Creating a fake invoice can seem like an easy way to commit fraud or obtain goods and services without paying. However, this act comes with legal risks that could lead to serious consequences. In most cases, creating a fake invoice is illegal and can result in fines or even jail time.
What is a Fake Invoice?
A fake invoice is a fabricated billing document that contains false information. This includes:
- Falsified business name
- Made up contact details
- Services or goods that were never purchased
- Inflated costs and quantities
The purpose of a fake invoice is usually to commit fraud. For example, someone may use a fake invoice to:
- Try to obtain payment for work that was never done
- Jack up the amounts owed to pocket the difference
- Support fabricated business expenses
- Secure a loan under false pretenses
Because fake invoices contain misleading or false information, they cannot legally be used for financial gain or accounting purposes.
Is it Illegal to Create a Fake Invoice?
In most cases, yes – creating a fake invoice is illegal. Specifically, it can violate laws against fraud, forgery, false statements, and false representations.
Here are some examples of how creating fake invoices breaks the law:
Fraud
Fake invoices are often created with the intent to defraud a person or business. This includes tricking someone into paying for non-existent goods or services. Fraud through fake invoicing can lead to criminal charges of larceny, embezzlement or false pretenses.
Forgery
When creating a fake invoice, the details are fabricated rather than factual. Signing or altering an invoice to reflect false information constitutes forgery. Penalties can include fines or years in prison.
False Statements
Including incorrect data on an invoice can lead to charges of making false statements. It is illegal to knowingly provide false information on financial documents orsubmitted to the government.
False Representation
Attempting to obtain goods, delay payment or improperly account for expenses by using fake invoices qualifies as false representation. This white collar crime can result in legal action.
So while fake invoicing may not seem like a big deal on the surface, it does break several laws regarding fraud, deception, and falsification of documents.
What are the Penalties for Fake Invoices?
The penalties for fake invoicing depend on the specific laws violated and the extent of the unlawful activity. But potential consequences can include:
- Felony fraud charges
- Fines in excess of $100,000
- Repayment of ill-gotten gains
- 5 or more years in prison
- Probation
- Community service
Those caught creating fake invoices may also face civil lawsuits from injured parties seeking repayment for money and resources lost due to the fraud.
Aggravating factors
Certain circumstances can increase the penalties associated with fake invoices. These include:
- Large dollar amounts
- Multiple fake invoices
- Lengthy deception span
- Use of invoices for government contracts
- Involvement of multiple perpetrators
- Previous fraud convictions
Because fake invoicing often occurs in the white collar business world, criminal charges can also result in perpetrators being barred from future work in their industries.
Real World Examples of Fake Invoice Penalties
To illustrate the real legal risks, here are some examples of penalties imposed in fake invoice cases:
Paul Manafort
The former Trump campaign chairman was convicted in 2018 of multiple financial crimes, including submitting fake invoices to banks. His total sentence was 7.5 years in federal prison.
Francisco Colorado Cessa
This Mexican business magnate provided over $500 million in fake invoices to support fraudulent loan applications. In 2018, he was sentenced to 24 years in prison.
Raymond Bowman
Bowman, a construction contractor, used fake invoices to overbill clients more than $100,000. He received 2 years in prison and was ordered to repay his victims.
Arvind Walia
Walia and conspirators utilized numerous fake invoices in a $135 million cellphone recycling scam. In 2016, he was sentenced to 15 years in prison.
These examples illustrate that authorities take fake invoicing crimes seriously, even for first-time offenders.
Legal Defenses
Despite the risks, some defendants accused of fake invoice crimes attempt to fight the charges in court. Potential legal defenses include:
Lack of Criminal Intent
This argues the defendant did not mean to defraud and lacks “intent” – an essential standard in fraud cases. However, this claim is unlikely to succeed if fake details were knowingly included on invoices.
Duress
Defendants may claim they were forced or coerced into producing fake invoices by an employer or other party. Though rare, courts occasionally accept this as a defense.
Return of Funds
Paying back all ill-gotten money from fake invoices before arrest may convince the injured party to drop charges. However, the state can still pursue criminal prosecution.
Statute of Limitations Expired
If enough time has elapsed between the crime and charges being filed, the statute of limitations could expire. This deadline varies by state and the crime.
However, prosecutors often reject these defenses and pursue convictions when evidence clearly shows the invoices to be falsified.
How to Avoid Fake Invoice Crimes
The best way to avoid the serious penalties above is simply to not create fake invoices under any circumstances. If you receive suspicious or possibly fraudulent invoices, you should also not accept or pay them.
Follow these tips to steer clear of fake invoice crimes:
- Always provide truthful and factual documents
- Scrutinize invoices from new or unknown businesses
- Watch for invoices with vague descriptions or odd amounts
- Do not sign any documents containing false information
- Contact suppliers to confirm legitimacy if uncertain
- Develop a system to check invoices against orders
- Refuse requests from employers or others to create fake invoices
- Report any suspicious billing activities to management
Avoiding involvement with fake invoicing completely is the surest way to prevent facing fraud accusations and potential penalties down the road.
Conclusion
Submitting fake invoices with bogus details is an illegal act that commonly leads to criminal charges. While it may seem harmless on the surface, fake invoicing breaks laws against fraud, forgery, false statements, and false representations.
Defendants can face penalties ranging from heavy fines to many years in prison if convicted. Aggravating factors like large money amounts or past fraud can increase sentences.
The risks simply aren’t worth it, especially with prosecutors willing to pursue these white collar crimes. A person’s best option, whether acting independently or pressured by others, is to refuse participation in any fake invoicing schemes in order to avoid prosecution.