Criminal law Part of the common law series Element (criminal law) Actus reus · Mens rea
Causation · Concurrence
Scope of criminal liability Complicity · Corporate · Vicarious Inchoate offenses Attempt · Conspiracy · Solicitation Offence against the person Crimes against property Arson · Blackmail · Burglary
Embezzlement · Extortion
False pretenses · Larceny
Possessing stolen property
Robbery · Theft
Crimes against justice Compounding · Misprision
Obstruction · Perjury
Malfeasance in office
Perverting the course of justice
Defenses to liability Defense of self
Defence of property
Consent · Diminished responsibility
Duress · Entrapment
Ignorantia juris non excusat
Infancy · Insanity
Justification · Mistake (of law)
Necessity · Loss of Control (Provocation)
Other common law areas Contracts · Evidence · Property
Torts · Wills, trusts and estates
Portals Criminal justice · Law
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g., in science, to gain prestige rather than immediate monetary gain.
A hoax also involves deception, but without the intention of gain or of damaging or depriving the victim.
Cost of fraud
The typical organization loses five percent of its annual revenue to fraud, with a median loss of $160,000. Frauds committed by owners and executives were more than nine times as costly as employee fraud. The industries most commonly affected are banking, manufacturing, and government.
Types of fraudulent acts
Fraud can be committed through many media, including mail, wire, phone, and the Internet (computer crime and Internet fraud). The international dimensions of the web and ease with which users can hide their location, the difficulty of checking identity and legitimacy online, and the simplicity with which crackers can divert browsers to dishonest sites and steal credit card details have all contributed to the very rapid growth of Internet fraud.
Types of criminal fraud include:
- Advance-fee fraud
- Bait and switch
- Bankruptcy fraud
- Benefit fraud, committing fraud to get government benefits
- Counterfeiting of currency, documents or valuable goods
- Confidence tricks such as the 419 fraud and Spanish Prisoner
- creation of false companies or "long firms"
- Embezzlement, taking money which one has been entrusted with on behalf of another party
- False advertising
- False billing
- False insurance claims
- Forgery of documents or signatures,
- Franchise fraud where the real profit is earned, not by the sale of the product, but by the sale of new franchise licenses.
- Fraud upon the court
- Health fraud, for example selling of products known not to be effective, such as quack medicines,
- Identity theft
- Insurance fraud
- Investment frauds, such as Ponzi schemes and Pyramid schemes
- Marriage fraud to obtain immigration rights without entitlement
- Moving scam
- Religious fraud
- Rigged gambling games such as the shell game
- Securities frauds such as pump and dump
- Tax fraud, not reporting revenue or illegally avoiding taxes. In some countries, tax fraud is also prosecuted under false billing or tax forgery
England and Wales and Northern Ireland
The offence of fraud is created by the Fraud Act 2006.
The government's 2006 Fraud Review concluded that fraud is a significantly under-reported crime, and while various agencies and organisations were attempting to tackle the issue, greater co-operation was needed to achieve a real impact in the public sector. The scale of the problem pointed to the need for a small but high-powered body to bring together the numerous counter-fraud initiatives that existed. The National Fraud Authority was established as a result of this recommendation.
Serious Fraud Office
See Serious Fraud Office (United Kingdom) is an arm of the Government of the United Kingdom, accountable to the Attorney-General.
National Fraud Authority
The National Fraud Authority (NFA) is the government agency co-ordinating the counter-fraud response in the UK.
CIFAS - The UK's Fraud Prevention Service
CIFAS - The UK's Fraud Prevention Service, is a not-for-profit membership association representing the private and public sectors. CIFAS is dedicated to the prevention of fraud, including staff fraud, and the identification of financial and related crime.
- a representation of an existing fact;
- its materiality;
- its falsity;
- the speaker's knowledge of its falsity;
- the speaker's intent that it shall be acted upon by the plaintiff;
- plaintiff's ignorance of its falsity;
- plaintiff's reliance on the truth of the representation;
- plaintiff's right to rely upon it; and
- consequent damages suffered by plaintiff.
Most jurisdictions in the United States require that each element be pled with particularity and be proved with clear, cogent, and convincing evidence (very probable evidence) to establish a claim of fraud. The measure of damages in fraud cases is to be computed by the "benefit of bargain" rule, which is the difference between the value of the property had it been as represented, and its actual value. Special damages may be allowed if shown proximately caused by defendant's fraud and the damage amounts are proved with specificity.
- Frank Abagnale Jr., US impostor who wrote bad checks and falsely represented himself as a qualified member of professions such as airline pilot, doctor, and attorney. The film Catch Me If You Can is based on his life.
- John Bodkin Adams, British doctor and suspected serial killer, but only found guilty of forging wills and prescriptions
- Eddie Antar, founder of Crazy Eddie, who has about $1 billion worth of judgments against him stemming from fraudulent accounting practices at that company.
