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Introduction to frauds

 Introduction to Fraud

Fraud is a broad legal term referring to dishonest acts that intentionally use deception to illegally deprive another person or entity of money, property, or legal rights.

Unlike the crime of theft, which involves the taking of something of value through force or stealth, fraud relies on the use of intentional misrepresentation of fact to accomplish the taking.

In proven cases of fraud, the perpetrator—a person who carries out a harmful, illegal, or immoral act—may be found to have committed either a criminal offense or a civil wrong.

In committing fraud, perpetrators may be seeking either monetary or non-monetary assets by deliberately making false statements. For example, knowingly lying about one’s age to obtain a driver's license, criminal history to get a job, or income to get a loan may be fraudulent acts.

A fraudulent act should not be confused with a “hoax”—a deliberate deception or false statement made without any intention of gain or of materially damaging another person.

Perpetrators of criminal fraud may be punished by fines and/or imprisonment. Victims of civil fraud may file lawsuits against the perpetrator seeking monetary compensation.

To win a lawsuit claiming civil fraud, the victim must have suffered actual damages. In other words, the fraud must have been successful. Criminal fraud, on the other hand, can be prosecuted even if the fraud failed.

In addition, a single fraudulent act may be prosecuted as both a criminal and civil offense. Thus, a person convicted of fraud in criminal court may also be sued in civil court by the victim or victims.

Fraud is a serious legal matter. Persons who believe they have been the victim of fraud, or have been accused of committing fraud, should always seek the expertise of a qualified attorney.

While the specifics of laws against fraud vary from state to state and at the federal level, there are five essential elements necessary to prove in court that a crime of fraud has been committed:

  1. A misrepresentation of a material fact: A false statement involving a material and pertinent fact must be made. The gravity of the false statement should be adequate to substantially affect the victim’s decisions and actions. For example, the false statement contributes to a person’s decision to purchase a product or approve a loan.

  2. Knowledge of falsehood: The party making the false statement must know or believe that it is untrue or incorrect.

  3. Intent to deceive: The false statement must have been made expressly with the intent of deceiving and influencing the victim.

  4. Reasonable reliance by the victim: The level to which the victim relies on the false statement must be reasonable in the eyes of the court. Reliance on rhetorical, outrageous, or clearly impossible statements or claims may not amount to “reasonable” reliance. However, persons known to be illiterate, incompetent, or otherwise mentally diminished may be awarded civil damages if the perpetrator knowingly took advantage of their condition.

  5. Actual loss or injury suffered: The victim suffered some actual loss as a direct result of their dependence on the false statement.
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