The definition of fraud is simple, but the potential legal repercussions of a fraud charge are far reaching. In this article, we’ll examine the basic elements of fraud, the different types of fraud recognized by the federal and state courts of California, and what steps can be taken to protect your rights if you are confronting a serious fraud allegation.
What is Considered Fraud in California’s Federal and State Laws?
Fraud is defined as the misrepresentation of a material fact, or an omission of fact, leading someone (e.g., a third party) to part with their money. That means that for the government (whether federal or state) to prove fraud beyond a reasonable doubt, it must be demonstrated that your case met these elements.
But What is a Misrepresentation of a Material Fact?
Here’s where the nuances of fraud law become more apparent. As stated above, in the context of fraud a misrepresentation of material fact means that through falsehood or omission, important elements of a financial transaction were intentionally misconstrued to separate a business, person, or government entity from money or other financial instruments.
An example in the investment fraud context would be as follows: A business or individual claims that they are seeking investors for a building project. However, once the money is collected, it is not invested into property building or maintenance but is instead pocketed. The material fact misrepresented here is that the money would be invested in building projects, rather than for the private use of a business or individual. This is therefore a classic case of fraud. If the investor(s) knew that the money was going to be pocketed, they never would have “invested” in the first instance.
What Types of Questions Should You Be Asking if Confronting a Fraud Case?
Your level of concern at an investigation or allegation of fraud should rise with the degree your actions or non-actions potentially misrepresented material facts. You should consult with a federal defense attorney such as Law Office of Diane Bass, a Professional Law Corporation to discuss the specific facts of your matter and the extent that you potentially said or omitted a detail that if the investor or third party was not aware of, they would not have given you the funds. Remember, at its core fraud is any material misrepresentation or omission of fact that would cause somebody to part with their money. That’s fraud in a nutshell.
What are the Different Types of Fraud Recognized in California and Federal Courts?
Now that we better understand what fraud is, let’s turn our attention to specific types of fraud. Some of the recognized claims of fraud include:
- Tax Fraud
- Medicare, Medicaid, or medical billing fraud
- Bankruptcy fraud
- Unemployment benefits fraud
- Investment/securities fraud and other forms of “white collar crimes”
- Real Estate fraud
- Mortgage fraud
One or more charges may be alleged by the government at one time. Some of those charges may be considered wire or mail fraud, depending upon the medium/source of the alleged infraction (whether electronic or mail).
What Are the Differences Between Federal and State Criminal Fraud Jurisdictions?
Many fraud charges are federal in nature and are brought forth by Federal Prosecutors working on behalf of the U.S. Department of Justice (including US Attorney Offices). However, federal jurisdiction does not attach in every case of fraud. First, it must be proven that the activity crossed state lines/territories, or that it impacted a federal institution or violated a federal law.
For example, federal tax fraud will almost always lead to federal criminal charges, because the specific allegation is that a party is defrauding or attempting to defraud the federal government. Private bank mortgage fraud, however, (as opposed to a federal “FHA” loan, for example), will only lead to federal charges if it can be demonstrated that the alleged crime crossed state lines or violated specific federal institutions or laws.
Wire fraud allegations (or mail fraud), represent a method by which the government alleges the use of electronic “wires” such as radio, television, telephone or even email to allegedly perpetuate a crime. In a world of constant communication and mobile telephones, it’s easy to imagine just how easy it is for documents or communications to cross state or territorial lines. And please note that California state (or other state/territory) charges may be prosecuted in federal courts along with federal allegations.
What Exactly is Federal Wire Fraud?
Wire fraud allegations represent both a method for prosecutors/agencies to procure federal jurisdiction and a way to increase the counts charged against an alleged defendant in fraud cases. A charge of wire fraud is thus something the US Attorney’s Office brings forth all the time. It’s the allegation that you used email, wire, or some other form of cross-state communication instrument to further a fraud.
The elements of federal wire fraud statutes include: (1) causing the use of mail or wire communications, including email; (2) in conjunction with a scheme to intentionally defraud another of money or property; (3) by means of a material deception. The intentionality aspect of wire fraud (or its cousin, mail fraud), are important defenses you should discuss with your attorney.
By way of example, if you’re charged (or being investigated) for alleged mortgage or bank fraud, with the specific allegation that you were dishonest on a loan application, then a wire fraud charge might be added to the other counts (mortgage fraud, etc.) because the loaned money was wired.
Even the act of filling out the mortgage application and transmitting it via email might be sufficient for a charge (or even a conviction) of wire fraud. And of course, this charge was historically brought as mail fraud because until relatively recently most communications occurred via mail rather than through technological means. As the United States Postal Service is a federal enterprise crossing state lines, this also aided federal agencies in obtaining federal jurisdiction.
Wire fraud will not often increase the term of a sentence, as it’s all part of the same underlying act(s). It may, however, be used to obtain jurisdiction where it may not otherwise lay. You may be charged with wire fraud in any state where funds are sent or received, but once a wire fraud crime involves multiple jurisdictions it almost always triggers federal involvement under 18 U.S.C. § 1343, the Federal Wire Fraud Law. The prosecutors (federal or state) are often looking to charge fraud every which way they can in these types of cases.
In sum, there are many kinds of fraud allegations, but ultimately, they all consist of the same elements: Did you make a material misrepresentation or omission of fact in order to receive money from a third party?
You Can Count on the Law Office of Diane Bass, A Professional Law Corporation to Protect Your Interests if You’re Charged with Fraud
Now you have a better understanding of Federal and California state fraud charges. But if you are already under investigation or charged with such serious crimes, do not delay: the most important next step you can take is to seek qualified legal representation.
With more than twenty-five years of Federal and Southern California criminal defense experience, you can trust the compassionate and aggressive legal representation at the Law Office of Diane Bass, a Professional Law Corporation.
Make sure your rights are protected by calling (949) 264-0696 today to schedule a free consultation, or fill out the requested information on our firm contact form. We will help you better understand your rights, protect your assets and freedoms, and help you move forward through this cloud of turmoil. We look forward to speaking with you.