Falsified Financial Statements Defense

Defense for Flasified Financial Statements Complaints

  • The defense attorneys at Oberheiden, P.C. regularly advise and represent clients on complicated cases of falsified financial statements and have the extensive training and legal experience necessary to defend your company.
  • We pride ourselves in representing our clients on all issues regarding falsified financial statements with the highest standards of diligence and persistence.
  • Place an experienced defense attorney on your side today to prepare your personalized defense strategy to combat these charges against you.

Experienced Defense Team

If you have been charged or are being investigated for falsified financial statements, now is the time to take prompt action in your defense.

The SEC has increased its aggressive enforcement efforts against companies suspected of falsifying financial statements, especially after the enactment of the Sarbanes-Oxley Act of 2002 and the creation of Public Company Accounting Oversight Board.

Ever since the notorious Enron and WorldCom scandals, for instance, various regulatory bodies in the nation have been increasingly eager to hold companies liable or criminally prosecute companies that engage in fraudulent financial reporting practices.

It has never been easier for companies to come under close scrutiny regarding their accounting and financial reporting practices. This could result in unfair accusations leading to significant jail time and criminal penalties.

You need a personalized defense strategy. Do not wait to get in touch with an experienced defense attorney today.

At Oberheiden, P.C., our attorneys are highly qualified in handling complex cases involving falsified financial statements. Our attorneys include former FBI agents, former U.S. attorneys, and former prosecutors. This inside perspective gives us the unique perspective to understand what it takes to help your company succeed.

Get a qualified attorney dedicated to the highest standards of commitment to help you. Your career, liberty, and reputation are at stake. Put Oberheiden, P.C. on your side today.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

John W. Sellers
John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena
Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Lynette S. Byrd
Lynette S. Byrd

Former Assistant U.S. Attorney

Partner

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley
Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (OIG)

Gamal Abdel-Hafiz
Gamal Abdel-Hafiz

Former Supervisory Special Agent (FBI)

Chris Quick
Chris Quick

Former Special Agent (FBI & IRS-CI)

Kevin M. Sheridan
Kevin M. Sheridan

Former Special Agent (FBI)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Dennis A. Wichern
Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

What are Falsified Financial Statements?

Falsified financial statements, also known as financial reporting and accounting fraud or falsified financial reporting, is falsifying a company’s financial statements such as their balance sheet, income statement, or statement of cash flows to manipulate people or entities.

There are generally two ways that a company can falsify its financial statements. Companies will either (1) inflate their earnings or the values of their assets or (2) decrease the amounts shown for expenses, debts, and liabilities. Companies could do both at the same time. The goal achieved by these two methods is to make the company look more favorable than it really is in order to manipulate the people taking action in reliance on it.

The reasons for perpetrating falsified financial statements could vary and can include the following:

  • personal gain (increase one’s compensation/bonuses)
  • to get a loan or advance
  • attract investors
  • keep the company solvent or operating

Matters can get complicated fast, especially where people such as investors rely and act on these falsified financial statements to their detriment.

In the sections that follow, we will give some examples of financial statement fraud and explain how a typical investigation will work.

Examples and Indicators of Falsified Financial Statements

Falsified financial statements is itself a broad category and can include but is not limited to the following examples:

  • Misappropriation – both tangible (cash, property) and intangible (intellectual property)
  • Embezzlement
  • Kickbacks
  • Theft from “insiders”
  • Payoffs
  • Check kiting (taking advantage of a check’s floating period to transfer cash between two accounts before they bounce)

In addition to the examples above, the company could take more subtle measures to make their performance seem healthier:

  • recording revenue prematurely
  • recording revenue for sales that did not occur
  • shifting revenues or expenses to earlier or later times
  • failing to record certain liabilities
  • falsifying the value of a certain asset
  • Skimming (taking cash of the business’ receipts without recording the revenue on the books)

The SEC has made clear that financial statement manipulation is a problem in corporate America and routinely encourages investors who buy company stock or bonds to be wary of certain warning signs:

  • requested documents that are missing
  • cash flows remain unchanged while revenues grow
  • a sudden increase in a company’s performance before the end of its fiscal year
  • unexplained bonuses to top employees or unexplained loans
  • discrepancies in a company’s comparative statements

How Falsified Financial Statement Investigations Work

The SEC is aware that the Financial Accounting Standards Board (FASB), the body that sets the GAAP standards, provides a great degree of flexibility and discretion in a firm’s accounting methods, thereby making it easier for companies to perpetrate a financial statement fraud. At the same time, it can be extremely challenging to get the proof needed to uncover a company’s fraud. Therefore, sometimes an investigation can start with a tip or other suspicion, which prompts the SEC’s Enforcement Division to begin an investigation.

The SEC is also suspicious of the relationship between a company’s independent auditor and the company itself, especially because the independent auditor is compensated by the company. This creates a great conflict of interest in the eyes of the SEC and can easily be used as a reason to begin investigating a company for alleged financial statement fraud.

An investigation into a company in connection with falsified financial statements could lead to a variety of charges:

  • Liability to the IRS for tax fraud/evasion (and the company may face the prospect of an audit)
  • White collar crime and Racketeered Influenced and Corrupt Organizations Act (RICO) violations
  • Accounting fraud for failure to comply with the accounting and auditing standards for financial reporting such as the Generally Accepted Accounting Principles (GAAP) or the Generally Accepted Auditing Standards (GAAS)

In addition to securities and accounting fraud, the defendant could also face liability for perjury. Defendants should also know that certain frauds such as check kiting, can be prosecuted at both the state and federal level.

How to Respond If You’ve Been Charged/Arrested in Connection with Falsified Financial Statements

A company can easily be accused of maintaining poor internal controls within the company or having an inadequate internal auditor. A charge or investigation into its alleged falsified financial statements can be devasting for the company’s profits and reputation. Individuals charged with an alleged fraudulent scheme can face civil and criminal penalties as well as significant jail time.

It is important that you understand your rights. Do not wait for an investigation into your company to proceed without taking prompt action. Do not divulge any information to a federal agent without first securing an attorney.

The attorneys at Oberheiden, P.C. have an impeccable success record in defending its clients. Your company’s success is our mission. Don’t wait. There are steps we can take to mitigate or prevent certain measures in the investigation process. Not only are the defense attorneys at Oberheiden P.C. highly qualified to take on complex cases involving falsified financial statements, but we also have the zeal to fight for our clients’ rights. Dedication. Passion. Success.

Call us today or contact our office for a free consultation.

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