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Corporations and Government Fraud in Maryland

A corporation typically receives fraud charges if large scale fraud is being committed. The allegation is typically that the fraud in question is not or cannot be the work of simply one person. Also, if the leadership of a corporation becomes aware that one person is the target of an investigation, the corporation will typically cooperate against that person in an effort to avoid prosecution. While theoretically a corporation can be charged with fraud because of the actions of one person, that doesn’t often happen, unless the person accused happens to be the CEO.

However, if you or your corporation does happen to be charged with government fraud you are looking at very serious penalties and should therefore consult with a Maryland government fraud attorney as soon as possible to ensure the harm of your case is minimized. This is particularly important of the recent Yates Memo (pdf) from the U.S. Department of Justice, stating that the DOJ is making it a priority to pursue individual liability.

Frequency of Criminal Charges Against Corporations

It’s fair to say that the government is more likely to go after individuals than corporations because when the government goes after a corporation, that entity can bring to bear much greater resources to defend its self; particularly with our new attorney general.

One of the scenarios that occurs more frequently is that the government is investigating a corporation, and that company will cooperate with the government in an effort to either prevent prosecution, or to put itself in a position where it can get what’s called a “deferred prosecution agreement.” This type of agreement helps the corporation to avoid prosecution by essentially trading that company’s cooperation against the individuals that are charged or are being investigated.

Being an Employee or Officer of a Corporation Under Investigation

Just because you’re a member or an employee of a corporation doesn’t mean you can get charged with government program fraud because someone else is doing something that is completely independent of you.

More often than not, the criminal liability is individual in nature, which protects innocent individuals from being charged with something that does not involve them personally. However, the law of conspiracy still applies in these situations, so theoretically an individual could be investigated to see if they have any involvement in an agreement to do something illegal. But, in these situations, most employees don’t have what is called “vicarious liability,” which means that innocent employees are protected from having to pay for the illegal actions of another member in the corporation.

However, if you are the CEO of a corporation, and someone that you manage is engaged in an alleged illegal activity, there’s a concept in the law called “willful blindness.” In other words you can’t turn a blind eye if you’re aware that one of your employees is doing something illegal. To do so would theoretically expose you to criminal liability. However, if you are an employee or the owner of a company and were completely unaware that fraud was being committed, then you cannot be convicted if it can be shown that you had no reason to be aware of that fraud.