What is Fraud Law?
Fraud law covers a broad range of crimes and civil tort actions that address situations in which a person wrongfully obtains money, property, or other benefits by deceit. In the criminal context, fraud is typically charged as a felony, meaning that a conviction can result in a year or more of incarceration. Criminal penalties can also include statutory fines, restitution (victim reimbursement), community service, as well as the loss of civil rights associated with a felony conviction. In civil court, financial compensation is generally the plaintiff’s sole remedy. Fraud cases can be brought in either state or federal court.
The Issue of Fraudulent Intent
Proving fraud can be difficult, even for government prosecutors with entire investigative agencies at their disposal. The difficulty is not establishing that the victim suffered a loss. Financial records are usually available to prove this element. Likewise, it may be quite clear that the victim’s loss resulted from the defendant’s actions. The hard part is proving that the defendant intended to defraud the victim. In other words, direct evidence may be lacking to show that the defendant acted purposefully.
Consider the following example. The defendant sells a used pickup truck to a neighbor. Shortly afterward, the truck’s transmission goes out, and the neighbor must spend a large sum of money to have it repaired. The neighbor confronts the defendant, who denies having known about the faulty transmission. In this situation, the jury would likely decide in favor of the defendant because there is no evidence to suggest the defendant intended to take advantage of the neighbor.
But now assume that during pretrial discovery, the neighbor obtains a copy of a repair estimate issued by a local transmission shop to the defendant the day before the sale. The neighbor introduces the document as an exhibit at trial. Now the jury has evidence from which it can infer that the defendant had reason to know the truck would break down. In the absence of direct evidence of fraudulent intent, it is often necessary for the jury to infer the defendant’s intent in this manner. Unfortunately for victims, circumstantial evidence is not always available as it was in this example.
Common Types of Fraud Crimes
A substantial percentage of the convictions entered each day in the United States involve fraud. Check and credit card fraud are two of the most common. Check fraud is widespread, as it requires only that the defendant write a check knowing at the time that the account contains insufficient funds to cover the transaction. There is a misconception that intentionally “bouncing” a check is more or less tolerated by law enforcement, and that it only exposes the check writer to modest bank and merchant fees. This is not so. Particularly in cases involving repeat offenders, a conviction for check fraud can result in significant jail time.
Credit card fraud occurs when an individual uses a card belonging to someone else without permission. The individual may have stolen the card from the owner, or simply obtained the account number through any number of schemes, such as skimming card information from a gas pump, or phishing for it using a fake internet website. The account is then used to purchase goods or services, or to remove money from an ATM machine.
Besides check and credit card offenses, financial fraud can take the form of counterfeiting, money laundering, prize or sweepstakes fraud, investment schemes, mortgage and foreclosure scams, and more. Common types of non-financial fraud include overseas romance schemes (to obtain immigration benefits) and identity theft. These examples are by no means a complete list of the devices criminals use to trick unsuspecting victims for the purpose of personal gain. Unique kinds of fraud, as well as variations on existing schemes, are constantly being developed, forcing legislatures to create new fraud crimes in response.
Fraud Allegations in Civil Court
Victims of fraud may be able to recover the money they lost at the conclusion of a criminal case, assuming the defendant is convicted and the judge orders full restitution to be paid. But issues can and do arise in criminal court that allow defendants to escape conviction. Even in the face of overwhelming evidence of guilt, a defendant may go unpunished as a result of prosecutorial errors, constitutional violations committed by the police, and so forth. By contrast, the likelihood of establishing liability in civil court is much higher.
The tort of fraud need only be proven by a “preponderance of the evidence.” This is an easier burden to meet than the “beyond a reasonable doubt” standard that applies in criminal proceedings. Civil litigants are also entitled to discovery, meaning they can force the defendant to turn over financial records, email messages, and the other evidence necessary to build a fraud case. In fact, if a victim is unable to recover compensation in civil court, it is probably because the defendant no longer has the money to pay the judgment – not because the victim is unable to prove his or her case.
Get Advice from a Professional
If you have been charged with a fraud crime, or if you are a fraud victim seeking compensation for your loss, you need a professional to fight for your rights. An attorney familiar with the fraud laws in your jurisdiction can do just that. To learn more, contact a lawyer in your area today.
