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Modern Rationalizations of Corporate Fraud & Litigating


Corporate fraud is an active part of civil litigation these days, especially as of late, where news headlines continue to highlight intentional misrepresentation and fraud by corporations, who sometimes do harm to people through these misrepresentations.

A new paper titled “The Trouble with Corporate Compliance Programs” identifies eight rationalizations most frequently associated with corporate fraud, as discussed in more detail below.

Justifications for Corporate Criminal Acts

Some of the most common justifications used in association with corporate fraud are done via the following:

  • By denying responsibility (i.e. claim that they were acting under someone else’s influence and/or for reasons related to bigger, economic implications);
  • By denying that any injury has occurred;
  • By making the claim that the victim deserved particular treatment;
  • By shifting the topic to other parties, such as government regulators or prosecutors;
  • By claiming that they were protecting someone superior to them;
  • By drawing attention to all of the “positive” things they have/the company has done;
  • By relying on entitlement to justify the fruits of illegal activity; and/or
  • By making the guilt look relative via drawing attention to others’ bad actions.

Some reporters have drawn parallels between these rationalizations and the latest news concerning sexual harassment allegations involving big movie producers, alleging that those who knew about the alleged occurrences justified not doing anything about them under the claim that they needed to put the company’s interests first and foremost.

Nudging Compliance & Suing For Fraud

Civil litigation is one way of addressing these issues, as it draws public attention to corporate fraud issues, and in doing so, allows customers to take into account how company policies and compliance should affect their own choices. Reportedly, this can bring about a certain type of “behavioral ethics nudging” that can advance corporate compliance and help fight against corporate wrongdoing.

In cases of fraud, it is also possible to do away with personal liability protection, and bring claims against the owners or officers of the company. The owner of a company has a fiduciary responsibility to both investors and the public, and violates this responsibility by mishandling funds or other company assets, or forming a company that has no assets while claiming that it does, all while using the company to sell bonds to the public, for example. In these types of circumstances, limited corporate liability will not protect the owner.

Fraud also covers a variety of other circumstances, including companies providing false information which then leads others to act upon that misinformation. To prove harm in these types of cases, an individual or company must prove that they suffered loss as a result of this action. 

Florida and Massachusetts Civil Litigation Attorneys

Companies commit fraud when they misrepresent material facts upon which people and/or other companies, shareholders, etc. rely. At the Baez Law Firm, we litigate civil claims against corporate fraud aggressively. Contact us today to find out how we can help.


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