A primary goal of almost every business executive is to increase the value of their company. Corporate vice-presidents and others use their business judgment to increase profits and decrease costs. This effort can take many forms, including staffing and product development decisions, as well as marketing campaigns and strategic partnerships. Occasionally these efforts draw the attention of federal prosecutors who are looking for business activities that they can characterize as fraud.

Federal prosecutors in Atlanta are now bringing charges against a vice president of a clothing manufacturer. The prosecutors claim that the vice president failed to properly account for rebates given to a retail chain that sells the company’s clothing line. Authorities allege that this caused inaccuracies in the clothing company’s quarterly financial reports, which artificially increased the stock price.

The executive left the company when the investigation into these allegations became public. He is facing charges of securities fraud, falsifying records of a public company, and filing false financial statements. It is alleged that the vice president sold at least some of his own shares of company stock at an artificially inflated price. He could face decades in prison if convicted on all of the pending charges.

Since the economic downturn, there has been an appetite to try to lay the blame at someone else’s feet. This public appetite is putting pressure on policy makers and public officials to come up with a scapegoat. It is easy to suggest that if the economy is no longer soaring it must be because business leaders are engaging in nefarious activity. For better or worse, the solutions to our economic challenges are not likely that easy. Hopefully, the search for a “fall guy” will not result in unfounded criminal investigation and prosecution.

Source: Atlanta Journal Constitution, “Feds charge another ex-Carter’s exec with fraud,” Greg Bluestein, March 20, 2012