Can Fraud Be a Federal Crime?

By San Diego Attorney on February 28, 2021

Fraud is a rather complex crime that can arise from something as simple as a misunderstanding. But it should be taken seriously. If you are accused of fraud, it has the potential to end with hefty fines, years in jail, and a significant blow to your professional reputation and career. Also, compared to other theft crimes, fraud can result in federal prosecution.

California’s Fraud Laws

Fraud is a broad legal concept that covers a variety of crimes, ranging from misdirecting funds out of a company account to writing a fake check, but generally, it involves one person (the defendant) using some form of deceit and misrepresentation to harm or deprive another person (the plaintiff) of property. Misrepresentation can include something as simple as a lie, but it can also refer to falsely representing the value of a product, creating fake documents, or filling out an application with someone else’s information.

In California specifically, fraud is defined under Civil Code 1572 as the act of deceiving another person into entering into a contract or agreement with the defendant by using any of the following methods:

• Suggesting that false information is a fact when the defendant knows it is false;
• A “positive assertion” that certain information is true when the defendant should reasonably know that it is false;
• Suppressing the truth in order to deceive someone;
• Making a promise or agreement without the intention of fulfilling it; or
• Any action that is designed to deceive someone else.

When applied in practice, fraud can include crimes such as:

• Accounting fraud, which can include misrepresenting a company’s success or misdirecting funds out of company accounts.
• Credit card fraud, which can involve creating fake credit cards or misusing someone else’s credit card.
• Identity theft, such as using someone else’s social security card or other personal information.
• Real estate fraud, such as lying during an appraisal or falsely claiming to help property owners with a foreclosure.

What Is Federal Fraud?

In addition to being state crimes, most fraud charges are also federal crimes. Federal crimes usually have harsher penalties, including longer prison sentences, significant fines and fees, and the loss of certain licenses and certifications. A single federal fraud conviction can destroy your business career.

Federal fraud crimes typically involve some form of deception used against a government agency or deception that uses a government service. Given that the federal government regulates most major business interactions, such as bank transactions and wire transfers, federal fraud can overlap with several different white-collar crimes, such as:

• Mail theft
• Bank fraud
• Securities fraud
• Wire fraud
• Healthcare fraud
• Medicaid and Medicare fraud
• Auto registration fraud

Like state crimes, federal crimes can also be charged as misdemeanors or felonies. While minor offenses may result in six-month sentences in county jails or probation with some fees, a felony charge can end with thousands upon thousands of dollars in fines and years in prison.

Contact an Experienced Attorney

Many people assume that fraud is only an issue for wealthy business executives, but anyone can accidentally commit this crime and end up on the wrong side of a federal prosecutor. The legal language for these types of crimes is relatively simple — even filling out a form at the DMV incorrectly or misinforming a customer about a contract can lead to a fraud charge. When that occurs, you will want to have a San Diego fraud defense lawyer at your side to protect your future.

If you or someone you love has been charged with fraud, reach out to jD LAW. Our lead attorney has more than 30 years of experience in the courtroom and is a former LAPD investigator. He understands the differences between state and federal crimes and can craft a detailed defense on your behalf. To discuss your case in a free consultation, call our office at (760) 630-2000.