Source: http://nycrubberroomreporter.blogspot.com/2012/07/what-is-fraud.html
Timestamp: 2017-03-27 10:32:06
Document Index: 566161680

Matched Legal Cases: ['§ 1341', '§7201', '§ 1306', '§ 104', '§ 3555', '§ 13', '§ 231', '§ 329', '§ 19', '§ 346', '§ 486', '§ 78']

NYC Rubber Room Reporter and ATR CONNECT: What is "Fraud"?
NYCourts - New York Court Corruption LINK A false representation of a matter of fact—whether by words or by
conduct, by false or misleading allegations, or by concealment of what should
have been disclosed—that deceives and is intended to deceive another so that
the individual will act upon it to her or his legal injury.
is commonly understood as dishonesty calculated for advantage. A person who is
dishonest may be called a fraud. In the U.S. legal system, fraud is a specific
offense with certain features.
is most common in the buying or selling of property, including real estate, Personal Property, and intangible property, such as stocks,
bonds, and copyrights. State and federal statutes criminalize fraud, but not
all cases rise to the level of criminality. Prosecutors have discretion in
determining which cases to pursue.
Victims may also seek redress in civil
must be proved by showing that the defendant's actions involved five separate
elements: (1) a false statement of a material fact,(2) knowledge on the part of
the defendant that the statement is untrue, (3) intent on the part of the
defendant to deceive the alleged victim, (4) justifiable reliance by the
alleged victim on the statement, and (5) injury to the alleged victim as a
elements contain nuances that are not all easily proved. First, not all false
statements are fraudulent. To be fraudulent, a false statement must relate to a
material fact. It should also substantially affect a person's decision to enter
into a contract or pursue a certain course of action. A false statement of fact
that does not bear on the disputed transaction will not be considered
the defendant must know that the statement is untrue. A statement of fact that
is simply mistaken is not fraudulent. To be fraudulent, a false statement must
be made with intent to deceive the victim. This is perhaps the easiest element
to prove, once falsity and materiality are proved, because most material false
statements are designed to mislead.
the false statement must be made with the intent to deprive the victim of some
the victim's reliance on the false statement must be reasonable. Reliance on a
patently absurd false statement generally will not give rise to fraud; however,
people who are especially gullible, superstitious, or ignorant or who are
illiterate may recover damages for fraud if the defendant knew and took
advantage of their condition.
the false statement must cause the victim some injury that leaves her or him in
a worse position than she or he was in before the fraud.
statement of belief is not a statement of fact and thus is not fraudulent.
Puffing, or the expression of a glowing opinion by a seller, is likewise not
fraudulent. For example, a car dealer may represent that a particular vehicle
is "the finest in the lot." Although the statement may not be true,
it is not a statement of fact, and a reasonable buyer would not be justified in
relationship between parties can make a difference in determining whether a
statement is fraudulent. A misleading statement is more likely to be fraudulent
when one party has superior knowledge in a transaction, and knows that the
other is relying on that knowledge, than when the two parties possess equal
knowledge. For example, if the seller of a car with a bad engine tells the
buyer the car is in excellent running condition, a court is more likely to find
fraud if the seller is an auto mechanic as opposed to a sales trainee.
Misleading statements are most likely to be fraudulent where one party exploits
a position of trust and confidence, or a fiduciary relationship. Fiduciary
relationships include those between attorneys and clients, physicians and patients,
stockbrokers and clients, and the officers and partners of a corporation and
statement need not be affirmative to be fraudulent. When a person has a duty to
speak, silence may be treated as a false statement. This can arise if a party
who has knowledge of a fact fails to disclose it to another party who is
justified in assuming its nonexistence. For example, if a real estate agent
fails to disclose that a home is built on a toxic waste dump, the omission may
be regarded as a fraudulent statement. Even if the agent does not know of the
dump, the omission may be considered fraudulent. This is constructive fraud,
and it is usually inferred when a party is a fiduciary and has a duty to know
of, and disclose, particular facts.
is an independent criminal offense, but it also appears in different contexts
as the means used to gain a legal advantage or accomplish a specific crime. For
example, it is fraud for a person to make a false statement on a license
application in order to engage in the regulated activity. A person who did so
would not be convicted of fraud. Rather, fraud would simply describe the method
used to break the law or regulation requiring the license.
resembles theft in that both involve some form of illegal taking, but the two
should not be confused. Fraud requires an additional element of False Pretenses created to induce a victim to turn over
property, services, or money. Theft, by contrast, requires only the
unauthorized taking of another's property with the intent to permanently
deprive the other of the property. Because fraud involves more planning than
does theft, it is punished more severely.
and state criminal statutes provide for the punishment of persons convicted of
fraudulent activity. Interstate fraud and fraud on the federal government are
singled out for federal prosecution. The most common federal fraud charges are
for mail and wire fraud. Mail and wire fraud statutes criminalize the use of
the mails or interstate wires to create or further a scheme to defraud (18
U.S.C.A. §§ 1341, 1342).
