Fraud charges may begin with either civil or criminal investigations; those investigations may stem from any number of alleged activities. An non-exhaustive list of those activities may include:
With more than 4,000 criminal statutes and millions of pages of government regulations, investigators have many more charges at their disposal. Any of those laws or regulations can prompt a government investigation. For such reasons, business owners do well when they invest time and energy to learn about what happens when investigators bring allegations of fraud. Since the acts of employees can launch an investigation, it makes a lot of sense to include such training for all new hires.
Any decision made during the course of business can threaten to undermine the enterprise.
When business leaders help all members of the company’s team understand these concepts, they are better situated to avoid problems that can lead to government investigations or criminal prosecutions. Authorities can charge executives for decisions they made while on the job, and they can also bring charges if people under their control engage in any type of act that they deem nefarious. Those charges can destroy careers, decimate shareholder value, and lead to the loss of liberty.
Even if an individual did not carry out the act, authorities may bring conspiracy charges. With a conspiracy charge, authorities will look to “overt acts” that they believe would further a conspiracy. Conspiracy charges prove to be very useful for prosecutors because they require a lower threshold of proof; further, conspiracy may not require intent, yet they could bring penalties that are identical to those that would exist if the fraud had been consummated directly.
One of the numerous cases brought during this past decade against healthcare providers may be instructive. A director of physical therapy regularly performed services for patients and supervised the services of other therapists, signing approvals for the work of others.
Separately, to further the enterprise, a marketing company (retained by the owners of the healthcare provider and not by the director of physical therapy) orchestrated media campaigns to spread awareness of the business’s services. Rather than charging a set fee for its services, the healthcare provider paid the marketing company on a per-patient basis. If the marketing company’s efforts resulted in a new patient, the healthcare provider would compensate the marketer.
The government launched an investigation for “patient brokering.” Although the marketing company thought its billing approach would reward it for success, legislators deemed the practice illegal.
Patient brokering represents a hot-button topic for regulators. Prosecutors filed charges against many people within the organization. According to prosecutors, the CEO “should have been” better supervising the marketing department. The director of physical therapy “should have known” that the company engaged in patient brokering and that patient brokering was against the law. The marketing company should not have participated. Each person in the conspiracy bore liability. The director of physical therapy chose to fight the charges at trial. After a jury returned a guilty verdict, the judge sentenced him to 12 years in prison.
For these reasons, stakeholders should understand the nature of corporate fraud and the allegations that may follow from a government investigation. By learning how regulators attach risk and learning more about the risk-exposure to corporate fraud, we help people make better decisions.
Knowledge can prove an effective first line of defense against any potential exposure.