Legal Question in Business Law in New Jersey

Corporate Officer Fraud

I am a project manager and as such have an obligation to report ethics and legal violations to my clients. The CIO of the company I work at on salary, headquartered in NJ, has signed a project approval form and pre-dated his signature to prevent other officers of the company, with oversight responsibility for this project approval form, from knowing that they had an ability to consider the approval and sign for it. I produced the form for signatures by all officers and put the creation date at the top, but the dated signature the CIO provided is before the dated form by three weeks. It would be completely obvious fraud to the board of directors and the project auditing authority of the company if I brought it to their attention.

My question, has the CIO violated any corporate laws of the United States or New Jersey that she can be charged with an offense for? I am not legally obligated to report ethics or legal violation but I signed an oath of ethical disclosure for my project management certification and I must consider doing the right thing.


Asked on 4/11/05, 8:13 pm

1 Answer from Attorneys
John Corbett Corbett Law Firm LLC

Re: Corporate Officer Fraud

On the surface, I see no legal liability on your part. That does no end the problem as you know.

If the stock in your company is publicly traded, you must make a decision as to whether the dating of the document by the CIO might have mislead investors. If so, you have a legal obligation to disclose it at least to higher management. That does not seem to be the case. As I understand your situation, the dating of the document has only the effect of circumventing an internal approval cycle. If that is the case, the problem is not a legal one, it is an ethical one.

Professions generally hold themselves to higher standards than is required by the law. That is one of the reasons why they are called "professions." You may have an ethical obligation to the owners and managers of the company that transcends your legal obligations to the State and to the United States. In meeting those obligations, I can offer you guidance, but not advice:

1. Anyone can be ethical when it does not hurt. It's like going to church, singing the hymns, and meeting the neighbors afterward to discuss how bad other people can be. Compliance with professional ethics in a real sense hurts. It denies us opportunity, it forces us to make others meet their obligations against their will, it closes off the easy path. It is of no consequence to be ethical about the 99% of the issues that are easy because anyone can do that. It is only the hard 1% that count.

2. Disclosure of the truth is rarely wrong.

3. You do have an obligation to the owners and managers of the business regardless of any legal obligation.

4. List your options and imagine explaining and justifying each of them to the best counsellor that you know. Do it out loud and hear how they sound.

5. If it feels bad and it sounds bad, it probably is bad.

I hope that helps.

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Answered on 4/12/05, 10:55 am


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