Fraud Crimes

Fraud involves deceit, misrepresentation, and false statement to gain something valuable, knowing it is not valid. Charges for fraud crimes are severe. Therefore, if you ever happen to face any fraud charges or if investigators ask you questions about a possible fraud incident, you should seek the services of a skilled attorney as soon as possible. It is best to remain silent and talk to an attorney before you give any statements to investigators. The Los Angeles Criminal Defense Attorney has a team of skilled attorneys to assist with all types of fraud charges. We will guide you through the process and protect your interests. In the following sections, we will provide detailed information on what you need to know about fraud crimes.

California Law on Fraud Crimes

Fraud broadly refers to acts that intend to swindle another person. In simple terms, it’s intentionally deceiving someone for your own personal or monetary gain. The California state can prosecute you for committing different types of fraud crimes. Many of these fraud crimes are known in California as white collar crimes. Most of the crimes have specific penalties while others can be prosecuted under:

  1. California’s perjury law, Penal Code 118 PC

  2. California’s forgery law, Penal Code 470 PC

  3. California’s theft laws

Fraud covers both civil and criminal laws. The difference is who will file the legal case. Any fraud victim can file for a civil lawsuit while only government prosecutors can file for criminal lawsuits. The fraud perpetrator may face both a criminal prosecution and be sued in a civil suit.

In a criminal lawsuit, you have to prove fraud beyond a reasonable doubt. If found guilty, the defendant may face a jail term or face probation and pay fines. In a private fraud lawsuit, the standard of proof is lower, and the punishment is usually restitution to the victim and monetary damages.

In California, most fraud crimes are treated as wobbler offenses; the prosecutor may charge them as either a felony or a misdemeanor offense depending on:

  1. Your criminal history

  2. Facts of the case

Some fraud crimes are treated as automatic felonies.

Elements of Fraud

The main aspects of fraud are usually:

  1. Intentional misleading on a very significant material fact

  2. Knowing that it’s not true

  3. To a victim who with good reason relies on the misrepresentation

  4. Who suffers real loss as a consequence

Common Types of Fraud Crimes

There are various types of laws on fraud that involve different institutions and means that can be prosecuted by the state of California. Below is a discussion of some of the most common types of laws on fraud and the penalties you could face if convicted.

Insurance fraud

This fraud is committed when you try to acquire insurance benefits or payments that you are not entitled to receive. The following violations are considered insurance fraud in the state of California:

Health Care Insurance Fraud

Pursuant with California PC 550, it’s unlawful to:

  • Submit fraudulent or false claims

  • Prepare a document that supports a fraudulent claim

  • Submit a claim for a medical procedure that wasn’t used by the person appearing on the application

  • Double-billing for the same medical service

  • Billing for undercharged services and failing to bill for overcharged services

To convict you of a health insurance fraud, the prosecutor has to prove beyond doubt that:

  • You had the intention to defraud

  • You knew that there’s a duplicated or fraudulent document prepared to submit a fraudulent claim

Penalties for health care insurance fraud

The penalties for health insurance fraud will depend on the amount defrauded. In cases of multiple claims, the amounts will be added up. If the total amount is more than nine hundred and fifty ($950) dollars, the fraud can be charged as a felony or misdemeanor depending on the circumstances surrounding your case.

If the fraud is charged as a felony, you get twelve (12) months in county jail or two (2), three (3), or five (5) years in state prison. You also pay a fine of fifty thousand ($50,000) dollars, or twice the amount you’ve defrauded, whichever is more significant if charged as a misdemeanor you face twelve (12) months in county jail and pay a fine of ten thousand ($10,000) dollars.

If the amount defrauded is less than nine hundred and fifty ($950) dollars, the fraud is charged as a misdemeanor, and if you are convicted it’s punishable by up to six (6) months in county jail, and you pay a fine of one thousand ($1,000) dollars.

