Commercial fraud is a legal term that relates to deceptive practices and illegal actions taken by corporate executives in significant positions of power within a company.
Although the wording may differ in each state, commercial fraud generally has several elements, including:
- The practice of deceit through information that is incorrect, incomplete or intentionally misleading.
- Deceitful information causes the business being defrauded to make a purchase or give up some valuable asset.
- There are actual damages or loss as a result of the fraud
Common Types of Commercial Fraud
There are a number of ways that corporate executives can commit commercial fraud, including:
- Misappropriation of Corporate Funds– Taking money intended for business use and using that money for personal gain is a common type of commercial fraud.Corporate executives can commit this fraud by creating fake expense reports, deleting payments from vendors and clients, and not reporting sales and revenue.
- Making False Statements About Company’s Performance – Another type of commercial fraud occurs when a corporate executive knowingly makes false statements about the current and future prospects of a business to increase stock value or generate investment.
- Kickbacks – Kickbacks are payments that a third party pays to a corporate executive to obtain a contract, obtain favorable terms on a loan, or influence any type of order. An executive who accepts consistent kickbacks often faces corruption charges in addition to charges of receiving kickbacks.
- Insider Trading– The U.S. Securities and Exchange Commission (SEC) defines insider trading as buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material [or] nonpublic information about the security. In other words, corporate executives who provide confidential information about their company to a third party in exchange for some type of financial gain are guilty of insider trading. This often occurs when a company is about to go public with a stock, and an executive tips off an investor ahead of time so that they can buy a significant amount of shares.
Hiring An Experienced Business Lawyer
Whether you are accused of commercial fraud, or you are accusing another entity of commercial fraud, the Law Firm of Peter M. Feaman, P.A. has the resources and the expertise to provide you with outstanding representation. We understand how your business can be impacted in a negative way when you’re accused of fraud, and we also understand how fraud perpetrated against your business can affect your future goals. Whether you need us to defend you from a fraud claim, or you need us to initiate a fraud claim against another party, we will use al our resources to achieve success on your behalf. Please call 561-734-5552 to schedule a an initial consultation.