Business Fraud: The Most Popular Legal Cases

One of the unfortunate realities in the business world, particularly among smaller, privately-owned businesses, is fraud.  While it is true that most fraud involves relatively “harmless” crimes such as swiping a tub of highlighters or a couple of rolls of tape, it only takes one serious offender to completely ruin a business owner’s day.  Take, for example, a relatively recent case that Fox Business News covered earlier this month.  US investigators reported on the 16 criminal counts brought against Jesse Litvak, former Jefferies Group Inc. managing director. The accusation is that he was using mortgage-backed securities to defraud investors in an attempt to make money for his employer during the 2008 financial crisis. This is certainly an extreme case, yet embezzlement and employee fraud in smaller businesses doesn’t need to be this extreme to completely destroy a small company. Now, a small business-owner might think that they are actually pretty safe, particularly if they have a good working relationship with most of their staff. The reality, as any good California business lawyer will tell you, is that theft and other kinds of fraud are not committed by employees whom you don’t trust. In practice, in order for an employee to have access to something worth stealing, they must have to be trusted in the first place.

Fraud can take the shape of many different kinds of theft.  Consider a case that came to light in the November of last year: Kohl’s executive Michael H. Johnson and a Carter’s Inc. executive were both accused of fudging the company’s accounting numbers by the U.S. Securities and Exchange Commission.  This case actually has a lot of interesting twists and turns and includes criminal charges brought against the former president of Carters to the tune of a 37-count indictment.  You can probably imagine the implications of two companies of such renown and standing having their names sullied by such sordid business dealings.  A smaller company might not survive such shenanigans by their employees.  The fines and court costs alone could bankrupt it.

According to Bloomberg BusinessWeek, the average company with smaller than 1000 employees loses an average of $150,000 for each fraud case they are faced with. Larger companies tend to lose less but still show depressing losses, averaging around $71,000 per case.

Clearly, it pays to be prepared to act in the event that fraud occurs in your business. Chances are even good that it already has.  A California business lawyer can assist you in determining whether fraud has occurred, and if it has, proceed with litigation to recover your assets.

Check out @ashleymarie1985 to see what else Ashley Wilson has to say!

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