Business Fraud and Theft
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UPDATED: Oct 10, 2012
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The essential meaning of fraud is the intent to deceive. Business fraud requires a theft, by an internal employee, accompanied by concealment of the theft, and the translation of the stolen assets or resources into personal assets or resources.
Criminal sanctions for business fraud and business theft can be found in Title 18 of the U.S. Code at Sections 641-649. A large majority of business fraud charges are levied by the federal government. Charges of business fraud and theft by state prosecutors are relatively rare.
Some fraudulent behavior may include cutting costs, spending corporate and shareholder money on personal expenses, and manipulating financial records for personal needs.
Male employees commit four times as much fraud against their employers than do female employees. Business losses due to fraud by employees over 60 years old are 28 times greater than those by employees 25 years old or younger. Approximately 58 percent of reported fraud is committed by non-managerial employees, 30 percent by managers, and 12 percent by owner executives.
A notorious case of fraud from the 1980s involved Michael Milken. As an executive at investment bank Drexel Burnham Lambert, Inc., Milken used high-yield junk bonds for corporate financing and mergers and acquisitions. He amassed an enormous personal fortune, but in 1989 he was indicted by a federal grand jury and eventually spent nearly two years in prison after pleading guilty to charges of securities fraud. While he is credited with founding the high-yield debt market, he was banned for life from the securities industry.
However, small businesses are the most vulnerable to occupational fraud and abuse. According to the Association for Certified Fraud Examiners, the organizations of 100 employees or less suffered higher median losses in 2002 than did the largest organizations (10,000 employees or more). While the largest companies suffered losses of $97,000 on average, small businesses’ losses averaged $127,500.
Those convicted of business fraud have faced fines, imprisonment, or both. If you are facing charges for business fraud or theft, seek the counsel of an experienced federal criminal defense lawyer right away. Your federal criminal defense attorney will help you sort through the charges and protect your rights.