Fraud FAQ
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What is Mail Fraud?
Regulated by the United States since 1872, mail fraud is the oldest form of fraud. Mail fraud involves an activity including concealment, dishonesty, trickery, and/or deception and conducted through the use of the U.S. Mail or a private mail service or package carrier.
To be convicted of mail fraud, an individual or business or organization must:
- Act with the specific intent of defrauding,
- Have knowingly created the plan to defraud,
- Have used interstate mail, and
- Have used false material representations in the plan.
In terms of punishment options for fraud, parole has now (since 1987) not been available in the Federal System; nor is expungement of records available for mail fraud nor other types of fraud.
What is Wire Fraud?
Wire fraud is similar to mail fraud with the difference that the activity must have included the use of an interstate telephone call or electronic means such as the telephone, radio, television, or the internet.
For wire fraud, the punishment is per transaction. For example, if 5 telephone calls were made, the punishment is multiplied by 5.
Are statutory penalties or punitive damages for fraud discharged in bankruptcy?
No. It is not only the actual value of the "money, property, services, or ... credit" the debtor obtained through fraud that is non-dischargeable in bankruptcy, but also treble "punitive" damages and attorneys fees and costs related to the fraud. This was made clear in a March 25, 1998 decision of the Supreme Court of the United States in Cohen v. de la Cruz .
The case involved a landlord who had overcharged his tenants. The trial court found that the landlord had committed "actual fraud" within the meaning of the Bankruptcy Act and that his conduct amounted to an "unconscionable commercial practice" under New Jersey's Consumer Fraud Act. As a result, the court awarded the tenants treble damages plus reasonable attorney's fees and costs. The debtor recognized the approximately $30,000 in improperly charged rent would not be dischargeable, but argued that he should not be stuck having to pay the $100,000 in punitive damages and attorneys' fees the court awarded. The court decided those extra damages had been awarded as a result of his fraudulent acquisition of "money, property, services, or . . . credit." All the debtor's obligations arising out of fraudulent conduct, including both punitive and compensatory damages, are not subject to discharge in bankruptcy.
Must a document have legal significance in order to be forged?
Yes. In order to be deemed a forgery, the writing must have some legal significance, and it must pretend to be something it is not. For example, it is considered forgery to write yourself a letter of reference for a job and purport it to be from a former employer. The legal liability the former employer could be held to for recommending someone makes it legally significant.
It is not considered forgery to write yourself a letter of introduction to a country club and purport it to be from a former member, because a letter of introduction has no legal, only social, significance. Painting a picture yourself and signing Picasso's name is legally not forgery, as the painting has no legal significance. It can, however, be considered false pretenses.
What is securities fraud?
Fraud is defined to be "an intentional perversion of truth" or a "false misrepresentation of a matter of fact" which induces another person to "part with some valuable thing belonging to him or to surrender a legal right".
Federal Securities Law covers a broad scope of possible types of fraud. Securities fraud is not limited to the selling of bogus securities.
Securities fraud also involves the sale of legitimate securities for illegal purposes. The laws also make "insider trading" illegal. "Insider trading" generally refers to the purchasing or selling of securities of a company while in possession of material information that has not been generally disclosed in the marketplace.  |
