Defending U.S. Federal Corporate Fraud Charges

What is Federal Corporate Fraud?

Federal corporate fraud, or what is commonly referred to as “white-collar crimes,” are serious, and you will need an experienced criminal defense attorney to help you with your defense, whether you have been charged at the state or federal level, or if you believe you are currently under investigation.

There is not one federal statute under which these crimes fall. There are numerous types of white-collar crimes, and this area of law is complex.

Examples of common corporate fraud are embezzlement, money laundering, bank fraud, mortgage fraud, and securities fraud. Federal agencies that typically are involved in these investigations are the Federal Bureau of Investigation (F.B.I.), Securities Exchange Commission (S.E.C.), and the Internal Revenue Service (I.R.S.). The F.B.I. often gets involved in cases where severe financial harm will result in a financial loss that could affect individuals or businesses and possible financial harm to the United States economy. As discussed below, although these are usually non-violent crimes, the consequences for committing them are severe, besides a damaged reputation.

Penalties could include:

• A prison sentence of up to 25 years;
• Restitution to the victims; and
• Forfeiture of any gains or profits.

Each fraud committed can carry a separate maximum sentence. How the state handles these cases can differ drastically from when the federal government is involved; criminal procedures and court rules will vary depending on how the crime is charged. Whether charged at the state or federal level, you will need an experienced criminal defense attorney to ensure that you have the best defense and legal strategy. Each case is different and carries with it a different set of facts. Your defense team will fight for you to have the charges completely dismissed, depending on your situation. If that is not a possibility, your criminal defense attorney will fight to have the charges brought against you or your sentence drastically reduced.

What is Federal Corporate Fraud

There is not one state or federal statute that covers these crimes. However, as discussed in more detail below, numerous types of fraud can be committed under many different state and federal statutes.

As mentioned briefly above, these are commonly referred to as white-collar crimes. They are charged at both the state and federal levels. They are usually non-violent crimes, which do not involve drugs or physical violence. The defendant in these cases is not someone who wants to harm another physically. Typically, these crimes are motivated by financial reasons; the defendant intends to receive monetary gain, either through receiving actual money or some other type of property or service. 

Usually, corporate fraud is committed by business or career professionals. However, the federal government typically gets involved due to the seriousness of these crimes and the types of victims involved. For example, victims can include national financial institutions, such as banks. The federal government, such as the F.B.I., usually gets involved when this occurs. The federal government has many sophisticated tools and methods at its disposal to investigate these alleged crimes. However, by the time you may learn you are being investigated, a wealth of evidence has most likely been gathered against you. For example, suppose a federal agency, such as the I.R.S. or S.E.C., is investigating. In that case, the charges are brought at the federal level and typically carry more severe penalties than those at the state level. Such penalties can include a maximum prison sentence of 25 years and restitution to the victims. 

These are usually intent-based crimes, meaning for the prosecution to obtain a conviction successfully, they must show that the alleged fraud was purposely and deliberately done with an intent to deceive someone or some business. Essentially, the defendant, such as a corporate officer or stockholder of a company, intentionally manipulates essential information to deceive to obtain financial gain. The deception can be carried out in multiple ways, such as through deceit, intentional misrepresentations or omissions, falsifying documents (such as tax returns), making deliberate false or misleading statements, or numerous other types of trickery. 

Types of Federal Corporate Fraud

Although this is a complex area of law and there are many different examples of these types of crime, some of the more common ones are as follows:

1. Securities fraud;
2. Commodities fraud;
3. Wire fraud;
4. Bribery;
5. Making false or misleading statements;
6. Money laundering;
7. Extortion; and
8. Mail fraud.

Again, in the crimes mentioned above, the motivation is undue financial gain; the alleged perpetrator does not intend to commit murder, physical harm, or destruction of property.

Types of Federal Agencies Involved in Investigation

The F.B.I. usually investigates these alleged crimes. They are trying to prevent significant financial harm and loss to investors, national financial institutions, and even potential damage to the economy of the United States.

In addition, they often work with other federal agencies such as the following:

1. Financial Industry Regulatory Authority;
2. Securities and Exchange Commission;
3. Internal Revenue Service;
4. Commodity Futures Trading Commission;
5. Department of Labor;
6. The United States Postal Service; and
7. Federal Energy Regulatory Commission.

Typically, these agencies have strict reporting guidelines and compliance requirements to ensure that individuals and businesses are not defrauded of money. For example, the S.E.C. requires strict annual compliance requirements for financial advisors, especially those who invest securities and commodities for their clients. Often, the S.E.C. will detect omissions or irregularities in the annual reporting by individuals or companies. If this occurs and fraud is suspected, an investigation will begin. Likewise, the I.R.S. requires that individuals and corporations file annual tax returns. The I.R.S. can also discover fraud by thoroughly reviewing these documents, including material omissions from the returns or incomplete reporting. Moreover, whistleblowers work with these agencies to help them uncover financial fraud; the whistleblowers are encouraged to do this by being rewarded for alerting these agencies of the alleged financial fraud.

