Fraud
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| Criminal law |
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| Tort law |
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| Defamation · Invasion of privacy False light · Breach of confidence Abuse of process Malicious prosecution Alienation of affections · Seduction |
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| Fraud · Tortious interference Conspiracy · Restraint of trade |
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| Law |
In the broadest sense, 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; the intention is often humorous.
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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:
- bait and switch
- bankruptcy fraud
- benefit fraud, committing fraud to get government benefits
- counterfeiting of currency, documents or valuable goods
- charlatanism
- 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,
- fraud upon the court
- health fraud, for example selling of products known not to be effective, such as quack medicines,
- identity theft
- investment frauds, such as Ponzi schemes and Pyramid schemes
- Moving scam
- religious fraud
- marriage fraud to obtain immigration rights without entitlement
- 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[1]
Elements of fraud
Common law fraud has nine elements:[2][3]
- 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.
National Fraud Authority
The National Fraud Authority (NFA) is the government agency co-ordinating the counter-fraud response in the UK. The NFA works with a wide range of partners with the aim of making fraud more difficult to commit in the UK. The NFA was established following the government's 2006 Fraud Review. It 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. 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, which is when the NFA was formed.
The NFA works to tackle frauds across the spectrum, but also works on fraud types and fraud issues that are a notable problem. These include identity fraud, mortgage fraud, accommodation addresses, mass marketing fraud and fraud affecting small and medium sized businesses. The NFA also produces the Annual Fraud Indicator, which estimates the cost of fraud. The current estimate puts the cost of fraud to the UK at £30billion a year, which equates to £621 a year for every adult in England and Wales. Working with the charity, Victim Support, the NFA has also done some significant work with victims, to ensure they receive the support they deserve if they have been a victim of the crime.
The NFA also runs Action Fraud - the UK's national fraud reporting service.
Action Fraud
Action Fraud is the UK's national fraud reporting service, run by the National Fraud Authority. Action Fraud is the place to go to get information and advice about fraud, as well as to report fraud. UK citizens can report fraud online or by calling 0300 123 2040. When a fraud is reported to Action Fraud, victims are given a crime reference number and their case is passed on to the National Fraud Intelligence Bureau (NFIB), which is run by the police service.
The Action Fraud website also has an A-Z of fraud describing different types of fraud, and offers prevention advice.
Notable fraudsters
- 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.
- 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.
- 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 closely-knit Ismaili community. His $75 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.[4]
- Richard Eaton, an English businessman who was business partners with mobster Paul Vario and Jimmy Burke and was involved in the Lufthansa heist. An associate of the Lucchese crime family
- 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.
- Samuel Israel III, former hedge fund manager that ran the former fraudulent Bayou Hedge Fund Group. He faked suicide.
- Ashok Jadejahas 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.[5]
- 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.
- 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).
- Christopher Rocancourt, a Rockefeller impersonator who defrauded Hollywood celebrities.
- 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".
- Richard Whitney, who stole from the New York Stock Exchange Gratuity Fund in the 1930s.
- Robert Douglas Hartmann, an American con man & felon implicated in a real estate mortgage investment Ponzi scheme which defrauded both private lenders & banks in excess of $34 million.
Related
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
See also
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Notes
- ↑ 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)
- ↑ http://money.cnn.com/2009/03/19/news/hedge_fund_fraud/index.htm?postversion=2009031914 retrieved on March 19, 2009
- ↑ Lozano, Juan A. (17 October 2006). "Judge vacates conviction of Ken Lay". Associated Press. http://www.cbsnews.com/stories/2006/10/17/ap/business/mainD8KQMS5O0.shtml.
References
- 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. Feb,2007.
- The Fraudsters - How Con Artists Steal Your Money(ISBN 978-1-903582-82-4) by Eamon Dillon, published September 2008 by Merlin Publishing
External links
- 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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