Fraud

Fraud-Related Offenses (Colorado Criminal Code)

• 18-5-101: Definitions

• 18-5-102: Forgery

• 18-5-104: 2nd Degree Forgery

• 18-5-110: Criminal Simulation

• 18-5-113: Criminal Impersonation

• 18-5-205: Fraud by Check

• 18-5-702: Unauthorized Use of a Financial Transaction Device

• 18-5-901 through 18-5-905: Identity Theft and related offenses

C.R.S. 18-1-501 - Culpable Mental States

• Culpable Mental State (4): Includes intentionally, knowingly, willfully, recklessly, or with criminal negligence.

• "Intentionally" or "with intent" (5): Specific intent offenses; person acts intentionally when their conscious objective is to cause the specific result defined by the statute, regardless of whether the result occurs.

• "Knowingly" or "willfully" (6): General intent crimes; person acts knowingly or willfully when they are aware their conduct is of a certain nature or practically certain to cause a specific result.

C.R.S. 18-5-101 - Definitions Related to Fraud

• Complete Written Instrument (1): A genuine written instrument fully drawn with respect to all essential features.

• Document-Making Implement (1.5): Any tool used for creating identification documents, false IDs, or similar implements.

• Falsely Alter (2): Changing a written instrument without authority to make it appear authentic.

• Falsely Complete (3): Adding or changing information to make an incomplete written instrument appear complete and authentic.

• Falsely Make (4): Drawing a written instrument that purports to be authentic but is not.

• Forged Instrument (5): A written instrument that has been falsely made, completed, or altered.

• Government (6): Refers to the U.S., states, counties, municipalities, or any governmental entity.

• Identification Document (6.5): A document used for identifying individuals, issued by a government or authorized body.

• Incomplete Written Instrument (7): A document requiring additional matter to become a complete written instrument.

• Produce (7.5): Includes altering, authenticating, or assembling a document.

• Utter (8): Transferring, passing, or delivering a written instrument to another person.

• Written Instrument (9): Any document or item containing written matter, including money, credit cards, or identification used to convey or record information.

Definition of Fraud

• Fraud: Any activity relying on deception to achieve a gain.

• Criminal Fraud: Occurs when there is a "knowing misrepresentation of the truth or concealment of a material fact to induce another to act to their detriment" (Black’s Law Dictionary).

• Example: Lying to deprive a person or organization of their money or property is committing fraud.

C.R.S. 18-5-102 - Forgery

• Forgery Definition: A person commits forgery with intent to defraud by falsely making, completing, altering, or uttering a written instrument.

• Types of Written Instruments Involved in Forgery:

  • (a) Money, stamps, securities, or other valuable instruments issued by a government or agency.

  • (b) Stock, bonds, or other instruments representing interests in a corporation or organization.

  • (c) Legal documents (deeds, contracts, promissory notes, etc.).

  • (d) Public records or instruments required by law to be filed.

  • (e) Official documents issued by a public office or government agency.

  • (f) Tokens or certificates used for transportation fees or to purchase property or services.

  • (g) Lottery tickets or shares used in a lottery.

  • (h) Document-making implements used to produce false identification or other fraudulent documents.

18-5-104 - Second Degree Forgery

• Second Degree Forgery: A person commits second-degree forgery with intent to defraud by falsely making, completing, altering, or uttering a written instrument.

• Exception: The written instrument involved is not described in C.R.S. 18-5-102 or 18-5-104.5.

Criminal Simulation (C.R.S. 18-5-110):

Definition: A person commits criminal simulation if:

• (a) With intent to defraud, they make, alter, or represent an object to appear as if it has antiquity, rarity, or other false qualities.

• (b) With knowledge of its true nature, they utter, misrepresent, or possess an object made or altered to appear as described in (a).

Trademark Counterfeiting (C.R.S. 18-5-110.5):

• Definition: A person commits trademark counterfeiting by intentionally:

  • Manufacturing, displaying, distributing, selling, or possessing goods with counterfeit marks.

