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Evasion Of Tax And Fraud

Tax evasion is the criminal practice in which a corporation, organization or person intentionally avoid paying the required state or federal taxes. Evasion of tax applies to both when there are illegal underpayments as well as illegal nonpayment of taxes. Every step of the taxation process is vulnerable to fraud. For instance, failure to file tax returns makes it difficult for the IRS to audit the finances of an individual. Underreporting income is the most common method people use to evade taxation. Employees and businesses that mostly deal in cash, such as retail store owners, hairdressers and wait staff, at times underreport their income because there is little paper documentation of such transactions. Also, some businesses can inflate their expenses to reduce tax deductions.

Identity Theft

It is a type of fraud where a fraudster obtains the financial and personal information of another person to use it to assume the identity of the person to make purchases and transactions. Many ways are used in committing identity theft. Identity thieves can use high-tech methods, such as gaining access to a corporate database to steal customer information. Some identity thieves look for a credit card or bank statement in trash bins where the target individual has discarded it. Credit card fraud involves taking another person’s credit card information without their authorization to remove funds from their accounts or charge purchases to the account.

There are four types of identity theft: child, financial, medical and criminal identity theft. Child identity theft involves the misuse of a child’s Social Security number to apply for bank accounts, government benefits, and other services. Most criminals often prefer children’s information since the damage may take more time to notice. Financial identity theft is where a criminal uses the information or the identity of another person to obtain benefits, services, and food. Criminal identity theft involves a criminal using another person to misrepresent himself or herself to avoid arrest or summons. Medical identity theft happens when someone obtains free medical care as a result of identifying himself or herself as another person.

Securities Fraud

It occurs when someone prepares a false statement about the stock value or financial information of a company to persuade others to use the false information in making financial decisions. Knowledge of security regulations is required to understand securities. There are various forms of securities fraud. A company can participate in securities fraud. This type of fraud happens when a company’s director of corporate reports financial information to the shareholders inaccurately. As a result, the worth of the company’s stocks rises artificially, and investors become encouraged to buy shares from such companies. The people who use false information to buy shares will completely lose their investment when the firm goes bankrupt. An example is the Enron scandal, where the corporate office did not report the expenses of the company, hence making the profit seem larger than the real profit.

Another form of securities fraud is insider trading. It occurs when someone within a company who has access to the company’s confidential financial information uses the information in making decisions on whether to sell or buy the stock before the public discloses the information. For instance, a company accountant may decide to sell his or her stock without noticing the board after realizing that the firm is becoming bankrupt. Third-party misrepresentation can also contribute to fraud. A third party may decide to give the public false stock market information firm, a scheme known as “pump and dump.” To accomplish the pump and dump scheme, an individual looks for a small, usually unknown company that has cheap stock and then buys a large number of shares. The perpetrator then encourages other people to buy the stock through the use of false information. After some time, the stock will be high, and the perpetrator will make a profit after selling his or her shares.

Whether An Evidence Chart Is Necessary For A Fraud Proceeding

An evidence chart is an important tool used in the analysis of fraud; hence, it is necessary for a fraud proceeding. It presents various vital advantages. First, it makes it possible to organize all the potentially relevant and relevant data of a complex fraud case into a single structure that is clear and coherent to help in an argument. Secondly, precise identification and articulation of each proposition considered to be essential in the case’s argument are required. Therefore, precision is the value being achieved. Finally, the person doing the analysis using the method is required to specify precisely each step in every argument being advanced. Fraud cases usually have three distinct information layers: a hypothesis (proposition) layer, a law layer, and an evidence layer. Therefore, any fraud case will have case theory or hypothesis, for instance, Y defraud X, a law layer which provides specific law elements that require stratification for proving of a fraud case and evidence material facts which serves as facts of a case.

Fraud Case In An Evidence Chart

The fraud involved illegal online solicitation that happened in Italy’s financial market, which is regulated by CONSOB. The Smallxchange Company, whose headquarters was in the British Virgin Islands, aimed to provide an unauthorized 24-hour stock exchange. The company asked the investors to tender shares in exchange for a stake in the venture. The trade of the shares was to occur between partners. A WWW page that advertises financial investment services solicited investors. The consideration of the appropriateness of CONSOB’s jurisdiction is required to establish the efficacy of the Internet fraud regulation. Smallxchange’s target was the Italian national investment market; thus, the jurisdiction of CONSOB was affirmed. The soliciting agent did not have the license to trade as per Directive 93/22/EEC requirement, and the web page had false statements.



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