What You Need to Know About Whistleblower Claims and Criminal Exposure
It’s a scenario that’s becoming increasingly common in California: a former employee leaves—whether voluntarily or under tension—and then makes allegations of fraud, embezzlement, or misconduct against their former employer.
What begins as a personnel dispute or HR grievance can escalate into a white-collar criminal investigation, putting business owners, executives, and professionals in serious legal jeopardy.
At Simmons & Wagner, we’ve seen these cases unfold from both sides. As former Orange County District Attorneys, we now defend clients accused of fraud by disgruntled or retaliatory employees. If you’ve been accused by a former staff member, this guide explains what may be happening—and how to protect your business and your future.
Why Do Former Employees Accuse Employers of Fraud?
In many cases, these accusations stem from:
- Being fired or laid off
- Being passed over for a promotion
- Personal grudges or workplace disputes
- A desire to gain leverage in severance or wrongful termination claims
- Whistleblower claims filed to trigger financial rewards or legal protections
Regardless of the motive, the allegations often involve claims like:
- Falsified financial documents
- Tax fraud or underreporting income
- Misuse of company funds
- False billing or overcharging customers
- Deceptive dealings with investors or vendors
While some whistleblower reports are legitimate, many are exaggerated or entirely false, used as a form of retaliation or leverage.
How These Allegations Turn Into Criminal Investigations
1. Whistleblower Reports Are Sent to Authorities
Employees can file complaints with:
- The California Attorney General’s Office
- The IRS (for tax-related claims)
- The SEC (for investment fraud)
- Local law enforcement or the Orange County District Attorney’s Office
- Federal agencies like the FBI or Department of Justice
These reports are often made confidentially or anonymously, giving accusers broad cover to make sweeping claims—some of which trigger immediate investigations.
2. Internal Records Are Subpoenaed
Once a report is filed, authorities may begin reviewing your business:
- Subpoenas for payroll, invoices, or contracts
- Interviews with other employees or partners
- Digital forensics of emails, accounting software, or banking records
- Surveillance or sting operations in severe cases
Even if the initial allegations lack merit, investigators will dig for anything that can support criminal fraud charges.
3. Parallel Civil or Employment Litigation Occurs
It’s common for the whistleblower to also:
- Sue for wrongful termination or retaliation
- File an EEOC or Labor Board complaint
- Demand a settlement in exchange for “withdrawing” the complaint
This creates a two-front legal battle—criminal exposure and civil liability—that requires strategic defense planning.
What to Do If You’re Accused of Fraud by a Former Employee
1. Do Not Attempt to Contact the Employee
Even if you’re confident the allegations are false, do not reach out to the person accusing you. It may be viewed as witness tampering or intimidation—and any message you send can be taken out of context.
2. Preserve Internal Records Immediately
Back up your:
- Payroll logs
- Contracts and emails
- Communications with the accuser
- Financial statements and expense reports
This ensures you’re ready to defend yourself with hard evidence—not just your word.
3. Hire a Business Fraud Attorney in Orange County
At Simmons & Wagner, we move fast to:
- Intercept investigations before they become criminal filings
- Respond to whistleblower allegations with clear legal defenses
- Work with your civil counsel if employment litigation is also in play
- Defuse false or malicious accusations with credibility challenges
- Ensure you assert your rights before speaking with any investigators
How We Defend Clients Against Fraud Accusations from Former Employees
As former prosecutors, we know that these cases aren’t just about the facts—they’re about the story. We build a defense that:
- Undermines the accuser’s motives (e.g., retaliation, financial gain)
- Proves a lack of criminal intent or fraudulent behavior
- Highlights internal compliance policies and good-faith conduct
- Demonstrates miscommunications or clerical issues—not deception
- Pushes back against overreaching subpoenas or fishing expeditions
We also engage forensic accountants, HR experts, and legal auditors when needed to fortify your defense.
Don’t Let a Disgruntled Employee Define Your Legacy
Allegations of fraud from a former employee can derail your business, destroy your reputation, and lead to criminal prosecution—even if you’ve done nothing wrong.
If you’ve received a whistleblower notice, a subpoena, or even just a warning that an employee made an accusation:
Don’t wait. Contact Simmons & Wagner today.
As former Orange County District Attorneys, we’ve handled these cases from both sides of the courtroom—and we know how to stop them before they spiral out of control.