4 Most Common Forms Of Corporate Fraud

White collar crimes have been a primary focus of contemporary law enforcement officials for the past several decades. The criminal situations can be difficult to establish without obvious fraudulent behavior, as many times the shenanigans can be hidden in the massive amount of company documents. Some cases are blatant prima facie situations that are understood by the trained investigator.

Most white collar crimes are based in accounting and business activity classification, but there are still some white collar crimes that tend to be found with regularity.

>> Lying, Stealing & Cheating: According to the Federal Bureau of Investigation, this is the essence of most white collar crime and pinpointing criminal activity can be difficult. Corporate management professionals assess inputs and outputs on a daily basis and honest mistakes can be made commonly. It is important for the company to catch billing and information errors as soon as possible to avoid confusion in the accounting repair process, but deliberate errors can be an ingrained process.

>> Financial Misrepresentation: Problems occur when corporations routinely erroneously qualify assets and liabilities in an orchestrated effort to impact profit margins and potential stock prices, along with bonuses and dividends. The practice of “borrowing from future sales” has been a common practice that can create major problems. The concept is based on estimated future sales and is added to current sales reports. They are falsely reported as an asset for the company, but as companies cannot be imprisoned, the result is normally a fine.

>> Tax Evasion: Tax evasion is absolutely illegal, but tax avoidance is a common practice for all businesses. Orlando criminal lawyer firm, Katz and Phillips, P.A, explain this difference as “By law, tax avoidance is considered to be using the law to avoid paying taxes; tax evasion is illegally using means to skip out on taxes.” Deliberate false cash-flow classifications can impact the amount of taxes that the company owes and can amount to evasion. Diverted revenues to anonymous bank accounts are a common method, as this is currently the tax shelter that many companies and individuals utilize. Prosecution jurisdiction in the U.S. is limited to American soil and all international industries have access to banking institutions worldwide. This is clearly one of the most prevalent problems for white collar law enforcement officers because the companies normally maintain internal legal departments that have carefully structured the “parking” legalities.

>> Identity Theft: One of the common problems in the digital age is identity theft. Making financial transactions online can leave the novice computer operator vulnerable to attack from data miners who are looking for a back-door opportunity to steal from an unsuspecting individual. This is particularly problematic for individuals with significant resources that could be drained from accounts with hacked password information. Many hackers actually assume multiple identities in an effort to maximize benefits by opening new accounts. Recovering from identity theft can be a frustrating process, but this has opened a new industry for companies serving as information protection entities.

> Why White Collar Crime Occurs: The reasons behind white collar crime are numerous. They can range from general mischief to absolute greed and the phenomena have moved outside of the exclusive corporate arena. Securities fraud has also been a focus of the Department of Justice in recent years, but prosecuting corporate officials has proven futile and expensive. In many ways, this activity often occurs because the operatives can get away with it, allowing fines to become a necessary expense of doing business. Corporations that are major economic components, such as large hedge funds and investment banks, have requested government help instead of prosecution for egregious manipulative management models. This, in turn, has had a major impact on economic growth and governmental balance sheets when the entity is perceived as too important or “too big” to fail.