What is Corporate Fraud?
Corporate fraud cases are often complex and can occur in several ways. In some instances of corporate fraud, the company is a victim of external fraud while in other situations, it’s the company which is the perpetrator. Sometimes leaders of the company are fully aware and involved, and sometimes they are oblivious to the crime if members of staff are secretly committing fraudulent activity or if the company is being targeted by an outside scammer. Whatever the situation, our fraud barristers are highly experienced in defending and prosecuting in corporate fraud cases. Let’s take a look at five of the most common corporate fraud instances.
Types of Corporate Fraud Cases
There are a number of ways identity fraud is committed, but the two main methods are:
- Company hijacking
The hacker begins by stealing information about the company such as name, address and company registration number – sometimes this information is found on lost payslips. These details may then be used to make purchases on the company’s credit, make VAT claims, or facilitate criminal activity such as money laundering or illegal financial activity. Fraudsters might also contact a company’s clients, impersonating the company, to defraud them.
Sometimes corporate identity fraud is committed from the inside by employees who have themselves been defrauded or have colluded to steal company information. It is also common for corporate identity fraud to have been committed by external parties.
Payroll fraud typically works on the premise that an employee submits a false timesheet and is paid for time they haven’t worked. They either do this by submitting incorrect numbers or by asking an employee to clock in for them when they aren’t present. This can go unnoticed if a supervisor hasn’t checked or approved the timesheets carefully before they are sent away for payment. This leads to the business paying for resources it didn’t receive, thus making a loss.
This type of fraud is generally committed by an employee of the business who doctors figures to make the business seem more appealing to current or potential investors. The corporation falsifies financial statements by overstating revenue or assets while understating expenses and liabilities to manipulate profit reports and mislead shareholders and investors. This way, a company could be running at a loss while increasing its share price and receiving continuous investment.
Payment fraud is a term that applies to false or illegal payments and covers a number of methods. For example, this can happen internally if an employee of a company was diverting business funds to their own personal account. However, payment fraud can also take place externally through cyber-attack, lost or stolen merchandise, false refund requests or bounced cheques.
Invoice fraud can be difficult to spot until it is too late. A fraudster poses as a known supplier and asks the victim company to change the bank account details associated with that supplier. Because the impersonation can be so seamless, the company then changes the bank details on file for that supplier and makes out future payments to the fraudster instead of the supplier.
Whether you are a company seeking representation in regards to internal corporate fraud or an external party who has targeted a business, please contact our team of fraud lawyers for advice in your case.