Frauds by officers

– section 596 of the Corporations Act 2001

This offence applies to employees of a company. It is when employees deceive someone to get credit for the company. Or when an employee steals from the company.

Examples of Frauds By Officers
  • An employee of a company lies to a potential investor about the productivity of a company in order to get credit from the potential investor.
  • An employee of a company transfers company property into their private trust.
What are some of the possible defences to a charge of Frauds By Officers?
  • There was no fraud.
  • There was no intent to defraud.
  • There was no inducement.
  • Permission was granted for the conduct.

There are other possible defences, depending on the circumstances surrounding the alleged offending. Each matter is unique and requires an individual approach and strategy.

Questions in cases like this
  • Did you obtain credit for your company through deception?
  • Did you take property from your company that you were not entitled to?

Court that deals with this charge

Fraud by officers is generally heard in the Federal Magistrates’ Court.

“Did you steal anything from your company?”
What is the legal definition of Frauds By Officers?

To prove this offence, the Prosecution must show that the accused was an employee or officer of a corporation, that the accused fraudulently induced another person to give credit to the corporation, or that the accused defrauded the corporation by removal or transfer of company property after or within 2 months before the date of an unsatisfied judgement against the corporation, or by causing a charge or levying of any execution against property of the corporation.

Legislation

The section that covers this offence is section 596 of the Corporations Act 2001.1

What can you be sentenced to for this charge?

If found guilty for this offence you are likely to incur a fine. However, depending on the extent of the fraud, you may get imprisonment in severe cases.

 


[1] Corporations Act 2001 – Section 596

(1) A person who, while an officer or employee of a company:
(a) by false pretences or by means of any other fraud, induces a person to give credit to the company or to a related body corporate; or
(b) with intent to defraud the company or a related body corporate, or members or creditors of the company or of a related body corporate, makes or purports to make, or causes to be made or to be purported to be made, any gift or transfer of, or security interest in, or causes or connives at the levying of any execution against, property of the company or of a related body corporate; or
(c) with intent to defraud the company or a related body corporate, or members or creditors of the company or of a related body corporate, engages in conduct that results in the concealment or removal of any part of the property of the company or of a related body corporate after, or within 2 months before, the date of any unsatisfied judgment or order for payment of money obtained against the company or a related body corporate;
contravenes this section.
(2) Absolute liability applies to so much of an offence based on paragraph (1)(c) as requires that an event occur after, or within 2 months before, the date of any unsatisfied judgment or order for payment of money obtained against the company or a related body corporate.