing investor funds, causing the investor to lose all of his money.

13 commercial firms have been charged by the Central Bureau of Investigation with transmitting unidentified overseas remittances totalling 2,253 crore rupees under false importation of commodities between 2015 and 2016. This information was reported in a 2017 Times of India investigation.

In a similar vein, the Bank of Baroda was allegedly implicated in a currency fraud involving rupees 6,172 crore in 2015, according to reports published by the Times of India. This money was sent to Hong Kong from India to buy rice, pulses, and cashew nuts. Later on, though, it was discovered that all of this money had gone into 59 separate bank accounts belonging to various companies—nothing had been imported.

Similarly, Manish Prakash Shyamdasani and Mungaram Hakmaram Dewasi, the directors of M/s Stelkon Infratel Pvt. Ltd., a Mumbai-based firm, were held accountable in 2015–16 for their involvement in large-scale unlawful overseas payments under fraudulent importation of products.

8.3.1.5 OFFSHORE INVESTING SCAMS

These frauds persuade victims to transfer money “offshore” to another nation in the hopes of receiving a larger payout than they originally invested. The main goal of these con games is to get someone to not pay taxes. However, consumers ultimately have to pay money in fines and back taxes as a result of it.
The main risk associated with these frauds is that, in situations of foreign investment, the victim will not be able to retrieve the invested funds since they would not be able to seek redress from a civil court.

2008 saw the conviction of Mumbai stockbroker Ketan Parekh, who also served as the director of the Madhavpura Mercantile Co-operative Bank, for his role in the Indian stock market scandal that took place between 1998 and 2001. Parekh was found culpable for manipulating stocks’ prices artificially.

He had been able to do this by taking out loans from several institutions, including the bank of which he served as director. First and foremost, Parekh used to buy substantial holdings from modest market capitalization businesses. He persisted in doing this up until a considerable quantity of money was amassed, at which point he raised the prices through cooperation with major institutional investors, other dealers, and other traders in a circular trading arrangement. The share prices increased significantly as a result of this. For instance, Zee Telefilms’ shares increased in value from 127 to 10,000 rupees. Parekh was named “Pentafour,” and these equities were referred to as the “K-10” stocks.

A Joint Parliamentary Committee was established to investigate this kind of scam, and it was under this committee’s direction that Parekh was found guilty of engaging in money laundering and manipulating the stock prices of ten firms between 1995 and 2001 for fraudulent reasons.

8.3.1.6 SCAM AGAINST THE PENSION OF A RETIRED PERSON

Savings for the time after they leave the workforce are kept in retirement accounts for older individuals. Most of the time, you may only take out a particular amount of money from these accounts each year and once you reach a certain age. You also usually have to pay taxes on the money you take out.

Such accounts can be faked by some companies. The individual may be requested to invest in their bank, which offers a secure place for them to put their funds. The bakers offer the customer to purchase firm shares with their savings, with the promise that the bank will keep the remaining amount as a charge and repay the loan by lending between 60 and 70 percent of the invested capital. The investment made is useless, and it turns out that these claims are false. Such frauds carry a great risk of causing one to lose all of their retirement money.

India Today released a study on pension fraud in India in 2009. According to the research, a substantial sum of money that was meant to be utilized for pension payments to 60-year-olds in Uttar Pradesh who were Below the Poverty Line (BPL) and made 300 rupees a month was instead going to younger recipients.
The elderly members of society from lower social classes were the primary target audience for the project. The Uttar Pradesh government helped facilitate the money’s divestment to youth by producing forged diplomas and BPL cards that purported to be older than they were. As a result, every program participant was able to earn 3,600 rupees a year, of which half went as a commission to the official who assisted the individual in forging the documents.

8.3.1.7 DOUBLE DIP SCAM

Someone who has before fallen victim to a scam will likely do so again. And it’s referred to be a double dip scam when it occurs. First of all, the criminal might keep the victim’s information on file and share it with other criminals to help them commit financial fraud.

It’s also possible that you get a call from the first perpetrator again and express your resentment for being duped for the first time. The con artist then suggests that you pay a small amount to have your money returned to you. In this manner, one would once more lose money.

In 2016, an article from India Today exposed the double dip fraud occurring within political parties, as it was discovered that politicians had exchanged their money for 40% commission by converting it back into white money. Political parties were shown to be acting as middlemen for unreported income. In the vicinity of their offices in Ghaziabad, Noida, and Delhi, the politicians used to transact the business of turning illicit money into white.

Politicians often enjoy powerful positions with a range of abilities, which gives them the ability to manipulate situations and benefit illegally from funds that are essentially meant for the public good. This makes it highly frequent for them to engage in unethical behaviour. In the end, the majority of victims are the regular people.

8.3.1.8 SCAM BY BUILDING A RELATIONSHIP

In these situations, the perpetrator attacks a community, an organization, or a group of individuals. In certain circumstances, the perpetrator is a close relative of the victim. He establishes a trustworthy connection with the victim or joins the same religious group that he has deceived, and then, taking advantage of the confidence that others have placed in him, he cheats on them to get money. Another name for these con games is affinity scams.

8.3.1.8.1 PONZI SCAM

A form of affinity fraud, the Ponzi scam, commonly referred to as the pyramid scam, involves the use of emails and adverts to deceive people into believing they can make large sums of money while lounging in the comfort of their living room—all for as little as a set amount of money. They also consistently make intriguing promises, such as the possibility of higher returns for early birds. Once individuals spend their money in these kinds of scams, they end up with nothing at all since the fraudster disappears with the money, leaving no trace of their presence to be found.

Instances of Ponzi schemes in India include:
In November 2018, the government charged Gaylen Rust of Utah with operating a Ponzi scheme and making enormous profits, estimated to be between 47 and 200 million dollars annually, at a rate of 25 to 40 percent. It was discovered that this scam has affected over 200 individuals.

In September of the same year that Gaylen Ruth was found guilty, a man from Utah named Claud R. “Rick” Koerber was found guilty of operating a Ponzi scheme. As a result, the property’s investors had lost $100 million.A loss of $27,000 million was suffered by investors when New Yorker Michael Scronic was charged with both civil and criminal offenses in 2017.

8.3.1.9 PUMP AND DUMP SCAM

Finding possible investors and convincing them to buy their shares is the tactic used by a corporation that has a sizable holding of inexpensive stock—which is essentially an illegal enterprise. When more people invested, the stock price rose, and when it peaked, the fraudsters sold all of the shares, made a profit, and fled, taking all of your money with them.

In 2015, Rakesh Jhunjhunwala allegedly increased his wealth by acquiring over 2,50,000 shares. As a result, his shares of “Surana Solar” saw an 18% increase in value; however, the prices fell once the dump-sum scheme was exposed. This also led to the discovery of a systemic loophole.

The prevalence of these frauds indicates that there is an inadequate mechanism in place to verify the veracity of the data being submitted. Additionally, the Surana Solar-manufactured namesake made easy transactions with the investors, causing them enormous losses, by making use of such a loophole.

8.3.1.10 SCAM BY WAY OF SENDING SPAM EMAILS OR PHISHING

Spam emails with fictitious offers and promises are frequently sent by scammers. A record of 7.5 million spam email instances was found in 2017. You fall victim to this scam as soon as you respond to these phony emails. The majority of these emails concern investments in microcap stocks, which carry a far higher risk than other equities.

Customers of the ICICI Bank fell prey to a scam in which a gang of individuals impersonating bank employees sought personal information about their bank accounts to defraud them. When some of the clients who had received these spam emails complained, the bank manager eventually found out about the scam. According to the IT Act, this type of deception is known as “phishing.”

8.4 THE ACT OF EMBEZZLEMENT

A person is accountable for embezzlement if they utilize funds or property that has been entrusted to them for their gain and begin utilizing it for purposes other than those for which it was intended or in an unlawful way. The criminal breach of trust described in section 405 of the Indian Penal Code, 1860, may be used for the crime of embezzlement.

A criminal breach of trust is defined as an act in which a person entrusted with property misappropriates it, fraudulently converts it for his use, or disposes of it without authorization from the law. As defined by Section 403 of the Indian Penal Code, 1860, embezzlement is the unlawful taking of another person’s property to cause that person to suffer financial loss.

The following are the fundamental components that make up the crime of embezzlement.

• There must be a fiduciary connection between the two, or a relationship built on trust.
• The defendant must benefit financially or materially from this connection being misused.
• When embezzling items or money, the defendant should behave as though he is the one providing the money to the recipient or the owner of the commodities.
• The perpetrator must have the purpose to mislead.

A few instances of embezzlement and the industry in which they occur as white-collar crimes are as follows:
In the banking industry, bank tellers—individuals who interact directly with customers—provide them with access to bank cash so they may do their jobs.
Customers and other people have access to the till money that is maintained in the store by the clerks or cashiers. The term “till money” describes the funds that a bank retains on hand to cover recurring needs for cash.
It is common knowledge that top staff members receive cars from the corporation for official business. However, it is observed that these vehicles are being utilized for activities other than official business, which is equivalent to embezzlement.
Electronic gazettes, which are either sold in the market for a certain price or utilized for purposes other than those allocated by the employer, are given to employees by many large corporations as a means of making them digitally savvy.

8.5 FRAUD WITH THE INSURANCE COMPANY

Occasionally, someone might use fake paperwork to get insurance from the insurance provider. An individual can, for instance, inflate the worth of her property on fictitious documentation and then secure insurance coverage for that fictitious sum. They fabricate the documents so that they appear authentic, defrauding the insurance company.

Another possibility is that the customer staged the accident, theft, injury, or any other harm covered by the insurance policy on purpose. Or, on occasion, they overstate the harm done. To make an insurance claim, some even go so far as to omit or give fraudulent information on applications or paperwork. Intentionally misleading another individual for improper financial advantage is another form of insurance fraud that can be perpetrated by an insurance firm, agent, or policyholder.

Because they had fraudulently obtained 3 crore rupees as death claims from the firm, two employees of the Life Insurance Corporation of India were placed under arrest. Around 190 insurance policies were modified by the authorities, who replaced the true nominee on the fake paperwork with the account numbers of their friends. Despite their advanced age, the original policyholders were unable to recognize the deception that had been perpetrated on them.

8.5.1 RELEVANT LEGAL PROVISIONS UNDER THE INDIAN PENAL CODE, 1860

8.5.1.1 SECTION 205 OF THE INDIAN PENAL CODE

False personation is the act of taking on an identity and behaving as though one is another person, living or dead. It can take many different forms, such as using a false name when in court or forging signatures. The fundamental intent is to fool or mislead other people.

