What are the three main types of corporate fraud?

On Behalf of | Apr 30, 2020 | White Collar Crime

Many people mistakenly believe that white collar crimes are victimless crimes. While they may not be violent, these crimes have a terrible economic impact. They can devastate families and ruin the finances of a company, taking it down and leaving employees without jobs. The consequences of such crimes are far-reaching, especially when it involves corporate fraud.

According to the FBI, corporate fraud happens when an executive or owner of a company engages in activities to  give it an illegal edge over competitors. Typically, it involves “creative” accounting that allows the company to cheat the government, investors, customers and employees. There are three main types of activities that the FBI focuses on when investigating this type of white collar crime.

Corporate insider deals

Those inside the business who have privileged information are in a position to commit a range of crimes. In such a position, you might engage in insider trading, misuse corporate property for your own benefit, take kickbacks or participate in tax evasion schemes.

Financial falsification

When you are an executive or business owner, you have plenty of room to generate false financial documents and to change figures in your accounting books to personally benefit yourself. Falsifying financial information may also involve engaging in transactions that are outside of the law and participating in trade deals that are not legal.

Hedge fund fraud

Many times, white collar crimes can go under the radar because they seem legitimate on the surface. A hedge fund may be legitimate, but it is possible to commit fraud in connection with it. This may involve market timing schemes, falsifying asset information and late trading.

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