Ch 13 Crimes BLAW

fraud

Intentionally deceiving someone to obtain money, property, or services through false statements or concealment of facts

• Falsifying or concealing a material fact

• Making false or fraudulent statements

• Using or making false documents

What are the three federal fraud actions in the U.S. Code?

a plan designed to deceive victims to obtain money or property

What is a scheme to defraud?

State-level fraud where someone intentionally misleads another to take their property.

What is theft by deception?

mail or wire fraud

Using mail or electronic communication as part of a plan to intentionally deceive someone.

Each use of mail or wire communication counts as a separate federal violation.

Why are mail/wire fraud charges often numerous?

No. It only needs to be part of the fraudulent scheme.

Does the defendant need to personally send the mail or message?

material fact

A fact important to a reasonable person in deciding whether to engage in a transaction.

If a defendant honestly believed their statements were true, they are not guilty of fraud.

What is the good faith defense?

No. Fraud requires intentional deception, not errors or carelessness

Do mistakes or bad judgment equal fraud?

Fraud involving breaches of duty like bribery or kickbacks.

What is honest services fraud?

The former CEO of Enron, charged with fraud, conspiracy, insider trading, and honest-services wire fraud.

Who was Jeffrey Skilling?

Manipulating Enron’s finances, making false statements, and inflating stock prices to enrich himself and others.

What were prosecutors accusing Skilling of doing?

Massive local prejudice in Houston due to Enron’s collapse and intense media coverage.

What was Skilling’s argument for an unfair trial?

He was charged with honest-services fraud, but the indictment did not involve bribery or kickbacks

Why was part of Skilling’s conviction overturned?

Conspiracy, securities fraud, false statements, and insider trading

Which parts of Skilling’s conviction remained valid?

The government must prove intent to defraud beyond a reasonable doubt.

Who has the burden of proof in fraud cases?

No. Only a “scheme to defraud” is required.

Does criminal fraud require proving reliance or damages?

securities fraud

Lying or hiding information about investments (like stocks) to trick investors

The Securities Exchange Act of 1934 and Rule 10(b)(5).

What law governs securities fraud

Corporate officers who create false financial statements

Who usually commits securities fraud?

phishing

Pretending to be a bank/company to steal personal information

skimming

Using a device to steal credit or debit card numbers

health care fraud

Lying on medical bills or falsifying information to get money from insurers or the government.

uncoding

Billing for a more expensive procedure than the one actually done

unbundling

Charging each step of a procedure separately to increase payment

Paying someone for patient referrals

What are kickbacks in health care?

Citizens report fraud, and if money is recovered, they receive a portion as a reward.

How do whistleblower suits work?

counterfeit access device

A fake or illegally obtained tool used to access funds, such as stolen bank cards, account numbers, or fraudulent codes

False Claims Act (FCA)

It punishes people or companies that lie to get money from the government (e.g., fake medical billing).

whistleblower (qui tam) lawsuit

A lawsuit filed by a private person on behalf of the U.S. government to report fraud; the whistleblower gets a share of recovered money

upcoding

Billing for a more expensive medical service than what was actually performed.

That someone fraudulently concealed property, meaning they hid or falsified information to deceive creditors or the court

What must the government prove for bankruptcy fraud?

No. Even failed attempts to hide property are still crimes

Does bankruptcy concealment have to succeed to be illegal?

Because it can begin before the bankruptcy is filed and continue afterward.

Why is concealment a “continuing offense”?

conspiracy

An agreement between two or more people to commit a crime, plus any act taken to help the plan.

No. The crime can fail completely — the agreement + overt act is enough.

Must the conspirators succeed for a conspiracy conviction?

Agreement, willful joining, an overt act, and the act was knowingly committed to help the plan

What are the required elements of conspiracy?

overt act

Any action, even innocent, done to help the conspiracy succeed

Yes. They only need to knowingly join the illegal plan.

Can someone be guilty of conspiracy if they don’t know all details?

obstruction of justice

Intentionally interfering with an investigation or legal process.

Executives manipulated financial results, lied about performance, and caused a huge corporate collapse.

What happened in the Enron conspiracy?

Knowingly giving false information to influence a federally insured bank’s decision

What makes a false statement to a bank a federal crime?