Automobile Insurance Fraud

This fraud is committed when you try to obtain money from an insurance company by doing the following:

  • Stage an accident

  • Charge excessively for a claim

  • Set your car on fire and report it stolen

Workers Compensation Fraud

This is committed when you attempt to make a false claim against the worker’s compensation insurance program from the state. Examples of this fraud include:

  • When you claim that an injury is work-related when it’s not

  • When you fake an injury

  • When you fail to reveal previous damage that would be closely related to your current claim

Unemployment Insurance Fraud

California’s laws on unemployment insurance fraud prohibit deliberate attempts to deny, reduce, or increase unemployment insurance benefits. You get convicted of unemployment insurance crime if you:

  • Collect benefits in two or more states

  • Falsify your work-search efforts

  • Deliberately providing false information about an employee’s wages or why they were fired to avoid contributing to the unemployment insurance program

Welfare Fraud

This is committed by increasing or trying to obtain welfare benefits that are not legally entitled to you. The two types of welfare fraud in California are:

  • Internal fraud - This is where an employee tries to distribute or collect unlawful benefits from a government agency that issues welfare benefits

  • Recipient fraud - This includes trying to obtain fraudulent benefits

Medical Insurance Fraud

This fraud is committed when a doctor bills for services that they never performed.

Identity Theft

In California, any purposeful act designed to cause someone else to suffer loss or obtain unlawful gain amounts to fraud. It is illegal to do the following:

  • Deliberately obtaining someone else’s personal identifying information without their consent and using it for any unlawful purpose

  • Selling, providing or transferring someone else’s personal identifying information, knowing very well that information will be used to commit fraud

  • Selling, providing or transferring someone else’s personal identifying information without their permission, intending to commit fraud

  • Acquiring or retaining possession of someone else’s personal identifying information without their consent, intending to commit fraud

Examples of personal identifying information include:

  • Name

  • Address

  • Date of birth

  • Social security number

  • Telephone number

  • Driver’s license number

  • Tax I.D. number

  • School I.D. number

  • Employee I.D. number

  • Passport information

  • Bank account details

  • Credit card information

  • Birth or death certificate details

Penalties for identity theft fraud under California Penal Code 530.5 include:

If convicted as a misdemeanor, you face:

  • 12 months in county jail

  • Pay a fine of $1,000

If charged as a felony, you face:

  • 16 months, 2 or 3 years in state prison

  • Pay a fine of $10,000

Other fraud offenses under forgery and identity theft include:

  1. Forging, possessing or counterfeiting a public seal - This consists of any seal whether it belongs to a government agency, government or a corporation.

  2. Forging or counterfeiting an Identification Card or a driver’s license - Counterfeiting a government-issued I.D. card or driver’s license or altering them constitutes to this crime. Also, having a counterfeit or a fake I.D. or driver’s license is a violation of the laws.

  3. False personation - This is violated when you present yourself as someone else to personally benefit and harm the other person.

  4. Internet fraud - California’s laws on internet fraud forbid fraudulent activities that occur on a computer like on email, an online store, and in a chat room. Examples of internet fraud include violating cyberstalking laws, creating and forwarding viruses on computers, and making fraudulent online purchases.

Financial Fraud

Some of the most prevalent financial fraud offenses include:

Check Fraud

It’s unlawful to endorse a check using someone else’s name without their permission. For the prosecution to convict you of check fraud, they need to prove that:

  • That you were aware of the fact that the document was altered and false.

  • That you were in possession, made, passed, used, or you tried to pass or to use an altered or false bill note, check or any other legal writing for payment of property or money.

  • That you intended to defraud when you possessed, you made, you passed, you used or tried to use or pass the document.

Penalties for a check fraud include:

Depending on your case, you can face either a felony or misdemeanor charges. For a misdemeanor conviction, you can face up to twelve months in county jail while for a felony conviction, you can face up to three years in county jail.

