A form of

white-collar crime The term "white-collar crime" refers to financially motivated, nonviolent or non-directly violent crime committed by individuals, businesses and government professionals. The crimes are believed to be committed by middle- or upper-class indivi ...

, 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 Tax evasion or tax fraud is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to red ...

: 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 Accounting, also known as accountancy, is the process of recording and processing information about economic entity, economic entities, such as businesses and corporations. Accounting measures the results of an organization's economic activit ...

for the

profit Profit may refer to: Business and law * Profit (accounting), the difference between the purchase price and the costs of bringing to market * Profit (economics), normal profit and economic profit * Profit (real property), a nonpossessory inter ...

, thereby the owner avoids paying either business or personal

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...

es on it. A famous example of this crime occurred at

Studio 54 Studio 54 is a Broadway theatre, Broadway theater and former nightclub at 254 West 54th Street (Manhattan), 54th Street in the Midtown Manhattan neighborhood of New York City, New York, U.S. Opened as the Gallo Opera House in 1927, it served ...

discotheque, which was forced to close as a result. Skimming may additionally be the direct

theft Theft (, cognate to ) is the act of taking another person's property or services without that person's permission or consent with the intent to deprive the rightful owner of it. The word ''theft'' is also used as a synonym or informal shor ...

of cash; in addition to hiding it from tax authorities, the perpetrator hides the taking from an employer (

embezzlement Embezzlement (from Anglo-Norman, from Old French ''besillier'' ("to torment, etc."), of unknown origin) is a type of financial crime, usually involving theft of money from a business or employer. It often involves a trusted individual taking ...

), 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. 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 Bribery is the corrupt solicitation, payment, or acceptance of a private favor (a bribe) in exchange for official action. The purpose of a bribe is to influence the actions of the recipient, a person in charge of an official duty, to act contrar ...

, kickbacks, or payment to a

protection racket A protection racket is a type of racket and a scheme of organized crime perpetrated by a potentially hazardous organized crime group that generally guarantees protection outside the sanction of the law to another entity or individual from vio ...

loan shark A loan shark is a person who offers loans at Usury, extremely high or illegal interest rates, has strict terms of debt collection, collection, and generally operates criminal, outside the law, often using the threat of violence or other illegal, ...

or even a

blackmailer Blackmail is a criminal act of coercion using a threat. As a criminal offense, blackmail is defined in various ways in common law jurisdictions. In the United States, blackmail is generally defined as a crime of information, involving a th ...

. Skimming at

casino A casino is a facility for gambling. Casinos are often built near or combined with hotels, resorts, restaurants, retail shops, cruise ships, and other tourist attractions. Some casinos also host live entertainment, such as stand-up comedy, conce ...

s is associated with the funding of

organized crime Organized crime is a category of transnational organized crime, transnational, national, or local group of centralized enterprises run to engage in illegal activity, most commonly for profit. While organized crime is generally thought of as a f ...

. In May 1963, the

FBI The Federal Bureau of Investigation (FBI) is the domestic Intelligence agency, intelligence and Security agency, security service of the United States and Federal law enforcement in the United States, its principal federal law enforcement ag ...

turned over to the Justice Department a two-volume document called ''The Skimming Report'' which detailed the skimming of

gambling Gambling (also known as betting or gaming) is the wagering of something of Value (economics), value ("the stakes") on a Event (probability theory), random event with the intent of winning something else of value, where instances of strategy (ga ...

profits by

Las Vegas Las Vegas, colloquially referred to as Vegas, is the most populous city in the U.S. state of Nevada and the county seat of Clark County. The Las Vegas Valley metropolitan area is the largest within the greater Mojave Desert, and second-l ...

s to avoid taxes. 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 Nicholas Pileggi (, ; born February 22, 1933) is an American author and screenwriter. He wrote the 1985 non-fiction book ''Wiseguy (book), Wiseguy'' and co-wrote the screenplay for ''Goodfellas'', its 1990 film adaptation, for which he received ...

's nonfiction book '' Casino: Love and Honor in Las Vegas'' and in the film ''

Casino A casino is a facility for gambling. Casinos are often built near or combined with hotels, resorts, restaurants, retail shops, cruise ships, and other tourist attractions. Some casinos also host live entertainment, such as stand-up comedy, conce ...

'', which is based on it. Other related usages can include things such as corrupt government officials "skimming" cash received as

foreign aid In international relations, aid (also known as international aid, overseas aid, foreign aid, economic aid or foreign assistance) is – from the perspective of governments – a voluntary transfer of resources from one country to another. The ...

References

{{reflist Finance fraud Organized crime activity