09 Jul 20

Corporate Fraud Crimes

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Last Updated on: 6th August 2023, 04:28 pm

A Prevalent White Collar

Corporate fraud is one of the foremost white-collar crimes that federal prosecutors, as well as the FBI, target. Not only can corporate fraud inflict a long-lasting and detrimental effect on investors, but it also wields the power to cause immeasurable damage to the U.S. economy and the confidence that investors have in leading corporations. Because of this, corporate fraud is a federal crime that extends further than Wall Street or corporate boardrooms.  Indeed, it affects medium and small businesses, individuals and families who could be forced to suffer under the damage caused to the economy.

Due to the huge potential repercussions that acts of corporate fraud can bring, federal agents and prosecutors penalize convicted offenders with long imprisonments and ruinous fines. However, cases of fraud are rarely black-and-white, and it is paramount to get the help of a well informed corporate fraud defense attorney to protect your rights and battle relentlessly for the best possible result, whether that is proving your innocence, getting the case dismissed, or fighting for reduced or alternative sentencing.

What is Corporate Fraud?

The term “corporate fraud” is a term that encompasses a wide range of illegal and unethical violations, where the aim of the fraudulent act  is to achieve certain benefits, advantages, or wealth at the expense of others. In general, this involves a deception to achieve a goal.  That deception can be carried out using multiple people and complex schemes. The targets of the deception can include the public, investors, investigators, and auditors.  Customarily, corporate fraud can bring the perpetrators benefits from inflated stock prices, increased salaries, and more. This kind of fraud is categorized as white-collar crime.

Kinds of Corporate Fraud

Many strategies exist by which individuals can pull off a corporate fraud scheme, and in multiple cases, the complexity of fraudulent schemes necessitates the collaboration of several implicit individuals. On top of that, some corporate fraud investigations start out as civil cases but they quickly evolve into federal criminal cases due to incidents of obstruction of justice.

The most common kinds of corporate fraud:

  • Payroll fraud
  • Corporate identity theft
  • Theft of cash, physical assets, or sensitive information
  • Corporate misuse of accounts
  • Bribery or corruption
  • False employment credentials
  • Securities fraud
  • Financial accounting deception
  • Suspense accounting fraud
  • Intellectual property fraud

Moreover, the FBI Corporate Fraud Investigation Division is tasked with investigating several of the following examples of fraud, such as:

  • Falsification of financial information — Matters in which financial conditions are misrepresented, false accounting entries are made, and fraudulent trades are transacted with the purpose to inflating profits or shroud losses, and illicit transactions occur that are designed to evade regulatory oversight
  • Insider trading and self-dealing — The use of kickbacks, misuse of corporate property for personal gain, individual tax violations related to self-dealing
  • Fraud in connection with mutual funds — Acts including late trading, market timing schemes, falsification of net assets

Penalties for Corporate Fraud

Penalties for corporate fraud are, in the majority cases, based upon the individual violations that were committed. For instance, 

  • Bernard Madoff is serving 150 years in prison for running a $65 billion Ponzi scheme; 
  • Walter Forbes, the former chairman of Cendant, is doing 12 years and 7 months and is obligated to pay $3.275 billion in restitution; and 
  • the former CEO of WorldCom, Bernard Ebbers, is serving 25 years behind bars. 

There are numerous other famous cases of corporate fraud, but if you’re the subject of an investigation for corporate fraud, or you’ve already been arrested, it can be tough to anticipate the extent of the punishments.

There are four forms of consequences that an alleged offender may face, including:

  1. Fines — For a corporation that is convicted of committing fraud, the fines can be in the billions. For individuals, it can be upwards of $250,000.
  2. Incarceration — These crimes are, for the most part, felony offenses, meaning that imprisonment lasts longer than a year.
  3. Restitution — Since this type of fraud is financially based, those convicted customarily face a restitution order to pay back their victims.
  4. Probation — Sometimes probation is used as a  penalty for fraud as well, and while on probation, the offender is required to adhere to court orders.