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Accounting Fraud Basics

Bank Fraud By Harvey Binnall PLLC - 2019/02/07 at 06:46pm

Accounting fraud — regardless of the jurisdiction in which you have been charged — is a serious felony that is punishable by financial penalties and a term of imprisonment (up to 10 years in Virginia).  If you’ve been charged with accounting fraud, it’s critical that you consult a qualified white collar defense attorney as soon as possible.

Defining Accounting Fraud

There are many forms of accounting fraud, though all operate on the same fundamental principles.  Put simply, accounting fraud involves the manipulation (i.e., falsification or concealment) of financial records so as to create a false impression of a company, which leads to various gains.  For example, the concealment of a company’s liabilities could convince shareholders to invest in the company.

Other examples of accounting fraud include, but are not necessarily limited, to:

  • Misstating revenue, income, expenses, losses, and liabilities
  • Failing to disclose revenue and/or assets in an effort to avoid tax payments or creditor payments
  • Concealing information related to business transactions
  • Prematurely reporting revenue when transaction is incomplete
  • And more

The range of possible misconduct giving rise to criminal accounting fraud is rather broad.  It is not solely comprised of straightforward understating liabilities and overstating revenues.  For example, an accounting department might report that a business transaction (still in negotiations) has been executed and paid in full so as to ensure that quarterly sales figures hit their target.

Common Defenses to Accounting Fraud

Intent is Absent

Accounting fraud — same as all fraud litigation — requires willful misconduct for liability to attach.  If the defendant lacks the requisite intent to commit fraud, then they cannot be held criminally liable.

If you did not actually know that you were committing accounting fraud, then you have a significant advantage, though it’s worth noting that a jury may not necessarily “believe” that you did not know, depending on the circumstances.  For example, if you are a skilled accountant and you worked on an account over the course of a year, then the jury may struggle to believe that you did not actually know that the liabilities and income were being misreported.

Evidence is Lacking

In any criminal litigation, the prosecution must be able to prove that you are guilty of the crime at-issue “beyond a reasonable doubt.”  The beyond a reasonable doubt standard can be defined mathematically as a 99 percent likelihood.  As such, it’s quite difficult for prosecutors to gather sufficient evidence to establish liability — in fact, many cases are simply dropped due to a lack of evidence.  With the aid of a skilled white collar defense attorney, pushing back against the aggression of prosecutors can sometimes persuade them to drop the case at an early stage.

Defendant Under Duress

In many accounting fraud cases, the defendant is an accounting employee who has been compelled — under duress — to engage in illegal activity.  Their supervisor or employer may have required them to commit fraud or else suffer violent consequences, for example.  Under such circumstances, liability will not attach — duress is a complete defense to accounting fraud.

Contact an Experienced Alexandria Fraud Attorney at Harvey & Binnall for Guidance

If you’ve been charged with accounting fraud, we encourage you to contact an experienced Alexandria fraud attorney at our firm for comprehensive guidance.

Here at Harvey & Binnall, PLLC, our attorneys have decades of experience representing white collar criminal defendants in a wide range of disputes, including those that center around accusations of accounting fraud.  We understand the unique challenges associated with such litigation, the tactics employed by prosecutors, and what is necessary to effectively minimize or avoid liability for the defendant.

Our attorneys are seasoned litigators who are willing and able to take a case to trial, if necessary to secure justice on your behalf.  This tenacity, in conjunction with the fact that we always prepare for the possibility of trial, giving  us substantial leverage during negotiations with prosecutors.

Ready to speak to an attorney about your case?  Call 703-888-1943 or request an appointment online.