ECONOMIC CRIMES

WHAT IS ECONOMIC CRIMES

• Economic crimes refer to illegal acts committed
by an individual or a group of individuals to
obtain a financial or professional advantage.
(uslegal.com)
• In such crimes, the offender’s principal motive is
economic gain.
• Cyber crimes, tax evasion, robbery, selling of
controlled substances, and abuses of economic
aid are all examples of economic crimes.
 THEORIES THAT EXPLORES 3 ASPECTS OF
ECONOMIC CRIMES

THE THEORIES: THE ASPECTS:

• offender
CLASSICAL AND
motivations,
NEOCLASSICAL
• Economic
OR ECONOMIC outcomes,
APPROACH •
 economic
processes.
OFFENDER MOTIVATION

1.Economic gain
2.thrill seeking
3.racial hatred
4.Revenge
 ECONOMIC OUTCOME

• an economic return
• economic cost
• "victimless" crimes that have
economic implications
 ECONOMIC PROCESS

• the processes that lead to criminal behavior

are the same as those that guide consumer
behavior in the marketplace
ECONOMIC IMPACT OF CRIME
 PRIMARY IMPACT
2 approaches b. is by breaking down the costs in
categorizing the relation to individual incidents
(Davidson, 1999).
primary impact:
This way, the costs of crime are
a. defining the subject categorized as:
who bears the effects in anticipation of crime: mainly
(victims, potential victims, costs of precaution measures to avoid
society etc.). crime such as locks, alarm prevention
From an economic point of programs and surveillance.
view, criminal offences can -as a consequence of crime: for
be aimed against: instance, loss of property, medical
• individuals/households and health care costs, victim support
etc.
• the commercial
-in response to crime: costs
sector/companies considering, police, prosecution,
• the public sector/society court proceedings, sanctions etc.
 SECONDARY IMPACT
• Crime not only leads
to financial or
physical damage and • Crime acts like a tax
prevention costs, but on the entire economy:
also indirectly it discourages domestic
influences the and foreign direct
local/regional and investments (Detotto
national economy of and Otranto (2010)
a country
 TOTAL ECONOMIC IMPACT
• economic growth; •business impact (crime
• income; reduces
• labor force competitiveness of
participation; companies and
• income spent on investments)
security measures; and •tourism impact
• reallocation of •impact on quality of
resources creating life/social capital
uncertainty and •impact on property
inefficiency. value
KINDS OF ECONOMIC CRIMES
FRAUD
BRIBERY
PONZI SCHEME
MONEY LAUNDERING
TAX EVASION
BLACKMAIL
FORGERY
INSIDER TRADING
EMBEZZLEMENT
COPYRIGHT INFRINGEMENT
CYBERCRIME
 WHAT IS FRAUD
 FRAUD 
Deliberate deception to secure unfair or unlawful gain, or to
deprive a victim of a legal right.
Fraud itself can be a 
  civil wrong (i.e., a fraud victim may sue the fraud perpetrator to
avoid the fraud and/or recover monetary compensation),
criminal wrong(i.e., a fraud perpetrator may be prosecuted and
imprisoned by governmental authorities)
 The purpose of fraud may be monetary gain or other benefits, such
as obtaining a driver's license or qualifying for a mortgage by way
of false statements.
A hoax is a distinct concept that involves deliberate deception
without the intention of gain or of materially damaging or
depriving a victim.
 SOME LAWS LAWS ON FRAUD
REPUBLIC ACT NO. 8484 AN ACT REGULATING THE
ISSUANCE AND USE OF ACCESS DEVICES,
PROHIBITING FRAUDULENT ACTS COMMITTED
RELATIVE THERETO, PROVIDING PENALTIES AND
FOR OTHER PURPOSES.
REVISED PENAL CODE, ART. 185, 186
RA 8293, INTELLECTUAL PROPERTY CODE
CIVIL CODE OF THE PHILIPPINES
RA 3019 - ANTI GRAFT AND CORRUPT PRACTICES
RA 10175 – CYBERCRIME
RA 10667 – PHIL COMPETITION ACT
 PONZI SCHEMES
A Ponzi scheme is an investment fraud that involves the payment of
purported returns to existing investors from funds contributed by
new investors.
Ponzi scheme organizers often solicit new investors by promising to
invest funds in opportunities claimed to generate high returns with
little or no risk.
In many Ponzi schemes, the fraudsters focus on attracting new money
to make promised payments to earlier-stage investors to create the
false appearance that investors are profiting from a legitimate
business.
Why do Ponzi schemes collapse?
With little or no legitimate earnings, Ponzi schemes require a
consistent flow of money from new investors to continue. Ponzi
schemes tend to collapse when it becomes difficult to recruit new
investors or when a large number of investors ask to cash out.
 BRIBERY
The offering, giving, receiving, or soliciting of 
something of value for the purpose of
 influencing the action of an official in the
discharge of his or her public or legal duties.
PENAL LAWS ON BRIBERY:
Revised Penal Code
• Art. 210 Direct bribery
• Art. 211 Indirect bribery
• Art. 211-a qualified bribery
Money laundering is the process of transforming the
proceeds of crime into ostensibly legitimate money or
other assets. (Duhaime, Christine. 
"What is Money Laundering? Duhaime's
Financial Crime and Anti-Money Laundering Law".
Retrieved 7 March 2014.)

