Let the experts at the Law Offices of Robert J. DeGroot help you better understand the specifics of corporate fraud, how the FBI and federal and state prosecutors treat this type of misconduct, and how defense attorneys help the accused protect their constitutional rights.
What is corporate fraud?
Corporate fraud can be broadly defined as criminal and/or illegal acts that are typically done to circumvent the law in an effort to give an individual, group, or company a monetary or competitive advantage that benefits said individuals, groups, companies, or even outside beneficiaries of such acts.
Illegal acts that fall under the umbrella of corporate fraud include payroll fraud, tax fraud, accounting fraud, and many more. In order to make a company more attractive to potential investors or purchasers, some companies have committed fraud by falsifying accounting records. Others have defrauded investors and customers by making false claims about the nature of a service or the capabilities of a product in an effort to increase sales.
Since these crimes are often committed by company employees or representatives in an effort to benefit the company, they can be difficult to detect without the necessary oversight in place.
To give you a clearer picture of what we mean, corporate fraud could be as simple as an internal accountant at a small business skimming cash in a bill pay scheme, to something as large-scale and broadly impactful as the Enron scandal, whose fraudulent accounting schemes costs investors billions of dollars and thousands of employees who weren’t participating in the fraud their jobs.
Corporate fraud can take on many sizes and shapes
Even when systems of checks and balances are properly placed within a company, these crimes can be difficult to detect due to the fact that they often are shrewdly intermixed within a business’s legitimate practices. The use of private or sensitive information further complicates detection as privacy concerns can hinder oversight efforts.
The fewer people involved in such schemes can make acts of fraud more difficult to detect and, conversely, the more people involved can make the schemes all the more sophisticated. Law enforcement officials take corporate fraud seriously and must be incredibly adept in their attempts to detect, confirm, and prosecute fraud cases.
How is corporate fraud prosecuted?
The FBI treats corporate fraud as one of its highest priorities. Due to the broad array of ways in which corporate fraud can occur, the FBI partners with different governmental agencies to be its most effective in uncovering and prosecuting these illegal acts. Detection of crimes like self-dealing, various types of accounting fraud, and even obstruction of justice, are believed to be more effective through collaboration with the Internal Revenue Service, the US Postal Inspection Service, the Department of Labor, the Securities Exchange Commission, and several more.
The FBI focuses on a few key areas in order to detect existing and prevent future corporate fraud from occurring. These include:
- Tax violations that relate to self-dealing
- Personal gain through the misuse of corporate assets or property
- Insider trading based on non-public information, market timing schemes, late trading, as well as fraudulent trades that manipulate the market and defraud investors by hiding losses or inflating profits
- Falsification of accounting information, including the falsification of net asset values, financial condition, and false accounting entries
- Transactions designed specifically to evade oversight
- Obstruction of justice-related activities that are practiced in order to obscure the above from detection
Experts recommend a variety of ways to avoid corporate fraud, including outsourcing of payroll, eliminating cash where at all possible in order to prevent skimming and more clearly track transactions, the implementation of signature verification, separate accounting and bookkeeping duties to create internal checks and balances, routine audits, and building strong relationships with your staff.
What do I do if I’m accused of committing corporate fraud?
If you are accused of participating in activities related to corporate fraud, the most important thing you should do is secure legal counsel. Your freedom is at stake, and a sound defense of your constitutional rights is critical in you being treated fairly by the justice system.
We recommend that you, while maintaining a respectful demeanor with authorities, exercise your right to remain silent unless otherwise authorized by your defense attorney.
Your relationship with your attorney is key to your ability to build a strong legal defense. Follow their advice, be as open and as honest with them about your situation as you possibly can. You have attorney-client privilege and can be candid with your attorney, even about potentially embarrassing information you might not normally feel comfortable sharing with others.
Any documents you might have that relate to your case must be shared with your attorney. Do not attempt to hide or destroy what might be considered evidence. These actions — and the information you intend to hide — will be discovered and will tarnish your image in the eyes of the court. We understand that this is a stressful and at times scary situation to be a part of, but remaining calm, cool, and collected in this face of this adversity will only help you in your pursuit of justice.
Relatedly, it is imperative that you limit those conversations about your case only to those individuals your attorney advises you to. The more discussions about your case, then greater the potential for information to leak media outlets or even to the prosecution team, who is hoping you’ll make incriminating statements that they can use against you in court. Do not speak to the media. Do not post to any social media. Simply follow the advice of your attorney.
Are you in need of a defense attorney due to corporate fraud-related allegations? You deserve a supportive, comprehensive, and effective legal team by your side. Call the Law Offices of Robert J. DeGroot TODAY for your confidential consultation!
