What is fraud?
In a broad strokes definition, fraud is a deliberate misrepresentation which causes another person to suffer damages, usually monetary losses. Most people consider the act of lying to be fraudulent, but in a legal sense lying is only one small element of actual fraud. A salesman may lie about his name, eye color, place of birth and family, but as long as he remains truthful about the product he sells, he will not be found guilty of fraud. There must be a deliberate misrepresentation of the product’s condition and actual monetary damages must occur. Many fraud cases involve complicated financial transactions conducted by ‘white collar criminals’, business professionals with specialized knowledge and criminal intent. An unscrupulous investment broker may present clients with an opportunity to purchase shares in precious metal repositories, for example. His status as a professional investor gives him credibility, which can lead to a justified believability among potential clients. Those w
Fraud is defined to be “an intentional perversion of truth” or a “false misrepresentation of a matter of fact” which induces another person to “part with some valuable thing belonging to him or to surrender a legal right.” In addition to the traditional criminal definition of fraud, there are many regulatory laws that have very specific rules that must be complied with. If you do not follow these rules to the letter, you could be charged with and convicted of fraud. Federal Securities Law cover a broad scope of possible types of fraud. Fraud is not limited to the selling of bogus securities. Securities fraud also involves the sale of legitimate securities for illegal purposes. The laws also make “insider trading” illegal. “Insider trading” generally refers to the purchasing or selling of securities of a company while in possession of material information that has not been generally disclosed in the marketplace. (See our Securities Law section for further information.
