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From Wikipedia, the free encyclopedia

In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain.

A hoax also involves deception, but without the intention of gain, or of damaging or depriving the victim; the intention is often humorous.

Contents

Types of fraudulent acts

Fraud can be committed through many media, including mail, wire, phone, and the Internet (computer crime and Internet fraud). The difficulty of checking identity and legitimacy online, and the ease with which hackers can divert browsers to dishonest sites and steal credit card details, the international dimensions of the web and ease with which users can hide their location, all contribute to the very rapid growth of Internet fraud.

Types of criminal fraud include:

Elements of fraud

Common law fraud has nine elements:[1][2]

  1. a representation of an existing fact;
  2. its materiality;
  3. its falsity;
  4. the speaker's knowledge of its falsity;
  5. the speaker's intent that it shall be acted upon by the plaintiff;
  6. plaintiff's ignorance of its falsity;
  7. plaintiff's reliance on the truth of the representation;
  8. plaintiff's right to rely upon it; and
  9. consequent damages suffered by plaintiff.

Most jurisdictions in the United States require that each element be pled with particularity and be proved with clear, cogent, and convincing evidence (very probable evidence) to establish a claim of fraud. The measure of damages in fraud cases is to be computed by the "benefit of bargain" rule, which is the difference between the value of the property had it been as represented, and its actual value. Special damages may be allowed if shown proximately caused by defendant's fraud and the damage amounts are proved with specificity.

Notable fraudsters

  • Buddy Adkins & Johnny Bonanno, US: Spector Freight Systems owner(s) falsely represented as a legitimate trucking firm to swindle tens of thousands from transportation firms by false pretenses. Also used check fraud as well as wire and mail fraud.
  • Frank Abagnale Jr., US impostor who wrote bad checks and falsely represented himself as a qualified member of professions such as airline pilot, doctor, and attorney. The film Catch Me If You Can is based on his life.
  • Eddie Antar, founder of Crazy Eddie, who has about $1 billion worth of judgments against him stemming from fraudulent accounting practices at that company.
  • Cassie Chadwick, who pretended to be Andrew Carnegie's daughter to get loans.
  • Charles Dawson, an amateur British archeologist who claimed to have found the Piltdown man.
  • Marc Dreier, Managing founder of Attorney firm Dreir LLP. Prosecutors allege that from 2004 through December 2008, He sold approximately $700 million worth of fictitious promissory notes.[3]
  • Richard Eaton, an English businessman who was business partners with mobster Paul Vario and Jimmy Burke and was involved in the Lufthansa heist. An associate of the Lucchese crime family
  • Bernard Ebbers, founder of WorldCom, which inflated its asset statements by about $11 billion.
  • Ramón Báez Figueroa, banker from the Dominican Republic and former president of Banco Intercontinental. Sentenced on October 21, 2007 to ten years in prison for a US$2.2 billion fraud case that drove the Caribbean nation into an economic crisis in 2003.
  • Martin Frankel is a former U.S. financier, convicted in 2002 of insurance fraud worth $208 million, racketeering and money laundering.
  • Samuel Israel III (1959)- Former hedge fund manager that ran the former fraudulent Bayou Hedge Fund Group. He had pretended to faked suicide.
  • Konrad Kujau, German fraudster and forger responsible for the "Hitler Diaries".
  • Kenneth Lay, the American businessman who built energy company Enron. He was one of the highest paid CEOs in America until he was ousted as Chairman and was convicted of fraud and conspiracy, although as a result of his death, his conviction was vacated.[4]
  • Nick Leeson, English trader whose unsupervised speculative trading caused the collapse of Barings Bank.
  • James Paul Lewis, Jr., ran one of the biggest ($311 million) and longest running Ponzi Schemes (20 years) in US history.
  • Gregor MacGregor, Scottish conman who tried to attract investment and settlers for the non-existent country of Poyais.
  • Bernard Madoff, creator of a $65 billion Ponzi scheme - the largest investor fraud ever attributed to a single individual.
  • Colleen McCabe, British headmistress who stole £½ million from her school.
  • Gaston Means, a professional conman during U.S. President Warren G. Harding's administration.
  • Matt the Knife, American born con artist, card cheat and pickpocket who, from the ages of approximately 14 through 21, bilked dozens of casinos, corporations and at least one Mafia crime family out of untold sums.
  • Barry Minkow and the ZZZZ Best scam.
  • Michael Monus, founder of Phar-Mor, which ultimately cost its investors more than $1 billion.
  • F. Bam Morrison, who conned the town of Wetumka, Oklahoma by promoting a circus that never came.
  • Lou Pearlman, former boy-band manager indicted by a federal grand jury in Orlando on charges that he schemed to bilk banks out of more than $100 million.
  • Frederick Emerson Peters, US impersonator who wrote bad checks.
  • Charles Ponzi and the Ponzi scheme.
  • Alves Reis, who forged documents to print 100,000,000 PTE in official escudo banknotes (adjusted for inflation, it would be worth about US$150 million today).
  • Christopher Rocancourt, a Rockefeller impersonator who defrauded Hollywood celebrities.
  • John Spano, a struggling businessman who faked massive success in an attempt to buy out the New York Islanders of the NHL.
  • John Stonehouse, the last Postmaster-General of the UK and MP who faked his death.
  • Kevin Trudeau (1963) – US writer and billiards promoter, convicted of fraud and larceny in 1991, known for a series of late-night infomercials and his series of books about "Natural Cures "They" Don't Want You to Know About".
  • Richard Whitney, who stole from the New York Stock Exchange Gratuity Fund in the 1930s.
  • In the UK a report concluded that the total costs of fraud and dealing with fraud in the year 2005-2006 was at least 13.9 Billion GBP.
  • Michael Sabo (1945) who was best known as a check, stocks and bonds forger. He became notorious in the 1960s throughout the 1990s as a "Great Impostor" over 100 aliases, and earned millions from such.
  • Elliot Castro, a Scottish former credit card fraudster who detailed his crimes in a biography and now advises banks and financial institutions.
  • Ashok Jadeja (2009) who has been accused of cheating people from across India of crores of rupees on the pretext of having divine blessings.