Let’s now look at the reasons why people use phony personas. Gaining an unfair advantage is frequently the goal, whether it be for one’s benefit, to avoid legal repercussions, or to obstruct the judicial system. To properly handle this problem, it is important to comprehend the motivations underlying fraudulent personation.

Certain requirements must be met to prove an offense, as stated in Section 205 of the IPC. Usually, these components consist of the intention to mislead, mistaking someone else’s identity, and being involved in a legal action or process.

Section 205 IPC lays forth punishments for persons found guilty of fraudulent personation to discourage it. The severity of the offense will determine the type of punishment, which might include jail time or fines. These repercussions must be understood by the legal authorities as well as by possible offenders.

8.5.1.2 SECTION 420 OF THE INDIAN PENAL CODE

The act of deceiving someone into delivering property to someone else, creating, altering, or destroying a valuable security in whole or in part, or creating anything that is sealed or signed and has the potential to be turned into a valuable security, is covered by Section 420 of the Indian Penal Code, otherwise known as IPC 420.

Inducement (to lead or move someone to happen) about the surrender of property and valuable securities is contained in Section 420 IPC, which is a serious kind of deceit. When deception or coercion results in property destruction, this clause also applies.

If found guilty under this provision, the offender faces a maximum sentence of seven years in jail of any kind in addition to monetary penalties. The offense is not subject to bail and is cognizable.

The following components are necessary for an offense to be classified as such under Section 420 of the IPC:

• That the accused’s representation was untrue;
• That when the accused made the assertion, he was aware that it was untrue;
• That the accused deceived the person with the false representation with the malicious purpose of tricking them; and that by doing so, the accused persuaded the victim to give up any property or to do or not do something that he otherwise would not have done or omitted to do.

8.5.1.3 SECTION 464 OF THE INDIAN PENAL CODE

According to this Section, forgery occurs when someone creates a false document, false electronic record, or portion of a document or electronic record with the intent to harm the public or any individual, to support a claim or title, to coerce someone into giving up property, to enter into an express or implied contract, or with the intent to commit fraud or to suspect fraud.
The IPC’s Section 465 addresses the penalties for forgeries.
It stipulates that anybody found guilty of forgery faces a maximum sentence of two years in jail of any kind, a fine, or both. The principles of Section 463 of the Indian Penal Code are as follows:

• The document has to be fictitious or fraudulent.
• Must injure people or the general public.
• Dishonestly modifies the claim or title of any person.
• Influences a person’s property title.
• Make someone relinquish something they own.
• It is an offense for which there is no compounding or recognition of bail.

8.6 THE KICK BACK FRAUD

A kickback scam is when someone pays someone else with something of value to persuade them to make a better choice. For instance, a contractor pays a government official to obtain clearance for a building complex in exchange for the official promising to give the contractor a tiny piece of the property. In another instance, a biomedical business promises a physician free travel for the next five years in exchange for the physician recommending their goods to their patients.

Known as the “Lord of War,” Abhishek Verma, the youngest millionaire, was detained in 1997 at the age of 28 due to his role in the AgustaWestland VVIP helicopter bribery scandal, the Navy War room leak case, and the Scorpene submarine purchase case. A total of 200 million dollars in kickbacks were allegedly given to him.

8.7 RACKETEERING

It alludes to the wrongdoing or criminal conduct of a person engaging in illicit business to make money.
Recently, there has been an increase in the number of racketeering cases. In February 2019, an article in India Today stated that Raju, also known as Hakla, was taken into custody on charges of 113 counts of murder, dacoity, and robbery. In 2019, a Gujarati businessman named Brijkishore Jaiswal was about to have an illicit kidney transplant when a kidney scam was exposed. This took place in the Hiranandani Hospital in Powai. Five additional individuals, including the hospital’s CEO Sujit Chatterjee, were placed under custody following the revelation of the improper behavior.

8.8 FRAUD IN BUYING OR PURCHASING SECURITIES

Securities fraud is the term used to describe the dishonest display of an inflated stock price by a company’s broker to entice investors to purchase his shares.

Anilesh Ahija, also known as Neil, was arrested in 2019 on suspicion of securities fraud. PPI was an investment firm that managed hedge funds. Jeremy Shor, a former trader for PPI, was also charged with the same offense. The arrests were made by a News18 report.

They all took part in an elaborate plan to inflate hedge firms’ net asset values by over $100 million. By inflating the value of the securities, they began manipulating the money. This allowed them to later acquire inflated bids for the PPI, which enabled them to raise USD 100 million. Displaying the inflated value of the PPI securities, tricked individuals into falling into the trap and kept the true value secret.

8.9 FRAUD OVER CALLS

Frauds committed over the phone are sometimes referred to as telemarketing fraud. In this instance, an individual is asked to invest in the establishment of a charity or provide their bank account information to receive a certain sum of money for charitable needs. Any purpose other than the one for which it was stolen is then accomplished with the amount obtained.
In 2018, Paul Witt, a Supervisory Data Analyst at the Federal Trade Commission, sent a consumer information report that revealed that, based on data on fraud cases, 1.48 billion consumers lost money, a 38% increase from 2017.

8.10 FRAUD IN WELFARE ACTIVITIES

Fraud in welfare is the attempt by an individual to get financial gain from the State or the federal government by taking advantage of programs such as food stamps, public assistance, healthcare, etc.

In India, for instance, Abdul Karim Telgi was charged in the stamp paper case for allegedly appointing 350 fictitious agents to disseminate fraud over twelve states. Selling stamp papers to financial institutions, insurance providers, and stock brokerage firms was part of this commercial venture. It took him over 200 billion rupees to the club.

8.11 USING WRONG WEIGHTS

Shopkeepers that inflate the weight of their products to sell them are a common sight on the Consumer Forums. The ignorant individuals are the ones who fall prey to these scams. The uneducated person is unable to determine whether the seller is being dishonest. In the beginning, there was a great deal of this kind of criminality. Since digital weighing equipment have been introduced, fewer of these offenses have been committed. Additionally, since literacy rates have increased over time, vendors now find it more difficult to trick their clients.

In the case of Sawkar v. Kanayalal Mohanlal Gujar [13], the defendant purchased a specific amount of hirda from Savleram, the vendor. The third was measured using ‘adholis,’ which are archaic techniques for calculating weights. Sawkar was advised not to use these weights by the village Patil since they did not provide precise measurements, but he persisted in using them. Later, he took possession of the adults and launched the lawsuit. In response to Sawkar’s claim that hirda was measured using a fake weight, the court ruled that Savleram would not be held accountable for fraud since Savleram had consented to the same and had no malicious intent.

9. COMMON TYPES OF WHITE COLLAR CRIMES IN INDIA

9.1 BANK FRAUD

Financial theft is the unlawful taking of funds or property from a bank by dishonest means. Another way that fraud might happen is when someone takes money or other assets from someone by pretending to be a bank or other financial organization.
In light of this, we deduce that there are two ways in which bank fraud might occur:

• via taking assets or money from a bank or other financial institution via illicit methods.
• People can have their assets or money taken from them by someone pretending to be a bank or other financial organization.
• In India, bank fraud is illegal under the Indian Penal Code, of 1860. The crime of fraud in banks is covered by several sections, including Section 403 on criminal misappropriation of property, Section 405 on criminal breach of trust, Section 415 on cheating, Section 463 on forgery, and Section 489A on counterfeiting of currency.

9.1.1 TYPES OF BANK FRAUD

9.1.1.1 INITIATING A FINANCIAL INSTITUTION

A person is deemed to have committed bank fraud when they create a phony firm or website and mislead others into believing they are a financial institution. This can be done by constructing a fake website or by identifying themselves as such.
Two individuals were detained, according to The Times of India, for setting up a phony State Bank of India website and operating a scam there. They have successfully conned individuals out of one crore rupees. Sahil Verma and Monu, two males from Haryana, were involved. They were accused of making fraudulent use of the computer resources and cheating against anyone.

9.1.1.2 DEFRAUDING USING CHECK

In this instance, offenders get employment that gives them access to corporate payrolls, mailboxes, post offices, and other facilities maintained by the corporation. After gaining in, they pilfer the checks and deposit the proceeds into a fictitious account they set up.

People were warned not to fall for phony emails purporting to be from the Reserve Bank of India (RBI) lottery, according to a report published on timesnownews.com. The email included the RBI emblem and its Delhi headquarters’ address. The RBI had issued a warning against it, yet despite that, the ID resurfaced and captured numerous innocent persons.

9.1.1.3 FALSELY GETTING LOANS APPROVED

Occasionally, the borrower will falsify details on the loan application and provide false documentation to prove his eligibility. It is also possible for someone to falsely assert that they are bankrupt after taking out a bank loan. Additionally, this would be considered bank fraud.

The M.P. Nagar police detained Anuj Pandey for allegedly presenting forged paperwork to the bank to get loans.

9.1.1.4 BANK FRAUD USING INTERNET

Individuals frequently fall prey to online scams. Someone may build a phony website that poses as a financial institution and advertises in a way that entices visitors to make investments in that bank.

It was reported that three people from West Bengal and Orissa had made up the website “Rail Vikas Nigam Limited.” The website misrepresented employment prospects to users. Governor Bind Singh and Narayan Patra were the culprits who were taken into custody. The victims said that although the company’s accomplishments, operations, and other announcements were all posted on its official website, no hiring was happening.

According to livemint.com, the number of bank fraud cases has increased at an unprecedented rate. A report published by the Reserve Bank of India (RBI) states that a total of 5,916 bank fraud cases totaling 41,167.03 crores were recorded between 2017 and 2018. High-profile fraud cases such as those involving Vijay Mallya and Nirav Modi were featured in this.

9.2 BRIBERY

Bribery refers to a type of white-collar crime when an individual requests money, a favor, or something valuable in exchange for completing another person’s task. It would be considered bribery, for instance, if an election official demanded that someone provide him alcohol before allowing him to vote.

Section 171E of the Indian Penal Code, 1860 stipulates that anybody found guilty of bribery faces up to a year in jail, a fine, or both. Public officials who participate in activities that fall within this category are also subject to penalties under Section 13 of the Prevention of Corruption Act, 1988.