Securities Fraud

Security is a business arrangement where a person gets a right to debt repayment or ownership stake in a company. Securities fraud is also known as investment fraud or stock fraud. It involves practices that encourage investors to make decisions based on information that is not true. Securities fraud is committed when you do the following:

  • Insider trading - when you buy or sell securities based on information that you only know because of your relationship with the company, but it’s not available to the public

  • Give a misleading or false opinion about the market for a particular security

  • Give misleading or false financial statements in the sale of securities

  • Sell securities that don’t meet the standards of the terms of qualifications

  • Sell unlicensed securities which have to be qualified by the California Department of Corporations

The prosecutor must have proof of the following to prosecute you of securities fraud:

  • That you took part in a scheme to fraudulently influence securities trade or offers, or that you allowed misleading or false statements to be released

  • That you deliberately violated the laws on security fraud by acting purposefully or impetuously to gain an unfair advantage

  • That you purposefully misrepresented or omitted material facts that would influence investors decisions

  • That the omission or misrepresentation directly affected the potential investors’ decisions to buy securities

  • That consequently, investors lost money for relying on the fact that you omitted or misrepresented

Penalties for committing securities fraud

Securities fraud can be convicted as either a felony or misdemeanor depending on the circumstances surrounding your case.

Following California Corporations Code Section 25540(a), if you willfully offer to sell or sell securities without abiding by the qualification requirements or selling securities in a way that violates the terms of the qualifications, you may face:

  • A fine of up to $1,000,000

  • Up to three years in county jail

  • Up to three years in state prison

Following California Corporations Code Section 25540(b), if you knowingly manipulate the market, make a misleading or false statement or take part in insider trading, you may face the penalties below:

  • Two, three or five years in county jail

  • Two, three or five years in state prison

  • Fines of up to $10,000,000

As a director of an issuer of securities, you face the following penalties if convicted of securities fraud:

  • Up to $25,000,000 fines

  • Two, three or five years incarceration

Some typical players involved in securities fraud include:

  • Traders

  • Accountants

  • Promoters

  • Stock traders

Real Estate and Mortgage Fraud

This involves making any intentional false representation concerning real estate transactions. The most common one is foreclosure fraud.

Foreclosure fraud

This takes place when a foreclosure consultant represents that they can prevent or postpone a pending foreclosure.

According to California Civil Code 2945, it’s unlawful for a foreclosure consultant to do the following:

  • Charge or receive compensation before performing all the legitimate services that they agreed to carry out for the homeowner

  • Charge or receive excess fees for their services

  • Try to convince or convince the homeowner to sign a contract that does not abide by all the statutory rules and regulations

  • Take a lien on the property, demand any other security as collateral for repayment or take any interest in the property

  • Take power of attorney from the homeowner (power of attorney is a legal document authorizing a person to act on behalf of another person in a business or legal matter)

  • Receive property or money from a third party concerning the services that the consultant agreed to provide to the homeowner and failure to disclose the involvement of the third party to the homeowner

Penalties for foreclosure fraud

Depending on the conditions surrounding your case and your past criminal history, foreclosure fraud can be charged as either a felony or a misdemeanor.

If charged as a felony, you face the following penalties:

  • Sixteen (16) months, two (2) or three (3) years in state prison

  • A maximum fine of ten thousand ($10,000) dollars

If charged as a misdemeanor, the penalties include:

  • Up to twelve (12) months in county jail

  • A maximum fine of ten thousand ($10,000) dollars

You may also be charged with additional penalties and serve more time in state prison as a result of the following:

  • If the renter or the homeowner was dispossessed of an amount more than $65,000, you face an extra and consecutive (this is to be served after finishing the first prison sentence) one to four years in state prison

  • If you were convicted of more than two felonies that involve fraud in the same case and the renter, or the homeowner was dispossessed of an amount exceeding $100,000, you face an extra and consecutive one to four years in state prison and pay a fine of $500,000 or twice the amount defrauded, the greater of the two.

