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The 3 Main Types of Fraud


What is Fraud?

Fraud is deception deliberately committed for an unlawful gain. This type of scam is a criminal offense that can lead to significant financial losses for an organization. Those found guilty of fraud on any level can face serious consequences.

There are three primary forms of this offense:

  • Asset misappropriation
  • Bribery and corruption
  • Financial statement deception

Asset Misappropriation

Asset misappropriation can be defined as the theft of an organization's assets. This offense includes the misuse of a company's resources and is the most rampant in occupational settings. It is also the least costly.

Examples of asset misrepresentation include:

  • Fake payroll schemes
  • Fake billing
  • False invoices
  • Fake vendor or fake employee payment schemes

Bribery and Corruption

Bribery involves giving or receiving an unearned gain, usually in the form of money, to influence someone's decision. Corruption is any illegitimate practice aimed at gaining an unfair advantage, usually at the expense of others. Bribery is a form of corruption and is rampant in many companies.

Examples include:

  • Kickbacks
  • Conflict of interest

Financial Statement Fraud

This type is the least common and easily the most expensive. Financial statement fraud is committed when an individual deliberately misrepresents an organization's financial situation. It can be done through omission of amounts and intentional misstatement of finances to defraud financial statement users.

Financial statement misrepresentation typically includes overstating or understating profits, revenues and assets, and overstating or understating losses, expenses, and liabilities.

Examples are:

  • Increased annual bonuses
  • Stock price manipulation
  • Favorable loan terms

Why Choose Nick Lotito & Seth Kirschenbaum?

Criminal deception in workspaces is a very serious offense with serious potential consequences. If you have been charged for any fraud, having an experienced defense attorney on your side can help you gain the most desirable outcome.

Schedule a free consultation with one of our attorneys by calling (404) 471-3177.

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