9.2.1 TYPES OF BRIBERY

9.2.1.1 WHERE PUBLIC OFFICIALS BRIBED OR BRIBES

According to the Prevention of Corruption (Amendment) Act of 1988, a public official is guilty of bribery if he offers something in exchange for carrying out his official duties or uses his authority to do so.

Together with the public officials, an individual will be held accountable if they try to bribe them for personal gain or to do their task.

9.2.1.2 WHERE A WITNESS BRIBES OR IS BRIBED

A witness would be prosecuted for the crime of bribery if he requests, accepts, or demands bribes in any way to provide false testimony or to introduce a phony witness in court.

9.2.1.3 WHERE A FOREIGN OFFICIAL BRIBES OR IS BRIBED

Bribing a government official in another country with cash or gifts is against the law. Such white-collar crime is frequently committed by government officials to preserve crucial commercial relationships.

9.2.1.4 BRIBING BANK OFFICIALS

It is against the law to bribe a bank employee, director, manager, etc. with food, entertainment, or any other kind of support in exchange for a job offer, increased pay, or other benefits.

9.2.1.5 WHERE A SPORTING OFFICIAL BRIBES OR IS BRIBED

A sports official can demand bribes to “fix” a game. Both the person who provided the briefing and the person who accepted the bribe in this instance will ultimately be held accountable for their crimes.

9.2.1.6 BRIBING IN AN INDUSTRY

Payroll plans and the health sector are two examples of businesses that are frequently linked to kickbacks. An instance of this would be if a pension provider bought off a company’s broker to persuade the latter to choose his pension offer rather than bids from rival providers.

9.3 CYBERCRIME

The number of crimes using computers and the internet is rising along with their use. Cybercrime is the term for crimes committed with a computer and the internet. This occurs when a computer is utilized either as the target of the crime or as a means of committing it.

The Information Technology Act of 2000 is the sole piece of legislation that addresses offenses linked to cybercrime. Since it is impossible to define a crime of this kind when computers and the internet are involved, no act or legislation has defined cybercrime precisely.

9.3.1 CATEGORIES OF CYBERCRIME

9.3.1.1 PROPERTY

This kind of situation is comparable to an actual incident in which someone gains unauthorized access to someone’s credit card information or bank account information. To access cash, make transactions, or carry out phishing schemes, the hacker here compromises personal information linked to the account or credit card. Additionally, access to sensitive data might be obtained by employing malicious software.

9.3.1.2 INDIVIDUAL

where information that the law forbids publication is unlawfully distributed, such as when pornographic material is distributed. Stalking and trafficking fall under this category as well.

9.3.1.3 GOVERNMENT

Cyberterrorism is the term for crimes committed against the government. This covers offenses like disseminating propaganda or breaking into websites run by the military or the government. Most of these offenders are opponents or terrorists from other countries. The most dangerous crime is this one, and India now has a relatively low rate of it.
The following are the main categories of cybercrimes that are common in India:

9.3.1.4 CHILD PORNOGRAPHY

It is the publication and dissemination of pornographic content created by children in electronic format. One horrible crime that happens is child pornography. Other crimes like child sex abuse and sex tourism have sprung from it.
Because it is so simple to use the internet, the rates of this crime have gone up over time. In 2018, there was a 10% increase in the number of child pornography cases—including rape and molestation—that were reported under the Protection of Children from Sexual Offences Act (POCSO). This information was reported in a 2019 Times of India story.

A report from the Mumbai police stated that 4,551 of these cases were registered in Mumbai between January 2015 and May 2019. Thirty-three percent of all crimes against children are included under the POCSO Act, which covers offenses like child pornography, sexual assault, harassment, and rape. The state of Uttar Pradesh has the highest number of crimes under the POCSO Act.

9.3.1.4.1 RELEVANT PROVISIONS UNDER THE POSCO ACT

Following the POCSO Act’s 2012 revision, several clauses were changed to introduce stricter penalties for child pornography.
The death sentence is now a punishment for offenses like sexual assault on an adulterer or engaging in penetrating sexual assault with a partner, as stipulated in Sections 4 and 5.
Children are protected by Section 9 of the Act in the event of natural disasters and when they are forced to get hormone injections or any other chemical substance to reach sexual maturity before their age is appropriate. The purpose of this is to prepare for a penetrating sexual attack.
Those who violate Sections 14 and 15 are subject to fines if they fail to remove or delete any pornographic reports or materials that feature children. They commit a crime against that child when they purposefully put it online and then distribute it to others.

9.3.1.5 CYBERSTALKING

In India, instances of online sexual harassment have increased. The abuse that women experience on the internet is the same as the harassment they experience outside. According to a Feminism in India poll, 50% of women in India’s largest cities had experienced online harassment. The fact that there is a rise in cyberstalking incidents targeting men is even more startling. Experts have shown that there is a 50:50 stalking ratio between males and women.

9.3.1.6 CYBER TERRORISM

he definition of terrorism is “the unlawful use or threatened use of force or violence against people or property with the intention of intimidating or coercing societies or governments, often for ideological or political reasons,” according to an individual or an organized organization.

Cyberterrorism is defined as “the planned, politically motivated attack against information, computer systems, computer programs, and data which results in violence against noncombatant targets by subnational groups or clandestine agents,” according to Mark M. Pollitt.

Given the wide nature of cybercrime and the fact that it occasionally involves more than a simple computer attack, it is challenging to define cyberterrorism precisely.

9.3.1.6.1 CHARACTERISTICS OF CYBER TERRORISM

The victims are precisely targeted, and the attack is specified.
The attack’s goal is to harm or destroy particular targets, including military, political, economic, and energy infrastructure.
The goal of an attack might be to undermine the informational framework of any religious organization to expose religious fraud.

Eliminate the enemy’s ability to continue operating in their sphere of influence.

9.3.1.7 MAJOR CASES RELATING TO CYBER TERRORISM

9.3.1.7.1 CASE 1

In 1998, there was a cyberattack on the website of the Bhabha Atomic Research Centre (BARC) located in Trombay. Virtual data was taken out of the BARC computer system by hackers who had gotten access to it.

9.3.1.7.2 CASE 2

In 2002, several well-known Indian websites were vandalized, most notably the Mumbai Cyber Crime Investigation Cell website. On the home pages of several websites, messages on the Kashmir issue were placed.

9.3.1.7.3 CASE 3

The principal parties involved in the Purulia arms drop case made heavy use of the Internet for worldwide planning, communication, and logistics.

9.3.1.7.4 CASE 4

The two Indian physicians who attacked Glasgow’s airport in 2007 utilized computers to further their terrorist objectives.

9.3.1.7.5 CASE 5

 Dr. A.P.J. Abdul Kalam, a former president of India, has voiced concerns about the unfettered online access to critical geopolitical images of many countries. He made the point that learning more about terrorist organizations may be accomplished with the help of the internet. He said that using “Google Earth” for earth observation posed a security concern to the country.

9.4 MONEY LAUNDERING

Money laundering occurs when a person, known as the launderer, successfully conceals the money he obtained illegally by converting it into legal currency. The crime of money laundering is known in India as a “Hawala transaction.” As per the Money Laundering Act of 2002, money laundering is defined under Section 3.

In certain cases, money launderers operate in such a way that the true source of the funds cannot even be traced by the investigating agency. This is the process by which those who invest their illicit funds in the capital market can turn them into real wealth.

9.4.1 THE THREE MAJOR STEPS INVOLVED IN MONEY LAUNDERING

9.4.1.1 INVESTMENT

First, the money launderers use banks or agents to transfer their illicit funds into the black market in the form of cash investments. Agreements, whether formal or informal, are used to accomplish this.

9.4.1.2 MANIPULATING THE DETAILS

Hiding the specifics of the money launderer’s actual earnings is the second stage. Money launderers achieve this by often depositing their funds in foreign banks in the form of stocks, bonds, and other securities. They would rather put their money into banks that withhold the account holder’s identity and other facts. This aids in the manipulation of the money’s owner’s information and its provenance facts.

9.4.1.3 MAKING WHAT IS ILLEGAL LEGAL

The last stage involves converting the illegal funds that were first launched into the market into real funds and reintroducing them to the financial sector.

9.4.2 CASES OF MONEY LAUNDERING IN INDIA

• It has been suggested that the Board of Control for Cricket in India, or BCCI, laundered twenty-three billion dollars by entering the guns and narcotics smuggling sector.
• Anosh Ekka was accused of participating in money laundering in the Anosh Ekka v. Central Bureau of Investigation case [4]. This was because, in the three years after his appointment as minister, he amassed a substantial amount of real estate and personal property in both his and his family’s names. The defendants were found guilty by the Supreme Court of embezzlement and money laundering involving vast sums of public funds. Along with manipulating the evidence against him, he postponed the verdict. Additionally, he was charged with misusing the legislative process and attempting to influence the administration of justice.
• Five individuals opened a fictitious account at Punjab National Bank (PNB), obtained money for their advantage, and severely damaged PNB in the case of Arun Kumar Mishra v. Directorate of Enforcement [5]. Since the offense in this case did not come under any of the Prevention of Corruption Act’s provisions, the money laundering case was not heard. Additionally, it has been said that ex post facto legislation is null and void under Article 20(1) of the Indian Constitution. It is a basic privilege guaranteed by the aforementioned Article to not be subject to prosecution under a statute that was not in effect when the offense was committed. Nonetheless, the court stated that the Enforcement Directorate may bring a new case against the petitioner by the statute that would be in effect when money laundering has been conclusively proven against him.

9.5 TAX EVASION

The purposeful manipulation of one’s circumstances to allow the government to impose a lower tax burden is known as tax evasion. An individual, a company, or a trust may carry out this task. It is a fraudulent way to avoid paying taxes to the government. To put it simply, both tax evasion and avoidance are crimes committed to lower one’s tax burden. According to Chapter XXII of the Income-tax Act, 1961, tax evasion is a crime that carries hefty fines and maybe even jail time.

Tax evasion may be defined as follows: (amount of income that must be declared) – (actual amount reported)

9.5.1 SITUATIONS WHERE ONE COULD BE PENALISED FOR TAX EVASION

9.5.1.1 FAILURE TO FILE INCOME TAX RETURNS

There might be a punishment of at least rupees 5,000 if someone does not file the income tax returns as required by Section 139 (1) of the Income Tax Act, 1961.

The apartment, registered under Prabodh Anand’s name, was sold. The sum was paid in the name of Anand and his spouse by the apartment buyer. The capital gains that his wife had become taxable because the apartment was solely registered in Anand’s name. They neglected to pay the taxes due and eventually received a tax notice.