Different legal traditions

Jewish law: Geneivat da'at

In Jewish law, the concept of geneivat da'at (גניבת דעת, literally "mind theft") covers various forms of deception and fraud. One Midrash states that geneivat da'at is the worst type of theft, because it directly harms the person, not merely their money.

See also

References

  1. ^ Morlan v. Kelly, No. 2009-UP-002, SC Supreme Court, 2009. [1]
  2. ^ Schnellmann v. Roettger, 373 S.C. 379, 382, 645 S.E.2d 239, 241 (2007).[2]
  3. ^ http://money.cnn.com/2009/03/19/news/hedge_fund_fraud/index.htm?postversion=2009031914 retrieved on March 19, 2009
  4. ^ Lozano, Juan A. (17 October 2006). "Judge vacates conviction of Ken Lay". Associated Press. http://www.cbsnews.com/stories/2006/10/17/ap/business/mainD8KQMS5O0.shtml. 

External links


1911 encyclopedia

Up to date as of January 14, 2010

From LoveToKnow 1911

FRAUD (Lat. fraus, deceit), in its widest sense, a term which has never been exhaustively defined by an English court of law, and for legal purposes probably cannot usefully be defined. But as denoting a cause of action for which damages can be recovered in civil proceedings it now has a clear and settled meaning. In actions in which damages are claimed for fraud, the difficulties and obscurities which commonly arise are due rather to the complexity of modern commerce and the ingenuity of modern swindlers than to any uncertainty or technicality in the modern law. To succeed in such an action, the person aggrieved must first prove a representation of fact, made either by words, by writing or by conduct, which is in fact untrue. Mere concealment is not actionable unless it amounts not only to suppressio veri, but to suggestio falsi. An expression of opinion or of intention is not enough, unless it can be shown that the opinion was not really held, or that the intention was not really entertained, in which case it must be borne in mind, to use the phrase of Lord Bowen, that the state of a man's mind is as much a matter of fact as the state of his digestion. Next, it must be proved that the representation was made without any honest belief in its truth, that is, either with actual knowledge of its falsity or with a reckless disregard whether it is true or false. It was finally established, after much controversy, in the case of Derry v. Peek in 1889, that a merely negligent misstatement is not actionable. Further, the person aggrieved must prove that the offender made the representation with the intention that he should act on it, though not necessarily directly to him, and that he did in fact act in reliance on it. Lastly, the complainant must prove that, as the direct consequence, he has suffered actual damage capable of pecuniary measurement.

As soon as the case of Derry v. Peek had established, as the general rule of law, that a merely negligent misstatement is not actionable, a statutory exception was made to the rule in the case of directors and promoters of companies who publish prospectuses and similar documents. By the Directors' Liability Act 1890, such persons are liable for damage caused by untrue statements in such documents, unless they can prove that they had reasonable grounds for believing the statements to be true. It is also to be observed that, though damages cannot be recovered in an action for a misrepresentation made with an honest belief in its truth, still any person induced to enter into a contract by a misrepresentation, whether fraudulent or innocent, is entitled to avoid the contract and to obtain a declaration that it is not binding upon him. This is in accordance with the rule of equity, which since the Judicature Act prevails in all the courts. Whether the representation is fraudulent or innocent, the contract is not void, but voidable. The party misled must exercise his option to avoid the contract without delay, and before it has become impossible to restore the other party to the position in which he stood before the contract was made. If he is too late, he can only rely on his claim for damages, and in order to assert this claim it is necessary to prove that the misrepresentation was fraudulent. Fraud, in its wider sense of dishonest dealing, though not a distinct cause of action, is often material as preventing the acquisition of a right, for which good faith is a necessary condition. Also a combination or conspiracy by two or more persons to defraud gives rise to liabilities not very clearly or completely defined.


