4 examples of serious financial crimes

On Behalf of | Mar 20, 2018 | blog, Firm News

You’ve run your company successfully for the past two decades. That puts you in a position of power. You handle company assets. Shareholders trust you with their money. Banks offer loans and lines of credit.

Moreover, no one questions you. It’s your company. You’re the boss. You make the decisions. That, too, is a benefit of this position of power. People simply assume you’re always working for the good of the company.

It’s important to be very careful. Even things you consider minor financial opportunities or mistakes could easily slide into the realm of fraud and deception. You could find yourself facing charges, still not feeling like you did anything wrong. But that one little mistake that perhaps crosses a line could haunt you for years to come.

To help you better understand how this happens, here are a few examples of financial crimes.

1. Hiding a company’s financial troubles.

You owe it to your shareholders to tell them how the company is really doing. They’re investing their money because they think it is going strong, with a bright financial future. It’s natural to want to hide any financial troubles, hoping to keep the company’s reputation intact, but actively covering up the reality can defraud your shareholders of their investment money when the company is actually sliding toward bankruptcy.

2. Taking investments without following through on business plans.

When investors give you money, you must actually have a plan to do what you indicated you’d do with their money. For instance, some financial crime cases have involved those who took investments in order to buy and sell electronic products, turning a profit with each sale. Those purchases and sales never happened.

3. Paying older investors with newer investors’ money.

Even for experienced investment firms, investments do not always pan out as well as you hope. It’s not legal to simply take money from newer investors and pay it to the older investors who want to see returns. This falsifies the returns and makes it look like the weak investments are actually strong, enticing more people to invest.

4. Falsifying assets and company value.

Again, this may come back to pride and a desire to make it look like the company is doing well, but you cannot falsify any financial information. If you hoped to make $1 million in sales and you only hit $500,000, it stings to admit you missed your projections. But calling it $1 million and quietly vowing to hit it next year is illegal.

As you can see, these crimes often involve inaccurate accounts and financial information. Transparency is the real issue, as much as money. Any deceptive practice, even if it feels harmless on your end, could lead to criminal charges. If that happens, it’s important to understand all of your legal options.