Fraud

In the broadest sense, a fraud is a deception made for personal gain, although it has a more specific legal meaning, the exact details varying between jurisdictions. Many hoaxes are fraudulent, although those not made for personal gain are not best described in this way. Not all frauds are hoaxes - electoral fraud, for example. Fraud permeates many areas of life, including art, archaeology and science. In the broad legal sense a fraud is any crime or civil wrong for gain that utilises some deception practiced on the victim as its principal method.

In criminal law, fraud is the crime or offense of deliberately deceiving another in order to damage them — usually, to obtain property or services from him or her unjustly. [1]. Fraud can be accomplished through the aid of forged objects. In the criminal law of common law jurisdictions it may be called "theft by deception," "larceny by trick," "larceny by fraud and deception" or something similar. Fraud can be committed through many methods, including mail, wire, phone, and the internet (see computer crime and internet fraud).

Acts which may constitute criminal fraud include:

• bait and switch
• confidence tricks such as the 419 fraud, Spanish Prisoner, and the shell game
• false advertising
• identity theft
• false billing
• forgery of documents or signatures
• taking money which is under your control, but not yours (embezzlement)
• health fraud, selling of products of spurious use, such as quack medicines
• creation of false companies or "long firms"
• false insurance claims
• bankruptcy fraud, is a US federal crime that can lead to criminal prosecution under the charge of theft of the goods or services
• investment frauds, such as Ponzi schemes
• securities frauds such as pump and dump

Fraud, in addition to being a criminal act, is also a type of civil law violation known as a tort. A tort is a civil wrong for which the law provides a remedy. A civil fraud typically involves the act of making a false representation of a fact susceptible of actual knowledge which is relied upon by another person, to that person's detriment.

English Law

In England and Wales the common law offence of conspiracy to defraud has been retained alongside the statutory form of conspiracy, and it is far wider in its scope than any of the individual statutory offences based on theft including agreements to do something that might not be an offence if done by one person. Examples given by the Law Commission include:

the unauthorised acquisition, disclosure or misuse of confidential information, which does not count as "property" for the purposes of theft;

the abuse of a fiduciary position to make a secret profit;

obtaining a service dishonestly but without deception, e.g. by giving false information to a machine which, in law, cannot be "deceived" because it has no mind; etc.

The term "fraud" is used generically to describe a number of offences in which the overriding component is that of deception (cf the allied torts such as conversion). Many of the criminal offences have a further common element of dishonesty, although in some there is no requirement that the dishonest person is intent on gaining for himself. It is sufficient that he has an intent to cause to loss to another.

Many of the criminal offences of fraud have been consolidated into the Theft Act 1968, the Theft Act 1978 and the Theft (Amendment) Act 1996 which created the new offence of obtaining a money transfer by deception. More specific offences may be found in other statutes such as impersonating a police officer under s90 Police Act 1996; or using a forged instrument under the Forgery & Counterfeiting Act 1981 (previously an offence known under the somewhat prosaic term of "uttering"). Criminal offences of fraud at English Law:

• Obtaining Property by Deception s15 TA 1968
• Obtaining Services by Deception s1 TA 1978
• Obtaining a Pecuniary Advantage by Deception s16 TA 1968
• False Accounting s18 TA 1968
• False Statements by Company Directors s19 TA 1968
• Suppression of Documents
• Retaining a Wrongful Credit
• Fraudulent trading occurs where a company has continued to trade and incur debts when officers knew there was no reasonable prospect of the creditors ever being paid or where a company is being run for a fraudulent purpose e.g. regularly submitting falsely inflated bills to customers for work done or services rendered. See generally corporate liability, bearing in mind that there are a wide range of regulatory offences under the Companies Act 1985 and the Insolvency Act 1986, and for bankruptcy offences under the Company Directors Disqualification Act 1986 and the Insolvency Act to regulate the behaviour of bankrupt people.
• Insider dealing in regulated markets as opposed to private deals.
• Social Security fraud
• s2 Computer Misuse Act 1990.

Known and alleged fraudsters and various forms of fraud

• Alves Reis, a Portuguese fraudster who forged documents to print official escudo banknotes. He is considered to be the biggest counterfeiter of the 20th century. In 1925 he counterfeited 100,000,000 PTE. Adjusted for inflation, it would be worth about 150 Million USD today.
• Frank Abagnale Jr., US impostor who wrote bad checks
• Ivan Boesky, inside trader in the 1980s
• Otto von Bressensdorf. German-born fraudster
• Cassie Chadwick, who pretended to be Andrew Carnegie's daughter to get loans
• Anthony Di Angelis, "the Salad Oil King"
• John Draper, also known as Captain Crunch, was a phone phreaker (not really a fraudster but he famously known as a fraudster by phone company in early and late 1970's)
• William Duer, accused of embezzlement of $238,000 from US Treasury Department in the 1790s
• Leontina Espinoza, a Chilean woman who did not give birth to 58 children
• Billie Sol Estes - cotton subsidy and loan fraud in 1960s, resulting in the eventual creation of the federal Office of Inspector General
• Shinichi Fujimura - archeologist announced Oct. 27 that it had discovered eight stoneware pieces, from a layer of earth, more than 600,000 years old in the Kamitakamori ruins in Tsukidate, Miyagi Prefecture. Experts believed the pieces were the nation's oldest. However, Fujimura confessed that he had buried the stones at the ruins in advance of the excavation.
• Sante and Kenneth Kimes, US fraudsters
• Ivar Kreuger “The Match King”
• Dennis Levine
• Mirko Manojlovic South African conman and fraudster.
• Gregor MacGregor, Scottish conman who tried to attract investment and settlers for a non-existent country of Poyais
• Robert Maxwell, UK newspaper tycoon who milked his companies dry
• Gaston Means
• Michael Milken, "The Junk Bond King"
• Barry Minkow and the ZZZZ Best
• Antonio Jiminez Moreno, welfare fraud
• Frederick Emerson Peters, US impersonator who wrote bad checks
• Charles Ponzi, and Ponzi scheme
• Peter Popoff, whose faith healing-based Pentecostal televangelist ministry was debunked by professional skeptic James Randi and television presenter Johnny Carson in the 1980s
• Christopher Rocancourt who defrauded Hollywood celebrities
• Oscar R. Rosales, a cardiologist and professor at the Yale School of Medicine plagiarized and intentionally misrepresented his work in an application for a national medical research grant (see reports of the findings by the Public Health Service's Office of Research Integrity. [2]
• Serge Rubinstein, Russian-born diamond swindler
• Rajendra Sethia, Indian fraudster
• Franz Tausend, fake alchemist
• Richard Whitney, stole from the New York Stock Exchange Gratuity Fund in 1930s
• Dorothy Mae Woods, US "Welfare Queen"
• Robert Vesco, US fugitive financier

See also

• Accounting scandals
• Affinity fraud
• Benford's law
• Caper stories (such as The Sting)
• Click fraud
• Corporate abuse
• Creative accounting
• Credit card fraud
• False Claims Law
• Front running
• Get-rich-quick schemes
• Hoax
• Inspector General
• Internet fraud
• Mail fraud
• Phishing
• pious frauds, a form of fraud in religion motivated by sincere zeal
• Phone fraud
• Political corruption
• Ponzi scheme
• Quatloos.com
• Questioned document examination
• Spin
• The National Council Against Health Fraud
• SAS 99

References

Podgor, Ellen S. Criminal Fraud, (1999) Vol, 48, No. 4 American Law Review 1[3]