Unintentional Embezzlement and White Collar Crimes That Might Break Your Enterprise

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Accidentally committed white-collar crime

As an entrepreneur, business owner, or someone looking to get into this field, you most likely already have a great vision of what the future holds for your ideas and finances. Before you get too far ahead, however, you should take a step back and make sure your business is keeping up with safe and healthy financial practices, including complying with all tax laws and federal financial regulations that your business falls under.

Not only is this step important in making sure that your business activities have a secure future, but it is also a good idea to learn the common financial mistakes newbies make so that you don’t fall into these traps before it’s too late .

We have listed a few below to provide you with an overview of simple and easy ways to protect yourself should you be accused of financial crime such as embezzlement, tax fraud or money laundering.

Accidental embezzlement? How does that happen

While this is not a valid excuse if you are charged with other types of crime, ignorance of financial laws can save you, but only if you are very lucky.

Many business owners typically open segregated bank and credit accounts in order to keep track of business profits and expenses in a way that is detached from their own personal finances. However, should you use these business resources for your own personal expenses (even accidentally) and then attempt to write them off on your taxes, you can be charged with tax fraud and embezzlement. Typically, an embezzlement charge requires a thorough knowledge of what you are doing. Usually, however, ignorance of the law fails as an excuse for stealing corporate funds.

Trade and tax fraud

The misappropriation of corporate funds can sometimes be way too easy as the responsibility for the crime lies with you, when someone else has committed a serious mistake.

For example, in Dan Bubalo’s case, a simple mistake by his attorney turned into a $ 4.5 million SEC lawsuit. Because his attorney forgot to register several of his businesses, Mr. Bubalo was charged with various types of financial security crimes, including securities fraud, wire fraud, and postal fraud.

Despite his ignorance of the law, Mr Bubalo did not use this as a defense – instead, the former CEO took responsibility for the crime and was offered a bargain by the FBI. Although his attorney had worked in securities law for over 30 years, this small mistake resulted in a big loss for Bubalo. It’s always wise to keep an attorney on speed dial when you run into legal trouble, but it doesn’t hurt, as a CEO, either to keep yourself up to date and to make sure your company isn’t doing any illegal activity under your supervision.

Another common type of “accidental” crime small business owners can commit relates to tax laws. If you work from home, even with a home office room, you can be confident that your mortgage payment for that office space should be tax deductible for your company. Don’t try this deduction so quickly, however – only part of your home qualifies for the Home Office deduction and attempting to claim your entire mortgage as a business expense could be considered tax fraud.

Managing the finances of small businesses

What can be done to prevent this from happening?

Despite the myriad of ways in which fraud and embezzlement can be accidentally committed, most financial crimes are committed by parties who are well aware of the illegality and consequences of the act. However, it never hurts to protect your business and its financial health, and researching tax and financial regulations can be an easy way to avoid falling into this trap that could end your business before it has the chance to get going.

If you’re ever in doubt about whether you’ve committed a financial crime, it’s time to speak to a criminal defense lawyer who may be able to help you tackle potential charges or correct your behavior before it gets out of hand. Protect yourself and your company from falling victim to criminal charges, now and in the future, and your path to success will be much smoother and easier to follow.

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