Executive Roadmap to Fraud Prevention and Internal Control: Creating a Culture of Compliance, 2nd Edition

CHAPTER 16

The Feds are Watching

What to Know and Do Now

EXECUTIVE SUMMARY

The federal government has had a strong response to the many corporate frauds over the last decade. Using the full range of law enforcement actions and new laws, federal agents and prosecutors have used a “shock and awe” strategy against corporate fraudsters. “Flipping” lower-level employees to testify against higher-ups, cooperation agreements, grand jury subpoenas, and search warrants are but a sampling of the weapons in the government's arsenal. Hopefully all businesses will embrace a culture of compliance; if not, the feds will be watching and will be ready to pounce. Organizations must also be prepared in the event the government makes them the focus of a fraud investigation. The right or wrong response at the beginning of the investigation may set the tone that follows. Entities that acknowledge wrongdoing early and “give up” their corrupt executives will do far better in surviving and emerging from a major fraud investigation. Companies must also have a policy as to legal recourse when it is discovered they have been the victims of fraud.

There is a new war on crime in America today, and it is being waged by the government to stop corporate fraud and corruption. In the past decade, titans of industry have succumbed to fraud and in their wake were left the many victims. This war is not being fought solely by the government. Businesses must now take appropriate action to detect and prevent fraud ...