No—intent is enough

Does the bank need to be misled or influenced?

When unsafe practices expose workers to serious injury or death

When can employers be criminally liable?

Impose fines and bring legal actions for safety violations

What can OSHA do?

Larceny

The unlawful taking of someone else’s property with the intent to keep it permanently.

shoplifiting

What common everyday example is a form of larceny?

Robbery involves using force or threats to steal (gun)

How is robbery different from regular larceny?

Burglary is breaking into a building with the intent to commit a felony, usually theft

How is burglary different from larceny?

embezzlement

Stealing money or property that you were trusted to handle (e.g., an employee entrusted with funds who steals them).

Because trusted employees often have access to cash, accounts, or financial systems

Why is embezzlement common in businesses?

Stealing company property, misusing company vehicles/computers, padding expense reports, or falsifying time sheets.

What are examples of employee larceny?

Executives can steal far larger amounts and disguise theft as “business expenses,” causing much greater harm.

How does larceny by executives differ from larceny by employees?

money laundering

Making illegal (“dirty”) money look legal (“clean”) by running it through businesses or financial transactions.

1) Get illegal money, 2) Pass it through financial systems, 3) Make it appear legitimate.

What is the basic 3-step idea behind money laundering?

RICO Act purpose

 To prevent and punish long-term, organized criminal activity carried out through businesses, organizations, or enterprises

“enterprise” under RICO

Any group or organization—formal or informal—such as a business, partnership, gang, or association engaged in ongoing activity

(1) The defendant participated in managing or operating an enterprise, and (2) they engaged in a pattern of racketeering activity.

What must be proven for RICO liability?

At least two related racketeering acts committed within 10 years showing ongoing criminal behavior.

What counts as a “pattern of racketeering”?

Murder, kidnapping, extortion, bribery, robbery, drug trafficking, counterfeiting, mail and wire fraud, witness tampering, obstruction of justice.

Name examples of racketeering acts.

1. Using criminal proceeds to run a business

2. Acquiring or maintaining control of an enterprise through crime

3. Conducting an enterprise’s affairs through criminal acts

What are the three main RICO violations?

Prison sentences, heavy fines, and forfeiture of illegal proceeds

What penalties exist under criminal RICO?

Treble (triple) damages, attorney fees, and possible injunctions

What penalties exist under civil RICO?

bribery

Offering, giving, receiving, or requesting something of value to influence the action of an official or decision-maker.

kickback

A payment made to someone who helped secure a transaction or contract, usually given as a reward or percentage of the deal.

Kickbacks usually occur after a transaction in return for favorable action; bribes can occur before to obtain the action.

How do kickbacks differ from regular bribes?

aiding and abetting

Knowingly assisting, encouraging, or supporting someone else in committing a crime, even if you do not perform the main criminal act

Aiding and abetting is assisting the crime itself; conspiracy is agreeing to commit the crime. A person can be charged with both

How is aiding and abetting different from conspiracy?

To hold minor participants liable, pressure them to testify, and build cases against those higher in the organization

Why do prosecutors often charge aiding and abetting?

accessory before the fact

Someone who helps plan or prepare for a crime; usually punished the same as the main offender.

accessory after the fact

Someone who helps conceal a crime or assist an offender after it's committed; punished separately and generally less severely.

cyber crime

Illegal activity involving computers, networks, or the internet, including theft, fraud, hacking, or misuse of digital information

Trade secrets, customer lists, personnel records, business plans, and confidential files.

What types of information do hackers commonly steal from businesses?

The FBI, through the Internet Crime Complaint Center (IC3).

Who investigates internet crimes in the U.S.?

 To make criminal sentencing more consistent and prevent “judicial roulette” where outcomes depended heavily on which judge handled the case.

Why were federal sentencing guidelines created?

Punishment, deterrence, and encouraging strong internal compliance systems

What are the goals of organizational sentencing guidelines?

The Sarbanes-Oxley Act, which requires stronger corporate accounting and compliance systems.

What law strengthened accountability mechanisms after major fraud scandals?

They charge lower-level employees first, then bargain for testimony against higher-level officials.

How do prosecutors reach top executives in investigations?