720 ILCS 5/17-26 – Misconduct by a Corporate Official
This law makes it illegal for corporate leaders to cheat or misuse company money or records for personal gain.
This statute says that directors or officers of a company can be charged with a felony if they knowingly try to cheat, lie, or misuse company funds, stocks, or financial reports to defraud others or break the law.
(a) A person commits misconduct by a corporate official when:
- If someone is a director of a company and knowingly helps with a decision or action meant to cheat others, such as:
- Improperly giving out dividends not allowed by law.
- Paying shareholders back part of the company’s main funds, except as allowed by law.
- Accepting debt or notes to pay for company stock in a way that breaks the law.
- Helping a shareholder take back money they already paid for their stock through dishonest means.
- Using company money directly or indirectly to buy its own stock, unless it’s legally allowed.
- If someone is a company director or officer and intends to cheat, they do things like:
- Vote for or help issue more stock than the company is legally allowed to have.
- Sell or agree to sell stock they don’t actually own, unless it’s part of a real public stock sale by a broker or underwriter.
- Trick someone into giving up shares of stock using lies or false information.
- If someone is a director or officer and wants to cheat or avoid state or federal financial reporting laws, they:
- Make or try to make the company or its accountants fail to file a required financial report.
- Make or try to make the company or its accountants turn in a report with false or missing important information.
(b) Sentence: If the person gained $500,000 or more from the misconduct, it’s a Class 2 felony. If they gained less than $500,000, it’s a Class 3 felony.
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