Law that defines the crime of Money Laundering:

  Anti-Money Laundering Act of 2001 (RA 9160), otherwise
known as the "Anti-Money Laundering Act of 2001."
“B A N K F R A U D”
Definition of Bank Fraud

Bank fraud is the use of potentially illegal

means to obtain money, assets, or other
property owned or held by a 
financial institution, or to obtain money
from depositors by fraudulently posing as a
bank or other financial institution. In many
instances, bank fraud is a criminal offence.
Types of bank fraud
Stolen checks
a. stolen checks
b. cheque kiting

Types
c. Forgery & altered cheques
d. accounting fraud
e. demand draft fraud
f. fraudulent loans
g. forged documents
of
h. wire transfer fraud
i. bill discounting fraud
Bank
j. payment card fraud
k. stolen payment card
Fraud
l. duplication or skimming of card information
m. impersonation or identity theft
n. prime bank fraud
o. internet fraud
p. money laundering
Cheque kiting exploits a system in which, when a
cheque is deposited to a bank account, the money is
made available immediately even though it is not
removed from the account on which the cheque is
drawn until the cheque actually clears.

Forgery
Fraudsters have altered cheques to change the
name (in order to deposit cheques intended for
payment to someone else)
Accounting Fraud - some businesses have been known
to use fraudulent bookkeeping to overstate sales and
income, inflate the worth of the company's assets, or
state a profit when the company is operating at a loss.

Demand draft (DD) fraud typically involves one or more 

corrupt bank employees

Fraudulent loan however, is one in which the borrower

is a business entity controlled by a dishonest bank
officer or an accomplice; the "borrower" then declares
bankruptcy or vanishes and the money is gone.
Forged or fraudulent documents
Forged documents are often used to
conceal other thefts; banks tend to count
their money meticulously so every penny
must be accounted for.

Wire Transfer Fraud - a person may send

a wire transfer from country to country.
 Bill discounting fraud
Essentially a confidence trick, a fraudster
uses a company at their disposal to gain
confidence with a bank, by appearing as a
genuine, profitable customer.
Payment card fraud
Credit card fraud is widespread as a means
of stealing from banks, merchants and
clients.
Stolen payment card - simplest form of this theft
involves stealing the card itself and charging a
number of high-ticket items to it in the first few
minutes or hours before it is reported as stolen.

Duplication or skimming of card information

This takes a number of forms, ranging from
merchants copying clients' credit card numbers for
use in later illegal activities.
Impersonation
 Identity theft
Impersonation has become an increasing problem;
the scam operates by obtaining information about
an individual,
then using the information to apply for identity
cards, accounts and credit in that person's name.

Prime bank fraud

The "prime bank" operation which claims to offer an
urgent, exclusive opportunity to cash in on the best-kept
secret in the banking industry
Phishing and Internet fraud
Phishing operates by sending forged e-mail,
impersonating an online bank, auction or payment
site; the e-mail directs the user to a forged web site .

Money laundering is the process by which large amounts of

illegally obtained money (from drug trafficking, terrorist activity
or other serious crimes) is given the appearance of having
originated from a legitimate source.
Modus Operandi
 Modus operandi

There are several middlemen who meticulously

study the banks’ rules and regulations, take
advantage of the ignorance of depositors by
offering higher interest rates and all types of baits
to the potential depositors to lure them into their
trap.
 How this fraud where committed?
Identity theft is where a dishonest individual or syndicate will gather
your personal details in order to gain some sort of financial or other
benefit, often leaving the real owner of that identity with a large
debt, a negative credit history, and in some cases with legal
implications.
Your information can be obtained in many ways:
Theft, including theft of mail from your mailbox at home
By going through your garbage bins, Telephone scams, Internet.
The following can be used to assume your identity:
Date of Birth
Utilities bills (phone, gas, water and rates notices)
Address.
Fraudsters - winning over the
depositors by offering higher rates of
interest, got large funds transferred to
the bank of their choice, where they got
the fixed deposit receipts issued in the
name of the depositors. But they
handed over only facsimile of these
receipts to the depositors who did not
suspect any foul play,  as the deposit
receipts were cleverly duplicated
through the modern printers that
produce colour prints which closely
resemble the originals. 
MAY TANONG ! ! ! !
BLACKMAIL
- Blackmail is an act, often a crime, involving
unjustified threats to make a gain or cause
loss to another unless a demand is met.
- Essentially, it is coercion involving threats of
physical harm, threat of criminal prosecution,
or threats for the purposes of taking the
person's money or property.
- Blackmail may also be considered a
form of extortion.
- Although the two are generally
synonymous, extortion is the taking
of personal property by threat of
future harm.
• Today blackmail is legally defined as the
criminal offense of attempting to extort
money or property by threats of exposure of a
crime or disreputable conduct.
• Blackmail is distinguished from extortion in its
broadest sense, which is the use of any means
of illegal compulsion or oppressive exaction.
TAX EVASION
Important terms
 Tax – an amount of money that a government
requires people to pay according to their income, the
value of their property, etc., and that is used to pay
for the things done by the government.

