Success and challenges often go hand in hand in the business world. While many challenges can be addressed through strategic planning and risk management, some situations may escalate. In the worst scenarios, these situations surmount to criminal charges against a business. Corporate crimes are a serious matter that can affect the business, its stakeholders and everyone in between.
Whether you own a business or are a part of one, understanding corporate crimes and how to respond and prevent them can prove indispensable if charges are filed.
Defining Corporate Crimes
Corporate crimes, more popularly known as white collar crimes, refer to unlawful activities committed by a corporation or its employees for financial gain. “The term “white collar crime” when initially defined (1939) meant crimes that were being committed by otherwise law-abiding citizens of high stature,” notes white collar crime attorney George H. Ramos, “now white collar crime is defined simply as a wide range of nonviolent criminal acts generally committed for monetary gain.”
White collar crimes can range from fraud and embezzlement to bribery, money laundering and environmental violations. Corporate crimes often involve complex schemes and manipulation of financial systems, as seen in the infamous Enron scandal. While corporations can be held criminally liable, individuals within the organization who are directly involved can also face personal liability.
Types of Corporate Crimes
Corporate crimes can vary in sophistication and reach. Below are well-known types of corporate crimes:
- Financial Fraud: Activities such as accounting fraud, securities fraud, insider trading, and Ponzi schemes, where false information is intentionally used to deceive others.
- Bribery and Corruption: Companies engaging in bribery to gain business advantages or to secure contracts.
- Environmental Violations: Ignoring or violating environmental regulations that result in damaging the environment or endangering public health.
- Intellectual Property Theft: Misappropriation of trade secrets, patents, copyrights, or trademarks.
- Money Laundering: Concealing the origins of illegally obtained money through various financial transactions.
- Consumer Protection Violations: Providing false information about products, manipulating product safety data, or engaging in deceptive advertising.
- Antitrust Violations: Engaging in anti-competitive practices, such as price-fixing or monopolistic behavior.
What to Do if Your Business is Facing Criminal Charges
No one expects their business to be facing criminal charges. If you are met with charges, it is important to act in the best interest of the business and the shareholders. Here are steps to consider if your business is confronted with criminal allegations:
1. Hire an Experienced Defense Attorney
The first and arguably most crucial step is to consult an experienced criminal defense attorney with a specialization in white-collar crimes. An attorney will help you understand the charges, examine the potential consequences and guide you through the criminal legal process.
2. Preserve Evidence
Preserve all relevant documents, electronic records and communication potentially related to the case. Safekeeping all evidence can help your legal team build a strong defense and respond to any allegations effectively.
3. Cooperate with Authorities
Demonstrating a commitment to resolving the situation transparently can have a positive impact on the legal proceedings. Heed instructions from both your legal counsel and authorities.
4. Commence Internal Investigation
An internal investigation can help determine the extent of the issue and help individuals that may be responsible. Doing so can illuminate any internal weaknesses or vulnerabilities that may have contributed to the alleged crime.
5. Consider Taking Internal Action Steps
Taking immediate action demonstrates a commitment to preventing future misconduct. Implement internal adjustments as needed, such as compliance programs and ethical guidelines to prevent similar situations.
6. Engage in Negotiations
Depending on the circumstances, your legal team may engage in negotiations with prosecuting authorities to reach a settlement or plea agreement that mitigates the impact on the business.
7. Defend the Reputation of the Business
Criminal charges can harm the company’s reputation. Consider engaging in a strategic public relations effort to manage the narrative and communicate the steps you’re taking to address the situation. In these crucial moments, it might be best to hire a public relations agency to help you navigate the situation.
Corporate crimes present unique challenges that demand a strategic approach. From understanding the types of crimes to taking immediate and comprehensive action if your business is facing criminal charges, planning and cooperation are key. Facing criminal charges is a serious matter, but a well-prepared response can mitigate potential damage and set the stage for a more secure and ethical corporate future.