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Articles on HG.org Related to Fraud Law
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- Supreme Court to Law Enforcement: Do Not Freeze Untainted AssetsThe precedent was set in 1989. In a United States v. Monsanto case, the Supreme Court held that a suspect who violated the Continuing Criminal Enterprise (CCE) and the Racketeer Influenced and Corrupt Organizations (RICO) should not have access to the funds obtained through illegal activity.
- SEC Whistleblower ProgramIn 2010, Congress implemented a new act that provides for monetary incentives for whistleblowers who report Securities and Exchange Commission violations. Whistleblowers are individuals with important information about the illegal acts of others.
- Massachusetts Law on Failing to Disclose Defects of Residential PropertiesIn Massachusetts, sellers of property have certain duties. One such duty is to disclose certain defects of the property. If the seller fails to disclose such defects, the buyer may have remedies available to him or her.
- Medicaid Fraud Investigations in New YorkA Medicaid fraud investigation begins long before you are contacted by an investigator. By the time they contact you, the investigators have already conducted interviews and collected all the records they need. At this point, anything you say can and will be used against you.
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- Responding to NYC Medicaid Fraud InvestigationsIf you receive a letter from the NYC Bureau of Fraud Investigation, it means that you are the target of a Medicaid fraud investigation. How you respond to the letter can mean the difference between an inconvenience and a criminal record.
- Filing a False Police ReportFiling a false police report is a crime under federal and state laws. However, the elements necessary to prove this crime and the severity of it vary by jurisdiction.
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Articles written by attorneys and experts worldwide discussing legal aspects related to Criminal Law including: arson, assault, battery, bribery, burglary, child abuse, child pornography, computer crime, controlled substances, credit card fraud, criminal defense, criminal law, drugs and narcotics, DUI, DWI, embezzlement, fraud, expungements, felonies, homicide, identity theft, manslaughter, money laundering, murder, perjury, prostitution, rape, RICO, robbery, sex crimes, shoplifting, theft, weapons, white collar crime and wire fraud.
Fraud Law - US
- ABA - Notario Fraud
Individuals who represent themselves as qualified to offer legal advice or services concerning immigration or other matters of law, who have no such qualification, routinely victimize members of immigration communities.
- ABA - Section of Public Contract Law - Procurement Fraud
Monitors the government's remedies, activities, and initiatives relating to the investigation and prosecution of alleged fraud by contractors, including voluntary disclosures and corporate self-governance.
- Consumer Complaint Resources: A Guide to Internet Fraud
The Federal Bureau of Investigation released a report in 2011, stating that during the calendar year of 2010, more than 300,000 Internet fraud crimes have been reported. This amounts to nearly 25,000 reported cases every month. In addition to these reported cases, there are thousands of other crimes that are not detected or not reported.
- Department of Justice - Fraud Section
The Fraud Section plays a unique and essential role in the Department's fight against sophisticated economic crime. The Section is a front-line litigating unit that acts as a rapid response team, investigating and prosecuting complex white collar crime cases throughout the country. The Section is uniquely qualified to act in that capacity, based on its vast experience with sophisticated fraud schemes; its expertise in managing complex and multi-district litigation; and its ability to deploy resources effectively to address law enforcement priorities and respond to geographically shifting crime problems
- False Claims Act
The False Claims Act is the single most important tool U.S. taxpayers have to recover the billions of dollars stolen through fraud by U.S. government contractors every year. Under the False Claims Act, 31 U.S.C. §§ 3729-3733, those who knowingly submit, or cause another person or entity to submit, false claims for payment of government funds are liable for three times the government’s damages plus civil penalties of $5,500 to $11,000 per false claim.
- FBI - Common Fraud Schemes
Our Common Fraud Schemes webpage provides information on common types of fraud as well as tips on how you can protect you and your family from fraud.
- Federal Trade Commission - Bureau of Consumer Protection
The Bureau of Consumer Protection works to protect consumers against unfair, deceptive, or fraudulent practices in the marketplace. The Bureau conducts investigations, sues companies and people who violate the law, develops rules to protect consumers, and educates consumers and businesses about their rights and responsibilities. The Bureau also collects complaints about consumer fraud and identity theft and makes them available to law enforcement agencies across the country.
