Running a company comes with countless responsibilities — from managing finances to ensuring compliance with California’s complex business laws. But even honest mistakes can sometimes be misinterpreted as business fraud, leading to criminal investigations that threaten both your livelihood and reputation. Understanding what legally counts as business fraud in California is the first step toward protecting yourself and your business.
If you’ve been accused or charged with business fraud, it is imperative that you get in contact with Simmons & Wagner for a free consultation.
What Is Business Fraud Under California Law?
Business fraud, also known as corporate or commercial fraud, occurs when someone intentionally deceives another person or entity for financial gain. Under California Penal Code §484 and related statutes, prosecutors must prove two key elements:
- Intent to deceive, and
- Resulting financial loss or benefit.
Unlike civil fraud, which typically leads to lawsuits and financial penalties, criminal business fraud can result in fines, restitution, and even prison time. The intent element is crucial—prosecutors must show you knowingly misrepresented facts or engaged in deceptive conduct.
Common Types of Business Fraud
Fraud can take many forms, and not all involve elaborate schemes. Some of the most common allegations include:
- Embezzlement: Diverting company or client funds for personal use.
- False billing: Creating fake invoices or inflating expenses.
- Check kiting: Exploiting delays in bank processing to cover shortfalls.
- Misrepresentation: Providing false information to investors, lenders, or customers.
- Investor fraud: Making exaggerated or misleading claims about business performance or returns.
Even seemingly minor accounting errors or poor documentation can trigger suspicion, particularly during audits or disputes between partners.
When a Simple Mistake Looks Like a Crime
Many business fraud cases begin as misunderstandings. A vendor payment error, a confusing bookkeeping entry, or an over-optimistic forecast can all appear deceptive to an investigator unfamiliar with the company’s operations. Prosecutors and regulatory agencies such as the California Department of Justice, IRS, or SEC often launch investigations based on incomplete or misleading evidence.
That’s why early intervention matters. The sooner you have legal counsel reviewing your business practices and communications, the better your chances of resolving issues before they escalate into criminal charges.
Protecting Yourself and Your Company
If you’re unsure whether your business practices could be viewed as fraudulent, it’s essential to take proactive steps:
- Review financial records regularly for accuracy.
- Maintain clear, detailed documentation for all transactions.
- Seek legal advice before communicating with investigators or auditors.
- Educate employees about compliance and ethical reporting.
A skilled corporate fraud defense attorney can analyze your case, identify weaknesses in the prosecution’s argument, and present evidence that your actions were lawful and without criminal intent.
Speak With a Business Fraud Defense Lawyer
If you’ve been accused of business fraud — or even suspect your practices are under review — don’t wait to seek help. Simmons & Wagner’s team of former prosecutors understands how the state builds fraud cases and how to dismantle them.
Contact Simmons & Wagner today to protect your rights, your business, and your future.