Criminal Fraud Law
A deliberate scheme to obtain financial or similar gain by using false statements, misrepresentations, concealment of important information, or deceptive conduct is known as fraud. Fraud typically involves getting property to which someone is not legally entitled, but it is different from criminal offenses categorized as theft in two important ways. Theft generally involves directly obtaining money or something else of value by stealing it, or by the use or threat of force. The offenses included in the category of fraud, by contrast, involve a “scheme or artifice” to convince someone to give something of value based on false statements or false pretenses. Fraud is therefore often considered a form of white collar crime, unlike most forms of theft.
The second key difference between fraud and theft is that the “scheme or artifice” is the key element of a fraud offense, instead of the actual wrongful acquisition of property. This means that a person could be found guilty of fraud even if the scheme does not succeed.
“Scheme or Artifice”
Federal fraud statutes, along with most state laws, require proof of a “scheme or artifice” to defraud. The statutes do not provide an explicit definition of these terms, but courts have developed definitions through precedent. The U.S. Supreme Court held in Carpenter v. United States that the terms apply to any plan intended to deprive another of property, regardless of whether it would cause immediate financial harm. Congress has expanded the scope of federal fraud statutes beyond schemes that affect property interests to include honest services fraud. This applies to schemes intended “to deprive another of the intangible right of honest services,” and it has generally been used to prosecute offenses related to government corruption, such as bribery.
Mail and Wire Fraud
The federal government asserts jurisdiction over fraud offenses that make use of interstate commerce. In the 19th century, Congress passed the mail fraud statute, which prohibits any scheme or artifice to defraud that involves false representations transmitted by the U.S. Postal Service and other carriers that deliver between the states. Congress passed the wire fraud statute in the mid-20th century, expanding the provisions of mail fraud to communications sent by telephone, radio, or television. Courts have since expanded the wire fraud statute’s scope to cover cable and internet communications as well.
Bank Fraud
The offenses categorized as bank fraud involve two types of schemes. In schemes to defraud banks and other financial institutions, a person might use forged or altered checks to withdraw money from fake accounts. Schemes targeting bank depositors might involve theft or forgery of checks drawn on real accounts, or misuse of deposited funds by bank employees or officers.
Credit Card Fraud
Credit transactions make up an increasingly large percentage of consumer purchases, and credit card fraud is growing along with it. Credit card fraud schemes are a common feature of identity theft, with fraudsters using people’s personal identification information, such as name, date of birth, and address, to open new accounts, or stealing credit card information to make counterfeit cards.
Insurance Fraud
Insurance fraud includes any scheme to obtain insurance coverage through deceptive means, or false or misleading claims made in order to obtain money from an insurance policy payout. “Soft” insurance fraud involves false information provided in an application for coverage or a claim for a damage payout, such as concealing information that might result in a denial of coverage or overstating the amount of damages in a claim. “Hard” insurance fraud involves fabricating a loss where none occurred, such as claiming damages for the loss of an asset that never existed or causing a loss, such as by setting fire to a building, in order to make a claim.
Securities Fraud
Numerous federal and state laws regulate the offering, buying, selling, and trading of stocks, bonds, and other securities. Insider trading, investment schemes, and other fraudulent acts affecting stock and commodities markets fall under the category of securities fraud.
Fraud Against the Government
Federal law deals with fraudulent acts targeting specific areas of government separately from fraud that targets private individuals or businesses. This includes fraud by government contractors, private individuals and businesses, and government employees and officials themselves.
Tax Fraud
Efforts to avoid tax liability through fraudulent means, or efforts to avoid payment of tax altogether, might be categorized as tax evasion. False statements and misrepresentations in the course of preparing tax documents, with the intent of reducing the amount of tax a person or business should owe, is generally considered tax fraud.
Welfare Fraud
False or misleading statements made to state or federal public assistance programs are known as welfare fraud. In certain well-publicized cases, people convicted of welfare fraud created dozens of aliases in order to claim benefits multiple times, and also claimed as dependents dozens of children who did not actually exist.
Perjury
Certain cases of the offense known as perjury, which involves knowingly making false statements of material fact, either under oath or “under penalty of perjury,” are closely related to fraud. Unsworn statements signed “under penalty of perjury” in connection with a public assistance program or tax program, for example, could be considered both fraud and perjury.
