Protecting Yourself from Claims of Corporate Fraud

October 24, 2009

The current economic crisis has caused an increase in government scrutiny of corporations. As a result, it is important for executives to protect their companies and themselves.

October 24, 2009 /24-7PressRelease/ -- Protecting Yourself from Claims of Corporate Fraud

Article provided by Parkman Adams & White LLC
Visit us at http://www.parkmanlawfirm.com

The current financial crisis and resulting economic downturn have put an increasing amount of public and regulatory attention on how companies, large and small, conduct their day-to-day business. From headlines about corporate excesses, Wall Street bonuses and bank bailouts, the public has been inundated with the message that corporations are to blame for all of the country's problems. This, in turn, has resulted in an increase in federal government regulatory scrutiny of corporate practices and transactions.

In this type of climate, it is important for CEOs, CFOs and other executives to take proactive steps to limit the possibility of corporate fraud being committed within their companies. Even an investigation that turns up no evidence of a white collar crime can have devastating consequences for the company and individuals involved. For more information on protecting yourself before or during a white collar crime investigation, contact an experienced criminal defense attorney.

Corporate Fraud Cases on the Increase

During poor economic times, the number of white collar crime cases tends to rise. As CFOs and other officers and directors face mounting pressures to maximize company profits while simultaneously cutting expenses, the allure of taking a short-cut becomes too much for some to resist. This pressure is not limited just to executives and directors trying to please shareholders, but is felt throughout the company ranks as some employees may do whatever they can to meet their goals and keep their jobs.

Some of the typical types of white collar crimes that may be committed include:
-Mail fraud
-Securities fraud
-Embezzlement
-RICO crimes
-Money laundering
-Tax evasion
-Bribery

"Corporate fraud" is another broad category of white collar crimes that may include insider trading, false accounting practices, illegal kick-backs and misuse of corporate property. Individuals also may face obstruction of justice charges for trying to hide or otherwise conceal any of these illegal practices from federal authorities.

What Can You Do to Protect Yourself?

The current scheme for federal investigations of white collar crimes encourages companies to throw their employees to the wolves rather than help them defend the charges. With the increased scrutiny on corporations and corresponding rise in the number of criminal investigations, it is important for executives and others to take steps to protect themselves and their companies from claims of corporate fraud and other white collar crimes. These steps include:
-Require all employees to attend mandatory corporate compliance training where the business's policies and ethic standards are explained
-Post the company's corporate compliance and ethics policies in a public place where all employees can view it, like the lunch room or other common area
-Clearly explain the consequences for any employee who fails to meet the company's corporate compliance and ethics standards and discipline any employee accordingly who fails to meet them
-Set up an ethics violation hotline that employees can call to report suspected/known violations of company policy
-Create an compliance oversight structure that allows you to regularly monitor employee activities for any suspicious and/or illegal transactions or other acts
-Monitor employee use of message boards and the content of message boards for any discussion of corporate violations

Officers and directors also should purchase their own individual directors and officers insurance policy (D&O policy) for additional protection in case they are investigated for a white collar crime. Not all companies provide their executive level employees with one of these insurance policies. In these cases, it is imperative that officers purchase their own coverage. Defending against corporate fraud and other white collar crime cases - even if they never proceed any further than allegations - can be very expensive. Individual D&O policies can help decrease these costs and will protect the policyholders even if their companies file for bankruptcy.

Lastly, at even the hint of a criminal investigation, executives should contact an experienced attorney for further advice. In some cases, the investigation may go no further than that and charges will never be filed. But even an investigation can be damaging on an individual's reputation and career. An experienced criminal defense attorney may be able to minimize the harm caused by a white collar crime investigation. For more information, contact an attorney today.

Article provided by Parkman Adams & White LLC
Visit us at http://www.parkmanlawfirm.com

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