Search Site
IBC Centre, 130 East Travis Street, Suite #425 | San Antonio, TX 78205

When Is a Company Criminally Liable for an Employee’s Fraud?

Prosecutions for white-collar crimes like fraud are often brought against people who work for corporations or other organizations. Even though the fraudulent activity may not have been authorized, the company that employs the individual might also be exposed to criminal liability under federal or state law. However, this liability is not automatic and requires a demonstration of the company’s knowledge and/or approval.

Under federal law, the prosecution must establish that the employee or agent’s actions were within the scope of employment and that company officials knew that the employee was engaging in criminal acts. The U.S. Justice Department will consider a number of factors in determining whether to prosecute a company for the criminal acts of an employee, including these:

  • The nature and seriousness of the offense
  • The harm to the public caused by the offense
  • The pervasiveness of wrongdoing within the company
  • The company’s willingness to cooperate in the investigation
  • The corporation’s history of similar misconduct
  • The existence and effectiveness of the corporation’s compliance program
  • Whether remedial measures were taken

If the prosecution can demonstrate that the company’s actions or assets were tied directly to the crime, the company may face significant fines, mandatory restitution orders and confiscation of property. In some cases, the company may also be barred from engaging in business activity.

Vicarious liability may be avoided if the company can establish that the employee’s fraud was committed outside of work duties and did not have the company’s approval. Even in cases in which a fraud or another white collar crime was committed using company assets, a corporation may still be able to escape liability by showing mitigating factors.

Texas law sets a higher standard of proof for a company to be convicted of fraud. These three elements must be established by the prosecution:

  • The employee committed the act while acting within the scope of their duties.
  • The employee committed the alleged fraud while acting on behalf of the company.
  • The employee’s act was requested or authorized by the CEO, a managerial agent or a majority of the board of directors, or the act constituted a strict liability offense.

This means, in essence, that the fraudulent act must have been committed with the company’s actual or tacit endorsement.

Whether at the state or federal level, prosecutors often target companies as deep pockets for seeking restitution for an employee’s fraud. This sometimes unfair tactic can seriously damage a business’s financial resources and general reputation. If your company is accused of fraud due to the criminal conduct of an employee, a skilled criminal defense attorney can develop a comprehensive strategy to fight the charges.

At The Law Offices of Kevin Collins in San Antonio, Texas, we provide aggressive and effective defense to white-collar criminal prosecutions, including those brought against corporations. Call 210-598-8629 or contact us online to schedule a consultation.

COVID-19 Notice
We are here to help and support you through these generally challenging times with your specific legal issues. You will be able to reach me or my staff through our main telephone numbers, and of course by email: [email protected]. Phone conferences for existing and potential clients are available, as is the video conference feature through the Zoom app. Zoom may present some privacy challenges so phone conferences are preferred. Please take care of your health by following the measures recommended by the CDC, and by state and local authorities.
Firm Recognition
  • Super Lawyers
    Best Law Firms 2021
  • Three Best Rated
  • ThreeBest Rated
Client Reviews
  • google

    Kevin Collins is legit - handled the case really well with a Texas university, all charges dismissed. I found him through a referral for a university related case. When I contacted his office, they asked for a full down payment before the contract wa...

    Read more

    Razal Minhas

  • yelp

    Kevin is highly respected in the law community. He took the time to listen, analyze the situation, provide clear and concise guidance, and provide outstanding service every step of the way. I would highly recommend him as he is the individual that ge...

    Read more

    Jason L.

  • google

    Kevin Collins is an exceptional attorney. Mr. Collins has an outstanding reputation and came highly recommended by multiple attorneys. With the effort and professionalism he and his team dedicated to properly represent me, it is easy to understand wh...

    Read more

    M Webb

  • google

    Mr. Collins and his staff did a fantastic job with not only my case, but also putting up with my constant questions. This was my first time every dealing with something like this, so I had no idea what to expect. Mr. Collins always made time to reply...

    Read more

    Jordan Petrovich

  • google

    Helped me tremendously at a great price!

    Read more

    Krista Hicks

See all reviews
Case Results
State of Texas v. J.T. Furnishing Alcohol to a minor dismissed after start of trial despite death caused by accident
View All
Contact us

Quick Contact Form