Career Advice - A Community Blog

Erik Larson writes about the job market, resume improvement, and career advice

Dealing with accusations of business fraud

Written by Erik Larson, Community Blogger | May 31, 2017 1:01 AM

Allegations of fraud require immediate action. Thus, the firm or individual being investigated or accused should act quickly to formulate a prompt and factual response since this is not an easy thing to deal with. If one does not act aggressively, the accusations could lead to criminal penalties, civil suits, and new sanctions. Nevertheless, if one plans a response, they may raise a litany of concerns.

The discovery of the fraud is what will determine the type of action the business will take. It could be from internal sources, civil lawsuits, or an investigation that was conducted by the government. Regardless of how the activities in question came to light, it is always best to use a legal expert. These cases tend to be complicated and stressful, and the business needs someone who will help get the situation under control without unnecessary publicity.

Conduct Internal Investigations

After the discovery of the fraud, the most crucial step the business needs to do is decide if they should carry out an internal investigation. Though there are risks associated with making the inquiry, the benefits that the business gets outweighs the risks.

A firm can formulate a sound strategic plan since it knows and comprehends better than other parties the scope of the fraud, the personalities involved, and any potential victims. Additionally, if the business conducts the investigation, it helps to reduce the liabilities, penalties, and critics from the public, and dissuade the government from having to carry out its inquiry. Thus, the internal inquest allows the firm to gain and maintain control over the situation.

Preserve Relevant Documents

When a corporation decides to have the allegations of fraud investigated, it should learn the extent of the wrongdoing, and one of the ways that they can understand it is by collecting documents. The collection of these files should be done as soon as the alleged fraud has been discovered to avoid any alteration or some documents missing. Another measure is that of securing electronic materials like e-mails until the situation gets resolved. The business might have to buy additional software or other computer drives as a way of increasing the capacity of its storage. Note that the government agency or preceding judge may not sympathize with a company that deletes or loses relevant documents while fraud investigations are ongoing.

Health Care Fraud

This includes Medicare malpractices and the filing of false claims through the Federal health program. It is a criminal offense that might lead the loss of hospital privileges, state license, and other forms of disciplinary action. In fact, you might have to face both criminal and civil penalties. That is the reason you should not take such accusations lightly. The ensuing case should be handled by a trained and experienced attorney who is prepared to go to trial on your behalf. Find one as soon as the accusations are presented so that you can plan the best way to deal with the situation.

Hire an Attorney

Hiring a legal representative is not something that a company should second guess. The lawyer has to be present from the time when the business becomes aware of the alleged crime. When an attorney is included during the initial stages, the company can claim comfortably that its deliberations fall under the attorney-client privileges. Other than asserting the privilege claim, the business also gets someone who has sound knowledge of the legal proceedings concerned.

Hire External Financial Analysts

It is best for the company to hire consultants who will aid in the investigation of the matter. The external financial analyst and auditors will increase the credibility of the response that the corporation offers to its accusers. This will put the business in a better position to deal with the authorities.

Corporate Privileges

Even if the corporation has to respond to the alleged fraud, it has to be careful to preserve its legal rights. One of the privileges the company should enjoy is that of attorney-client. This right covers the communication involving outside and in-house counsel, as long as they are discussing the purpose of seeking legal counsel as opposed to business information. That being the case, the firm has to distinguish between legal and business counsel. The privilege covers any individual or company working under the direct orders of the business, and this includes outside experts.

Take the Best Action

Depending on the extent of the issue, it is ideal that you take action after such a crime has been committed. Find out the necessary measures that you should take by consulting an attorney. At the same time, note that the decision you make during this period will have a ripple effect on your business, and that is the reason you need to weigh all the options available. However, note that any action has consequences.

Dealing with allegations of fraud is not an easy matter; however, in the business environment today, it is essential to develop a system for detecting, preventing, and responding to the accusations. The strategies and approach will vary depending on the situation and the laws applicable, but the best thing is to have meaningful policies or systems in place so that your business can minimize the risk of fraud and also detect it before it gets out of hand.

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