- Fraud - Definition
In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and is also a civil law violation. Many hoaxes are fraudulent, although those not made for personal gain are technically not frauds. Defrauding people of money is presumably the most common type of fraud, but there have also been many fraudulent "discoveries" in art, archaeology, and science.
- Fraud - Overview
Fraud is commonly understood as dishonesty calculated for advantage. A person who is dishonest may be called a fraud. In the U.S. legal system, fraud is a specific offense with certain features.
- Fraud Enforcement and Recovery Act of 2009 (FERA)
On May 20, President Obama signed into law, the Fraud Enforcement and Recovery Act (“FERA”) of 2009. FERA is intended to bolster the federal government’s ability to investigate and prosecute financial fraud, especially any misuse of government stimulus and Troubled Asset Relief Program (“TARP”) funds.
- Major Fraud Act
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Fraud Law - International
- Canadian Fraud Prevention and Laws
The Competition Bureau is an independent law enforcement agency that contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice. Headed by the Commissioner of Competition, the Bureau is responsible for the administration and enforcement of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.
- Economic and Financial Crimes Commission (EFCC) - 419 Fraud
The Economic and Financial Crimes Commission (EFCC) is a Nigerian law enforcement agency that investigates financial crimes such as advance fee fraud (419 fraud) and money laundering. The EFCC was established in 2003, partially in response to pressure from the Financial Action Task Force on Money Laundering (FATF), which named Nigeria as one of 23 countries non-cooperative in the international community’s efforts to fight money laundering.
- European Anti-Fraud Office (OLAF)
The mission of the European Anti-Fraud Office (OLAF) is to protect the financial interests of the European Union, to fight fraud, corruption and any other irregular activity, including misconduct within the European Institutions. In pursuing this mission in an accountable, transparent and cost-effective manner, OLAF aims to provide a quality service to the citizens of Europe.
- FTC - International Netforce Law Enforcement Effort
The Federal Trade Commission has joined eight state law enforcers in the United States and four Canadian agencies in an initiative targeting deceptive spam and Internet fraud. The agencies have brought 63 law enforcement actions against Web-based scams ranging from auction fraud to bogus cancer cure sites, and have sent more than 500 letters warning people sending deceptive spam that it is illegal. In addition, Netforce partners tested whether "remove me" or "unsubscribe" options in spam were being honored.
- International Association of Insurance Fraud Agencies, Inc. (IAIFA)
IAIFA's goal is "to co-ordinate the efforts, training and education of law enforcement agencies, government bodies, and the insurance industry to move more effectively prevent and combat insurance fraud worldwide." IAIFA has kept its focus on insurance fraud, which its members view as a crime against all segments of society - not a victimless felony, as some would define it.
- Serious Fraud Office (SFO) - UK
Our aim is to protect society from extensive, deliberate criminal deception which could threaten public confidence in the financial system. We investigate fraud and corruption that requires our investigative expertise and special powers to obtain and assess evidence to successfully prosecute fraudsters, freeze assets and compensate victims
Organizations Related to Fraud Law
- American Banker's Association - Fraud and Security
Fraud is a continuing issue for banks. Criminals are constantly searching for creative new ways to obtain money from banks through fraud. This webpage is designed to provide you with numerous resources and solutions related to the various types and aspects of fraud that banks encounter. It includes resources to help prevent, measure, report, and prosecute fraud. It also offers materials and surveys to help banks understand the deposit account fraud experiences of other banks in order to assess their own bank's experience. In addition, the resources allow banks to learn about the fraud prevention strategies and tools used by other banks.
- Coalition Against Insurance Fraud
Leaders of the anti-fraud fight realized America needed a catalyst to unite and ignite the power of many diverse groups against rampant fraud. Only a longterm commitment would work against such a deeply entrenched problem. The vision of these charter members became the Coalition Against Insurance Fraud — the nation's only anti-fraud watchdog that speaks for consumers, insurance companies, legislators, regulators and others.
