Official Text
“Maintaining false books of account, making material omissions, or publishing false financial statements with intent to defraud or mislead.”
Legal Analysis
Elements to Prove:
- Knowledge of falsity or omission.
- Material misstatement in books/statements.
- Intent to deceive stakeholders/regulators.
Potential Defenses:
- No knowledge or intent.
- Compliance with accounting standards.
- Prompt correction and disclosure.
Practical Examples
What Constitutes the Offense:
Round-tripping revenue, capitalizing expenses to inflate profits, off-balance-sheet liabilities concealed.
What Doesn't Constitute:
Good-faith estimates, immaterial errors corrected, disclosures per standards.
Punishment
Imprisonment up to 7 years, and Fine