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FRAUD ISSUES

Ignorance of the Law Excuses No Man

In the 17th Century, John Selden wrote that “Ignorance of the Law Excuses No Man.” His statement doubtless arises from an even older maxim of Roman Law: Ignorantia Juris Non Excusat. Actions which are prohibited by laws or by regulations may not be excused, ignored, or forgiven simply because the defendant thought that “In our business it always done that way.”

Criminal Defense Lawyers frequently represent well-meaning business people, who have fallen into that habit of certain “Smart business tricks.” Occasionally, a business person will find himself in hot water for the irregular movement or transfer of funds, usually off the books and done with a wink and a nod. Business people also get in trouble for handling money with an informality beyond the parameters of the contract in question, or for producing documents which they erroneously believe to be “close enough.”, or for inflating numbers to compensate for funds they believe they were entitled to receive.

On the other hand, the same business people who need to make certain they are not inadvertently committing crimes, have to protect themselves from being victimized by their employees. In any given term of Court, there will be a number of prosecutions, in which a business owner has been victimized.

The circumstances follow a predictable pattern:

The entrepreneur delegated all responsibility and authority for keeping the books, making payroll, etc, to one person. The business person enjoys not having to deal with the commercial transactions that arise on a daily basis. Eventually, the sly employee writes extra payroll checks, deposits checks into her own accounts, or alters the books. The proliferation of software, bankcards, and the internet, create even more opportunities for the skilled, but deceitful employee.

As it happens, there are actions that business people can take, to make certain that they are not inadvertently afoul of the law, and to further make certain they do not become victims of enterprising employees. For example, professional accounts can assist the small business owner in structuring oversight, and implementing internal controls into the daily operations. Other protective measures include demanding counter-signatures on all checks and scrutinizing all checks written above a certain minimal amount.

We have to face the fact for most business people it is more fun to make money than it is to carefully tend to it. No matter how small or simple the operation, it is usually a good idea to have a simple protocol regarding the management of finances. The protocol should both protect the employer from inadvertently violating the law and prevent theft by employees. Most importantly, when business practice questions arise, it is best to err on the side of caution and to consult an attorney or accountant.