Understanding kickbacks and why they’re illegal

Feb 09 2021

Sometimes people do business in ways that may seem normal or at least harmless but that actually violate the law. In other cases, people take positions where their predecessors engaged in these illegal actions, and the same is expected of them.

One of these illegal activities involves kickbacks. A kickback is a payment that’s given in exchange for some type of preferential treatment or improper services. The payment is often cash, but it can be anything of value. Those who provide kickbacks and those who receive them are both violating the law.

How kickbacks caught up with a U.S. vice president

A good example of kickbacks is detailed in Rachel Maddow’s podcast-turned-book Bag Man. She details Vice President Spiro Agnew’s long history of giving contracts to engineers, architects and contractors when he held local and state office in exchange for payment of around 5% of their profit from the contract.

That history caught up with him after he became President Nixon’s VP. The kickbacks typically took the form of envelopes of cash delivered by a “bag man.” Agnew eventually reached an agreement with prosecutors and the U.S. attorney general that spared him jail time, but forced him to resign just as the Watergate scandal was catching up with Nixon.

This illegal practice isn’t limited to the public sphere

Kickbacks don’t have to involve public officials. Someone in a company’s accounting department might inflate an invoice for a vendor in exchange for receiving a percentage of the extra money they’re paid. When companies are allowed to bill for nonexistent services or pad their invoices because they’re willing to “play ball,” more qualified and cost-efficient companies can lose out. Kickbacks can significantly impact the bottom line of the business whose employees engage in it.

If you’re being investigated for paying or receiving kickbacks or if you’re already facing charges, it’s essential to have an experienced attorney on your side. The consequences of an accusation, let alone a conviction, to your life, career and reputation can be significant, as Spiro Agnew learned the hard way.

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