© D.L. Crumbley
Interagency Corporate Fraud Task Force was formed in July 2002.
To coordinate investigations into alleged misconduct at major corporations (e.g., Adelphia Communication and Quest Communications).
To equip local staffs with the expertise and resources to obtain indictments.
In the past accounting fraud has been difficult to prosecute, but lawyers now believe many common accounting restatements can put corporate executives at risk for jail time.
According to John K. Markey, “With the new Sarbanes-Oxley requirement to have strong internal controls and officer certification of financial statements, the bar has been lowered on the ‘knew or should have known’ standard,” says Markey. “The presumption will be that the CFO must have known if something has gone wrong.”
The Department of Justice is now encouraging prosecutors to “flip” lower level participants to get the “big guys.” The FBI has an agency-staffed hotline that should “generate four or five new corporate fraud cases each month.”
Source: Alix Nyberg, “Fraud Squad,” CFO, April 2003, pp. 36-44
Corporate Fraud Task Force