9.5.1.2 NOT PROVIDING A PAN CARD OR GIVING A FAKE ONE

An individual faces a 10,000 rupee fine if, during the hiring process, they fail to furnish their employer with a legitimate Permanent Account Number (PAN) or give someone else’s PAN instead.

Four men have been detained for operating six fictitious businesses that were involved in a scheme to evade paying 60 crore rupees in taxes, according to a report published in The Economic Times. Fake PAN (Personal Account Number) cards were among the several false documents that they were accused of using. Because these fraudulent companies were able to make 615 crore rupees, the people suffered greatly.

9.5.1.3 GIVING FALSE INFORMATION UNDER FORM 26AS

Form 26AS has to be completed by Section 203AA of the Income Tax Act of 1961. Examining the submitted information is crucial, as incorrect information might result in harsh penalties. In a similar vein, one would still face consequences even if they gave false information about their income, spending, or investments.

According to an Economic Times story, employers were excluded from paying taxes on medical expenditures to the tune of almost 15,000 crore rupees. An employee’s company provides him with HRA and Leave Travel Allowance if he wants tax-exempt reimbursements. The only person who can make the payment is the one who has the related bills or receipts. However, to get reimbursed, those who lost their invoices or receipts typically fabricate them.

9.5.1.4 PUNISHMENT FOR NOT PAYING SELF-ASSESSMENT TAXES

A person is deemed a defaulter under Section 140A (1) of the Income Tax Act, 1961 if they do not pay the self-assessment tax, in full or in part. According to Section 221(1) of the Income Tax Act, 1961, the assessing officer may apply a penalty if they are not given a valid explanation for the payment delay.
In the case of Galaxy kiraman Pvt. Ltd. v. Acit, New Delhi [12], the appellant was penalized by the assessing officer for failing to pay the self-assessment tax for the 2010–11 fiscal year. By Section 140A(3) of the Income Tax Act, 1961, a fine of 1,09,71,691 rupees was assessed.

9.5.1.5 GIVING A WRONG ACCOUNT OF INCOME TO ESCAPE TAX PAYMENT

According to Section 271(c) of the Income Tax Act, 1961, an individual who knowingly withholds their true income from the government to lower their tax liability faces penalties ranging from 100% to 300% of the taxes they have avoided. The many circumstances under which the penalty could be imposed are outlined in Section 271AAB.

According to a Live mint story, a Haryana man was detained for allegedly conducting a scheme in which about ninety businesses produced fake invoices to avoid paying taxes. The Directorate General of GST Intelligence (DGGSTI) discovered that 173 bank accounts were connected to a total of 110 debit cards and blank check books.

9.5.1.6 KEEPING SILENCE ON THE INCOME TAX NOTICE

If the individual has disregarded the notification sent to him by the Income Tax Department, the assessing officer may, under Section 142(1) or 143(2), issue a notice requesting that the individual either submit the income return or provide all relevant information in writing.

According to a story published in the Times of India, Mirdul was shivering outside the Mumbai magistrate court, where he might have faced severe penalties for failing to comply with the Income Tax Department’s 30-day warning. The notice was sent because the employee’s salary contained TDS that she had collected but had not deposited.

9.6 CELLULAR PHONE FRAUD

The term “cell phone fraud” is the act of altering, deceiving, or using cellular phones or services without authorization. In this instance, the criminal would create a fictitious account in your name, gain access to your credit card information, and bank account information, and make purchases without your permission. The criminal could even sell your phone to other criminals so they can use it to carry out illicit activities.

As stated in the Mobile Device Equipment Identification Number, Rules, 2017, using a mobile phone’s IMEI number without the owner’s consent is illegal and can result in up to three years in jail. The Indian Telegraph Act of 1885’s Sections 7 and 25 have been combined with this clause. Section 25 states that anybody found to have caused damage to telegraph lines, machines, or other similar equipment faces a maximum 3-year prison sentence, a fine, or both. Section 7 grants the Department of Telecom the authority to establish regulations for the conduct of telegraph and telecom services.

An article in the Business Standard claims that there was a 43% spike in social media fraud in 2018. These scams involve thieves using credit card numbers and stolen identities to make illicit earnings. The number of people using mobile applications—mostly Facebook, Instagram, and WhatsApp—to commit fraud increased by 680% between 2015 and 2018.

Users of social media on the internet are at risk from this, thus they should exercise caution and awareness when using it. This necessitates taking appropriate precautions to secure one’s account and credit card information while supplying it online via a website.

9.7 COMPUTER FRAUD

Computer fraud is the term for using a computer to deceive others to obtain financial advantage. Section 43 of the Information Technology Act of 2000 stipulates the penalties for it. The wrongdoer is penalized by being required to make restitution. The internet, internet-connected devices, or online services can be used for it. The use of computers illegally includes the following practices: social engineering, DDoS attacks, malware, and phishing.

9.7.1 THE VARIOUS TYPES OF COMPUTER FRAUDS ARE :

• When a fake letter spreads extensively and is then utilized by thieves to carry out illicit acts using computers.
• When someone attempts to get unauthorized access to another person’s computer, computer system, or computer network.
• When a computer is used to download, copy, or extract any kind of information from a computer, its system, or its network, including data or computer databases. The data that is kept in the “recycle bin” folder is also included in the information or data under this heading.
• When someone tries to break into or harm a computer, computer system, or computer network.
  When someone attempts to prevent someone with legitimate or authorized access from utilizing a computer, computer system, or computer network.
• In which someone helps another individual access a computer, computer system, or computer network.
  By using any computer, computer system, or computer network to manipulate or tamper with it, and charging someone else for the services received.
• If someone tampers with or manipulates a computer, computer system, or computer network to reduce the value of the data.
  In cases where someone intentionally causes harm to another individual by stealing, hiding, destroying, or altering any computer source code utilized for a computer resource.
• A corporation may have computers that are only accessible by a small number of the technical staff. An employee would be considered to have committed a crime if he or she used it for personal benefit through criminal means when not permitted to do so.
• A white-collar crime is considered to have been committed when an individual with full knowledge of a computer system attempts to introduce malware or spyware into the system to create patterns in data sets without authorization.
• Account hacking is a frequent topic of news coverage. Accounts are frequently hacked by hackers to get users’ personal information, which they subsequently use to commit crimes.
• The introduction of a virus into the system that would interfere with its operation and result in the user losing data is not a major concern for computer specialists.

9.8 COUNTERFEITING

The act of imitating something real to steal, damage, or replace someone else’s original work is known as counterfeiting, as described by section 28 of the Indian Penal Code, 1860. This makes it easier to benefit from illicit activities and fool someone into thinking that what is being shown to them is real and that the work that is being duplicated is more valuable.

Section 489B of the Indian Penal Code, 1860, provides penalties for the use of counterfeiting, which is typically connected to coins and currency. It can occasionally also involve copying items such as toys, purses, watches, jewelry, apparel, and toys. False trademarks and logos are used on counterfeit goods, and some of them contain dangerous substances that might kill the user.

India is seeing a sharp increase in the number of coin counterfeiting cases. Three individuals were apprehended on July 4, 2019, by the Special Task Force of Kolkata after they were discovered in possession of counterfeit Indian rupees having a face value of Rs 6,50,000. Two persons were apprehended in Rajkot recently in possession of 1,080 counterfeit notes with a face value of INR 21.60 lakh, according to a story published in the Times of India.

9.9 EXTORTION

Section 383 of the Indian Penal Code, 1860 makes extortion illegal. Extortion is the term for the crime committed when one person forces another to give him money, goods, or services. It is referred to as a “white collar crime” because an officer may threaten someone for paying money, transferring property, or rendering services by using his official authority and his higher position within the organization. According to the ruling in People v. Fort [6], the following crucial components make up the crime of extortion:

• One side should communicate their requests to the other. The other party or his family should be threatened with harm for the demands to be fulfilled.
• The other party should be the target of an attempt to extract money in exchange for some benefit. It is necessary to threaten the other person to act or refrain from doing so.

For instance, American TV star David Letterman was blackmailed for $2 million after it was discovered that he had been having sex with one of his coworkers. Later on, Robert Halderman, the suspect, was apprehended and dealt with.
In another instance, Cindy Crawford, a well-known actress, and model, and her spouse fell prey to a $100,000 extortion scheme in which the suspect threatened to make public their daughter’s photo, which showed her restrained and gagging, if the pair did not comply with his demands.

9.10 FAKE EMPLOYMENT PLACEMENT RACKET

There are several instances when criminals have tricked students or job seekers into believing they can position them or get them a job, only to flee with the money they took as a down payment on a job. The Information Technology Act of 2000’s Section 66D outlines the consequences of utilizing computer resources to personate someone else to cheat on them.

For instance, in January 2019, Ajay Kolla, the CEO of Wisdom Jobs, was detained along with thirteen other employees on suspicion of engaging in fraudulent recruiting. The renowned hiring company Wisdom Jobs was founded in 2009 and has since won several awards. Based on false placement promises, Ajay Kolla has since conned around 1.04 individuals, making about 70 crore rupees, according to the Economic Times.

9.11 FORGERY

According to Section 464 of the Indian Penal Code, 1860, the act of forging checks or securities to deceive another individual is referred to as forgery. In the accounting department of the business, it is very uncommon for clerks or staff members to falsify documents and abscond with corporate funds, resulting in financial loss for the business.

For instance, Ravi Prakash, the CEO of TV9 News Channel, was fired in 2019 due to allegations of falsification. Based on the press release from ABCPL, NDTV reported that Ravi Prakash had faked the company secretary’s signature to deceive the Registrar of Companies. It was also claimed that Ravi Prakash had falsely filed charges against the new directors, motivated by malice and self-interest. To keep the directors from doing their duties, he persuaded other parties to bring false accusations against the business.

10. WHITE COLLAR CRIME IN OTHER PROFESSIONS

10.1 WHITE COLLAR CRIME IN MEDICAL PROFESSION

Penologists have long since acknowledged the issue with the doctor-patient interaction. Manu threatened to impose severe penalties on anybody who engaged in dishonest behavior. For instance, he claimed that a doctor who reports a bogus diagnosis will face harsh consequences. Removing an immature fetus was seen as a horrible crime, and the perpetrator was expected to face harsh punishment.
Numerous instances have occurred in which a medical professional was not licensed to practice medicine. The patient’s doctor turned out to be a fraud, taking their money and mistreating them to defraud them.