  • Possessing more than 25 items bearing counterfeit marks.

• Classification: Follows Theft classifications.

Penalty Based on Fraud Amount:

• < $50.00: PO1

• $50.00 to $299.99: M3

• $300.00 to $749.99: M2

• $750.00 to $1,999.99: M1

• $2,000.00 to $4,999.99: F6

• $5,000.00 to $19,999.99: F5

• $20,000.00 to $99,999.99: F4

• $100,000.00 to $999,999.99: F3

• > $1,000,000.00: F2

Joint HSI/17th JD Investigation

• Source of almost all counterfeit sports apparel on the Front Range.

• Surveillance verified large volume of counterfeit merchandise.

• Over a dozen COPRs and resulting documentation.

• Thousands of emails revealed $10 million in merchandise ordered/shipped.

• Hundreds of Western Union and MoneyGram transfers totaling more than $850,000.

• More than 20 interviews with family, money transmitters, and UPS Store employees.

C.R.S. 18-5-113 - Criminal Impersonation

• Criminal Impersonation (1): A person commits criminal impersonation if they knowingly:

  • (a) Assume a false or fictitious identity or legal capacity and:

    • (I) Pretend to marry or sustain a marriage relation without the other person's connivance.

    • (II) Become bail or surety in a civil or criminal action.

    • (III) Confess a judgment or prove a written instrument with the intent for it to be delivered as true.

  • (b) Assume a false identity or capacity and:

    • (I) Perform an act that subjects the falsely impersonated person to liability or legal action.

    • (II) Perform an act that might subject the impersonated person to liability or legal action.

    • (III) Perform an act with intent to unlawfully benefit themselves or another or to harm or defraud someone.

• (3) Using false or fictitious personal identifying information constitutes assuming a false identity or capacity.

C.R.S. 18-5-205 - Fraud by Check

• Definitions:

  • Check: A written, unconditional order to pay a sum of money, drawn on a bank, payable on demand, and signed by the drawer. Includes negotiable orders of withdrawal and share drafts.

  • Drawee: The bank or financial institution upon which a check is drawn.

  • Drawer: The person whose name appears on the check as the primary obligor, whether the signature is their own or authorized by them.

  • Insufficient Funds: A situation where the drawer has insufficient funds in their account to cover the check, or no account exists with the drawee.

  • Issue: A person issues a check when they make, draw, deliver, or pass it.

  • Negotiable Order of Withdrawal/Share Draft: Instruments drawn on accounts for making payments or withdrawals.

• Fraud by Check (2): A person commits fraud by check if, knowing they have insufficient funds with the drawee, they issue a check with intent to defraud for services, wages, rent, property, or other things of value.

C.R.S. 18-5-702 - Unauthorized Use of a Financial

• Definition: A person commits unauthorized use of a financial transaction device if, with intent to defraud, they use or attempt to use a financial transaction device (such as a credit card, debit card, or other similar device) without the consent of the owner.

• Key Elements:

  • The person must use the device without permission.

  • The intent to defraud is required.

  • The device may include credit cards, debit cards, or any other device used to access funds or financial resources.

C.R.S. 18-5-702 - Unauthorized Use of a Financial Transaction Device

• Definitions:

  • Account Holder: Person or business entity named on the face of a financial transaction device to whom or for whose benefit it is issued.

  • Automated Banking Device: A machine that, when activated by a financial transaction device or personal identification code (PIN), can be used for purposes such as withdrawing cash or making payments.

  • Financial Transaction Device: Instruments like credit cards, debit cards, or account numbers used to obtain cash, goods, services, or to make financial payments. Does not include checks or negotiable orders of withdrawal.

  • Issuer: The entity (bank, financial institution, business, etc.) that assigns financial rights and controls financial transaction devices.

  • Personal Identification Code: A code (letters, numbers, or symbols) used to authenticate a financial transaction device.

