Texas Gold had planned to finance the expansion through a sale of securities, bu

Question

Texas Gold had planned to finance the expansion through a sale of securities, but market conditions were unfavorable for such a sale. A management meeting comprised of the president and vice presidents for accounting, finance and marketing was called to discuss alternative means of financing the project. It was decided that Texas Gold would attempt to secure a loan from Federal First, a federally insured bank. The vice president for finance expressed concern that the loan application would be denied because of stagnant sales over the last 24 months. Texas Gold was convinced that the expansion would be a success and that the loan would be repaid. Consequently, it was decided that the sales would be over stated by 35 percent in the financial statements provided to Federal First. After the meeting, the vice president of accounting adjusted the financial statements and provided the statements to Federal First. During the investigation by the FBI the vice president for finance directed that all of the minutes and any documents related to the loan be either destroyed or not turned over to investigators. The president and the vice president for marketing then contacted their local congressman, to whom the individual officers made significant campaign contributions, requesting that he intervene in the investigation. They both promised that he would receive a sizeable donation to his campaign. Has Texas Gold, the participants in the management meeting or any of the officers individually commit crime?

Explanation / Answer

Yes, Texas Gold, the vice president of accounting, the person who adjusted the financial statements and provided the wrong statements to Federal First , have committed the crime. The vice president for finance has individually committed the crime of deliberately inducing others to fabricate the documents and tried to secure loan on the basis of presenting wrong financial statements. The vice president for finance also committed the crime of destroying the materials/evidences related to the crime.

The conduct of the president and the vice president for marketing also held them irresponsible and may be even considered for bribing their local congressman to intervene in the investigation. Therefore both of them have committed the crime as per my understanding of the case.

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