In today’s complex corporate environment, executives, CFOs, accountants, and financial officers often walk a fine line between aggressive reporting and allegations of fraud. When accusations of falsifying financial statements arise, the consequences can be devastating—both professionally and personally.
As Former Orange County District Attorneys, Simmons & Wagner understand that not every financial irregularity is criminal, and that good people can find themselves facing serious charges over misunderstood or misrepresented data.
If you’re facing accusations of falsifying financial statements, knowing what you’re up against—and how you can defend yourself—is critical.
What Is Considered Falsifying Financial Statements?
Falsifying financial statements generally refers to intentionally altering, misrepresenting, or omitting information in a company’s financial records with the intent to deceive investors, lenders, regulators, or the public. Common examples include:
- Inflating revenue figures
- Underreporting expenses or liabilities
- Misclassifying assets or income
- Failing to disclose material risks
- Fabricating transactions to meet financial targets
- Manipulating valuations to secure loans or investments
These allegations can arise in a wide range of industries—from small businesses to Fortune 500 companies—and are often investigated by the SEC, the DOJ, or other regulatory and law enforcement agencies.
Common Legal Charges Related to Falsifying Financial Statements
Depending on the nature of the alleged conduct, you could face multiple overlapping criminal charges, including:
- Wire fraud
- Securities fraud
- Bank fraud
- Conspiracy to commit fraud
- False statements to federal investigators
Penalties for these charges can include heavy fines, restitution, disbarment from professional practice, and significant prison time.
How Do These Accusations Arise?
Allegations of financial statement fraud often originate from:
- Internal whistleblowers
- SEC or IRS audits
- Failed mergers and acquisitions
- Investor lawsuits
- Bankruptcy proceedings revealing prior inconsistencies
Unfortunately, these accusations can occur even in cases where there was no criminal intent—such as accounting errors, rapidly changing market conditions, or genuine differences in judgment regarding valuation.
Possible Defenses to Allegations of Falsifying Financial Statements
Every case is unique, but several key defenses commonly arise when fighting these types of charges:
1. Lack of Criminal Intent
Most financial fraud charges require the government to prove that you intended to deceive. Demonstrating that any misstatements were inadvertent, the result of reasonable judgment calls, or based on incomplete information can undermine the prosecution’s case.
2. Reliance on Professional Advisors
Executives and CFOs often rely heavily on internal accounting teams, auditors, or outside consultants. If you acted in good faith based on the advice of trusted professionals, that reliance can be a powerful defense.
3. Honest Differences in Accounting Methods
Accounting is not always black and white. Different accepted methodologies (like how to recognize revenue or value assets) can lead to different outcomes. Demonstrating that the financial statements reflected a reasonable, accepted interpretation—not fraud—can shift the narrative in your favor.
4. Lack of Materiality
Not every error rises to the level of fraud. If the alleged misstatement was immaterial—meaning it would not have influenced the decision-making of investors or stakeholders—that fact can be critical to your defense.
5. Procedural Violations by the Government
In some cases, improper investigative tactics, unlawful searches, or violations of your constitutional rights can lead to suppression of evidence or even dismissal of charges.
Why You Need an Experienced Business Fraud Defense Team
When your career, reputation, and freedom are on the line, experience matters. At Simmons & Wagner, we have a proven record of defending professionals accused of business fraud. We understand the intricacies of financial documents, accounting standards, and the investigative tactics used by regulators and prosecutors.
Our defense team works tirelessly to dismantle the government’s case—challenging intent, demonstrating good faith, and protecting your rights at every stage.
If you have been accused of falsifying financial statements—or fear you are under investigation—time is critical. The sooner you consult an experienced defense attorney, the stronger your position will be.
Contact Simmons & Wagner today for a confidential consultation. Your career and your future are too important to leave to chance.