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What is Federal Corporate Fraud?

Posted by Dmitry Gorin | May 31, 2022

Review of Bribery, Corruption, and Other Corporate Crimes

The business world can be an exciting one, especially in times of high profitability—but unfortunately, it also can set the stage for plenty of illegal activities performed by bad actors.

The federal government, specifically the Department of Justice and the Securities and Exchange Commission, is taking a hardline stance against instances of bribery, corruption, and similar corporate criminal activities, commonly called "corporate fraud.”

What is Federal Corporate Fraud?

Most federal corporate fraud cases are highly complex areas of law involving many different statutes. Just an accusation of corporate and business fraud can be life-changing. It can destroy a career that took a lifetime to achieve.

Often, the primary key to a favorable outcome will depend on your attorney's ability to negotiate and reduce the amount of loss.

These days, even companies and individuals who comply may find themselves the target of investigation over transactions that the government finds questionable.

White-collar crime within a corporate profession by otherwise trustworthy people includes a wide range of federal crimes, such as bribery, forgery, counterfeiting, extortion, and kickbacks. Suspected violations of corporate laws are generally investigated aggressively.

Companies, executives, board members, and individuals in the business world may all be subject to criminal liability if federal agencies find evidence of corruption.

For this reason, it's in the best interest of anyone being investigated for such crimes to hire legal counsel with experience in federal criminal defense—especially those familiar with corporate laws. Let's review this topic in more detail below.

What Are the Common Types of Corporate Crimes?

The federal government regulates the business world with many laws on the books. These include, but are not limited to:

  • Foreign Corrupt Practices Act (FPCA),
  • Internal Revenue Code (IRC),
  • International Traffic in Arms Regulations (ITAR),
  • Food, Drug, and Cosmetic Act (FDCA),
  • Truth in Negotiations Act (TINA),
  • Securities Exchange Act,
  • Sherman Antitrust Act.

Both the state and federal governments penalize corporations for misrepresenting facts for unjust gain, including charges against corporations and their officers and managers with fraud crimes. Federal law, for example, includes these corporate fraud crimes:

  • 18 U.S.C. 1001 – general federal false statements statute,
  • 18 U.S.C. 1031 – major fraud schemes against the United States,
  • 18 U.S.C. 1341 – mail fraud accomplished by using Postal Service, and
  • 18 U.S.C. 1343 - wire fraud, accomplished by electronic means,
  • 18 U.S.C. 1347 - healthcare fraud,
  • 18 U.S.C. 1348 - securities or commodities fraud,
  • 18 U.S.C. 1956 - laundering of monetary instruments,
  • 18 U.S.C. 472 - counterfeit obligations or securities,
  • 18 U.S.C. 873 - extortion and blackmail.

Violations of these and other laws regulating corporate behavior and business practices can result in criminal charges against a company, its officers, or individuals within that company.

Many of these federal crimes may result in significant prison time if convicted. Let's look at some of the more common criminal offenses related to the corporate world.

Bribery is when an individual or company offers money or goods to another party in exchange for influencing their judgment. Bribery can occur between two companies or between a company/individual and a government official.

Federal Bribery Defense Lawyer

Corruption is similar to bribery, but it often takes place on a much larger scale. It can involve kickbacks, money laundering, payoffs, and other activities to help a company or individual gain an unfair advantage.

Fraud isperhaps the most common type of white-collar crime. It takes many different forms, but all involve deception to gain an advantage or financial benefit. Examples include accounting fraud (e.g., "cooking" the books), tax fraud, government contract fraud, insurance fraud, government programs fraud, etc.

Insider Trading is a specific type of fraud that occurs when someone uses non-public information to make investment decisions. It's illegal because it gives the individual an unfair advantage over other investors.

Money Laundering is the process of concealing the origins of illegally-obtained money. It's often done by moving the money through complex financial transactions to make it difficult to trace.

