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AZHARI LLC BLOG

Apr. 26 2018

Understanding Common Types of Corporate Fraud in Chicago

Posted By: Sami Azhari
Category:

Understanding Common Types of Corporate Fraud in Chicago

Illinois law prosecutes any person or company who practices business activities that are illegal or deceptive and are intended to grant favor to the person or company at the expense of others. This is known as corporate fraud, and it can take many different forms – all of which come with serious penalties under Illinois law.

Below, we’re going to detail how corporate fraud works and cover some of the most common types of schemes that get prosecuted.

How Corporate Fraud Works

Schemes involving corporate fraud can be carried out in both small and large companies, and in just about every industry. Essentially, assets or information is used in a way other than originally intended to give the individual or company an advantage that would not otherwise have been gained.

Sometimes the fraud scheme is disguised within a legitimate business or branch of the business. Often, the person or group of people responsible are in a position of trust at the company, such as an executive secretary or company president. They have access to the financial records and can use fraud to manipulate the information or assets. These individuals may even use the power in their position to pressure other employees or contractors to comply with the scheme.

Corporate Fraud Examples Illinois Law Enforcement Commonly Handles

Here are specific ways corporate fraud may occur.

Misappropriation of Funds

This is the most common kind of corporate fraud, occurring in up to 80 percent of cases. When an individual has control over certain funds or assets within a company, and then uses them for personal benefit, charges of embezzlement may apply.

How does this work?

A company may make up false employees to divert funds to personal accounts. An individual may approve his own expense reports with inaccurate information to receive higher payouts. Individuals may take hard assets from the company for personal use or resale.

These are just a few examples of how funds can be misappropriated.

Corruption

It is illegal to solicit, receive, or provide anything of value in order to influence an individual’s or company’s business decisions.

Skimming

If income is intercepted before it is added into the ledgers, this is known as skimming.

False Accounting

With this crime, the financial numbers are altered to present a false picture of profit, income, or liabilities, which does not reflect reality.

The inflated numbers can be used to secure loans, win new clients, or deceive investors. The well-known Enron case is an example of corporate accounting fraud.

Misrepresentation

If a company is developing a product, they may hide known flaws to protect their profits rather than spending more money to correct the problems.

Investment Fraud

An investment company may divert or spend funds that should have been used for investing and building reserves for clients.

Tax Fraud

Companies can falsely report income and losses on tax forms to artificially lower their tax burdens.

Here is one example of a 2017 Illinois corporate fraud conviction. An owner of four gas stations near Peoria received a 21-month prison sentence and must pay $1.5 million in fines and an additional $1.48 million in restitution. He pled guilty to charges of tax evasion and mail fraud for misrepresenting sales on both state and federal tax returns by altering the numbers.

Get Help with Your Illinois Corporate Fraud Charges

Chicago Corporate Fraud Attorney

If you are facing charges or being investigated for corporate fraud, you need a skilled Illinois criminal defense attorney to help. The criminal penalties for conviction can be quite serious, potentially involving prison time and high fines, but other consequences can be just as severe. Your reputation will likely be ruined, making it a struggle to rebuild your career. Loans may be harder to come by. Even finding housing can be difficult.

A knowledgeable lawyer can minimize the damage greatly. In some cases he or she may be able to get your charges dropped or dismissed – or, better yet, if no charges have yet been filed and you are merely under investigation, it is sometimes possible to put a halt to the investigation before charges ever come. Call today for a free consultation to learn about your options.

 

About the Author 

Sami Azhari has been working as a lawyer since 2007, after receiving his Juris Doctor from the Michigan State University College of Law. He has handled numerous state and federal cases, and is known throughout the Chicago and Rolling Meadows area for providing his clients with high-quality, skilled representation. He has been recognized by SuperLawyers, the National Trial Lawyers Association, and other notable organizations, and has spoken at a number of legal conferences.