Artificial intelligence (AI) and other evolving technologies have opened the door to new forms of white-collar crime. At the same time, it’s allowing investigators to identify criminal activities and file charges for these new types of violations.

One good example of a novel type of crime took place in April 2024, when a Maryland athletic director allegedly used AI to impersonate a high school principal’s voice. The reportedly fake recording appears to show the principal making racially charged comments about teachers and students at his school. After the fraudulent audio clip was posted on social media, the principal was temporarily removed from his position, and the school experienced hate-filled shockwaves. The headlines showcased a new possible use of these tools to commit crimes, and Maryland leaders began focusing more on AI and white-collar crime. The increased focus is leading to more scrutiny, and those accused of these offenses may face serious consequences as a result.

What is white-collar crime?

White-collar crime is typically a financially motivated, non-violent crime. Those who typically commit these violations of the law include people, businesses, or government officials in leadership roles. The term dates back to 1939 when sociologist Edwin Sutherland used it to describe sophisticated crimes committed by professionals. White-collar crimes often involve plots to influence financial systems, dodge tax obligations, or cover up the origins of funds gained through illegal means. Here are some common types of white-collar crime, along with notorious examples:

Fraud

This crime involves deception or misrepresentation for financial or personal gain. Some examples include accounting fraud and insurance fraud. Accounting fraud may involve a company overstating its earnings to manipulate share prices. Insurance fraud could happen when a person files a fake claim after staging a robbery at their home or business.

Example: In February 2024, a New York man was ordered to pay $336 million and sentenced to 12 years in federal prison for stealing millions of dollars from various health insurance companies.

Embezzlement

Stealing funds or property entrusted to someone in a company or organization is embezzlement.

Example: In the early 2000s, Bernie Madoff—widely considered the biggest embezzler ever—stole billions of dollars from investors in his Ponzi scheme.

Money laundering

This crime is a tactic to disguise money gained illegally to make it seem legitimate, often via complicated financial transactions.

Example: In 2010, Wachovia Bank received a $160 million fine for laundering over $380 billion for various Mexican drug cartels.

Insider trading

The illegal practice of trading on the stock exchange with access to confidential information is called “insider trading.” Insider trading is a type of fraud.

Example: In 2004, lifestyle expert Martha Stewart spent five months in prison for insider trading after her broker had told her that her stock was about to drop, and she sold it based on that information.

Tax evasion

Purposely not paying taxes by falsifying income or exaggerating deductions constitutes illegal tax evasion.

Example: Richard Hatch won the first season of “Survivor,” which earned him a $1 million prize. Hatch failed to pay tax on his winnings, leading to a conviction for federal tax evasion in 2006. He served over three years in federal prison but didn’t learn his lesson. When a court found that Hatch didn’t amend his 2000 and 2001 tax returns, he returned to jail for another nine months.

White-collar crime doesn’t just lead to financial losses for investors. It can also weaken public trust in businesses, financial institutions, and government entities. The Enron Scandal is one example of an enormous accounting fraud that made international headlines. The crime, which was discovered in 2001, led to the collapse of Enron Corporation and billions of dollars in losses for investors and employees. Because of this, prosecutors take these charges seriously, and the consequences can include prison time.

AI and white-collar crime

AI is creating opportunities for more complex white-collar and cybercrime. For example, AI can help those committing these acts stay under the radar by imitating legitimate business activity or launching cyberattacks that adapt whenever they encounter security protocols. At the same time, fraud detection and other AI tools are helping identify those engaging in these acts. Here are some modern, AI-related white-collar crimes that can result in severe legal consequences.

Cyberattacks

Artificial intelligence (AI) and machine learning (ML) are allowing for continually more complex, precise, and harder-to-detect cyberattacks. These technologies facilitate phishing schemes, allow the creation of realistic fake emails with deepfake technology, and allow people to manipulate data to exploit system weaknesses. AI-driven systems can also adapt quickly to evade conventional security systems. AI-generated deep fake audio and video are used to impersonate key individuals like executives, tricking companies into transferring money or revealing confidential information.

Financial crimes

AI is enabling and identifying insider trading and market manipulation. Investigators are finding that AI is allowing people to use algorithmic trading systems to capitalize on market inefficiencies. Some are also using technology to launder money, particularly through cryptocurrencies and digital transactions. In response, regulatory bodies and financial institutions are using AI-powered tools to track large transactions and identify possible money laundering activities by analyzing behavioral patterns. AI-powered systems can recognize unusual trading behaviors, an indicator of insider trading or market manipulation

Recently, the federal government announced a crackdown on AI-related crime. Earlier this year, Deputy Attorney General Lisa Monaco said, “Going forward, where Department of Justice prosecutors can seek stiffer sentences for offenses made significantly more dangerous by the misuse of AI, they will.”

The new focus on AI means that those accused of using this technology in the furtherance of a crime need to be extremely vigilant when it comes to protecting their legal rights and futures. AI is new territory for many people, including investigators, meaning that there might be mistakes when it comes to charges and biases from the justice system that could lead to harsh consequences.

In Maryland, most white-collar crimes are charged as felonies, with possible sentencing including prison time and costly fines–whether or not AI played a role in the alleged violations. At Carey Law Office, our criminal defense lawyers represent clients at the state and federal levels. We routinely handle various types of criminal matters, including white-collar crime. Call us or fill out our contact form to schedule your initial consultation with an experienced Maryland criminal defense attorney today—when your life’s on the line, we’re here to help.