Business Offenses -fraud, embezzlement, upcoding- will be discovered

Business offenses such as embezzlement, fraudulent up-coding or over-billing, or misreporting of sales or income can be committed by high-level executives or lower-level staff members.  Whatever the position of the wrongdoer, their actions will most likely be discovered.  A person who may have commited a business offense must analyze their exposure to liability and make life-altering strategic decisions in how to handle their situation.  Often, a strong strategic decision will be to “come clean” or self-report their own actions.

Discovery of a business offense is almost inevitable and isn’t always prompted by an audit or accounting.  More often, crime in a business setting is discovered by informal and fairly mundane ways – the admission by the wrongdoer to a co-worker or confidant who in turn blows the whistle on the wrongdoing.  Sometimes these whistleblowers are cooperating with investigators because they have been ensnared in their own problems and are “working-off” these problems by informing on others.

Other motivations for whistleblowing are even more ordinary—former paramours or spouses or competing businesses who have caught wind of the practice.  The most common whistleblowers in business offenses are estranged or disgruntled former employees who know of the wrongdoing firsthand and are motivated to get back at their former employers.

Audits or regular accounting can also discover business offenses.   However, even if the wrongdoer is a CFO or accounting staff member who can engineer an embezzlement or misreporting scheme to avoid detection through regular business practices, an outside audit or a perceptive colleague will often discover the scheme.

In a closely-held business, sometimes fraud, embezzlement, or other business offense won’t be discovered until the principals go to sell or wind-down their company.  During a sale, the buyer’s due diligence process will discover fraud or embezzlement-type schemes that were successfully hidden.  A winding-down will similarly discover a long-running scheme.

Because most business offenses can reasonably be expected to be discovered, it is important for the committer of such an offense to contemplate “coming clean” or participating in some self-disclosure.

Self-disclosure may seem illogical – blowing the whistle on yourself entails emotional, financial, and reputational hardships.  Furthermore, self-reporting may entail  placing yourself in legal jeopardy – both civil and criminal.  However, because most business offenses will be inevitably discovered,  by making a strong self-disclosure, a committer of a business offense will be much more sympathetic both to the victim of the offense, as well as to law enforcement if they become involved.

The decision to self-disclose an offense of any kind is a major decision in person’s life and should be made with the aid of counsel.  Attorney Adams has experience guiding Wisconsin business professionals through misconduct situations and is available to confer and counsel individuals going through these situations.