Daily business decisions can help your business grow, give you a competitive edge, or set you back a year -- even land you in jail. Tax evasion, election-law violations, puffing up financial records to get a bank loan, failing to comply with environmental laws--all these and many other actions can lead to criminal charges.
"I don't believe there's more business crime today than in the past," says Washington, DC, attorney Frank Razzano of Dickstein, Shapiro, Morin & Oshinsky LLP. Razzano, who is chair of the Criminal Laws Committee of the American Bar Association's Business Law Section, contends there's been a change in the moral structure of the United States since Watergate. Ethically questionable decisions made by business owners and other respectable people now rank in the public mind with street crimes. "It's a lot sexier to go after white collar criminals than drug kingpins," he says.
It doesn't help that many people simply don't understand how business works, including many of those elected to public office. "Bureaucrats are making decisions about how business should operate," Razzano says. The result is a plethora of government regulations and reporting forms that require scrupulous attention, especially for public companies. While big companies can afford whole departments with no other purpose than to make sure the company files all the proper forms and complies with all applicable government regulations, small businesses have just a few people trying to do everything. "Many small-business owners are very busy, and they're not careful," Razzano says. "Filing any false document with the U.S. government is a crime."
Once the false document, misjudgment or slip-up in compliance comes to light, it's up to the regulators in charge to decide whether or not to prosecute. "The only thing that separates you from the jailhouse is your intent," Razzano says.
If you're convicted of a business-related crime, that often means you'll pay criminal fines, sometimes up to three times the amount of the actual damages. What's especially frightening for a small business, however, is that the business owner may face jail time if found guilty. While a large company can probably survive the situation by offering a few managers as scapegoats, in a small company, the owners and managers targeted are probably the heart of the business.