NCJ Number
32508
Date Published
1975
Length
18 pages
Annotation
STUDY OF 34 CASES INVOLVING FALSIFICATION AND CONCEALMENT OF FACTS IN BALANCE SHEETS BY LEADING PERSONNEL TO THE DETRIMENT OF THIRD PARTIES, IN VIOLATION OF THE ACCEPTED PRINCIPLES OF BOOKKEEPING, WHETHER ILLEGALLY OR NOT.
Abstract
A FULL ACCOUNT IS GIVEN OF THE METHOD USED IN COLLECTING AND PROCESSING THE CASE HISTORIES, WHICH WERE OBTAINED FROM THE STATE CRIMINAL POLICE BUREAUS AND PUBLIC PROSECUTORS. THE NATIONAL AND STATE CENTRAL OFFICES OF THE ASSOCIATION OF CREDIT INSTITUTIONS ALSO WERE OF SOME ASSISTANCE. THE CASES ARE SUBDIVIDED ACCORDING TO WHETHER THEY WERE CHIEFLY CONCERNED WITH DEFRAUDING OTHERS CONNECTED WITH THE SAME COMPANY, DEFRAUDING FINANCIAL INSTITUTIONS, A COMBINATION OF BOTH OF THESE TYPES OF FRAUD, OR DEFRAUDING CREDITORS. ILLUSTRATIVE COMPANY STRUCTURE DIAGRAMS ARE PROVIDED WITH SOME OF THE CASE HISTORIES. STATUTORY PROVISIONS CONCERNING THE KEEPING OF BOOKS AND AUDITING THEM ARE CITED AND THEIR IMPLICATIONS IN REGARD TO THE POSSIBILITIES FOR VIOLATING THEM ARE DISCUSSED. IN GENERAL, THE AUTHORS SAY, THE FEWER THE PEOPLE INVOLVED IN DRAWING UP BALANCE SHEETS, THE LESS INTENSIVE THE AUDITING AND THE FEWER OUTSIDERS HAVING ACCESS TO THE BOOKS, THE EASIER IT IS TO FALSIFY BALANCE SHEETS AND CONCEAL FACTS. IN 22 OF THE 34 CASES, THE OFFENDERS' BALANCE SHEETS WERE NOT AUDITED BY AN OUTSIDER. FURTHERMORE, IN ONLY SEVEN OF THE CASES WERE MORE THAN TWO PEOPLE INVOLVED IN COMMITTING THE OFFENSE. THE FOUR-PHASE INVESTIGATIVE PROCESS USED BY THE WEST GERMAN POLICE IN THESE CASES IS DESCRIBED, ILLUSTRATED BY A DIAGRAM. THE AUTHORS STATE THAT THE BEST WAY OF OBTAINING EVIDENCE AGAINST A SUSPECTED FIRM IS TO GET DETAILED KNOWLEDGE REGARDING ITS PERSONNEL, ADMINISTRATION AND OPERATIONS. IF WRONG-DOING EXISTS, SUCH KNOWLEDGE WILL ENABLE THE INVESTIGATORS TO UNCOVER THE REQUIRED EVIDENCE. STATISTICAL INFORMATION IS PROVIDED ON THE AGE AND EDUCATIONAL LEVEL OF THE OFFENDERS AND ON THE TYPES OF INSTITUTIONS, INDIVIDUALS AND GROUPS OF INDIVIDUALS THAT WERE MADE THE VICTIMS OF THESE OFFENSES. THE TOTAL AMOUNT OBTAINED THROUGH FALSIFYING BALANCE SHEETS IN THE 34 CASES WERE 65,240,000 MARKS. WEST GERMAN LAW REQUIRES A BUSINESS TO PREPARE A BALANCE SHEET AT THE END OF EACH FISCAL YEAR, SHOWING PROFIT OR LOSS AND ASSESTS AND LIABILITIES. THE AMOUNT OF DETAIL IS NOT SPECIFICALLY PRESCRIBED BY LAW. A FALSIFIED BALANCE SHEET CAN MISLEAD CREDITORS, POTENTIAL INVESTORS IN THE BUSINESS AND POTENTIAL LENDERS OF MONEY. FOR THE ORIGINAL OF THIS DOCUMENT IN GERMAN, SEE NCJ-26509.