Types of Common Fraud Investigated by the F.B.I.

Again, financial gain is the motivation, and auditors and financial analysts frequently become victims of the perpetrator’s intent to deceive for financial gain. The Federal Bureau of Investigation often investigates individuals or companies that try to accomplish deceit for financial gain through the following methods:

1. Making fraudulent transfers of corporate assets;
2. Falsifying values of assets;
3. Misusing corporate property for personal financial gain;
4. Embezzling;
5. Falsifying accounting entries;
6. Filing false tax returns;
7. Concealing debts;
8. Concealing assets;
9. Evading regulators through false transactions;
10. Transferring corporate assets in a fraudulent manner; and
11. Insider trading through information not made public.

Prosecuting Federal Corporate Fraud

Unlike other crimes, such as mail fraud, federal corporate fraud is not defined under one federal statute. Instead, there are several federal statutes that the prosecution can use to file charges against a defendant for corporate fraud. The following are some examples:

1. 18 U.S.C. § 1956; money laundering;
2. 18 U.S.C. § 1341; mail fraud;
3. 18 U.S.C. § 1343; wire fraud;
4. 18 U.S.C. § 1344; bank fraud;
5. 18 U.S.C. § 873; blackmail and extortion;
6. 18 U.S.C. § 1001; filing false documents with officials;
7. 18 U.S.C. § 1031; major fraud committed against the government of the United States;
8. 18 U.S.C. § 1348; fraud committed concerning securities or commodities;
9. 18 U.S.C. § 1347; fraud related to healthcare;
10. 18 U.S.C. § 1350; certification of false financial reports;
11. 18 U.S.C. § 1342; obtaining postal packages through the use of fictitious names.

Federal Corporate Fraud Sentencing

Due to the severe nature of these crimes and the devastation that can be inflicted on the victims of the crimes, criminal convictions can result in severe penalties. Criminal penalties vary under the different federal statutes, and there are sentencing guidelines for each offense pursuant to the statutes. In addition, each offense carries a different maximum sentence, which is outlined in the particular statute that has been violated. 

Some of the penalties include harsh prison sentences in federal prison from anywhere between five (5) to 25 years for each fraudulent offense. Moreover, the punishment can consist of a hefty fine, restitution to the victims, and forfeiture of whatever gains were received due to the crime or offense. It is possible that a defendant who is convicted of the crime can end up paying twice the amount of whatever was fraudulently obtained as a result of the crime. Moreover, many individuals convicted of this crime are involved in the financial field, such as corporate officers or financial advisers. Convictions of these corporate fraud crimes can result in severely damaged reputations and being banned in the future from working in any meaningful way in a finance-related position. 

Some notable individuals convicted of federal corporate fraud include Bernie Madoff (Wall Street financier), Allen Stanford (convicted of Ponzi schemes), and Jeffrey Skilling (Enron’s C.E.O.). These individuals and other high-profile individuals have committed fraud related to losses totaling hundreds of millions (and billions) worth of dollars.

Fighting/Defending Federal Corporate Fraud Crimes

You need an experienced federal defense attorney to assist you in defending against these serious crimes and potential convictions and penalties. The government has most likely spent weeks, months, or years in obtaining the evidence they will use against you. This can make it difficult to defend against such charges. For these reasons, you need an experienced federal criminal defense attorney. The government has the burden to prove each element of the charge beyond a reasonable doubt. You are also presumed innocent until proven guilty in a court of law. If the prosecution cannot meet the burden of proving each element of the crime, there cannot be a conviction. This is a high standard for the prosecution. An experienced defense attorney can help you prepare the best possible defense to challenge the prosecution’s case.  

Each case is different, but federal corporate fraud or so-called “white-collar crimes” focus on intent. Thus, the defense will focus on your intentions, knowledge of any alleged crime, and your state of mind. For example, even for experienced individuals who work in the finance field, financial transactions and reporting requirements can be complex; it is possible for financiers, corporate officers, and those in charge of financial reporting, such as accountants, can make honest mistakes. Such mistakes are not typically federal corporate criminal fraud without intent to deceive or defraud.

We Want to Help

If you’ve been charged with Federal Corporate Fraud Crimes in the Los Angeles area, contact us today for a free consultation. Your freedom depends on finding an experienced defense attorney immediately. The sooner you reach out, the sooner we can work on getting your case drastically reduced or dismissed entirely.

Need a Criminal Defense Attorney? CALL NOW: 310-274-6529

Seppi Esfandi is an Expert Criminal Defense Attorney who has over 20 years of practice defending a variety of criminal cases.