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 fraud, 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 who believe the opportunity to be legitimate
contribute substantial amounts of cash and receive
authentic-looking bonds in return. If the investment broker
knew that no such repositories existed and still received
payments for worthless bonds, then victims may sue him for
fraud.
Fraud is not easily proven in a court of
law. Laws concerning fraud may vary from state to state, but
in general several different conditions must be met. One of
the most important things to prove is a deliberate
misrepresentation of the facts. Did the seller know
beforehand that the product was defective or the investment
was worthless? Some employees of a large company may sell a
product or offer a service without personal knowledge of a
deception. The account representative who sold a fraudulent
insurance policy on behalf of an unscrupulous employer may
not have known the policy was bogus at the time of the sale.
In order to prove fraud , the accuser must demonstrate that
the accused had prior knowledge and voluntarily
misrepresented the facts.
Another important element to prove in a
fraud case is justifiable or actual reliance on the
expertise of the accused. If a stranger approached you and
asked for ten thousand dollars to invest in a vending
machine business, you would most likely walk away. But if a
well-dressed man held an investment seminar and mentioned
his success in the vending machine world, you might rely on
his expertise and perceived success to decide to invest in
his proposal. After a few months have elapsed without
further contact or delivery of the vending machines, you
might reasonably assume fraud has occurred. In court, you
would have to testify that your investment decision was
partially based on a reliance on his expertise and
experience.
The element of fraud which tends to
stymie successful prosecution is the obligation to
investigate. It falls on potential investors or customers to
fully investigate a proposal before any money exchanges
hands. Failure to take appropriate measures at the time of
the proposal can seriously weaken a fraud case in court
later. The accused can claim that the alleged victim had
every opportunity to discover the potential for fraud and
failed to investigate the matter thoroughly. Once a party
enters into a legally binding contract, remorse over the
terms of the deal is not the same as fraud.
If you suspect you are a victim of fraud,
consult a legal professional and collect all tangible
evidence of damages. Keep in mind that fraud is not easily
proven in a court of law, although the court of public
opinion may be squarely on your side.