Do You Legally Have To Report Corporate Fraud Activity?

Question

If a person knows of a small corporation that has fraudulant activity, (ie personal items and events being charged as company expense, and things like that), does one legally have to report it? Can they go to jail and/or be fined for not reporting?

Hypothetically: It isn't a public traded corportion. All shares are owned by the husband and wife, and they are both in charge of these activities. Some employees know, but are afraid to do anything.

Answer 1

that guy up there is wrong. you have to report fraud for publicly traded companies. If they get busted and it was known that u knew and didnt do anything about it, ur going to get rocked

Answer 2

No you don't.

With a VERY few exceptions ("mandated reporter" laws that require people like teachers or doctors to report child abuse, or regulations attached to things like SEC licensed financial professionals) no one has a legal duty to report a crime.

The ultimate example of this is the case of David Cash. Cash was gambling in a casino in Nevada when he saw his friend Jeremy Strohmeyer following 9 year old Sherrice Iverson into the ladies bathroom at about 4am. Cash followed them in after a couple of minutes, to find they were both in a bathroom stall. He went into the next stall and climbed on the seat to look over, where he saw Strohmeyer sexually molesting Iverson. Cash simply left him to it and went back to the tables. When Strohmeyer came out, Cash asked him what happened to the girl, and he just said "I killed her".

Cash never reported this to the police until after Strohmeyer was arrested after telling another friend about the killing, but the Nevada police were unable to charge Cash with ANY crime.

Richard

Answer 3

No, there is usually no law that says you must report anything. Morally, however, it is the right thing to do.

Answer 4

yes everybody living in the US under us laws is legally bound to report any kind of fraud that he or she is cetain of.