What happens when company accuses you of fraud?

Question

One of my friends friend(let's call him Harry) who I know is accused of fraud from a company he worked some time ago. What happens next, will he be able to continue work at some other company? Of-course depends on case and how far the case went etc..

Here is his full story. Harry worked as a application developer for a startup starting his career apart from internships, startup didn't work out, was laid off with his team within 6 months of his joining and joined other startup.

Worked for around a year at second startup and they found someone with good experience and because of some differences was laid off. Joined third workplace with only himself working as a tech person apart from the CEO.

The CEO has his company(of-course should be) is from other country and the company he joined is partner company that also provides service to the company from different country. Harry is from India.

Since he was only person working, initially it was a good start and was given complete project with requirements keeping on adding. Apart from his job as a full stack developer he was asked to do other work like cable fixing, printer installation and all kind of IT support task.

Real twist is here, all the three companies he worked had a common man with chief level position at all the companies. He moved him from a company to another since Harry is good with his job.

Being alone, long working hours, micro management, low salary despite asking for raise, health problem etc led Harry into discomfort thoughts and would take medications and finally decided to quit.

There was no written contract between Harry and the consultant company or the company outside his country. Although I read written contract isn't necessary for employment. Finally he said about quitting a month ago and quit without formal documentation.

After leaving he is working as freelancer and was doing well until received a call from employer(the consultant company) after 6 months stating work is incomplete and committed a fraud.

The man common in all the companies(also is consultant company) is a big shot and is threatening to use all legal and illegal ways to extract money and get work done. There is some work incomplete by Harry and he isn't interested to work. Although he may but due to all these issues he want's to stay away.

After he left, Harry worked on multiple projects including taking project from my own company and doing well.

Since Harry is not much experienced as me, he keeps on asking good practices from me. I consult him for tech related doubts and he solves them pretty quickly.

Now the question is if the company suites a case don't know how bad it can get. If he doesn't go to jail or something but cannot join some company due to allegations reported and all, will he be able to work independently on his own? What do other people who actually commit fraud at huge level do? Do they still work? If they can't work somewhere else how do they earn? I am sure Harry can do work outside his day job taking any option available, what happens with other people? Are they restricted doing their day job or any job? Do big companies hire talent still after having a bad tag? Frank Abagnale (used as an inspiration example can remove if it doesn't match site rules) is considered a good man, maybe did few notorious things at past. Here it says people may get hired.

Since he is talented(I feel) I am sure under some supervision he can easily work and do good job. Is it okay for me to help him? I don't have any bad feeling for him even if people claim he is bad, I know him for around 5 years now and kind of great person apart from mistake he did.

Note:

We are trying to get it settled without involving court or legal method and come out clean.

Update:

1 - Since it's been ~6 months since he left and no one worked since he left, they are asking for financial compensation and damage occurred.

2 - Most of the answers suggest getting a lawyer, I know they have lot of knowledge regarding this and knows exactly how to tackle situation. Don't know how easy it is in other countries but since Harry just started his job; he may end up paying more to the lawyer than what he earned in his entire career, risking the benefit of winning and demanding money from company can payoff later but Big Shot said he can get accusation charge from other companies as well which actually never happened and Harry had a good relation with previous companies. Don't know if they change their mind after getting some offer with Big shot.

3 - Also I have asked Harry to document all the stuff and if witnesses so that it can be producible.

Answer 1

Harry should retain a lawyer, follow their advice, and forward any communication from Mr. Big Shot to the lawyer. Mr. Big Shot's communications should not be replied to unless directed by the lawyer. This is probably cheaper and less stressful for Harry than the alternative.

Answer 2

Being called a fraud or a fraudster doesn’t matter. If they do it in public, you take them to court for libel and a good lawyer will make them pay.

Being convicted for fraud would be a problem, but with your description I can’t see this happening. Especially if someone threatened to use “all legal and illegal ways to extract money and get work done”. That kind of “big shot” tends to be just a “big mouth”. And they leave traces.

Answer 3

People leave jobs all the time, and usually when someone leaves a job, there is work left incomplete. Not their problem unless they had a written contract to produce a certain item by a certain date.

Harry's only obligation is to maintain a written record of all communications with the ex-client. Keep a diary of any phone calls, but ideally, refuse to take their calls.

When (and it's very much, "if") ex-client decides to go legal, engage a lawyer.

Answer 4

We are trying to get it settled without involving court or legal method and come out clean.

WTF are you doing?

You don't need to do anything. In fact, you shouldn't do anything. Anything you try to do now will probably be used against you later.

The burden is on the company to prove that your friend committed fraud. The burden is not on your friend to actually prove himself innocent.

In fact, when the accusation is so vague and when there were no contract to begin with, proving things one way or another is an almost impossible task either way.

But the more your friend tries to prove his innocence without involving the courts, the more he's actually providing potential evidence that will be used against him later on.

He needs to stop that! He needs to shut up. When he gets a call from them, he needs to hang up and block their call. When he receives an email from them, he needs to put it in a special folder and ignore it.

And yes, he should document what happened, but he shouldn't share any of that documentation with the opposite side.

And no, he probably won't need a lawyer, but if he keeps on trying to prove his innocence to the other side, he may need to hire a lawyer eventually. Because the more he talks to the other side, the more likely they're going to sue him in the end.

And yes, if the police gets involved, or if there is a summons, or an actual court case, he will need to get himself a lawyer. But that's the worst-case scenario. At this current stage, your friend just needs to shut up and say nothing to the opposite side. If he wants this issue to go away, that's the best strategy.

The man common in all the companies(also is consultant company) is a big shot and is threatening to use all legal and illegal ways to extract money and get work done.

The "illegal" part of the threat is worrisome. What did that big shot say exactly?

I don't know how things work in India. But if anyone threatens your friend over the phone, or comes at his door to threaten him, he should video record what he can.

Of course, he should follow all applicable laws regarding audio recording / video recording in his country. And he should contact the police if the threats are bad enough.