fraud against the federal government consists of the willful attempt to evade
or defeat the payment of taxes due and owing (I.R.C. §7201). Depending on the
defendant's intent, tax fraud results in either civil penalties or criminal
punishment. Civil penalties can reach an amount equal to 75 percent of the
underpayment. Criminal punishment includes fines and imprisonment. The degree
of intent necessary to maintain criminal charges for tax fraud is determined on
a case-by-case basis by the Internal Revenue
Service and federal prosecutors.
are other federal fraud laws. For example, the fraudulent registration of Aliens is punishable as a misdemeanor under federal law
(8 U.S.C.A. § 1306). The "victim" in such a fraud is the U.S.
government. Fraud violations of banking laws are also subject to federal
prosecution (18 U.S.C.A. §§ 104 et seq.).
Federal Sentencing Guidelines recommend consideration of the intended victims
of fraud in the sentencing of fraud defendants. The guidelines urge an upward
departure from standard sentences if the intended victims are especially
vulnerable. For example, if a defendant markets an ineffective cancer cure,
that scheme, if found to be fraudulent, would warrant more punishment than a
scheme that targets persons generally, and coincidentally happens to injure a
vulnerable person. Federal courts may require persons convicted of fraud to
give notice and an explanation of the conviction to the victims of the fraud
(18 U.S.C.A. § 3555).
states maintain a general criminal statute designed to punish fraud. In
Arizona, the statute is called the fraudulent scheme and artifice statute. It
reads, in pertinent part, that "[a]ny person who, pursuant to a scheme or
artifice to defraud, knowingly obtains any benefit by means of false or
fraudulent pretenses, representations, promises or material omissions" is
guilty of a felony (Ariz. Rev. Stat. Ann. § 13-2310(A)).
further criminalize fraud in a variety of settings, including trade and
commerce, Securities, taxes, real estate, gambling, insurance,
government benefits, and credit. In Hawaii, for example, fraud on a state tax
return is a felony warranting a fine of up to $100,000 or three years of
imprisonment, or both, and a fraudulent corporate tax return is punished with a
fine of $500,000 (Haw. Rev. Stat. § 231-36). Other fraud felonies include fraud
in the manufacture or distribution of a controlled substance (§ 329-42) and
fraud in government elections (§ 19-4). Fraud in the application for and
receipt of public assistance benefits is punished according to the illegal
gain: fraud in obtaining over $20,000 in food coupons is a class B felony;
fraud in obtaining over $300 in food coupons is a class C felony; and all other
public assistance fraud is a misdemeanor (§ 346-34). Alteration of a
measurement device is fraud and is punished as a misdemeanor (§ 486-136).
civil court, the remedy for fraud can vary. In most states, a plaintiff may
recover "the benefit of the bargain." This is a measure of the
difference between the represented value and the actual value of the
transaction. In some states, a plaintiff may recover as actual damages only the
value of the property lost in the fraudulent transaction. All states allow a
plaintiff to seek Punitive Damages in addition to actual damages. This right is
exercised most commonly in cases where the fraud is extremely dangerous or
costly. Where the fraud is contractual, a plaintiff may choose to cancel, or
rescind, the contract. A court order of Rescission returns all property and restores the parties to
their precontract status.
is also penalized by administrative agencies and professional organizations
that seek to regulate certain activities. Under state statutes, a professional
may lose a license to work if the license was obtained with a false statement.
particularly well publicized area of fraud is Corporate Fraud. Corporate fraud cases are largely governed by
the Securities Exchange Act of 1934 (15 USCA §§ 78a et seq.), along with other
rules and regulations propagated by theSecurities and
Exchange Commission. These laws were a
response to the market turmoil during the 1930s and well-publicized corporate
Securities Exchange Act and the SEC regulate anything having to do with the
trading or selling of securities and stocks. They govern fraudulent behavior
ranging from stock manipulation to insider trading. They also provide for civil
and criminal penalties for corporate fraud.
the act and the SEC, in the early part of the twenty-first century, corporate
fraud began to seem endemic. Such well-known companies as energy trader Enron, Telecommunications company WorldCom, cable provider Adelphia, and
other lesser-known firms went into Bankruptcy as a result of corporate fraud. In light of
these events, Congress decided to tighten up corporate fraud requirements with
the passages of the Sarbanes-Oxley Act of
2002 (U.S. PL 107-204).
other features, Sarbanes-Oxley required expanded and more frequent disclosure
by public companies of their finances to prevent fraud. It created a Public
Company Accounting Oversight Board to register and regulate accounting firms
and accounting practices. It also enhanced the SEC's power to monitor and
investigate compliance with securities laws, adding stiff penalties for
fraudulent behavior by corporations, their officers, and their accountants.
John. 2002. "Corporate Fraud: Where Should the Buck Really Stop?" American Bankruptcy Institute Journal 21 (November).
