Fraud involves using a lie, deception, falsehood, or dishonesty in an attempt to gain a benefit. The states and the federal governments have identified some types of fraud as criminal--typical fraud crimes are explained below. Fraud can also be a civil wrong, which means that victims can bring a civil lawsuit for money damages, to compensate them for the losses they suffered as a result of the fraud. Civil fraud does not carry the possibility of jail time or fines; criminal fraud can result in both. A particular instance of fraud can be both a criminal offense and the basis for a civil lawsuit.
There are numerous categories and types of fraud, and the types described here are not an exhaustive list.
State and Federal Laws
Both the federal government and the individual states have numerous laws that criminalize various types of frauds. Depending on the circumstances of the case, fraudulent activity can be either a state crime or a federal crime, or both. This means that person who commits an act of fraud may be in violation of both a federal and state law at the same time, and can be prosecuted for both.
Mail fraud is one of the most commonly charged federal crimes. It applies to any scheme to defraud that involves using the United State Postal Service, or other interstate mail carrier. For example, a con artist might send a letter to a victim in an attempt to convince the victim to hand over money. Even if the con artist is unsuccessful in his attempt, using the mail in an attempt to commit fraud violates the federal mail fraud law.
Wire Fraud, Including the Internet
Wire fraud, like mail fraud, is a federal crime, and one that is also quite broad and applicable to numerous types of activity. Wire fraud occurs whenever a person uses a telephone, electronic communication device, or even a computer with Internet access to commit an act of fraud. Like mail fraud, this law is incredibly broad and applies to numerous situations.
Anyone who produces counterfeit currency, documents, or goods also commits a type of fraud. Counterfeiting currency is a federal crime, but state laws can also apply if, for example, you forge false birth certificates, driver's licenses, or other documents. Manufacturing goods and selling them while claiming they are a name brand item, such as selling counterfeit shoes, is also considered an act of fraud.
Check fraud occurs when a person passes a check knowing that it is counterfeit, will not be honored, or in any way will result in the check writer obtaining goods or services without actually having to pay for them. Check fraud is sometimes charged as a theft crime because the fraud results in someone else losing property, and it can be charged as both a federal and state crime.
Credit Card Fraud
Another common form of fraud occurs when someone fraudulently obtains, uses, or forges a credit card. Credit card fraud can occur when, for example, a server obtains your credit card numbers when you pay for your restaurant bill and uses that information to make a purchase; or when a person finds your wallet and uses your cards.
Committing any type of fraud can lead to some significant criminal penalties. Depending on the state in which you live and the crime you're charged with, fraud can be either a felony or misdemeanor offense.
- Incarceration. Fraud convictions bring with them the possibility of a jail or prison sentence. Though sentences differ widely, a misdemeanor conviction can lead to up to a year in a local jail, while a felony conviction can lead to multiple years in prison. Federal charges can lead to 10 years or more in federal prison.
- Probation. A court can also impose a probation sentence if you're convicted of a fraud crime. Probation allows you to serve your sentence without having to go to jail or prison, but it is not a “get out of jail free” sentence either. Probation limits your freedom is significantly. Probation typically lasts 12 months or more, and while on probation you must obey specific conditions the court imposes. These will often require you to report to a probation officer, take random drug tests, find or maintain a job, and of course, not commit more crimes.
- Fines. Fines for fraud convictions are very common, and like incarceration sentences they can differ significantly depending on the circumstances of the case. Fines for misdemeanor violations can be a few thousand dollars or less, while felony convictions can bring fines of well over $10,000.
- Restitution. A person convicted of fraud will have to pay money to victims, compensating them for any loss they suffered. Court orders for compensation are known as restitution. Restitution payments must be made in addition to any fines the court imposes.
Find an Attorney
While not all types of fraud are criminal, anyone suspected of or being investigated for fraud needs to speak to a criminal defense attorney as soon as possible. The different types of fraud crimes that exist make it possible for prosecutors to charge you with wide number of crimes, some of which you may not even be aware of. If you speak to investigators without legal advice you might unwittingly damage your case or provide the investigators with the evidence they need to charge you with a crime. Talking to a local defense lawyer who knows how to manage criminal investigations and how to defend your rights through the entire criminal justice process is the only way to ensure you are protected. You need to speak to a lawyer as soon as you are investigated or charged with any type of fraud crime.