  • Payment of compensation to the victim

Other types of real estate and mortgage fraud crimes include:

  1. Forging title deeds - Forgery can be defined as deliberately creating, altering, or using a written document, purposefully to commit fraud. The laws of California against forging title deeds forbids trying to record, register, or file a forged title deed and filing a forged title deed.

  2. Predatory lending schemes - This refers to illegal practices by banks and other financial institutions that capitalize on unsuspecting borrowers. It is violated when a lender manages to extract maximum profits from a loan without considering if the borrower will be able to repay.

  3. Illegal property flipping - Generally, property flipping is a legal practice where a buyer purchases a property below the market value, improves it then sells it for a profit. A violation happens when you illegally create appraisals and loan documents to give justification to an inflated asking price.

  4. Rent skimming - This is a civil offense that only subjects you to fines. It is violated when you use rent money from your residential rental property in your first year after acquiring the property, without channeling that amount towards your mortgage first.

  5. Straw buyer schemes - Straw buyers are used when the real buyer is not able to complete a transaction for some reason. Brokers and real estate agents recruit them because they have good credit. Straws are used to secure a loan for a fictitious buyer who is unable to acquire a loan because they have bad credit. After the loan has been processed, the agent or broker takes the money and disappears, leaving the straw to pay for the mortgage.

Miscellaneous Fraud Crimes

Other fraud offenses include:

  • Mail fraud - This is a federal offense. It comprises of any illegal activity that uses the postal system to commit fraud. You may be convicted of mail fraud if you are sending a fake check via mail, using the mail to advertise illegal services and deliberately failing to deliver products ordered through the mail.

  • Fraudulent vehicle registration stickers - You can be convicted of this fraud when you try to avoid paying fees or taxes and deliberately interfere with registration stickers, a registration card, or a license plate.

  • Telemarketing fraud - It is a crime to participate in telemarketing fraud. The fraud is a wobbler, and if convicted, you could face twelve (12) months in jail as a misdemeanor or up to thirty-six (36) months in custody as a felony.

  • Gambling fraud

  • Wire fraud

  • Tax evasion

  • Bankruptcy fraud

In addition to serving time in prison, paying fines, serving probation and restitution, if convicted of fraud crimes you may lose your professional license if you are practicing as a doctor, an attorney, a stockbroker, a mortgage broker or a real estate broker.

Possible Legal Defenses Against Fraud Crimes

For California state to prove that you are guilty of fraud, the prosecutor must prove that your specific intention was for financial gain or to deceive someone else. An expert criminal lawyer can review your case and present credible defenses that may lead to your charges being dropped or dismissed. Some of the most common arguments that an attorney can present on your behalf include:

  1. Insufficient evidence - There might not be sufficient evidence to find you guilty of committing fraud

  2. A mistake of fact - You were not aware that what said was not true

  3. No injury - The alleged victim didn’t suffer any damage or loss

  4. No intent - You did not have fraudulent intent to commit fraud

  5. No justifiable reliance - Fraud cannot be constituted by the victim relying on an absurd false statement

  6. No knowledge - You didn’t have any knowledge that the scheme was a fraud

  7. Non-fraudulent statement - Not all false statements are fraudulent. A false statement has to be related to a material fact

  8. Mistaken identity - You were a victim of mistaken identity. There wasn’t any eye-witness, and the real culprit is not known

  9. Entrapment defense - If you can prove that law enforcement coerced you into committing the fraud

Contact a Fraud Attorney Near Me

Any person, entity, or business can be targeted for fraud. Though it doesn’t involve serious bodily harm or death, fraud can lead to hefty fines and severe prison sentences. However, early intervention by a skilled criminal attorney is essential for a successful defense of fraud crimes. Contact The Los Angeles Criminal Defense Attorney immediately if you are accused of fraud. Call our Los Angeles criminal defense lawyer at 310-933-9439 and we will work effortlessly to ensure that your legal rights are protected.

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