Street Gangs Venture into White-Collar Crime

By
Jacob Gershman

Bloomberg News

White-collar fraud is a Wall Street crime — and increasingly these days, it’s also a street crime.

WSJ’s Nicole Hong reports on how gangs traditionally associated with drugs and violent crimes are donning white collars and committing financial frauds, like identity theft, bank fraud and counterfeiting.

When federal agents arrested a group of Outlaw Gangsta Crips last summer in Brooklyn, N.Y., the 38-page indictment accused nearly two dozen gang members of robbery, attempted murder and cocaine distribution. But the allegations also included an atypical charge for a street gang case: bank fraud.

Prosecutors said the gang members created and deposited fake checks, and then quickly withdrew money from the accounts before the banks—including J.P. Morgan Chase and Bank of America BAC -0.95%—could identify the checks as fake. The alleged scheme reaped more than $500,000 for the group, according to the government.

At least two defendants have already pleaded guilty, while several others are engaging in plea negotiations with the government, according to court filings.

White-collar crime is “certainly something that street gangs have historically not been involved in,” said Scott Decker, a professor who studies gang behavior at Arizona State University.

What explains the shift in tactics? The answer seems to boil down to money (more of it) and risk (less of it). Crimes like check fraud and identity theft are more lucrative and easier to conceal. And if you do get caught, prison sentences are lighter.

That’s taken some adjustment for city police departments like in New York, whose gang and financial-crimes units have traditionally operated in their own corners.

The trend isn’t entirely new. The FBI for several years has been tracking how gangs like Bloods and the Crips have migrated into the world of white-collar crime. But now, the schemes have gotten bigger and bolder.

“The sums of money involved are staggering,” Ron Huff, a criminology professor at the University of California, Irvine, who studies gangs, told the Journal. “Even though it’s a small minority…the potential amount of money involved and damage to people’s financial accounts is greatly out of proportion to other gang crimes.”