White-collar crimes in the medical field include things like providing false certifications of medical fitness, helping to carry out illegal abortions, and selling trial medications and prescriptions straight to Indian pharmacies or patients. On occasion, it is seen that medical practitioners advise offenders on how to avoid accusations by citing medical reasons.

Two physicians in Karnataka, K.H. Jnanendrappa and K.M. Channakeshava, are accused of fabricating medical certifications for Abdul Karim Telgi, a participant in a multi-crore stamp paper scam, to support his bail on the pretext of health concerns. Thus, by the Prevention of Corruption Act, of 1988, they were each sentenced to seven years in jail and a fine of fourteen lakh rupees.

10.2 WHITE COLLAR CRIME IN THE LEGAL PROFESSION

In court, lawyers frequently fabricate witnesses and offer false evidence in exchange for payment or other services from their clients. Legal professionals engage in unethical behavior and transgress all ethical principles in exchange for financial gain when they receive ministerial assistance. The case might take a different turn when professional witnesses are brought in and evidence is manipulated. As a result, the innocent person is frequently imprisoned while the true culprit is frequently released.

Delhi resident D.K. Gandhi brought legal action in 2006 against his lawyer’s unethical conduct. Gandhi had given the lawyer an appointment in exchange for a specific sum of money. It was expected of the attorney to wrap up the matter as quickly as possible. Gandhi was to get the compensation money when the lawsuit was resolved during the first hearing. But, the attorney declined to provide the money to Mr. Gandhi, his client, unless he was also given an additional five thousand rupees.

Referring to the ruling in Jacob Mathew v. State of Punjab [11] by the Supreme Court, the court held the appeal in D.K. Gandhi v. M. Mathias [10] and left the case for the State Commission to determine by the law.

In the case of Jacob Mathews, the Supreme Court ruled that professionals from various fields, such as law, medicine, architecture, or any other field, would be held accountable for negligence in the practice of their profession if any one of the following two requirements is met: A. Not only did he lack the necessary competence to be proclaimed, but he also did not practice the same even when he did possess the necessary skill.

10.3 WHITE COLLAR CRIME IN ENGINEERING PROFESSION

Like mining engineers, engineers are frequently discovered to be involved in unethical actions such as delivering subpar materials and works, failing to preserve records, or keeping false records. These kinds of controversies cost the organization a great deal of money and are frequently covered by new media outlets.

A bridge fell as a result of the carelessness of an assistant engineer named S.F. Kakulte, who was detained in April 2019, according to an article published in India Today. The project featured Kakulte, four more engineers, and the top engineers of Bombay Municipal Corporation. Neeraj Desai, the structural auditor, was also detained for carelessness in the report. He said that although the audit included an inspection of beams, pillars, and metal fittings, the inventory provided to him for the audit did not include any mention of concrete slabs, which led to the deaths of six individuals and the serious injuries of thirty-five others.

10.4 WHITE COLLAR CRIME IN EDUCATION

To get government subsidies to operate their schools, many private educational institutions engage in dishonest methods such as fabricating documents and facts. It is frequently seen that the workers and teachers are paid far less than what was agreed upon. The institution can raise a significant amount of money illegally thanks to these dishonest activities.

A senior member of the railway ticket-checking personnel was detained by the Central Crime Branch in 2019 after it was revealed by the New India Express that the employee had leaked the test questions for the constable and sub-inspector positions in exchange for cash.

A Time of India story from 2013 claimed that Gujarat Technological College has been hiring engineers for lectureships who weren’t even competent to have a B. Tech degree. Yogesh Patel had not yet completed his bachelor’s degree when he was a civil engineering instructor at S.R. Patel Engineering College, which is connected to Gujarat Technological University.

Applied mechanical and seismic engineering were among the topics in which he had failed. He even went so far as to examine documents and was paid for his labor. an investigation of the appointment of an individual for teaching purposes who is ineligible for the position of ad hoc, or temporary, lectureship.

11. CAUSES OF WHITE COLLAR CRIME IN INDIA

Starvation, illiteracy, and widespread health difficulties are just a few of the major issues that India is dealing with. The management of the mass population becomes problematic since India is the second most populous country in the world. Although the government has strict regulations, it frequently fails to enforce them because it becomes challenging to maintain control over so many individuals. White-collar crime is likely to flourish in such an environment. Here are a few other factors contributing to the rise in white-collar crime in India:

1. People who are financially stable and carry out these criminal activities to satiate their desires are the ones who conduct white-collar crimes. People’s greed is typically what drives these actions.
2. In India, underdevelopment is said to be mostly caused by poverty. For the majority of people, poverty is a contributing factor to both physical and financial hardship. People are so in need of money that they are readily drawn in by lies that are told to them. They neglect to verify if the claims being presented to them are accurate.
3. White-collar crimes have a heavier penalty than other types of conventional crimes. White-collar crimes result in significant losses for victims on all fronts, including monetary and psychological ones. False pharmaceutical testing and other corporate errors claim more lives than murder does.
4. Technological advancements, accelerated commercial and industry expansion, and political pressure have presented criminals with new, quicker, and simpler ways to perpetrate these kinds of crimes.
5. Since individuals have had access to the internet and the digital world, where large transactions can be completed in a matter of seconds and contacts with people worldwide can be made in a matter of minutes, criminals have been motivated to commit more crimes and hide anywhere on the globe.
6. Because these cases are extremely complex and tracking down a suspect is a challenging task, our law enforcement organization has likewise grown reticent to deal with such crimes. Compared to regular crimes, white-collar crime investigations take a lot longer.
7. The legal system fails to prosecute white-collar crime offenders even when they are apprehended.

The following are the main causes of the inability to hold these criminals accountable for their wrong doings:

• The lawmakers and those putting the laws into effect are members of the same class or group as the offender, so they end up supporting these criminals rather than taking action against them.
• Due to their inability to make connections between the fragments of information they gather, the investigating officers work less hard at their jobs. Despite their best efforts, they are unable to get significant evidence in many cases since everything is done online, making it challenging to track down objects or people.
• Because there are no rules about this kind of crime, those who do it are free. Laws that have loopholes cause them to be favorable to criminals in numerous situations.
• Why The existing law does not provide the harsh consequences that may discourage people from committing these sorts of crimes. There is little incentive for suspects to refrain from committing these sorts of crimes.                                                       It is disheartening to learn that, despite white-collar crime’s pervasiveness in society and the ease with which its victims might fall victim to it, little action is being taken to stop these crimes from being committed. This is because powerful individuals with better social positions are the ones who perpetrate white-collar crimes.

12. THE EMERGENCE OF WHITE COLLAR CRIME IN INDIA

12.1 WHITE COLLAR CRIME IN ANCIENT TIME

 Crimes allegedly began to occur as soon as people began to live in groups. As society has become more contemporary, certain crimes have taken on new dimensions, while others have vanished completely with time. According to an ancient Vedic book, the concept of white-collar crime has supposedly been in civilization since the beginning of time.

12.2 THE CRIME OF BRIBERY

In Indian culture, the notion of bribery is not new. The many holy books contain references to these atrocities.
Once upon a time, Narada said that anything given by a man in a condition of intoxication, in jest, out of fear, rage, desire, or sadness, or through a minor’s fraudulent deed, would be regarded as bribery.

As long ago as long ago, Yagnavalkya had suggested that the monarch, who possesses ultimate authority, should execute the traitorous officer and honor the true believers. He continues by saying that anyone found attempting to extort someone would have their possessions seized and dealt with appropriately.

Kautilya said in his Arthashastra that those in positions of power would have their actions closely monitored and that they would be held responsible for any negligence.

12.3 HEALTH

People’s concerns about their health have long been there. Dog meat was prohibited from being sold back then as well to stop an epidemic from starting. The many forms of punishment that one may face for engaging in the sale or purchase of dog meat were proposed by Yajnavalkya, Vijnaneswara, and Kautilya.

With the general health of the populace in mind, Ashoka established hospitals for both humans and animals. In his rulings, Ashoka cautions against using meat as nourishment and against butchering birds for sustenance.

12.4 USING FALSE WEIGHTS IN STORES

It is crucial to avoid using manipulative market strategies to keep the economy on course. Shopkeepers used to frequently fabricate weights and measures to increase their earnings in antiquity. Kautilya suggested the presence of a supervising officer who would monitor market transactions to prevent shopkeepers from engaging in such unethical business activities. When one is discovered using unethical methods in the marketplace, Kautilya and Yajnavalkya propose imposing a fine.

According to Section 8(3) of the Legal Metrology Act of 2009, one of these violations is the use of false measurements or weights that deviate from the proper standard measure or weights. The Legal Metrology Act, 2009, Section 25, imposes fines on violators that can reach 25,000 rupees. If the offence is committed again, the punishment consists of a fine, up to six months in jail, or both.

12.5 COUNTERFEIT OF COINS

Coins were utilized as a means of exchange for the first time in the Indian economy. When it came to money concerns in the past, the guild had authority. The State authority controlled the manufacturing of copper, gold, and silver used to mint coins. One who counterfeits coins would face penalties, according to a regulation set by Kautilya. The counterfeit coins he referred to as “Nanaka” were made by people known as “Kutarupa Kara,” who were the manufacturers.

12.6 GROWTH IN THE MODERN ERA

Class division resulted from India’s fast industrialization following World War I (1914–1919). There existed two social classes: the capitalists, who had the bulk of the means of production, or the bourgeois institution, and the proletariat, also referred to as the working class. A consequence of the hard economic conditions and the fast growing economy was the social exclusion of the proletariat class.

Criminalist behavior has grown as a result of intense competition and a desire to profit from monopolies. By now, the seeds of white-collar crime had been sown. These crimes developed to be a danger to the expansion of the Indian economy during the time the country was preoccupied with fighting wars and waging the liberation movement.

13. COURTS AND WHITE COLLAR CRIMES IN INDIA

Nowhere in the law is a definition for white-collar crimes, yet several laws suggest they exist. The rise in these crimes has been significant in recent years due to the development of new technology and advancements in several areas, such as the commercial and industrial sectors.

It is well known that the Indian courts currently handle over 3 crore cases. It would be very difficult to drop the white-collar criminal accusations as quickly as it would be possible in this case.

To speed up the handling of cases involving white-collar crime, fast-track courts and tribunals must be set up around the country. Furthermore, the judgment made by the tribunal or fast-track court in a matter would be legally binding on all parties involved. It would be improper for the parties to present the same arguments in front of a separate court in the same matter.