Anti-trust Violations are designed to protect competition by preventing companies from monopolizing a particular market. These laws are often broken when companies engage in price-fixing, bid-rigging, and other anti-competitive practices.

Corporate Espionage is when a company or individual illegally steals trade secrets or other confidential information from a competitor to gain an unfair advantage. Corporate spying happens regularly and is not considered illegal as long as it stays within legal boundaries—but those lines are often crossed.

What Type of Illegal Activity Occurs in Corporate Fraud Cases?

Corporate fraud is a white-collar crime and a highly complex area of law that usually involves several federal statutes. It's a crime committed by deceitful business executives, controllers, accountants, and managers.

The illegal activity is manipulating information, often financial information, to swindle, defraud, and deceive. Federal law enforcement agents typically uncover corporate fraud with audits using sophisticated measurements. Corporate fraud is a broad term covering a wide range of illegal activity, such as:

  • misrepresentation of the value of a business,
  • concealment of debts or assets,
  • submitting false tax returns,
  • false accounting entries,
  • creation of fraudulent sales and receipts
  • “cooking the books” and other fraudulent bookkeeping,
  • embezzling corporate funds for personal gain,
  • stealing business trade secrets or their patents,
  • using business funds or property for personal gain,
  • fraudulent transfer of corporate assets or property,
  • misusing corporate retirement or pension funds,
  • market timing schemes,
  • transactions evading regulators.

What to Do If You're Being Investigated for Corporate Crimes?

If you know you are suspected of fraud, received a grand jury subpoena, a search warrant was executed, or you were already indicted, you will need to retain a federal criminal defense lawyer to protect your constitutional rights.

If federal investigators or agents have contacted you from the Department of Justice (DOJ)—or if you otherwise receive word that you or your company is a target of scrutiny by the government—it's vital to seek experienced legal counsel immediately to protect your interests.

Federal Criminal Defense Lawyer

Federal investigators sometimes spend months or years gathering evidence and building a case before procuring an indictment—which means by the time they indict you, they already have a reasonably solid chance they believe they can win.

The Federal Bureau of Investigation (FBI) asserts that it prioritizes corporate fraud investigations because of the significant harm corporate fraud causes to investors and the United States economy. The FBI is not alone in investigating corporate fraud.

They work with other agencies to detect and prosecute corporate fraud, such as the Securities and Exchange Commission, Commodity Futures Trading Commission, Internal Revenue Service, Department of Labor, Federal Energy Regulatory Commission, and U.S. Postal Inspection Service.

Corporate fraud detection frequently involves these other federal agencies' reporting and compliance requirements.  Thus, involving a skilled federal defense attorney at the earliest sign of trouble can improve your chances of a more favorable outcome. An experienced criminal defense attorney can:

  • Analyze the specific allegations against you or your company;
  • Evaluate the evidence to determine its merit and your risk of criminal exposure;
  • Gather documentation and witness statements to support your innocence and prove your compliance with the law;
  • Explore potential defenses that may be available;
  • Develop a strategy for responding to government investigators;
  • Negotiate with prosecutors on your behalf; and
  • Defend you at trial, if necessary.

Your defense to federal corporate fraud charges will depend on the specific details of your case. Any effective strategy by our federal criminal lawyers will be built after a thorough review of all the documentation.

Defenses of fraud charges frequently focus on the defendant's intention, knowledge, and state of mind. We may be able to negotiate with the federal prosecutor for a favorable plea bargain but are prepared to take the case to trial if necessary.

Eisner Gorin LLP is located in Los Angeles County and serves people acing all types of federal offenses anywhere in California and throughout the United States. You can contact our law firm for an initial consultation at (877) 781-1570 or fill out the contact form.

About the Author

Dmitry Gorin

Dmitry Gorin is a licensed attorney, who has been involved in criminal trial work and pretrial litigation since 1994. Before becoming partner in Eisner Gorin LLP, Mr. Gorin was a Senior Deputy District Attorney in Los Angeles Courts for more than ten years. As a criminal tri...

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