Are there any penalties, civil or criminal, for falsely inflating the value of a privately-held company?”
Yes, there are civil and criminal penalties for intentional misrepresentation in every state I am aware of, and where there is federal jurisdiction, federal statutes of mail and wire fraud, conspiracy, and others. There are also generally criminal penalties for attempts to commit fraud. But under the facts you described, if the friend has not actually purchased the business based on the fraudulent valuation, she is not legally harmed and may not be able to sue for damages when there are none. Also, prosecutors are less interested in a criminal case when the victim is not in the end harmed financially, unless the fraud is part of an ongoing scheme which may ensnare other victims. It is possible, depending on jurisdiction, to recover the expenses of due diligence in relying on false representations about a business you are investigating for purchase. But a business broker agreement is generally worded to protect the broker from lies told by the seller. My general advice to those contempl
