Financial Reporting

The Law Offices of David Berg defends executives, officers, directors, and companies facing state and federal criminal investigations or prosecutions for financial reporting fraud in Texas and nationwide.

Financial reporting fraud cases move on a different timeline than most criminal matters. By the time federal prosecutors or the SEC pursue charges, the investigation has typically been underway for months or years. Witnesses have been interviewed, documents have been subpoenaed, and parallel civil enforcement proceedings may already be in motion. If you have reason to believe you are under scrutiny for how financial results were reported, the time to build a defense is now.

What Financial Reporting Fraud Charges Involve

Financial reporting fraud, in its most common forms, involves alleged misrepresentation of a company’s financial condition through its public filings, disclosures, or statements to investors. Prosecutors and regulators pursue these cases when they believe financial results were manipulated, material facts were concealed, or accounting treatments were chosen to mislead shareholders, regulators, or the market.

Federal cases in this area typically arise under the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, and general federal fraud statutes. The SEC investigates and refers criminal matters to the Department of Justice.

The individuals most commonly targeted include CFOs, CEOs, controllers, and other officers who signed or certified financial filings, but charges can extend to auditors, board members, and outside advisors who participated in or approved the conduct at issue.

Situations We Handle

The firm’s financial reporting fraud defense practice covers a range of federal and state matters:

• Executives under DOJ or SEC investigation for alleged manipulation of reported revenue, earnings, or asset values
• Officers who signed Sarbanes-Oxley certifications under investigation for knowingly certifying false or misleading financial statements
• Directors and audit committee members facing an inquiry over alleged failure to disclose material information
• Individuals under investigation for insider trading arising from access to unreported financial results
• Controllers and accounting officers accused of improper revenue recognition, channel stuffing, or cookie jar reserves used to smooth earnings
• Executives at privately held companies facing state securities fraud charges for misrepresentations to investors in connection with capital raises
• Outside auditors or financial advisors facing a criminal referral arising from their engagement with a client under investigation

How We Build the Defense

Financial reporting fraud prosecutions are built on documents. The government reconstructs the accounting and decision-making process through emails, board minutes, audit workpapers, and financial models. The factual record is dense, and the prosecution’s narrative is built over years before it ever reaches a jury.

David Berg’s approach in complex fraud cases is to understand the record as thoroughly as the government does — and then to find the places where its narrative does not hold up. In financial reporting cases, that often means identifying the legitimate business judgment that explains the accounting choices at issue, the audit processes followed, the disclosures made, and the intent — or lack thereof — behind the conduct the government characterizes as fraud.

Intent is the central issue in most financial reporting fraud prosecutions. The government must prove that an officer or director knowingly made or caused false statements. Aggressive accounting, poor judgment, or a business that failed to meet that standard. The defense is built around drawing that line clearly, factually, and credibly for a jury.

David Berg tries these cases himself. He has represented major financial institutions, corporations, and individual executives in complex commercial and fraud-adjacent matters throughout his career, including serving as co-lead counsel for Deutsche Bank in an Enron-related class action in the Southern District of Texas, where Judge Harmon granted summary judgment and dismissed the case entirely.

What Prosecutors Must Prove

In a federal financial reporting fraud prosecution, the government must establish, beyond a reasonable doubt, that:

• The defendant made or caused to be made a materially false or misleading statement (or omission) in a document, filing, or statement covered by the relevant statute
• The defendant acted knowingly and with intent to deceive, manipulate, or defraud
• The false statement was material, meaning a reasonable investor would consider it significant
• The defendant used interstate commerce or a national securities exchange in connection with the conduct

The “knowing and willful” element is where most defenses to financial reporting fraud are concentrated. An aggressive accounting strategy that was disclosed, reviewed by auditors, and approved by legal counsel looks very different from intentional fraud, and presenting that distinction clearly to a jury requires both legal precision and the ability to make complex financial material comprehensible in a courtroom.

