Penalties and punishments for company fraud

Scale of the fraudulent activity
Was it a one-off offence, or a large-scale operation? A well-planned and executed defrauding of the system will clearly attract a stronger punishment.

Who was affected by the fraud?
Were creditors or members of the general public directly affected by what happened? If a material, identifiable loss was incurred, the case will come under investigation but it doesn’t necessarily mean that you’ll be arrested.

Do you have a history of unfit conduct as a director?
Your previous history as a company director could affect the outcome of a case. 

Trading whilst insolvent
Some directors do this unknowingly and with the best intentions, unaware that they are committing an offence. Others, however, deliberately accept deposits from customers knowing that they cannot supply the product or service requested.

Already disqualified as a director?
Acting as a company director, or instructing someone else in the direction of a company, if you have already been disqualified is a breach of the Company Director Disqualification Act, 1986.

Selling assets at an undervalue to a ‘phoenix’ company
Pre-pack administration, or ‘phoenixism’ as it is commonly known, is certainly a legal product, but a problem can arise when directors ‘sell’ business assets to the new company at less than market value. This results in a reduction in available funds for creditors when the company is liquidated.

False accounting
This might involve over-stating revenue and profits, or under-stating the level of company liabilities in order to present the picture of a healthy business. Reasons for doing this include hiding financial losses, obtaining finance that would otherwise not be available, and to inflate the company share price.