- Cassie Chadwick, who pretended to be Andrew Carnegie's illegitimate daughter to get loans.
- Columbia/HCA Medicare fraud. Columbia/HCA pleaded guilty to 14 felony counts and paid out more than $2 billion to settle lawsuits arising from the fraud. The company's board of directors forced then–Chairman and CEO Rick Scott to resign at the beginning of the federal investigation; Scott was subsequently elected Governor of Florida in 2010.
- Salim Damji is a convicted fraud artist who defrauded millions of dollars in an affinity fraud. The money came mostly from relatives and members of the close-knit Ismaili community. His $78 million scam was among the largest in Canadian history.
- Charles Dawson, an amateur British archeologist who claimed to have found the Piltdown man.
- Marc Dreier, Managing founder of Attorney firm Dreir LLP. Prosecutors allege that from 2004 through December 2008, He sold approximately $700 million worth of fictitious promissory notes.
- Bernard Ebbers, founder of WorldCom, which inflated its asset statements by about $11 billion.
- Ramón Báez Figueroa, banker from the Dominican Republic and former President of Banco Intercontinental. Sentenced on October 21, 2007 to ten years in prison for a US $2.2 billion fraud case that drove the Caribbean nation into an economic crisis in 2003.
- Martin Frankel is a former U.S. financier, convicted in 2002 of insurance fraud worth $208 million, racketeering and money laundering.
- Pearlasia Gamboa, president of the micronation of Melchizedek, hundreds of aliases; in 2002, one of Gamboa’s banking and investor fraud schemes was described by the Italian newspaper La Republica as "one of the most diabolical international scams ever devised in recent years", and in 2000, the Asia Times described Gamboa’s operations as "an astonishing series of worldwide swindles".
- Robert Douglas Hartmann, an American con man and felon implicated in a real estate mortgage investment Ponzi scheme which defrauded both private lenders and banks in excess of $34 million.
- Samuel Israel III, former hedge fund manager that ran the former fraudulent Bayou Hedge Fund Group. He faked suicide.
- Ashok Jadeja has been accused of cheating people from across India of scores of rupees on the pretext of having divine blessings.
- Konrad Kujau, German fraudster and forger responsible for the "Hitler Diaries".
- Kenneth Lay, the American businessman who built energy company Enron. He was one of the highest paid CEOs in America until he was ousted as Chairman and was convicted of fraud and conspiracy, although as a result of his death, his conviction was vacated.
- Nick Leeson, English trader whose unsupervised speculative trading caused the collapse of Barings Bank.
- James Paul Lewis, Jr., ran one of the biggest ($311 million) and longest running Ponzi Schemes (20 years) in US history.
- Gregor MacGregor, Scottish conman who tried to attract investment and settlers for the non-existent country of Poyais.
- Bernard Madoff, creator of a $65 billion Ponzi scheme – the largest investor fraud ever attributed to a single individual.
- Colleen McCabe, British headmistress who stole £½ million from her school.
- Gaston Means, a professional conman during U.S. President Warren G. Harding's administration.
- Matt the Knife, American born con artist, card cheat and pickpocket who, from the ages of approximately 14 through 21, bilked dozens of casinos, corporations and at least one Mafia crime family out of untold sums.
- Barry Minkow and the ZZZZ Best scam.
- Michael Monus, founder of Phar-Mor, which ultimately cost its investors more than $1 billion.
- F. Bam Morrison, who conned the town of Wetumka, Oklahoma by promoting a circus that never came.
- Lou Pearlman, former boy-band manager indicted by a federal grand jury in Orlando on charges that he schemed to bilk banks out of more than $100 million.
- Frederick Emerson Peters, US impersonator who wrote bad checks.
- Thomas Petters is an American masquerading as a business man who turned out to be a con man and was the former CEO and chairman of Petters Group Worldwide. Petters resigned his position as CEO on September 29, 2008, amid mounting criminal investigations. He later was convicted for turning Petters Group Worldwide into a $3.65 billion Ponzi scheme and was sentenced to 50 years in federal prison.
- Charles Ponzi and the Ponzi scheme.
- Alves Reis, who forged documents to print 100,000,000 PTE in official escudo banknotes (adjusted for inflation, it would be worth about US$150 million today).
- John Rigas, cable television entrepreneur, cofounder of Adelphia Communications Corporation and owner of the Buffalo Sabres hockey team. Defrauded investors of over $2 billion and was sentenced to a 12 year term in federal prison.
- Christopher Rocancourt, a Rockefeller impersonator who defrauded Hollywood celebrities.
- Joseph Rothe, of Fonthill, Ontario, ordered to pay $500,000 in restitution, received a four-year prison sentence, along with Ewaryst Prokofiew, of Mississauga, Ontario, in the biggest GST fraud in Canadian history. Code named Project Phantom for the lengthy police investigation, the organizers lined up a steady supply of vehicles that were to be sold at the auctions. The cars never materialized and were never purchased. But the operators of the fraud claimed that they had been sold, and because of the natives' tax-exempt status were able to claim the GST exemption. Authorities could only guess at the full loss sustained by the Canada Revenue Agency. Madam Justice Lynda Templeton of Superior Court said the scheme siphoned at least $11-million from Ottawa, possibly a great deal more.