Why the Timing of Your First Call Matters

Federal financial reporting fraud investigations are often triggered by SEC inquiries, whistleblower complaints, restatements, or the collapse of a publicly traded company. By the time a target is aware of the investigation, the government may have already spent a year or more building the record.

What you do from the point of first awareness significantly shapes what follows. Document preservation, management of parallel SEC civil proceedings, preparation for voluntary interviews, and decisions about cooperation all carry real consequences. Engaging counsel as soon as you have reason to believe your conduct is under review gives you the most options.

If you have been contacted by federal investigators, received a subpoena, or have reason to believe a financial restatement or whistleblower complaint has put you under scrutiny, tell us about your situation.

Why David Berg

David Berg has defended complex fraud matters in federal and state courts for more than 50 years. Best Lawyers in America has recognized him in White Collar Criminal Defense and Securities for decades — two of the eight practice categories in which he has been listed. The National Law Journal named him to its “Who’s Who of Criminal Defense Nationwide.”

His commercial litigation practice, which includes representation of Samsung, Deutsche Bank, Credit Suisse, and other major institutions, gives him direct experience with the financial and regulatory context underlying most financial reporting fraud prosecutions. When the civil and criminal dimensions of a matter overlap, he is equipped to handle both.

Frequently Asked Questions

What is the difference between a civil SEC enforcement action and criminal financial fraud charges?

An SEC enforcement action is civil and can result in disgorgement of profits, civil penalties, and bars from serving as an officer or director. Criminal financial fraud charges are brought by the DOJ and can result in imprisonment. The two often run simultaneously, and the SEC regularly refers matters to the DOJ when evidence of willful conduct emerges. Statements made or documents produced in the civil proceeding can be used in the criminal one, which is one reason parallel civil and criminal exposure must be managed together from the outset.

Can I be personally charged for financial reporting fraud that happened at my company?

Yes. Federal law allows individuals to be charged for financial fraud even when the conduct occurred within a corporate context. Officers who signed certifications under Sarbanes-Oxley, who directed accounting treatments, or who approved false disclosures face personal criminal liability. The government does not need to charge the company in order to charge an individual.

What is Sarbanes-Oxley, and how does it affect individual criminal liability?

The Sarbanes-Oxley Act of 2002 imposed direct criminal liability on officers who knowingly certify false or misleading financial statements filed with the SEC. CEOs and CFOs of public companies are required to personally certify that their company’s periodic filings do not contain material misstatements or omissions. Knowingly certifying a false filing carries a penalty of up to $1 million and 10 years’ imprisonment; willful violations can result in up to $5 million and 20 years. Sarbanes-Oxley is the most commonly cited statute in executive-level financial reporting fraud prosecutions.

What triggers a criminal referral from an SEC civil investigation?

The SEC refers a matter to the DOJ when its investigation develops evidence suggesting knowing or willful misconduct — conduct that crosses from negligence or aggressive accounting into intentional fraud. Internal communications, accounting judgments made with knowledge of their misleading effect, and conduct following a restatement or audit finding can all contribute to a referral. The SEC and DOJ often coordinate their investigations, which means the civil and criminal investigations may draw on the same documents and witnesses simultaneously.

Are restatements or internal audit findings used as evidence in criminal prosecutions?

They can be, and frequently are. A financial restatement is often the starting point of an SEC inquiry and the evidentiary foundation for a criminal theory. Internal audit findings, audit committee communications, and outside auditor workpapers may all be subpoenaed and used to establish what officers knew, when they knew it, and what they chose to do with that information. How those materials are handled during the internal process and once a subpoena is issued has significant consequences.

Contact the Law Offices of David Berg

Financial reporting fraud investigations are complex, high-stakes matters. Early decisions about cooperation, document preservation, and legal strategy carry lasting consequences. Tell us about your situation. Initial consultations are confidential and at no charge.