  • Sales Form: Written record of a transaction involving the use of a financial transaction device.

• Unauthorized Use (1): A person commits unauthorized use if they use a financial transaction device to obtain goods, services, or make payments with intent to defraud, and:

  • (a) The device has expired, been revoked, or canceled.

  • (b) The use is unauthorized by the issuer or the account holder.

• Notice: Notice of expiration, revocation, or cancellation may be in person or written (via registered/certified mail) and is considered received with a signed receipt.

• Classification: This statute follows the Theft classification for financial transaction device offenses.

Definitions in Financial Transaction Device Law (C.R.S. 18-5-702)

1. Account Holder: Person or business entity named on or associated with the account or financial device.

2. Extension of Credit: Agreement where the repayment or satisfaction of a debt is deferred.

3. Falsely Alter: To change a written instrument or financial device without proper authorization, making it appear as an authentic creation.

4. Falsely Complete:

   • (a) Transform an incomplete instrument into a complete one by adding unauthorized information.

   • (b) Add materially false statements affecting actions, conduct, or decisions.

5. Falsely Make: To create a financial device or written instrument that purports to be from its maker but is not authorized.

6. Financial Device: Instruments like credit cards, debit cards, checks, money orders, or any device used for transactions.

7. Financial Identifying Information: Data like credit card numbers, PINs, bank account numbers, and routing numbers that can be used to gain value.

8. Government: Refers to U.S. entities or political subdivisions, including corporations carrying out government functions.

9. Issuer: Entity that assigns financial rights to an account or financial device.

10. Personal Identification Number (PIN): Number assigned to an account holder to permit authorized use.

11. Personal Identifying Information: Information such as name, Social Security number, biometric data, and other identifiers used to uniquely identify individuals.

12. Utter: To transfer or deliver a financial device or written instrument to another.

13. Written Instrument: A document or item used for recording or transferring value, including money, tokens, and identification.

Identity Theft (C.R.S. 18-5-902)

1. Identity Theft Definition: A person commits identity theft if they:

   • (a) Use another's personal or financial information or device without permission to obtain value (cash, credit, services, etc.) or make financial payments.

   • (b) Possess another's personal or financial information or device without permission, intending to use or help someone else use it for obtaining value or making financial payments.

   • (c) Falsely make, complete, alter, or utter a financial instrument or device containing another's identifying information with intent to defraud.

   • (d) Possess personal or financial identifying information of another to apply for or complete a financial device or credit extension without permission.

   • (e) Use or possess another’s identifying information without permission to obtain a government-issued document.

Criminal Possession of a Financial Device (C.R.S. 18-5-903)

Criminal Possession Definition: A person commits criminal possession of a financial device if they:

• Possess or control any financial device that they know, or reasonably should know, is:

  • Lost

  • Stolen

  • Delivered by mistake as to the identity or address of the account holder.

Criminal Possession of an Identification Document (C.R.S. 18-5-903.5)

Criminal Possession Definition: A person commits criminal possession of an identification document if they:

• Knowingly possess or control another person’s:

  • Social Security card or passport

• Without permission or lawful authority.

Gathering Identity Information by Deception (C.R.S. 18-5-904)

1. Gathering Identity Information by Deception Definition: A person commits this offense if they:

   • Knowingly make or convey a materially false statement

   • Without permission or lawful authority

   • With the intent to obtain, record, or access the personal identifying information or financial identifying information of another.

Possession of Identity Theft Tools (C.R.S. 18-5-905)

Possession of Identity Theft Tools Definition: A person commits this offense if they:

• Possess tools, equipment, computers, scanners, printers, or other articles designed, adapted, or commonly used for committing identity theft (as described in C.R.S. 18-5-902).

• The person intends to use the possessed items for identity theft or knows that someone else intends to use them for this purpose.

