Skimming (fraud)

This article is about cash skimming. For credit card skimming, see Credit card fraud ยง Skimming. For other uses, see Skim (disambiguation).

A form of white-collar crime, skimming is taking cash "off the top" of the daily receipts of a business (or from any cash transaction involving a third interested party) and officially reporting a lower total. The formal legal term is defalcation.

Examples

A skimming crime may be simple tax evasion: the owner of a business may fail to "ring up" a transaction and pocket the cash, thus converting a customer's payment directly to the owner's personal use without accounting for the profit, thereby the owner avoids paying either business or personal income taxes on it. A famous example of this crime occurred at Studio 54 discotheque,[1] which was forced to close as a result.

Skimming may additionally be the direct theft of cash; in addition to hiding it from tax authorities, the perpetrator hides the taking from an employer (embezzlement), business partners, or shareholders. A large-scale allegation of this kind has been levelled at Satyam Computer Services concerning the billion dollars missing from the company's coffers.[2]

Skimming may be necessitated by a third crime; for example, an otherwise honest businessman who pays taxes and does not cheat his partners might still be forced to skim some cash from the business and use it to give to an extortionist in the form of a bribe, kickbacks, or payment to a protection racket or loan shark or even a blackmailer.

Skimming at casinos is associated with the funding of organized crime. In May 1963, the FBI turned over to the Justice Department a two-volume document called The Skimming Report which detailed the skimming of gambling profits by Las Vegas casinos to avoid taxes.[3] The report documented how pre-tax profits from casinos were being routed to various organized crime syndicates across the nation. No one could be prosecuted as the FBI obtained its information by illegally bugging casino money rooms. Casino skimming during the 1970s and 1980s is featured in Nicholas Pileggi's nonfiction book Casino: Love and Honor in Las Vegas and in the film Casino, which is based on it.

Other related usages can include things such as corrupt government officials "skimming" cash received as foreign aid.[4]

References

  1. ^ "THE CITY; Two of Studio 54 Get Reduced Terms".
  2. ^ "Breaking News, World News & Multimedia".
  3. ^ Navasky, Victor (1971). Kennedy Justice. Atheneum. p. 89. ISBN 978-1111648763.
  4. ^ Sachs, Susan (29 February 2004). "Hussein's Regime Skimmed Billions From Aid Program" – via NYTimes.com.