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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