 Evasion – the act of avoiding something that a

person do not want to do or deal with.

(merriamwebsterdictionary)
Definition of Tax Evasion

 Tax evasion is using illegal means to avoid paying taxes. 

Typically, tax evasion schemes involve an individual or
corporation misrepresenting their income to the Internal
Revenue Service
https://www.law.cornell.edu/wex/tax_evasion

 Tax evasion is the illegal evasion of taxes by

individuals, corporations and trusts. Tax evasion often
entails taxpayers deliberately misrepresenting the true
state of their affairs to the tax authorities to reduce their
tax liability and includes dishonest tax reporting, such as
declaring less income, profits or gains than the amounts
actually earned, or overstating deductions.
https://en.wikipedia.org/wiki/Tax_evasion
 An illegal practice where a person, organization or
corporation intentionally avoids paying his/her/its
true tax liability.
http://www.investopedia.com/terms/t/taxevasion.asp#ixzz3ikTNuoz5

 Tax evasion or tax fraud is the use by the taxpayer of

illegal or fraudulent means to defeat or lessen the
payment of a tax.
http://www.mb.com.ph/what-you-need-to-know-about-tax-evasion-in-the-
philippines/
 Modus Operandi
 Deliberately under-reporting or omitting income. This is self-explanatory:
concealing income is fraudulent. Examples include a business owner's failure to
report a portion of the day's receipts or a landlord failing to report rent
payments.
 Keeping two sets of books and making false entries in books and
records. Engaging in accounting irregularities, such as a business's failure to
keep adequate records, or a discrepancy between amounts reported on a
corporation's return and amounts reported on its financial statements, generally
demonstrates fraudulent intent.
 Claiming false or overstated deductions on a return. This can include claiming a
large charitable deduction without substantiation or making a substantial
overstatement of travel expenses. It can also include paying your children or
spouse for work that they did not perform.
 non-issuance of receipts
• Claiming personal expenses as business expenses. This is an
easy trap for a sole practitioner to fall into because often assets,
such as a car or a computer, will have both business and personal
use. Proper record-keeping will go a long way in preventing a
finding of tax fraud.

• Hiding or transferring assets or income. This type of fraud can

take a variety of forms, from simple concealment of funds in a bank
account to improper allocations between taxpayers. For example,
improperly allocating income to a related taxpayer who is in a lower
tax bracket, such as where a corporation makes distributions to the
controlling shareholder's children, is likely to be considered tax
fraud.

• non-existent suppliers. Some businesses use smuggled raw

materials for their supplies to save on costs.
 Prevention
• prevent tax evasion by making it easier to comply with
the tax rules and to encourage people to meet their
obligations voluntarily.
• use an intelligence and risk-led approach to identify and
tackle evasion.
• Response is driven by the behavior of the tax payer - the
more entrenched the non-compliance, the more robust
our response.
• high-tech analysis system, Connect, combined with
access to a wide range of data sources, allows us to
identify evasion at the touch of a button.
• use a variety of tools from financial penalties and civil
litigation through to criminal prosecution against people
who deliberately evade paying their tax.
 INVESTIGATION-RATE PROGRAM
As of December 31, 2014, only five cases were dismissed with
finality, 283 cases are pending at the Department of Justice while 39
cases are with the courts. Of the P64.98 billion total estimated tax
liability, can we expect any collections?

Unlike the other BIR programs which are designed for revenue-
generating purposes to hit its collection goal, the RATE Program aims
to investigate, prosecute, and convict tax evaders and other violators
of the tax code. That’s probably the reason why we are not collecting
enough from the tax evasion cases filed.

 Run After Tax Evader is a program to investigate and prosecute

individuals and/or entities engaged in tax evasion and other criminal
violations of the National Internal Revenue Code (NIRC) of 1997
The objectives of the RATE program are as follows:

1. Generate the maximum deterrent effect on the

taxpaying public by impressing the fact that tax evasion
is a crime and violators will be caught and punished.

2. Enhance voluntary compliance among taxpayers.

3. Promote the confidence of the public in the tax system.

 Any person, association, partnership and company
found to have committed a violation of the provisions of
the NIRC of 1997 may be charged under the RATE
Program. But in the case of associations, partnerships or
corporations, the penalty shall be imposed on the partner,
president, general manager, branch manager, treasurer,
officer-in-charge and employee/s responsible for the
violation.
THANK YOU!!!
• Reclusion Perpetua-  [30] years after which the
convict becomes eligible for pardon.
2. Reclusion Temporal- 12 years and 1 day to 20
years
3. Prision Mayor and Temporary Disqualification- 6
years and 1 day to 12 years
4. Prision correccional, suspension, and destierro- 
6 months and 1 day to 6 years
5. Arresto Mayor- 1 month and 1 day to 6 months
6. Arresto Menor- 1 day to 30 days
7. Bond to keep the peace— The bond to keep the
peace shall be required to cover such period of
time as the court may determine.