13.1 WHITE COLLAR CRIME INVESTIGATION

13.1.1 WHITE COLLAR CRIME INVESTIGATION PROCESS

The investigation of white-collar crimes has been more extensive in India in the recent past. A growing number of firms are conducting periodic investigations in response to the rise in anti-corruption marches. These internal investigations are conducted in order to keep an eye out for any bad activity. Additionally, this keeps the business from pulling out humiliating raids. It is not necessary to adhere to any precise protocol while conducting internal investigations into white-collar offenses in India.

Companies are motivated to expedite their investigations into allegations of sexual harassment following the #MeToo movement’s wave of popularity.

For instance:
In reaction to claims of fraud against ICICI Bank CEO Chanda Kochhar, the bank initiated an internal investigation that was carried out by the Reserve Bank of India, the Securities and Exchange Board of India, and the Central Bureau of Investigation together. A disinterested committee headed by retired Supreme Court justice B.N. Srikrishna was tasked with looking into the circumstances.

In response to serious allegations of misconduct against Flipkart co-founder and global CEO Binny Bansal, the bank made the decision to launch an independent investigation on behalf of both Flipkart and Walmart.

13.1.2 WHITE COLLAR CRIME INVESTIGATION TECHNIQUES

A few fundamental methods exist for looking into white-collar crimes, and they are as follows:

• The team should include an informant who can provide firsthand knowledge on white-collar crimes that are occurring or have previously occurred in a firm and who can keep the investigating officers informed about all the activities that have occurred, are occurring, or will occur in the organization. No inquiry can begin unless someone notifies the police about the crime. As a result, the informants’ function becomes crucial.
• Clandestine agents’ involvement. Undercover operatives play a crucial role in discovering evidence that does not meet the requirements of prima facie. They also support the provision of information on individuals who commit serious crimes prior to going into hiding. Since it is impossible for authorities to hunt down such individuals, they designate undercover operatives who gather all the information on the accused without giving him a hint.
• To make a decision, it is important to introduce the laboratory investigation of the physical evidence. The medical evidence is crucial in determining the course of a lawsuit. If the results of the medical examinations are not changed, they may be a very useful tool in identifying the suspect in serious crimes like rape.
• Police personnel are frequently observed using dogs for physical surveillance, CCTVs for electronic surveillance, phone log tracking, etc. These surveillance systems may be able to uncover even the smallest bit of evidence pointed towards the culprit.
  The interrogation technique is a police tool used to get information from suspects that they otherwise would not have shared. When permitted by law, wiretapping aids in the prosecution of guilty parties by presenting call logs to the court. In certain cases, call records could be sufficient evidence to find someone guilty of a crime.

14. LEGISLATIONS AGAINST WHITE COLLAR CRIMES IN INDIA

To identify white-collar crime, there are several available provisions. The following laws have been put into place by the government to ensure that people who commit white collar crime are held responsible:

• The Companies Act, 1960.
• The Income Tax Act, 1961 .
•  Indian Penal Code, 1860 .
•  The Commodities Act, 1955 .
•  The Prevention of Corruption Act, 1988.
•  The Negotiable Instrument Act, 1881.
•  The Prevention of Money-laundering Act, 2002.
•  The Information Technology Act, 2005.
•  The Imports and Exports (Control) Act, 1950.
•  The Special Court (Trial of offenses relation to Transactions in Securities) Act,1992.
•  The Central Vigilance Commission Act, 2003.

14.1 SOME IMPORTANT LEGISLATION AND THEIR FLAWS

14.1.1 FUGITIVE ECONOMIC OFFENDERS ACT, 2018

The purpose of this Act is to expedite the handling of criminal cases involving asylum applications from countries other than India. As a result, their properties and assets are seized to make up for the harm they have caused. The limitation of this law, which only applies to assets valued at least $100 million, is an issue. What about crimes when the victim’s loss is less than Rs. 100 crore? Do they escape punishment? Is the government unwilling to impose sufficient restrictions on them? This appears to be a gray area as it ignores offenses involving smaller amounts of money, which would potentially enable them to avoid punishment.

14.1.2 PREVENTION OF MONEY LAUNDERING ACT,2005

Because of stringent foreign exchange laws, this legislation has not only assisted in reducing money laundering inside national boundaries but has also been extended beyond them to combat similar operations. A lot of people are involved in this, much like in the majority of white-collar crimes. Yet, as technology has advanced, these tasks have become simpler and more complex, digital, and accessible. With the rise of cryptocurrency platforms, a new type of money laundering has also emerged, allowing criminals to more easily and effectively move funds online with the click of a button, anywhere in the world. Regretfully, at this time, we lack the legislation that would be required to keep up with these developments in technology.

14.1.3 PREVENTION OF CORRUPTION (AMENDMENT) ACT, 2018

With its most recent amendments in 2018, this act—which was introduced in 1988 in an effort to fight corruption in India—has proven to be more successful. However, the cost of the act was increasing the length of the trial process and requiring approval before beginning an investigation into a public servant. Additionally, the prosecution now bears the burden of proof, which can be advantageous in situations where corruption is typically committed by higher officials because it can help them identify loopholes that could allow such offenders to go unpunished in some cases.

14.1.4 INDIAN PENAL CODE 1860

The IPC does not adequately address the wide range of crimes and offenses that fall under the category of white-collar crimes. While it does mention some crimes of this type, such as forgery, corruption, bribery, and counterfeiting, it falls short of providing a comprehensive definition of white-collar crimes. For instance, under Section 465, the maximum sentence for document forgery is two years. This might not be enough as document forgeries are now regarded as serious crimes and because the social and economic landscape has evolved to such an extent that the IPC is becoming antiquated and might not be able to adapt to the needs of the modern world.

14.2 PENALTIES FOR WHITE COLLAR CRIMES

14.2.1 SENTENCING IN WHITE COLLAR CRIMES IN INDIA

14.2.1.1 PUNISHMENT FOR FRAUD

The Companies Act of 2013 penalizes fraud commissions under section 447. If an individual is found guilty of fraud, the sentence stipulates that they will serve a minimum of 6 months and a maximum of 10 years in jail. He will also be responsible for a fine that should never be less than the amount of the fraud and might be up to three times the amount of the crime. The minimum sentence for fraud would be three years in jail if it was conducted against the interests of the public.

14.2.1.2 PUNISHMENT FOR FALSE STATEMENT

If someone intentionally withholds important information or knowingly makes a false statement, they will be held liable for their actions, as stated in Section 448 of the Companies Act of 2013. To make this false statement, one may utilize a return, report, certificate, financial statement, prospectus, statement, or any other document required for the purposes indicated by this Act or any rules established under it.

14.2.1.3 PUNISHMENT FOR FURNISHING FALSE EVIDENCE

According to Section 449 of the Companies Act of 2013, providing misleading testimony is illegal. It is stipulated in a court of law that in the event that a witness gives false testimony:

• If a corporation is about to dissolve or for any other reason about any matter arising under this Act, in any affidavit, deposition, or solemn affirmation, or upon an examination under oath or solemn affirmation,
• In addition to a fine, he will serve time in jail. A fine of up to 10 lakh rupees may be imposed, along with a minimum sentence of three years that may be extended to seven years.

14.2.1.4 PUNISHMENT WHEN NO SPECIFIC PUNISHMENT OR PENALTY HAS BEEN PROVIDED

If an individual breaches any of the terms of the Companies Act of 2013, regardless of their status as an official of the business, they may be subject to fines of up to 10 lakh rupees, as stipulated under Section 450 of the Act. Should the violation persist, the offender may be required to pay a fine of up to 1,000 rupees each day as long as the intervention is in place.

14.2.1.5 PUNISHMENT WHEN THE DEFAULT HAS BEEN REPEATED

In accordance with Section 451 of the Companies Act of 2013, a company or any of its officers that commit the same offense for which they have already been punished and have faced imprisonment will be punished twice as much as the amount of fine in addition to the term of imprisonment specified by the act for each officer involved in that offense if they do so again within three years. Nevertheless, in the event that the offense was committed three years after it was first committed, this rule would not be applicable.

14.2.1.6 APPOINTMENT OF ADJUDICATING OFFICERS

In accordance with Section 454 of the Companies Act of 2013, the Central Government may appoint an adjudicating commissioner by publishing an order in the official gazette, who would have the power to determine fines under the terms of this act. The Central Government will also decide what is under the officials’ jurisdiction.

The corporation or any of its executives may be subject to a penalty by the adjudicating officer if they fail to comply with a specific Act requirement. An appeal can be made to the regional director, who has jurisdiction over the matter, by an officer who was penalized by the adjudicating officer and is not content with what he did.

15. IMPLICATIONS OF WHITE COLLAR CRIME IN INDIA

Concerns are growing around the world over the rate at which white-collar crimes are rising. It has been shown that white-collar crimes negatively impact society far more than other types of crime. Not only does an extraordinary rise in white-collar crime damage India’s reputation, but it also poses a risk to the country’s economic progress as it is still a developing nation.

Furthermore, white-collar crimes inflict mental anguish on both the victims and the broader community. When someone becomes a victim of white-collar crime and cannot afford the costs associated with it, the public’s trust in the authorities begins to erode. Who else will the people trust if the powerful individuals in positions of authority begin to abuse their authority?

Furthermore, since these crimes are on the rise nationwide, individuals don’t feel safe anywhere—in the real world or the virtual one. The digital world was brought about to help individuals avoid physically taxing work such as waiting in line to deposit or withdraw money from banks, as well as to lessen other forms of physical labor. However, it has not grown to be the main hub for white-collar crime. The populace finds no safety anywhere.

Above all, the government has not been able to assist the victims of white-collar crime very much, despite several campaigns against these crimes and the enactment of numerous rules and regulations. The complexity of the methods used to perpetrate these kinds of crimes makes it challenging for the authorities to locate proof. Because of this, a large number of criminals can roam about freely, which has led to the growth of crime. The fact that there is no motivation for the criminals to carry out these acts allows them to obtain cheap money.

The fact that there are so few examples of white-collar crime reported in the media contributes significantly to the growth of these crimes. Media representatives frequently identify with the same social group or class as the perpetrators and thus tend to favor them rather than presenting the public with their reality.

Furthermore, those in positions of authority who carry out these kinds of crimes buy off media representatives or threaten to shut down their channels to prevent the media from reporting on their wrongdoings or unlawful activities that they have performed or will conduct in the course of their employment.