Larry. 2002. "Market vs. Regulatory Responses to Corporate Fraud: A
Critique of the Sarbanes-Oxley Act of 2002." Journal of Corporation Law 28 (fall).
West's Encyclopedia of
American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights
fraud n. the intentional use of
deceit, a trick or some dishonest means to deprive another of his/her/its
money, property or a legal right. A party who has lost something due to fraud
is entitled to file a lawsuit for damages against the party acting
fraudulently, and the damages may include punitive damages as a punishment or
public example due to the malicious nature of the fraud. Quite often there are
several persons involved in a scheme to commit fraud and each and all may be
liable for the total damages. Inherent in fraud is an unjust advantage over
another which injures that person or entity. It includes failing to point out a
known mistake in a contract or other writing (such as a deed), or not revealing
a fact which he/she has a duty to communicate, such as a survey which shows there
are only 10 acres of land being purchased and not 20 as originally understood.
Constructive fraud can be proved by a showing of breach of legal duty (like
using the trust funds held for another in an investment in one's own business)
without direct proof of fraud or fraudulent intent. Extrinsic fraud occurs when
deceit is employed to keep someone from exercising a right, such as a fair
trial, by hiding evidence or misleading the opposing party in a lawsuit. (See: constructive fraud, extrinsic fraud, intrinsic fraud, fraud in the
inducement, fraudulent conveyance) damages)
fraud noun artfulness, artifice, beguilement, charlatanry, cheating, chicane, chicanery, collusion, covin, cozenage, craftiness, crookedness, cunning, deceit, deceitful
practice, deceitfulness, deception, deceptiveness, delusiveness,dishonesty, dissembling, dissimulation, double-dealing, dupery, duplicity, fabrication, fallacia, fallaciousness, false
conduct, false
representation, falseness, falsification, falsity, fraudulence, fraus, furtiveness, guile, improbity, insidiousness,intentional
deception, lack
of probity, mendacity, misrepresentation, perfidy, pretense, prevarication, quackery, ruse, sham,
sneakiness, subreption, surreptitiousness, swindling, treachery, trickery, trickiness, underhandedness,untruthfulness, wiliness
Associated concepts: action for fraud, actionable fraud, bad
faith, collateral fraud, collusion, constructive
fraud, debt created by fraud, deceit,
discovery of fraud, extrinsic
fraud, false
representation, fraudulent misrepresentation, fraudulent
representation, implied fraud, intrinsic
fraud, material fraud, misrepresentation,
positive fraud, presumptive fraud, public fraud, statute
of frauds Foreign phrases: Qui per fraudem agit frustra agit.What a man
does fraudulently he does vainly. Vendens
eandem rem duobus falsarius est. He is
fraudulent who sells the same thing to two persons. Dolus
auctoris non nocet successori.The fraud of a predecessor does not prejudice the
successor. Fraus latet in generalibus. Fraud
lies hidden in general expressions. Fraus
est odiosa et non praesumenda. Fraud
is odious and will not be presumed. Fraus
et jus nunnuam cohabitant. Fraud and justice never dwell together. Nulla
pactione effici potest ut dolus praestetur. It
cannot be provided in any contract that fraud can be practiced. Nemo ex
dolo suo proprio relevetur, aut auxilium capiat. No one
is relieved or gains an advantage by his own fraud. Nemo
videtur fraudare eos qui sciunt et consentiunt. No one
is considered as deceiving those who know and consent to his acts. Lata
culpa dolo aequiparatur. Gross fault or neggigence is equivalent to fraud. Ex dolo
malo non oritur actio. No right of action can arise out of fraud. Non
decipitur qui scit se decipi. A
person is not deceived who knows he is being deceived. Fraus
et dolus nemini patrocinari debent. Fraud
and deceit should not excuse anyone. Dolus
et fraus nemini patrocinentur; patrocinari debent. Deceit
and fraud shall excuse or benefit no man; they themselves need to be excused. Dolum
ex indiciis perspicuis probari convenit. Fraud
should be established by clear showings of proof. Aliud
est celare, aliud tacere. To conceal is one thing, to be silent is another. Dolus
circuitu non pergator. Fraud is not purged by circuity. Quod
alias bonum et justum est, si per vim vel fraudem petatur, malum et injustum
efficitur. What otherwise is good and just, becomes bad and
unjust if it is sought by force and fraud. Megna
negligentia culpa est; magna culpa dolus est. Gross
negligence is fault; gross fault is equivalent to a fraud. Dolo
malo pactumse non servatuuum. An
agreement induced by fraud is not valid. Fraus
est celare fraudem. It is fraud to conceal a fraud.
Director of the DOE's HR Connect stated that I did things and behaved in ways that I didn't. I called in a DOI investigation to look into the matter. They referred it to SCI who stated they will not investigate. Now what? In hiss capacity as a city employee he committed fraud. No? NYC Charter section 1116