Criminal Fraud Laws

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 What is Criminal Fraud?

Criminal fraud is a white-collar crime involving developing a scheme to cheat or deceive another individual or entity to obtain a financial or other gain. The person committing fraud uses false statements, lies, or misrepresentation; hides or conceals important information; or uses deceptive conduct.

Fraud involves getting property to which the criminal is not entitled, which sounds like theft. However, fraud is different from theft. Theft generally means directly obtaining property or money by stealing it, often with the use or threat of force.

By contrast, fraud involves a “scheme or artifice” to convince someone to give up property or cash based on false pretenses. Fraud occurs if an individual knows and lies about an important or key fact in a transaction or relationship, and the other party relies on that misrepresentation of fact and suffers harm. It does not occur when an individual provides a fact they believe to be true, even if they are mistaken.

Are There Different Types of Fraud?

There are many types of fraud, although the basic elements of fraud remain the same. Examples of fraud may include:

  • Welfare Fraud
  • Credit or debit card fraud
  • Identity theft
  • Check fraud
  • Bankruptcy fraud (for example, lying about assets or debts)
  • Mail fraud (committing fraud using mail as a method of communicating with victims)
  • Romance scam fraud (pretending to care about several romantic partners, but in reality just hitting them up for money)
  • Gambling fraud (a cyber crime designed to get money out of the creator of an online gambling site)
  • Wire fraud (fraud committed by wire transfer)
  • Pharmacy fraud (e.g., a customer no longer needs a particular drug, but the pharmacy keeps filling it and billing Medicare)
  • Securities fraud (lying about stocks or other investment forms – Ponzi schemes, pyramid schemes, and insider trading)
  • Charity fraud (the person claims they need money for a charity, but in reality, the money goes to themself)
  • Insurance fraud
  • Forgery

In order for an individual to be convicted of criminal fraud, the prosecution must prove all of the following:

  • There was a misrepresentation of a material fact
  • By an individual who knew the material fact was false
  • The person intended to defraud the victim
  • The victim justifiably relied on the misrepresentation of fact
  • The victim suffered actual injury or damages as a result of their reliance on that false information

What’s the Difference Between Criminal Fraud and Civil Fraud?

The basic elements of fraud in civil and criminal fraud cases are the same. One difference is the type of punishment that may be meted out. A criminal fraud conviction will result in large fines or time in jail or prison. It can be charged as a misdemeanor (the amount of jail time can be no more than one year) or a felony (prison time greater than one year).

The defendant can also be ordered to make restitution to the victim (pay the victim back) or be sentenced to probation or community service. A civil fraud finding of liability will not involve jail or prison time. Instead, the judge will order payment to the victim of the value of the item taken and any incidental expenses the victim may have suffered. In a civil case, punitive damages may be awarded – a monetary award sufficiently high for the defendant to feel it as a punishment, which it is.

In addition, criminal law has a higher standard of proof. Sufficient evidence must prove crimes to make guilt beyond a reasonable doubt. Each element of the crime discussed above must be proven beyond a reasonable doubt for a defendant to be convicted. In a civil case, the plaintiff’s burden is lower. They must submit evidence to convince the judge or jury that fraud occurred by a “preponderance of the evidence.” This means there is a greater than 50% chance that the plaintiff’s case is true.

Another difference is that the prosecution does not have to prove the fraud was successful in criminal fraud cases. The mere fact that an individual attempted and intended to commit fraud is enough. In civil fraud cases, the individual who was the victim must prove the fraud elements discussed above and prove they suffered damages due to the fraud.

The difference between a civil and criminal fraud case is that in a civil case, the individual must show actual damages, and in a criminal case, the prosecution only needs to show that the defendant attempted fraud.

What If I’ve Been Accused of Criminal Fraud?

A criminal fraud conviction can carry serious consequences. The penalties for a criminal fraud conviction will vary depending on the following:

  • The jurisdiction
  • The severity of the fraud
  • Whether the defendant has any prior convictions
  • If the defendant is currently on probation or parole
  • The nature of the person or entity that was a victim of the fraud, and the relationship between the victim and the defendant
  • The amount of money or property lost as a result of the fraud

The penalty may also be influenced by the attitude of the community or the court towards this type of crime. If the entity that was a victim of the fraud is the federal government, the charges may be brought under federal law instead of state law and may result in harsher penalties.

What Should I Do If I’m a Victim of Criminal Fraud?

If you believe you are a victim of criminal fraud, you should contact local law enforcement and report the fraud. The case will be forwarded to the local prosecutor for prosecution if sufficient evidence exists.

It is important to keep records of all losses resulting from the fraud. This may be especially important where restitution is a possible penalty. It is also important to consult an attorney to determine if an individual can pursue civil and criminal fraud cases.

What are Some Potential Defenses Against an Accusation of Fraud?

Several defenses may be available to a charge of criminal fraud. These include:

  • Insufficient evidence
  • Lack of intent to commit a crime
  • Non-fraudulent untrue statements
  • Entrapment

Insufficient evidence means there is insufficient evidence to show that fraud occurred or that the defendant was responsible for the fraudulent acts.

A second possible defense is a lack of intent to commit a crime. The prosecution must prove the defendant intended to deceive another individual or entity to obtain a fraud conviction. Sometimes, it is difficult to prove intent. For example, an individual may accidentally use their friend’s insurance card, which is not fraud. However, if they did so intentionally, it would be fraud. A possible defense is that the defendant never meant to trick or deceive anyone.

Non-fraudulent untrue statements may be made by accident and do not constitute fraud. This is the case if the defendant believed what they said was true. In addition, not all false or deceitful statements are considered fraudulent. Also, mere statements of opinion are not considered criminally fraudulent. A misleading statement must be related to an existing fact to be fraudulent. It must not be an opinion and must also not be based on a promise to complete a future action.

Entrapment is another possible defense to a criminal fraud charge. Entrapment occurs when a police officer persuades a defendant to commit a crime, and the defendant would not otherwise have done so. Entrapment requires that the police officer’s conduct be more than simply presenting the defendant with an opportunity to commit a crime. The defendant must have committed the crime only at the officer’s behest.

An experienced attorney will be able to assist in presenting any defenses during a criminal trial. An attorney will be knowledgeable about how to successfully present the defense and argue against the evidence presented by the prosecution.

Do I Need a Lawyer for Help with Criminal Fraud Charges?

It is important to consult with an experienced fraud lawyer if you are facing criminal fraud charges. Whether you are charged with a misdemeanor or a felony, the consequences may be serious and long-lasting. If necessary, an attorney can review your case, determine what defenses may be available to you, and represent you during any court proceedings.

If you are a victim of fraud, it is also important to consult an attorney. An attorney will help you gather necessary evidence, review your case, determine whether you can pursue a civil case, and represent you during court proceedings.


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