16. LANDMARK JUDGEMENTS ON WHITE-COLLAR CRIMES

Several significant rulings that rocked the subcontinent’s financial system have been provided, including:

16.1 HARSHAD MEHTA SECURITIES FRAUD

The first thing that comes to mind when we hear the name Harshad Mehta is a swindle. Since this is one of the biggest stock-market scams to ever occur in India, we will go into more depth about it later. After earning his B.Com. from Mumbai’s Lala Lajpat Rai College, Harshad worked for a few years at a variety of businesses.

Harshad started to show interest in the stock market during this period. He quit his work and started working with B-Ambala as a broker. Afterward, he worked as a broker for Nand Lal Shah and J S Shah. The company he and his brother started is called Grow More Research and Asset Management. He began his profession in 1984 when he was appointed as a BSE broker. In his con, Harshad took advantage of the Ready Forward Deal.

To pay for its expenditures, the government essentially issues securities in a few of its initiatives. These are referred to as “government securities,” much like government bonds, which are used by the government to raise money for spending. All of the government’s investors receive interest in exchange. Each bank was required to put up a specific amount of money for these securities.

A bank would sell its government assets to another bank to raise money, and it would also take out short-term loans. The bank would refund the loan at the prearranged interest rate and receive its government securities back in a matter of days. To put it another way, it’s similar to going to a jeweler, borrowing money in exchange for your jewelry, and then receiving it back from them a few days later after paying back the loan plus interest.

This and the Ready Forward are comparable in several ways. One bank used to lend money to another bank for a brief period. Brokers are used to represent the banks as mediators in RFD. Their responsibility was to locate vendors for individuals looking to sell and buyers for those who wanted to purchase. Because he was a broker as well, Harshad acted as a go-between for the banks. The RFD has some gaps in it that may have been used to generate revenue.

Since Harshad was well aware of these weaknesses, he began taking advantage of them for his gain. When it was time to sell bank “A” securities, Harshad used to hunt for purchasers. After that, he would travel to bank “B,” withdraw the securities’ funds and request a little time to get the seller. The ash from bank “B” and the security provided by bank “A” were formerly kept by him. According to RBI restrictions, no bank was allowed to directly issue a check in the broker’s name.

But in this instance, the checks were being written out straight to the broker by the banks. For the most part, banks interacted directly with Harshad, so it’s surprising that most of them were unaware of whose bank they were transacting with. This is why Harshad would request that checks be written in his name be issued by banks. For several years, Harshad has been a successful broker in the stock industry.

Additionally, back then, Harshad enjoyed considerable popularity on the stock market. Harshad grabbed hold of the chance. He manipulated the stock market by driving up the price of the stocks using the money he got from the bank. Upon receiving a request for the securities from bank “A,” Harshad would search for another bank that was interested in purchasing government securities.

Harshad allegedly used to go to bank “C” and ask for money if bank “C” was also in the market for securities. He then requested some time to give the money back. He gave bank “A” the same amount of money in the interim. He used to take the identical offers to close the deals with banks “B” and “C.” He used to deal with other banks when these banks came to seek their money.

Through the utilization of the RFD as a chain system, Harshad was able to accumulate a significant sum of money. However, in the past, when a bank sold short-term bank securities to another bank, it would only provide the other bank with a receipt rather than the bank securities themselves. This document made it quite evident that the bank had received its money and that government security had been sold off.

When Harshad needed more money, he continued his deception. He went beyond and began using a few banks to assist him create phony bank receipts. When banks desired to purchase government securities, Harshad would provide them with fictitious receipts, and the banks would pay Harshad the money under the mistaken impression that the documents were authentic.

With this money, Harshad was able to influence other stocks and raise their value. Through his efforts, the ACC stock was raised from Rs. 200 to Rs. 9000. Numerous individuals began investing in equities after witnessing the abrupt rise in the share market. The share market’s stock prices increased as a result of this.

Harshad used to sell his equities during rising stock markets, return the money to the banks, and receive his bogus receipt back. This continued until the shares’ price increased. Abruptly, the value of the shares began to decline, resulting in losses for Harshad as he was unable to reimburse the banks for their money.

Journalist Sucheta Dalal then revealed Harshad Mehta’s swindle in a Times of India piece on April 23, 1992, which led to the exposure of his scam. The banking system was forced to bear a 3000–4000 crore loss at that point. Many investors lost a great deal of money when this hoax was discovered, causing the stock market to drop severely.

As soon as the scheme was revealed, the chairman of Vijaya Bank took his own life. Banks began requesting their money back from Harshad at this point, but the market downturn prevented Harshad from returning the funds. Nobody knew about Harshad’s method or motivation before the fraud was made public.

After Harshad was taken into custody by the CBI on November 9, 1992, he was accused of being involved in 70 criminal cases and 600 civil action proceedings. He was prohibited from making any stock market investments by SEBI indefinitely. Even though there were still 27 charges against him, he was being held at Thane Jail when all of a sudden he felt agony in his chest and stopped breathing at 12:30.

16.2 SARADA CHIT FUND SCAM

This hoax originated in the state of West Bengal, where it not only caused losses for the middle class and wealthy segment of society but also caused suffering for the impoverished. Several Ponzi scams in India aim to deceive the gullible populace. Sarada Chit Fund was one of these programs.

The principal individual associated with this fraud is Sudipta Sen, the former chairman of the Sarada Group of Companies. To get money for his business at cheap interest rates, he began issuing bonds and debentures. He gave investors a great deal of assurance when he began this project with careful preparation, saying that they would receive a significant return on their investment in his business.

A company that wants to raise money from more over 50 investors must first get SEBI authorization. However, Sen didn’t act in this manner since he was fully aware that the bonds and debentures he planned to issue were fraud rather than being issued for legitimate purposes. His first action was to appoint agents who would be paid a commission for introducing investors to these bonds and debentures.

A fee of 20–25% was granted to the agents, but they were also informed that the money would be refunded at certain interest rates by the corporation. They used to persuade the people in their immediate vicinity to invest and make money. The majority of people in India are ignorant about financial awareness. They don’t know what the hazards are when a business or somebody offers more profits.

Sudipta Sen was able to obtain 4000 crores in cash from 17 lakh people in this manner. This fraud was even extremely well-marketed; for example, the business name Sarada indicates that it is a consortium of other firms, and the name was picked to elicit goodwill. After that, he began to support actors and athletes. This corporation began investing in sports groups and sponsored Durga Puja because of the great enthusiasm for football and Durga Puja in Bengal.

They even went so far as to give away free ambulances to the general public. Due to these actions, the public began to invest more in Sarada Group because they began to trust the firm and feel that it works for the public welfare. Currently, this fraud has touched not just Bengal but also the states that surround it. It was discovered by SEBI sometime in 2009 that the Sarada gang was employing certain deceptive tactics.

Thus, the deceptive methods were reported to Sudipta Sen, the Bengal government, and the Sarada Group of Companies by SEBI. Even after being made aware of the fraud, the Bengali government did nothing, and the populace was further duped. To deal with the problem, Sudipta came up with a different concept in which he established several other businesses—roughly 300—under the Sarada Group.

So that SEBI would likewise be perplexed as to the true nature of the issue, he next began adding investors to those firms. It was difficult for SEBI to go into the underlying cause since Sudipta created a highly complicated network of firms.

After an examination, SEBI raised concerns about this, to which the administration responded that the firm raises chit funds, which are overseen by the state government rather than SEBI, and uses that method of raising capital instead of bonds and debentures. It was easy to pay the investors who joined the earliest, therefore this fraud was running extremely well until tons of money started arriving via it.

The fund’s intake gradually began to decline, and occasionally the business was unable to pay its investors. People patiently awaited their turn, but eventually, they began to voice their objections, and in 2013 this swindle was fully revealed. Sudipta Sen and a few others took off, and they were all taken into custody in April 2002. Around 200 people committed themselves as a result of losing all of their money when this fraud was discovered; politicians and movie stars were also involved.

16.3 SATYAM SCANDAL

In 1987, B. Ramalinga Raju and his brother-in-law established Satyam Computer, an IT company located in Hyderabad. B. Ramalinga Raju had a cotton company before founding Satyam Computer. In addition to being listed on the New York Stock Exchange in 2001, Satyam Computer was listed on the Bombay Stock Exchange in 1991–1992. Satyam Computer and B. Ramalinga Raju have won several accolades for being two of India’s fastest-growing enterprises.

Raju’s attention switched to the real estate market boom even though Satyam was doing nicely at the time. Since Hyderabad’s real estate prices were rising significantly, Raju began purchasing land there and in the surrounding areas as soon as possible.

When Raju began purchasing real estate in 1998, he did so under the names Maytas Infra and Maytas Properties, which he owned in addition to his possessions. Aggressively purchasing real estate, Raju thereafter began falsifying Satyam Computers’ financial accounts to obtain further funding.

In other words, he started the crime. The steady expansion and solid financial performance of Satyam Computer led to a rise in its share price. To raise the money needed to purchase real estate, B. Ramalinga Raju and his brother B. Rama Raju started selling their shares on that high share, keeping the remaining shares as collateral. Raju has launched close to 365 businesses to purchase real estate.

In the past, Raju purchased land in the name of his friends, family, and relations. Raju had transformed some of the 4000-rs. 5000 per month workers on his farm became directors of a small number of the 365 businesses he owned, and he had even purchased land in their names. He also made several of his pals into directors of various businesses. Raju has some sensitive knowledge on the proposed metro line in Hyderabad, according to Metro Man Sreedharan.

This indicates that Raju was already familiar with the metro line’s path. Raju began purchasing land close to the planned metro route with great aggressiveness, figuring that the land’s value would increase once the metro arrived. To enable Raju to easily bridge the gap between Satyam’s actual sales and profits, he intended to invest some of his real estate income in the company.

Raju began creating phony sales invoices to demonstrate more sales at Satyam Computers. 7500 bogus sales invoices were created by Raju. He displayed fictitious sales using them, but what about the profit? Where are the fictitious sales proceeds going? Raju created bank statements to demonstrate that the profit money was in the bank to address this. This indicated that he displayed a substantial financial stockpile that was untrue.

Raju persisted in fabricating sales, earnings, and other statistics for a long time. Raju continued to draw investors to the firm as it demonstrated strong growth, which raised the price of Satyam Computer’s shares and allowed its promoters to continue selling them for bigger amounts.

