Criminal fraud is generally considered a white collar crime since it does not involve violence or the threat of violence and is often committed by sophisticated thieves who know how to hack into computers, forge documents, or are acting in a position of trust.
For criminal fraud to be committed, a person must intentionally misrepresent a material fact that he or she knows is false, and that is reasonably relied on by someone to their detriment or loss. The person defrauded is not coerced into giving up something but is tricked or intentionally misled.
Here are some common examples of criminal fraud:
Credit Card Fraud
Credit card fraud occurs when another person unlawfully uses another person’s card without his or her permission. Cards can be stolen outright, or someone is able to copy the credit card number along with the expiration date and security code. More sophisticated thieves are able to obtain the victim’s mailing address and other identifying information as well when buying larger items over the internet to retain their anonymity.
Many states no longer use this term, but include this type of criminal fraud as a felony theft, or first or second degree theft. The fraud is committed by a person in a fiduciary capacity, or position of trust, who gains control of that person’s property or funds and transfers it to the thieve’s own use.
Criminal fraud of this type occurs in different forms. A person may fake a loss or stage an accident to obtain insurance benefits, commit arson to collect compensation, or fail to make certain disclosures on a form to obtain insurance coverage. Insurance companies may commit fraud when it cancels an insurance policy when a legitimate claim is made or unlawfully raises premiums.
By hiding assets or by failing to disclose all your income, a taxpayer commits criminal fraud. Failing to file a tax return is also considered a crime.
Criminal fraud in healthcare is a major concern. Physicians and other healthcare providers may over-bill for services or bill for services that are not delivered or provided. Millions of dollars in Medicare fraud is lost each year by these methods.
The buying and selling of stocks or securities based upon confidential information that is not available to the trading public is criminal fraud. The Securities and Exchange Commission (SEC) requires that employees of a corporation who trade their own stocks to report them to the SEC. Criminal fraud by executives is committed when they make a trade based on information that only they know based on their affiliation or employment with their company.
Real Estate Fraud
This includes any misrepresentation of a material fact that is intended to take advantage of someone. For instance, foreclosure experts commit fraud by promising to buy your home to prevent foreclosure and eventually sell back to you but then charge you an exorbitant rent and evict you. Banks and lenders have committed criminal fraud by forging deeds and filing them in court to foreclose on a property.
Another type of real estate fraud is illegal house flipping where someone buys a house at auction or short sale and then creates a false appraisal or loan document to inflate the price when it is put up for sale.