Business Fraud

False financial statements are often central to business fraud claims. When a party misrepresents revenue, expenses, liabilities, or asset values in financial records, those misrepresentations can form the basis of claims including fraudulent misrepresentation, fraudulent inducement, and civil RICO violations. Courts scrutinize accounting records, audited financials, and internal communications to determine whether the misrepresentations were material and intentionally made. Victims of false financial reporting may recover actual damages, consequential damages, and in cases involving civil RICO, treble damages and attorney’s fees.

Concealed side agreements—arrangements made outside the four corners of a primary contract—can give rise to claims of fraudulent misrepresentation, breach of contract, and in some cases civil RICO violations. When one party secretly negotiates terms with a third party that undermine an existing agreement, the concealment itself is evidence of fraudulent intent. Discovery of concealed side deals often involves forensic accounting, document review, and the deposition of key principals to uncover the full scope of the deception.

Misappropriation of business funds—whether through unauthorized withdrawals, diversion of business revenue, or payment of personal expenses with company money—can support claims for fraud, breach of fiduciary duty, conversion, and civil theft. In Texas, civil theft claims carry the potential for treble damages and attorney’s fees under the Texas Theft Liability Act. Forensic accounting is frequently necessary to trace diverted funds and quantify losses, and courts may award prejudgment interest in addition to compensatory damages.

Fraudulent inducement occurs when a party is misled into entering a contract through false representations of material fact. In Texas, a fraudulent inducement claim can render a contract voidable, entitle the injured party to rescission, and support a claim for benefit-of-the-bargain or out-of-pocket damages. Unlike some jurisdictions, Texas allows fraudulent inducement claims even where the alleged misrepresentations concern the same subject matter as the contract itself, making it a powerful tool in commercial disputes.