Area of Law: Criminal Law
Answer # 1815
Corporate fraudRegion: Ontario Answer # 1815
What is corporate fraud?
There are two types of corporate fraud, internal and external. Employee fraud is considered in law to be different from corporate fraud.
1. Internal corporate fraud
Internal corporate fraud is committed by the officers and directors of the corporation. An example is a director writing cheques from the company’s bank account for supposedly legitimate business purposes, but in fact the expense is fake and the cheques are payable to the director, or to a business owned by the director.
2. External corporate fraud
External corporate fraud is fraud committed by individuals or entities (such as corporations, partnerships etc.) who are not part of the corporation. For example, external corporate fraud is committed if a director of a corporation steals corporate cash, or other assets, with the help of an outside third party (who takes a payment). The third party might then move the assets to another third party (who also takes a payment), and which then makes payments to the director. Another example is a director or officer overpaying a company for a legitimate expense. In that example, the director or officer and the third party company would share the portion of the payment that was in excess of the actual expense amount. This is considered an external corporate fraud as external third parties were used and were necessary for this fraud to be perpetrated, and because the third parties benefitted from the fraud.
If you discover you are a victim of fraud, it is a good idea to contact a fraud recovery expert for advice.
If you have been charged with a fraud, contact a criminal law lawyer.
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