NYC Accounting Fraud Lawyers
Accounting fraud involves the intentional, deliberate manipulation of a company’s financial records. The intent is to falsify and misrepresent the financial health of the organization. This usually takes place by inflating financial records so that it appears that the company has generated more profits than it actually has. This misleads banks, investors, shareholders and the public in general. The financial information may also be falsified to manipulate the overall financial performance of other areas such as decreasing costs and expenses, falsifying bonuses that are due to staff members, dividend payments that are due to shareholders, overstating assets or a wide variety of other areas that could compromise the legitimacy of the financial records.
The impact of intentionally misrepresenting financial records is vast. It could have an effect on what’s reported to regulating organization such as the SEC for publicly traded companies, or to potential business owners for those who may consider buying or selling a business. Accounting fraud also lends itself to tax fraud in some form or another.
When profits and assets are overstated and cost and expenses are understated, it also has an impact on a company’s equity and their overall net worth which is reflected on the balance sheet.
Individuals who typically commit accounting fraud include accountants, CFO’s, other accounting staff members or business owners themselves. Those who are found guilty of accounting fraud can receive penalties that consist of fines or time spent in jail. Some of the more serious violations could result in longer sentencing and higher fines. Those who repeat such acts can also experience much heavier consequences. To that end, criminal sentencing can be more complex.
If you are involved with accounting fraud, then you will need to seek the assistance of an experienced attorney right away. The following are some common areas that are associated with accounting fraud cases and how you can go about addressing them.
1. Contact an Attorney
Those who are involved in accounting fraud should seek out the assistance of an experienced attorney as quickly as possible. It will allow the attorney to look into the legalities of your case and begin legal proceedings that are in your best interest. When attorneys are not brought into the picture as early in the process as possible, the opposing party can begin to proceed with legal processes that are not in your best interest.
2. Obtain Information that Supports Your Claim
It is in your best interest to gather up as much supporting documentation that best supports your case – and as quickly as possible. Your attorney will be able to use this information on your behalf as soon as possible. Thus it’s also imperative that you work very closely with your attorney every step of the way.
3. Accounting Fraud that Involves Publicly Traded Companies
Accounting fraud that involves a publicly traded company now involves the names and faces of shareholders and other corporate victims. It also has an impact on publically traded regulatory agencies such as the SEC and The Financial Industry Regulatory Authority, Inc. known as FINRA. To receive the best legal representation possible, attorneys should be familiar with agencies that regulate accounting fraud and its impact on shareholders and other victims.
4. Banks and Investors
If your accounting fraud case involves misleading financial statements that were presented to banks or investors, other penalties and consequences may occur depending on the severity of the issue. For example, when financial statements are overstated and presented, to banks, it’s usually because a company wants to prove to a banker that they generate a certain level of profits on a monthly basis, quarterly or annual basis to better qualify for a loan. The loan would ultimately be used to obtain debt financing – or immediate cash that needs to be repaid at a later time. This misleads banks in that they are gauging the net profit to determine a company’s ability to repay a loan. When those profits are overstated, the banker is making decisions based on fraudulent, misleading information.
When a company approaches an investor for funding it involves equity financing, which in turn, misleads the investor who would likely become an equity partner. The investor would assume that the company’s financial performance is greater than it is as he or she has been presented with overstated financial statements. Hear again, penalties and possible criminal charges that the alleged could face would vary based on the severity of the crime and the dollar amount involved. It would also be based the unforeseen losses that the investor of experience.
It is imperative to hire an experienced New York-based attorney that understands financial statements and the due diligence process when representing cases that involve investors.
Taking the Next Step
If you have accounting fraud allegations charged against you, you must work very closely with your attorney. Together, this allows the two of you to provide the burden of proof needed to successfully disprove the claims that have been made against you and settle your case. You will need to speak with an attorney in detail to provide them with a better understanding of your case. They will then provide you with the best steps to take to resolve your accounting fraud issue.