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“When I was arrested by the Feds on Drug Conspiracy charges, they told me I was facing mandatory life in federal prison without the possibility of parole. I knew that I was innocent, but I was scared . . . so I knew that I would have to find a lawyer who was not afraid of the Feds and would take my case to trial. I chose Greg Robey because he is a fighter. After over 2 weeks in a federal jury trial, I was found Not Guilty of all charges. My family and I am forever grateful to Mr. Robey.” -L.B., Mansfield, Ohio

SEC Increasing Accounting Fraud Investigations

As its financial crisis enforcement slows, the U.S. Securities and Exchange Commission (SEC) is now turning its attention back to accounting fraud and other violations of financial disclosure laws. The SEC is introducing a technological innovation, dubbed an accountant-style “RoboCop” in late 2013.  This new computerized tool is designed to trigger alerts regarding suspicious activity at companies within the jurisdiction of the SEC.

This new tool will alert the SEC to certain red flags put up by companies, such as;

  • Accruals, which are non-cash entries that are viewed as being susceptible to manipulation
  • A high proportion of off-balance-sheet transactions
  • Frequent changes in auditor
  • Delays to earnings announcements

Although many of these activities are innocent, a company may be subject to an arduous and probing investigation if automatic alerts are triggered. One of the most common reasons that the SEC files charges of accounting fraud is inflating company revenues, which can be effectuated in a number of ways. For example, a company might prematurely recognize revenue for work that had not been performed yet. Another common reason for accounting fraud charges is misstating operating income to investors.

Regulations regarding financial crimes are often extremely confusing, and it is sometimes difficult to distinguish purposeful manipulation with simple errors or mistakes. SEC fines can be steep and the consequences can be long-lasting. Often those involved are barred from serving as officers or directors of a public company for 10 years.

If you have been accused of any white collar crime, contact a knowledgeable and experienced Ohio criminal defense attorney who can provide diligent representation.

 

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