FRAUD BASICS
WHAT IS FRAUD?
Fraud, sometimes referred to as the fraudulent act, is an intentional deception, whether by omission or commission, that causes its victim to suffer an economic loss and/or the perpetrator to realize a gain. A simple working definition of fraud is theft by deception.

Legal Elements of Fraud
Under common law, fraud includes four essential elements:

1. A material false statement
2. Knowledge that the statement was false when it was spoken
3. Reliance on the false statement by the victim
4. Damages resulting from the victim’s reliance on the false statement
In the broadest sense, fraud can encompass any crime for gain that uses deception as its principal technique. This deception is implemented through fraud schemes: specific methodologies used to commit and conceal the fraudulent act. There are three ways to relieve a victim of money illegally: force, trickery, or larceny. Those offenses that employ trickery are frauds.

The legal definition of fraud is the same whether the offense is criminal or civil; the difference is that criminal cases must meet a higher burden of proof. For example, let’s assume an employee who worked in the warehouse of a computer manufacturer stole valuable computer chips when no one was looking and resold them to a competitor. This conduct is certainly illegal, but what law has the employee broken? Has he committed fraud? The answer, of course, is that it depends. Let us briefly review the legal ramifications of the theft.

The legal term for stealing is larceny, which is defined as “felonious stealing, taking and carrying, leading, riding, or driving away with another’s personal property, with the intent to convert it or to deprive the owner thereof.” In order to prove that a person has committed larceny, we would need to prove the following four elements:

1. There was a taking or carrying away