Gathering Evidence

• • Obtain copies of all relevant documents, such as checks, payroll records, and financial statements (business and personal). This would include:

    • Fraudulent checks issued or cashed by the suspect.

    • Credit card transactions showing unauthorized charges.

    • Emails or memos related to business transactions or any changes made to financial records.

    • Travel bookings made using company credit cards.

    • Employee records if applicable (i.e., payroll and timesheet data).

  • These documents are critical to proving the fraudulent activities committed by the employee.

• Video Surveillance from Place of Compromise:

  • Obtain video footage from the place where the fraudulent activity took place (e.g., a bank, store, or business).

    • Banks and financial institutions may have surveillance systems in place that record transactions and events.

    • Stores or other businesses where purchases were made with fraudulent checks or stolen financial devices should also be checked.

    • Video retention policies can vary, so requesting this early is crucial as it may become unavailable after a certain period (e.g., 30 days for some banks or stores).

• Corroborating Evidence:

  • Corroborating evidence could include:

    • Testimony from employees or other witnesses who observed suspicious activities.

    • Evidence that supports the unauthorized use of checks, credit cards, or other financial devices.

    • Financial records showing unusual discrepancies or missing funds.

  • Determine if there is sufficient probable cause (PC) to proceed with criminal charges. If the gathered evidence clearly supports the allegations, you can move forward with filing the case.

Filing the Case:

• Write It Up and File It:

  • After gathering sufficient evidence, prepare a report for Intake and Line Deputy District Attorneys (DDAs) to review.

    • File the report with the appropriate department to start the legal process.

    • If there are multiple victims, such as the business, employees, or even the RP (Reporting Party), ensure each victim’s case is documented.

• At-Risk Persons and Theft:

  • The At-Risk Persons Statute (C.R.S. 18-6.5-103) applies in cases where theft occurs involving at-risk persons, such as the elderly or individuals with physical or mental disabilities.

    • If the victim is an at-risk person (e.g., the business owner), the theft could result in a Class 5 felony (if the value of the stolen goods is under $500) or a Class 3 felony (if the value is $500 or more).

    • If the theft involves at-risk persons who were targeted due to their vulnerability, or the thief was in a position of trust, it enhances the charges.

Business as Victim:

• Businesses can be victims of theft, fraud, or embezzlement:

  • Building Contractors and Homeowners:

    • Contractors who misappropriate funds or fail to deliver work as promised may be liable for fraud or theft.

    • For example, if a contractor takes payment and doesn’t complete the job, it could involve both civil fraud and criminal fraud.

• Roofing Contractors:

  • For roofing contractors, C.R.S. 6-22-101 stipulates that money paid to contractors is held in trust for homeowners.

  • Theft from the homeowner can occur if the contractor misappropriates funds for personal gain or doesn't complete the work.

• General Contractors and Subcontractors:

  • C.R.S. 38-22-127 creates a trust for subcontractors. If a general contractor fails to pay subcontractors, it can result in both civil and criminal penalties.

  • Homeowners who “double pay” a contractor can also be victims of fraud.

Civil vs. Criminal Cases:

All criminal cases involving fraud and theft may have a civil component (e.g., if the perpetrator must return the stolen funds or face damages).

• However, not all civil cases automatically become criminal cases. For example, an issue of poor work quality or breach of contract between businesses and contractors might be purely civil if there is no criminal intent or illegal actions (like fraud).

• Be cautious not to dismiss any case as merely civil, especially if fraudulent activity or criminal intent is involved.

Final Steps:

• Analyze and prioritize evidence to decide which elements are most critical in proving fraud, identity theft, or forgery.

• Ensure that all the evidence (both physical and digital) is preserved and submitted correctly to support criminal charges.

• If fraud, theft, or identity theft is evident, ensure that both the criminal case (against the perpetrator) and the civil case (to recover stolen assets or damages) are pursued.

• Consult with a District Attorney for case direction and charging decisions, particularly if the theft involves large amounts of money or at-risk persons.