Criminal fraud encompasses a wide variety of different criminal offenses. Generally, any false, misleading, or false statement that is intended to gain something of value from another person by getting the victim to believe in the truth of something the perpetrator knows to be false, for monetary or personal gain, is considered criminal fraud.
To be criminal fraud, there are certain elements of the offense that need to be proved beyond a reasonable doubt, regardless of which state the offense was committed. These elements are as follows:
There must have been a misrepresentation of a material fact;
The defendant must have known or believes the material fact to be false;
The victim or person to whom the misrepresentation was directed or intended to affect justifiably relies on the misrepresentation;
The victim suffers an actual injury or loss as a result of relying on the material misrepresentation.
Criminal fraud occurs in many different types of settings. Identity theft is one of the more insidious types since the victim is often unaware that he or she has been defrauded or that their Social Security number or passwords have been stolen until a bank account has been deleted, a large bill appears in the mail, or the victim becomes the target of a criminal investigation for an offense committed by the thief or thieves.
Obvious criminal fraud occurs when injury accidents are staged to defraud insurance companies, when a taxpayer lies about his or her income on a tax form prepared under oath, or a job seeker puts false information on a resume and receives a job as a result.
Financial fraud can take the form of embezzlement where a person in a fiduciary capacity gains control over another person’s business operations or activities to whom that duty is owed, and then unlawfully transfers funds for their own use without the person’s consent. Another type of criminal financial fraud is insider trading, a form of securities fraud, where a person involved in a company unlawfully gives certain confidential information to another person, or uses that information, before it is publicly disclosed to buy or sell stock at a favorable price, thus giving them an unfair advantage.
Governmental fraud is also common. Healthcare providers may bill the government under Medicare for services never provided or overcharge for the services. People applying for benefits may provide false information about their assets and income.
Other simpler instances of fraud may be buying alcohol with a false ID or gaining entrance to a sporting or entertainment venue with a counterfeit ticket or with stolen tickets.
Generally, the penalties for criminal fraud depend on the type of fraud perpetrated and the value of the property unlawfully taken. Most identity theft is considered a felony, while other types depend on the property’s value. Most states treat any property stolen with a value of less than $50 as an infraction, meaning it is not criminal fraud and only subjects the violator to a fine.
For theft under $1,000, most states will treat the criminal fraud offense as a misdemeanor. Misdemeanors entail a maximum jail sentence of less than one year coupled with a fine, although most first-time offenders will usually have to make restitution to the victim, pay a fine, and serve a year or more on informal probation.
For criminal fraud involving property valued over $1,000, most states consider these as felonies. Felonies include possible incarceration in a state prison facility for more than one year, restitution to the victim, and thousands of dollars in fines. For multiple offenders or if the property had considerable value, or involved drugs or dangerous weapons, the prison sentences can be substantial.