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Criminal Fraud

What is criminal fraud

Fraud can take many forms but in general it is deception that often involves falsifying credentials in some way and is designed to financially enrich or further the goals of the individual perpetrating the fraud.

In recent years identity fraud has been in the news due to many security breaches of companies that host digital records as well as the availability of technology that allows for the theft of personal records through techniques such as skimming credit card numbers.  Experts estimated that 17 million Americans were victims of identity theft in 2017. The situation became so serious in recent years that nearly every state enacted laws specifically addressing identity fraud.

Michigan, California, Florida, and Delaware are the states with the highest reported rates of fraud related to identity theft.

According to the Department of Justice, just 300 individuals were charged with fraud at the federal level in 2017, but there were an additional 10 corporate fraud enforcement actions, resulting in penalties and restitution amounting to more than $4 billion. Health care fraud is another significant aspect of the department’s work, including prosecuting those who steal from the government by overbilling Medicare. In 2017 this type of fraud accounted for about $1.6 billion in losses, but 162 individuals were sentenced for their crimes.

Types of criminal fraud

Anytime that a person pretends to be someone he is not or lies in order to financially gain from another person, he has committed fraud. According to a consumer protection group operated by the Federal Trade Commission, more than 3 million complaints were registered in 2016, with about one-third of them for fraudulent debt collection scams. In the period 2013-2015, the organization says, identity fraud complaints increased by 47 percent.

Financial scams are often perpetrated by fraudulent actors, including Ponzi schemes, which promise to return large amounts of money to investors but in fact collapse and only enrich those who began the fraud. The carmaker Volkswagen was found to falsify exhaust emissions in a massive international scheme to defraud car buyers, also considered a criminal conspiracy. Likewise, the Enron corporation went bankrupt when massive fraud that falsified earnings was discovered, and stockholders lost $78 billion.

Common frauds include products that do not perform as promised, loan fraud in which a person lies about his finances in order to get a loan, people who return stolen merchandise to stores for refunds or credits, people who write or cash worthless checks, those who forge financial documents, those who manufacture counterfeit credit cards, and those who underreport earnings to avoid taxes.

Due to the sophisticated nature of criminal fraud, it is considered a white-collar crime. Criminal fraud schemes that use telephones or postage are often prosecuted at the federal level, as are those which cross state lines. Criminal records of those convicted of fraud can be found on reports.

Penalties for criminal fraud

The scope of the fraud committed (number of victims) and the value of theft involved play a major role in sentencing for fraud convictions, as does any abuse of position such as a doctor selling prescription drugs. Some states have specific statutes that apply to fraud perpetrated on the disabled or elderly.

Pennsylvania classifies most types of fraud by the losses incurred, which makes most cases of fraud felonies. Similarly, Wisconsin sets the threshold of felonious fraud at $2,500 and has established special categories for theft from the elderly or infirm. Florida sets the bar much lower, classifying the lowest level of felonious fraud at $500.

A felony is any crime that is punishable by a year or more in prison.