- DOJ - National Procurement Fraud Task Force (NPFTF)
On October 10, 2006, the National Procurement Fraud Task Force (NPFTF) was created to promote the prevention, early detection, and prosecution of procurement and grant fraud. Chaired by Assistant Attorney General (AAG) for the Criminal Division Lanny A. Breuer, the Task Force members include the FBI, the Department of Justice Inspector General and other federal Inspectors General, defense investigative agencies, federal prosecutors from United States Attorney’s offices across the country, as well as the Antitrust, Civil, Criminal, Environmental & Natural Resources, National Security, and Tax Divisions of the Department of Justice. The Task Force focuses on civil and criminal enforcement where it has the greatest effect, including defective pricing, product substitution, misuse of classified and procurement sensitive information, false claims, grant fraud, fraud associated with labor mischarging, fraud involving foreign military sales, ethics and conflict of interest violations, and public corruption associated with procurement fraud. On January 12, 2010, AAG Breuer announced that the NPFTF would expand its mission by focusing on combating Recovery Act fraud, as well as other types of procurement and grant fraud.
- Fraud Aid - Fraud Victim Advocacy
Our mission is to provide support and guidance for fraud victims and their families worldwide; to serve as a deterrent to fraud everywhere; to spread easy-to-understand fraud awareness, recognition, and prevention education throughout the world community; and to develop efficient tools and support systems for public and private investigators, fraud examiners, fraud attorneys and defense attorneys.
- Health Care Anti-Fraud Association (NHCAA)
Founded in 1985 by several private health insurers and federal and state government officials, the National Health Care Anti-Fraud Association is the leading national organization focused exclusively on the fight against health care fraud. We are a private-public partnership — our members comprise more than 100 private health insurers and those public-sector law enforcement and regulatory agencies having jurisdiction over health care fraud committed against both private payers and public programs
- National Council Against Health Fraud
The National Council Against Health Fraud is a nonprofit, tax-exempt voluntary health agency focused upon health fraud, misinformation, and quackery as public health problems. This site, which belongs to long-time NCAHF board member Stephen Barrett, M.D., archives many NCAHF documents that can help people evaluate health claims.
- Office of Victims of Crimes - Fraud
The following information resources may offer fraud victim assistance information, research findings, educational materials, or strategies for program and policy development specific to this topic.
- SEC Center for Complaints and Enforcement Tips
You can file a complaint or provide us with tips on potential securities law violations though the links on this page. We welcome hearing from you because your information may alert us to broker or firm misconduct, an unfair practice in the securities industry that needs to be changed, or the latest fraud.
- Taxpayers Against Fraud
Taxpayers Against Fraud Education Fund, The False Claims Act Legal Center (TAF), is a nonprofit public interest organization dedicated to combating fraud against the Federal Government through the promotion and use of the federal False Claims Act and its qui tam provisions.
- United States Secret Service - Know Your Money
The United States Secret Service, one of the nation's oldest federal investigative law enforcement agencies, was founded in 1865 as a branch of the U.S. Treasury Department. It was originally created to combat the counterfeiting of U.S. currency - a serious problem at the time. In fact, following the Civil War, it was estimated that one-third to one-half of the currency in circulation was counterfeit.
- US Department of Health and Human Services - Medicare Fraud
Most doctors, health care providers, suppliers, and private companies who work with Medicare are honest. However, there are a few who aren’t. Medicare is trying harder than ever to find and prevent fraud and abuse by working more closely with health care providers and strengthening oversight. Fraud costs the Medicare Program millions of dollars every year. You pay for fraud with higher health care costs. Fraud schemes may be carried out by individuals, companies, or groups of individuals.
Publications Related to Fraud Law
- Election Fraud
The Election Fraud Beginners Guide
- Fraud Sharks
Having practiced forensic analysis and fraud detection for many years, I've learned to listen to that inescapable "sixth-sense" that has rarely failed, and I have honed the art of ignoring what people say and mostly observing only their actions. These skills have served me well throughout my career, but have earned me the dubious distinction of predicting calamity, misfortune, and failure. This blog is my effort to provide these skills a positive platform and to share my interests, insights, observations and trend analysis with others, and to further hone my forensic skills.
- Mortgage Fraud Blog
Mortgage Fraud Blog is the premier website for news and information on mortgage fraud and real estate fraud throughout the United States.