24% of Satyam’s shares were owned by the promoter in 1999. By year’s end, it had fallen to two percent, and he used that money to purchase real estate. Raju’s fictitious figure and reality figure diverged more and more as Satyam evolved, reaching an enormous disparity. Raju’s strategy to sell homes and close the difference in the figures did not work when the crisis hit in 2008 and the real estate market slowed down.

Raju then came up with a novel scheme to cover this hole. Satyam Computer will acquire a 51 percent share in Maytas Properties and Maytas Infra as per his proposal. Raju said, “These funds are going to the Maytas promoters.” Raju’s family was the owner of Maytas. If you spell Satyam backward, you get Maytas. Raju believed this arrangement would enable him to demonstrate how the firms were acquired by using the discrepancy in the numbers.

But in actuality, since it was a family company, there was no money exchanged. In this manner, the space between the numbers would be filled. The strategy was authorized by the Board of Directors of Satyam Computer on December 16, 2008. Without seeking approval from the shareholders, Raju approved this transaction. However, this move was not well received by Satyam’s investors, particularly those who were institutional.

Satyam’s shares plummeted shortly after this choice. The NYSE saw a decline in Satyam’s stock after a US investor even launched a lawsuit against the company. Satyam chose to scrap his acquisition of Maytas as a result of the pressure. The four independent Satyam directors quit as soon as this plan didn’t work.

When Raju admitted that Satyam Computer had been falsifying financial accounts for years after seeing this approach fail to close the deficit, it was on January 7, 2009. A discrepancy of Rs. 7000 crores has been disclosed by Raju. Following this, Raju and the independent directors and auditors of Satyam were questioned about how long the business had been altering the financial accounts and how they had been unaware of it.

How is it even possible? The auditor for Satyam was Price Waterhouse Cooper. So for all those years, PWC neglected to review the bills and statements even though the statistics continued to balloon? Verifying the correctness and dependability of a company’s financial statements is the responsibility of an auditor. An auditor is sort of a shareholder’s representative, however in this case, the auditor also deceived the shareholders.

The US stock market regulator and PWC were both banned by SEBI for two years. PWC got a $6 million fine from the SEC. Satyam used to pay PWC twice as much as any other IT business paid its auditor, it was later discovered. Raju and his sibling B. Rama Raju were taken into custody on January 9, 2009. Following this fraud, the government promptly announced the appointment of new Board members to Satyam and started making plans to prevent Satyam from failing.

As planned by the government, Tech Mahindra eventually purchased Satyam. The firm was renamed Mahindra Satyam when Tech Mahindra acquired a 51% share in Satyam in April 2009. Mahindra Satyam later merged with Tech Mahindra in June of 2021. In line with the CBI investigation, Raju was involved in money laundering. He allegedly started by sending money to Europe and subsequently redirected it to India.

Raju would purchase several nameless buildings with this money. In addition to charging Raju and 47 of his associates, the Enforcement Directorate also seized the assets of Raju’s family and his 166 businesses for money laundering. In addition to ordering Raju and his family to repay Rs. 1850 crores in profits gained through insider trading, plus 12% interest, SEBI has accused Raju and his family of insider trading. For 14 years, they were also prohibited from dealing in securities.

Raju, his brother B. Rama Raju, the former CFO Srinivas Vadlamani, two PWC partners, and five other individuals were all given seven years in prison by the special CBI court on April 10, 2015. Raju and his sibling were hit with a fine of Rs. 5.5 crore. Before the disclosure of this fraud, Satyam was well-known. It was the fourth-biggest IT business in India. Both the Sensex and NIFTY included Satyam’s shares.

The stock of Satyam Computer was taken off of Sensex and NIFTY on January 9, 2009. Four months after Satyam received the worldwide peacock award from the World Council for Corporate Governance in September 2008, Satyam’s accounting scam came to light. The former CFO of Satyam and a few other executives had liquidated their Satyam shares a few months before Raju’s admission. Following this scandal, LIC, a Satyam institutional investor, lost Rs. 950 crores, while the investors in Satyam lost Rs. 14, 162 crores overall.

17. RECENT WHITE COLLAR CRIMES IN INDIA

17.1 SEBI V.BURMAN PLANTATION AND OTHERS

The learned counsel for SEBI before the Allahabad High Court said that the business was being unfairly accused and that it was not in a position to fulfill its debts, including payments to its investors. In response to inquiries concerning the company’s advertisement, the council said that although the advertisement had been disseminated in 2003, the order had been passed in 2004 due to the company’s inability to fulfill its financial responsibilities.

Furthermore, there was no mention of the amount of money the investors were demanding. The lawyer’s main point of contention was that the lawmakers amended the laws by adding section 24(1) of the SEBI Act, which increased the fine from one year to 10 years and the penalty from one year to twenty-five crores. Ultimately, the accused, Ravi Arora, was found accountable.

17.2 ABHAY SINGH CHAUTALA V. S.B.I

Two appellants were charged with offenses in the current case under Sections 13(1)(e) and 13(2) of the Prevention of Corruption Act, 1988 read with Section 109 of the Indian Penal Code, 1860, and charge sheets were filed against them in separate trials. The accusation made against the two individuals was that throughout their time as Legislative Assembly members, they amassed money that was exceeding their salaries.

Upon commencing its inquiry, the Central Bureau of Investigation (CBI) discovered that the appellant’s father had amassed substantial real estate holdings, a situation that also applied to the appellants. The appellant had submitted an entirely different office or offices of the defendants than they were already holding, the High Court ruled. Consequently, it was determined that the penalty imposed by Section 19 of the Prevention of Corruption Act, 1988, was not warranted.

17.3 BINOD KUMAR V. STATE OF JHARKHAND AND OTHERS

The Chief Minister and numerous other State of Jharkhand politicians were named in this lawsuit for allegedly possessing unaccounted-for funds. The issue was sent from the Enforcement Directorate to the CBI by the High Court, who requested the Central Government to employ its jurisdiction under Section 45-1A. A thorough inquiry was suggested even though there was insufficient evidence to accuse the ministers of money laundering despite the claims that they had substantial sums of money.

It was rumored that the ministers owned property both domestically and internationally. So, to ascertain if these riches were obtained by abusing the official position, the court requested an inquiry. Determining if the Indian Penal Code, 1860, and the Prevention of Corruption Act, 1988, had been used in a white crime was the aim of the clarification.

With the help of the Indian Penal Code of 1860 and the Prevention of Corruption Act of 1988, the Central Bureau of probe (CBI) started its probe. This was because only the Enforcement Directorate had the authority to investigate the Prevention of Money Laundering Act, and that authority was naturally subject to the Central Government’s authority granted under Section 45 A (1) of the Act.

18. MEASURES TO CURB WHITE-COLLAR CRIMES

Adopting the following actions can help stop white-collar crime from being committed:

• To enhance their effectiveness, stringent regulations should be put in place for the nation’s major investigating agencies, which include the Central Bureau of Investigation, Enforcement Directorate, Income-tax Department, Directorate of Revenue Intelligence, and Customs Department. The Central Vigilance Commission should monitor the actions of the officials holding prominent positions and double-check their work in order to preserve transparency in the system.
• The training of investigative officials ought to progress in tandem with how these types of white-collar crimes are perpetrated. Older police officers often possess sufficient experience to understand the nuances and strategies of their work, but they are not equipped to employ modern technologies to track down the criminal. A lack of training is the cause of this. Hence, regardless of how complex the case is, every investigating officer needs to be taught so that they can simply handle it.
• To completely eliminate the possibility of such violations, the system has to incorporate strict regulations. It is quite casual for criminals to commit such crimes because there is less punishment and a shorter jail sentence.
• Fast-track courts and tribunals need to be set up around the country in order to resolve these cases as quickly as feasible. A convicted person need to be able to face consequences from the tribunal, such as jail time. These steps would result in a decrease in the incidence of white-collar offenses.
• The appropriate use of print and electronic media is necessary to increase public awareness of white-collar crimes. The general public needs to be informed that these types of crimes occur everywhere, from local cafes to large, international corporations. In the event that they become victims of one of these crimes, they should also be aware of the resources at their disposal.
• People who perpetrate these kinds of crimes should be subject to strict regulations, heavy fines, and lengthy jail sentences. For this to occur, provisions for white-collar crimes need to be included in the Indian Penal Code, 1860 by amendment. A distinct chapter devoted to white-collar crimes might be included in the IPC, for instance.
• To investigate the issue of crimes and criminality that exist in the nation, the government may create a distinct body. Maybe the impartial body should be called the National Crime Commission. Their activities may be more effectively directed towards decreasing crime in the nation since it would be apart from the government and just focused on crimes.

19. CONCLUSION

White-collar crimes are characterized by two unexpected aspects: firstly, they are typically perpetrated by those in higher professions; secondly, despite the culprits’ propensity for control or entitlement, the crimes are not violent.

Though the mastermind behind the crime may be a wealthy individual with a better social standing in their line of work, similar crimes are sometimes carried out by low-paid underlings. Most often, peer pressure or business culture have an impact on white-collar crimes.

As the globe obtains new technological developments and our society embraces modernity, the rate of crime is increasing at a faster pace. For example, there has been a significant surge in white-collar crime.

A concerning number of instances of internet fraud are also occurring. These are the kinds of crimes that happen everywhere, including in hospitals and schools. India, being a developing country, has had a tough time guiding its economy toward prosperity, mostly due to these crimes in general and corruption in particular.

For the investigating authorities to become proficient in locating these offenders, they must get training; otherwise, hunting them down would be a challenging, intricate, and exhausting task. Since those who conduct white-collar crimes typically have higher social statuses in their line of work, the work of the investigating officials should be closely examined to guarantee openness.

Laws that are rigorous enough to discourage the conduct of such crimes must be passed by the government. In addition, the system needs to be set up such that rules imposing severe penalties on the accused are in place and that the greatest number of cases are resolved quickly. Because these crimes are being perpetrated by those who ought to be role models for society, if something isn’t done, people will eventually lose all trust in the system.

To slow the pace of the rise in white-collar crime, the media is really important. Reports state that the majority of white-collar crimes go unreported. The rate at which white-collar crimes are committed would therefore be reduced if the media took a more active role in disclosing higher-level frauds and scams, as well as in exposing the arbitrary use of power by those in positions of authority within companies. Additionally, efforts would be made to raise public awareness of white-collar crimes and encourage people to abstain from corrupt practices.

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