This study examines how intentional financial misrepresentation (i.e., accounting fraud) by a firm affects the financial situation of the individuals who establish the spatial community around which the firm operates. Utilizing granular data from a consumer credit panel covering 10% of the U.S. population with credit histories, we analyze both pre-revelation financial decisions and post-revelation financial distress. Upon revelation, we identify significant increases in indicators of financial distress among individuals who reside in spatial proximity to fraudulent firms' headquarters. On average, we observe incremental increases in debt in collection, affecting approximately one in every one hundred to one in every two hundred individuals. Additionally, we compare individuals' credit demand and supply under fraudulent 'good' information to that under truthful 'bad' information from firms headed for bankruptcy, revealing misinformed financial decisions before the fraud's exposure. Overall, we offer critical insights into the connection between one of the roots of social outcomes, the financial health of a broad set of individuals in a spatial community, and accounting fraud.

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