Criminal Fraud

• Is fraud a crime?
• What is fraudulent intent?

For the most part, there is no single crime called “fraud.” However, fraud is an intrinsic part of a number of offenses, most notably those in the theft category. The early theft crime of larceny required a taking of property from the possession of another; therefore using deceit to take the property of another that had been entrusted to the offender was not punishable because it was not larceny. The crime of embezzlement was created to plug this loophole in theft law. Embezzlement is committed when the offender fraudulently converts the property of another, which is already in the offender’s possession. Fraudulent conversion occurs when the offender seriously interferes with the victim’s rights over the property by using it up, giving it away, unreasonably withholding possession from the victim, or seriously damaging the property with the intent to benefit himself and deprive the victim. Fraudulent intent requires a finding that the offender had the specific intent to deceive the victim, and mere negligence in the handling of the property will not sustain a conviction.

Fraud is also at the heart of the crime of false pretenses, which is committed when the offender knowingly makes a false representation of fact with the intent to cause the victim to pass title to his or her property to the offender. False pretenses requires a false representation; making misleading statements or merely remaining silent does not satisfy the requirement of a false misrepresentation. Neither are opinions enough to make a false representation; “In my opinion, your property is worthless,” is not a false representation for the purposes of the crime. The false representation must be about an important fact. A false statement about an unimportant fact generally will have little impact on the victim’s decision to complete the transaction, and therefore will not support a charge of false pretenses.

Fraud is an important part of the federal mail and wire fraud statutes. The scope of fraud under those statutes is broader than under embezzlement and false pretenses since it includes using tricks, schemes, or devices to defraud; therefore an unimportant misstatement can serve as one element of a scheme to defraud. In addition, the federal crimes can be charged when the offender secures a service through fraud, not just takes property. Other federal crimes that prohibit fraud protect the banking industry and stock market transactions. Statutes prohibit the use of fraud in obtaining government goods or services and the filing of fraudulent tax returns.