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Bible wiki

Up to date as of January 23, 2010

From BibleWiki

In the common acceptation of the word, an act or course of deception deliberately practised with the view of gaining a wrong and unfair advantage. Its connotation is less wide than that of deceit, which is used of concealment or perversion of the truth for the purpose of misleading. Stratagems employed in war to deceive the enemy are not morally wrong; yet even in war it would not be right to practise fraud on him. Fraud is something which militates not only against sincerity and straightforward conduct, but against justice, and justice is due even to enemies.

The question of fraud is of special importance in the matter of contracts. It is of the essence of a contract that there should be an agreement of wills between the parties as to its subject-matter. Without such an agreement in all that is essential there can be no contract. Hence, if by fraud one of the parties to a contract has been led into a mistake about what belongs to its substance, the contract will be null and void. If a dealer in jewellery offers a piece of coloured glass to a customer as a valuable ruby, and induces him to pay a Iarge sum of money for it, the contract is for the want of consent. The customer wished to buy a precious stone, and he was offered glass. If one of the parties to a contract is fraudulently led into a mistake about something which is merely accidental to the contract and which did not induce him to enter into it, the contract will be valid and there is no reason for setting it aside. If a higher price or more favourable terms were obtained by means of the fraud, there was, of course, wrong done thereby, and if, in consequence, more than the just value was given, there will be an obligation to make restitution for the injustice. But there was no mistake about the substance of the contract, there was union of wills therein, and so, there is no reason why it should not stand. If, however, such a mistake, not indeed regarding the substance of the contract, but caused by the fraud of the other party was the reason why the contract was entered into there are special reasons why such a contract should not be upheld. As there was agreement about the substance of the contract, this will, indeed, be valid, but inasmuch as the consent of the party who was deceived was obtained by fraud and would not otherwise have been given, the contract should be voidable at the option of the party deceived. It is a matter of importance for the public weal that no one should be able to reap benefit from fraud (Nemini fraus sua patrocinari debet), as canonists and moralists never tire of repeating, Moreover, the fraudulent party inflicted an injury on the other by inducing him by fraud to do what he would not have done otherwise. It is only equitable and right that one who has thus suffered should be able to rescind the contract and put himself again in the same position as he was in before -- if that be possible. Contracts, therefore, induced by the fraud of one of the parties, eaten though there was no substantial mistake, are voidable at the option of him who was deceived, if the contract can be annulled. If the fraud was committed by a third person without the connivance of the other party to the contract, there will be no reason for annulling it.

Besides fraud committed against a person and against justice, canonists and moral theologians frequently mention fraud against law. One is said to act in fraud of the law when he is careful to observe the letter, but violates the spirit of it and the intention of the lawgiver. Thus one who is bound to fast would act in fraud of the Church's law if on a fasting day he undertook some hard and unnecessary work, such as digging, in order to be excused from fasting. On the other hand, there is no fraud against the law committed by one who leaves the territory within which the law binds even if he do this with tne intention freeing himself from the law. He is at liberty to go and live where he pleases, and he cannot act fraudulently in doing what he has a right to do . And so, on a fast day which is only kept in some particular diocese, one who lives in the diocese may without sin leave it even with the intention of escaping from the obligation of fasting, and when he is once outside the limits of the diocese he is no longer bound by a purely diocesan law. There are two celebrated declarations of the Holy See which seem at first sight to contradict this doctrine. The first occurs in the Bull "Superna" of Clement X (21 June, 1670), where the pope says that a regular confessor may absolve strangers who come to him from another diocese from sins reserved therein unless he knows that they have come to him in fraud of the reservation. These words have caused great difficulty and have been variously interpreted by canonists and divines.

According to the common opinion they limit the power of the confessor only when the principal motive which induced the penitent to leave his diocese was to avoid the jurisdiction of his own pastor and to make his confession in a place where the sin not reserved. By reserving the sin in question the ecclesiastical authority desired to compel a delinquent to appear before it and to receive the necessary correction; by leaving the diocese with a view to making his confession elsewhere the penitent would circumvent the law and make it nugatory. If he left the diocese from some other motive, and while outside took the opportunity to make his confession, he would not act in fraud of the law of reservation. Urban VIII (14 Aug. 1627) approved of a declaration of the Sacred Congregation of the Council according to which parties subject to the Tridentine law of clandestinity would not contract a valid marriage in a place where that law was not in force if they betook themselves thither with fraud. There was a similar difficulty as to the meaning of fraud in this decree. According to the more common view, the parties were guilty of fraud by the very fact of leaving the parish with the intention of contracting marriage without the assistance of the parish priest, whose right and duty it was to testify to the valid celebration of marriage of his parishineers. This question, however, is now only of historical interest, as the law has been radically changed by the papal decree "Ne temere" (2 Aug., 1907) q.v.

Portions of this entry are taken from The Catholic Encyclopedia, 1907.

Simple English

Fraud (or defrauding) is a crime in which someone tricks somebody else into giving them something, especially money or a valuable object for less than it is worth at the time. A fraud can also mean somebody who does such tricks. Fraudulent is the word used to describe something that is fraud, or is causing fraud. To defraud someone is to commit a fraud against them.

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