Common Types of Business Fraud

Fraud tends to rise in times of economic distress. During such times, people become desperate and may do things such as including inaccurate information on an application for a loan. Our Chicago corporate fraud lawyers know that others, on the other hand, try to take advantage of desperate people and businesses in these situations by engaging in commercial or business fraud.

Weak economies often lead to mergers and acquisitions where smaller struggling businesses are bought by larger, more successful businesses. Those experienced in business fraud know this and take advantage of the weak economy by conducting a form of fraud known as "phishing" in which they send a fake email to a smaller company, which is made to look like it came from a larger institution. By pretending to be a large successful institution, fraudsters use these emails to gain sensitive information on the smaller company which they can then use for their own purposes.

While consumer fraud is a widely-discussed issue, business fraud, though just as serious, usually receives less attention because businesses are not treated as people by the law and so business fraud is considered a "victimless" crime. Perpetrators of business fraud also frequently escape punishment because the fraud receives less attention from law enforcement. As a result, a detective may be overwhelmed with cases and be forced to focus her attention on the few that she thinks have the highest likelihood of resulting in a conviction. Small losses also tend to get ignored. In many cases, police may be reluctant to take on any claims of fraud amounting to less than $10,000.

The ways in which business fraud can be conducted are numerous but some of the most common are:

Never Payment:

Also known as "never pay," this is when a business owner opens a new account and never makes a single payment on the debt. Alternatively, a third party might steal a business or business owner's identity, take out a loan in their name, and never make a payment on the loan. In some cases this is considered merely a credit risk problem, rather than fraud, but it is certainly a problem for those who grant the loan and never see a return on their money. 

Shell Companies:

These are fictitious companies which are created solely for the purpose of money laundering. They usually do not have a physical presence, although some might set up a store front in order to appear more legitimate. Our corporate fraud attorneys can help Chicago clients try to identify and expose shell companies.

Business Identity Theft:

Just as individuals can have their identity stolen so that the fraudster can open a line of credit in the individual's name, the same can happen to businesses. This is often accomplished using letterhead made to look like that of the company. Or a fraudster may simply compromise an already existing account of the company. This type of fraud is usually accomplished through telephone scams or email "phishing."

Commercial Bust-out:

This is another type of fraud that can be conducted either by the business or business owner (first-party fraud) or by a third party (third-party fraud). In this case, the fraudster opens an account in order to establish good credit with the issuer, and then requests credit line increases and begins opening other lines of credit. The fraudster will then write a bad check that puts them at or above their original credit limit and take advantage of the time between issuing the check and the attempt to clear it to max out all the other lines of credit. This type of fraud can easily reach into the millions of dollars.

The Chicago corporate fraud attorneys at DiTommaso Lubin Austermuehle have decades of experience litigating cases of business fraud. We are committed to protecting the rights of businesses and we have the skills and experience to do so effectively. With offices conveniently located in Oakbrook Terrace and Chicago, our knowledgeable corporate fraud lawyers have successfully represented businesses in the Chicago area and all over the country. To schedule a consultation with one of our knowledgeable business attorneys today, contact us online or call us at 877-990-4990.