Fraud is an intentional misrepresentation where one party secures unlawful gain. Business fraud is a business dispute that extends beyond the standard breach of contract situation between individuals or a company. Because business fraud includes a high level of dishonesty, these situations tend to be complex and can severely impact businesses, employees, and other parties.
In order for fraud to be proven, the defendant’s actions must have the following elements:
• A false statement or act;
• Intent to deceive;
• The defendant must have knowledge of the false statement or act;
• The victim must have reliance on the defendant’s fraudulent behavior; and
• The victim must have experienced loss or injury due to the fraudulent activity.
Our business litigation attorneys have successfully handled cases that involve deceptive trade practices, asset misappropriation, non-disclosure, breach of fiduciary duty, financial and accounting, tortious interference, non-compete agreements, bribery, check tampering, inventory fraud, commercial bribery, application fraud, false accounting, intellectual property fraud, fake invoicing, embezzlement, theft of cash, confidential information or assets, money laundering, fraudulent expense claims, extortion, and corruption.
The best ways to prevent fraud within a business are to have a strong ethical culture, as well as systems in place that control the business functions. Some additional ways eliminate or prevent the risk of fraudulent activity within a company include:
• Review all financials on a regular basis;
• Create policies that outline the acceptable use of company assets;
• Immediately disconnect former employees access to the company;
• Do background check on all employees;
• Identify risk areas and create policies;
• Foster an honest environment;
• Have an audit process in place;
• Create a written fraud policy to be signed by all employees (should include: prevention, deterrence, detections and response).
Business owners should also be aware of some common red flags which could indicate that there is fraudulent activity taking place. Some examples are:
• Authorization signatures are missing
• Discrepancy between earnings and lifestyle
• High number of failed login attempts.
• Originals are replaced with photocopies
• Inappropriate or unusual journal entries
Business attorneys work with business owners to create policies to help prevent fraud in the company as well as work with the business owner to get back any losses they may have suffered in the event of fraudulent behavior. After a business fraud dispute is settled, an attorney focuses on getting businesses healthy, so they may grow, and be successful.