- Scott W. Rothstein, a disbarred lawyer from Ft. Lauderdale, Florida, who perpetrated a Ponzi scheme which defrauded investors of over $1 billion.
- Michael Sabo, best known as a check, stocks and bonds forger. He became notorious in the 1960s throughout the 1990s as a "Great Impostor" over 100 aliases, and earned millions from such.
- John Spano, a struggling businessman who faked massive success in an attempt to buy out the New York Islanders of the NHL.
- John Stonehouse, the last Postmaster-General of the UK and MP who faked his death to marry his mistress.
- Kevin Trudeau, US writer and billiards promoter, convicted of fraud and larceny in 1991, known for a series of late-night infomercials and his series of books about "Natural Cures "They" Don't Want You to Know About".
- Andrew Wakefield, UK physician who claimed links between the MMR vaccine, autism and inflammatory bowel disease. He was found guilty of dishonesty in his research and banned from medicine by the UK General Medical Council following an investigation by Brian Deer of the London Sunday Times.
- Richard Whitney, who stole from the New York Stock Exchange Gratuity Fund in the 1930s.
Apart from fraud, there are several related categories of intentional deceptions that may or may not include the elements of personal gain or damage to another individual:
- obstruction of justice
- 18 U.S.C. § 704 which criminalizes false representation of being been awarded any decoration or medal authorized by Congress for the Armed Forces of the United States
- ^ Report to the Nations on Occupational Fraud and Abuse. Association of Certified Fraud Examiners. 2010. p. 4. http://www.acfe.com/rttn/2010-highlights.asp.
- ^ Tax Fraud and the Problem of a Constitutionality Acceptable Definition of Religion. BJ Casino – American Criminal Law. Rev., 1987
- ^ Morlan v. Kelly, No. 2009-UP-002, SC Supreme Court, 2009
- ^ Schnellmann v. Roettger, 373 S.C. 379, 382, 645 S.E.2d 239, 241 (2007)
- ^ "Largest Health Care Fraud Case in U.S. History Settled; HCA Investigation Nets Record Total of $1.7 Billion" (Press release), U.S. Department of Justice, June 26, 2003, http://www.justice.gov/opa/pr/2003/June/03_civ_386.htm, retrieved April 11, 2011
- ^ Farberfinancial.com
- ^ Kokenes, Chris (March 19, 2009), "N.Y. lawyer arraigned in alleged $700M fraud", CNNMoney.com, retrieved April 10, 2011
- ^ Lugli, Massimo (March 15, 2002), "'Dominio di Melchizedek' Stato Fantasma Sull" ("'Dominion of Melchizedek' Ghost State"), La Republica, Rome Section: p. 5, "una trappola di lusso per le vittime di una delle piu diaboliche truffe internazionali mai escogitate negli ultimo anni" ("a trap of luxury for the victims of one of the most diabolical international scams ever devised in recent years")
- ^ Knight, James (February 17, 2000), "Cyber Nations with Real Repercussions", Asia Times Online
- ^ Lozano, Juan A. (17 October 2006). "Judge vacates conviction of Ken Lay". CBS News. Associated Press. http://www.cbsnews.com/stories/2006/10/17/ap/business/mainD8KQMS5O0.shtml. [dead link]
- ^ Nicole Muehlhausen, BIO: Tom Petters, KSTP.com, September 24, 2008. Retrieved October 8, 2008.
- ^ Tom Petters Resigns As Petters Group CEO[dead link], WCCO.com, September 29, 2008. Retrieved October 8, 2008.
- ^ Hughes, Art (December 2, 2009). "UPDATE 2-Tom Petters found guilty of Ponzi scheme fraud". Reuters (Thomson Reuters). http://www.reuters.com/article/idUSN024978920091202. Retrieved December 10, 2009.
- ^ CBC.ca
- ^ Wikidfranchise.org
- Fred Cohen Frauds, Spies, and Lies – and How to Defeat Them. ISBN 1-878109-36-7 (2006). ASP Press.
- Review Fraud – Alex Copola Podgor, Ellen S. Criminal Fraud, (1999) Vol, 48, No. 4 American Law Review 1.
- The Nature, Extent and Economic Impact of Fraud in the UK. February, 2007.
- The Fraudsters – How Con Artists Steal Your Money(ISBN 978-1-903582-82-4) by Eamon Dillon, published September 2008 by Merlin Publishing
- Association of Certified Fraud Examiners
- Immigration Marriage Fraud Amendments of 1986
- FBI Home page for fraud
- U.S. Department of Justice Fraud Section
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