Fraud crimes usually involves professional and business people who allegedly use deception to benefit another person or themselves. Since the evidence of fraud crimes includes complex financial documents, it might be challenging to prove who is legally responsible, and the authorities might charge an innocent individual.  

If you get charged with a fraud crime or even arrested, you should protect your rights by hiring a qualified attorney to defend you. If you are in Los Angeles, contact The LA Criminal Defense Law Firm – we are experienced in dealing with all matters of fraud crimes.

What Are Fraud Crimes?

Fraud crime is a class of theft crimes in which the manner of theft is done by artifice, trick, or other forms of device. Although crimes like grand theft, burglary, and robbery carry severe penalties, a fraud crime is sometimes considered to be more serious than other crimes and comes with harsher penalties.

Federal law has defined a fraud crime as any intentional misrepresentation or deception used to benefit someone else or yourself. The federal government penalizes all types of fraud crimes through its prosecutors in the US Attorney’s Office.  

Both the county and state laws identify different types of fraud crimes, and every fraud has its penalties. Before we look at the different types of fraud crimes, you need to understand that there are both civil and criminal fraud crimes.

Civil Fraud Crime Vs. Criminal Fraud Crime

The difference between a civil fraud crime and criminal fraud crime lies in the person pursuing legal action in the suit or case. One act of fraud can be charged as a civil crime by the victim and also as a criminal crime by the prosecutor. 

Whether civil or criminal, fraud crimes generally have a few legal elements as listed below:

  • Misrepresentation of material facts
  • The accused awareness that he or she was misrepresenting facts
  • The misrepresentation was done intentionally, to deceive the accuser
  • The accuser held the misrepresentation and depended on it
  • The accuser suffered damages due to the misrepresentation

When you are accused of a criminal fraud crime, the case is brought by a federal, state, or local prosecutor, who must prove that you wanted to commit the misrepresentation and benefit from it. Your case could go to court even if you were not successful in committing the crime and even if no party was harmed.

On the other hand, a civil fraud crime lawsuit is brought to the court by the victim, who must prove that you materially misrepresented the facts, the facts were false, and you knew they were false.

The accuser must also show that he or she suffered damage due to your misrepresentation. This shows that the other major difference between a criminal and civil fraud crime is to show that damages indeed occurred in a civil case. 

The purpose of pursuing civil and criminal fraud cases is to ensure that justice is served and punish the defendant, but the penalties that arise from a guilty ruling are unique for every case.

Different Type of Fraud Crimes and Penalties 

There are different types of fraud crimes that can be committed. The most common kinds of fraud crimes include:

  1. Auto Insurance Fraud

Auto insurance fraud is listed in the California Insurance Code Section 1872.8. Exaggerating or faking injuries from a car accident, planning a collision, or staging vehicle theft are some of the common types of auto insurance fraud. Generally, any act that is intended to procure undeserved financial benefits from a vehicle insurance firm is termed as a fraud. 

A false insurance claim is a serious crime that can cost an insurance company billions of dollars. This type of fraud crime can also be classified as:

Soft Insurance Fraud

This is a minor offense compared to the next classification (hard fraud). It means being opportunistic by taking advantage of an occurrence that has happened. For instance, if you are injured in a car accident but pretends that your injury is more severe than it is, that would lead to soft insurance fraud.

Soft fraud is the most common form of auto insurance fraud because it is easy to commit and harder to detect. This is specifically true in cases where people sustain back and neck injuries.

Hard Insurance Fraud

This is the most serious type of auto insurance fraud. It involves staging a car accident, deliberately inviting thieves to steal your car, or intentionally staging a situation where you stand to gain from your insurance money. Hard fraud is less common compared to soft fraud, but it still costs the insurance firms a lot of money.   

Common Convictions for Auto Insurance Fraud

The penalties for a guilty verdict are classified into two categories: misdemeanors and felonies. This will depend on the seriousness of auto insurance fraud.

Misdemeanor Auto Insurance Fraud

Most vehicle insurance fraud guilty verdicts are misdemeanors or for soft fraud. These means frauds such as exaggerating your claim, lying when applying for your insurance claim (such as where your car was parked), and fraudulent personal injury claims.

Whichever the case, these will count as misdemeanors and attract the following penalties:

  • A fine that will vary depending on the seriousness of the fraud, up to $15,000
  • A sentence of up to 5 years
  • Probation

One main issue is that the law doesn’t cater to the high levels of advanced technology that is used for car insurance fraud. Most of these frauds are considered misdemeanors, even staged accidents.

Felony Auto Insurance Fraud

The defendant must destroy property for the insurance fraud to be treated as a felony. It can include arson or a situation where a person died due to a staged accident. One example of this fraud is where a person burns his or her car or pays another person to burn it.  

In felony cases, the insurance investigator will review everything carefully, which means that you might end up being convicted. Here, you will face the following penalties:

  • A sentence of between five years and ten years
  • A fine of up to $150,000

There is no probation in a felony auto insurance fraud crime.

  1. Check Fraud

California Penal Code Section 476 states that it is a criminal crime to fraudulently possess, create, write, or pass a forged or fake check to get something valuable in exchange for that check. This crime is broadly called PC 476 or Check Fraud.

Often, the PC 476 fraud is done by a person, but organizations and businesses can be liable for this crime as well. The main thing you should know about check fraud is that the action is committed with the aim of misleading or defrauding another institution or person.

It does not mean that the victim must suffer loss or get injured for a check fraud to be committed. The mere intent of writing a forged or fake check can make you liable for check fraud charges.

Common Convictions of PC 476

Check fraud can lead to civil charges or criminal charges. Depending on the seriousness of the crime, check fraud can be classified as either a felony or a misdemeanor charge. The prosecutor looks at the amount involved when determining if to charge you for a misdemeanor crime or a felony one.

Misdemeanor Check Fraud

Writing a forged or fake check of about $100 will lead to a misdemeanor crime and attract the following penalties:

  • A penalty of up to $500
  • A jail term of about one year

Felony Check Fraud

Felony charges will result in more severe penalties, with extended prison sentences and heavier fines. For instance, if you write a fake check of about $100,000, you could end up:

  • Paying a penalty of up to $1 million
  • Serving a jail term of three years
  1. Credit Card Fraud

A credit card fraud can include both the crimes of theft and fraud. It is considered as part of identity theft charges because it encompasses fraudulent use of another person’s private information for monetary gain.

The cases of credit card fraud have been on the rise since most people and businesses use the card to make a payment online. The California law upgraded some kinds of identity theft to be considered felony crimes in 1999.

There are different types of credit card fraud, including:

  • Skimming – This occurs when an electronic device records details from a magnetic strip
  • Application fraud – This happens when someone applies a credit card using another person's identity
  • Card not present – This happens when a person finds a card’s account number, security code, and expiration date and purchase goods via phone or online using these details
  • Stolen or lost card – This happens if someone loses his or her card and the card is used by another person to buy things

Common Convictions and Penalties of Credit Card Fraud

A stolen credit card can be charged as a misdemeanor or felony and attract the following penalties:

  • Misdemeanor – Up to one year in jail and a fine of at most $1,000
  • Felony – a maximum of one year in jail and probation, between 16 months to 3 years in jail, and a maximum fine of $10,000

Counterfeiting a credit card can attract these penalties:

  • Misdemeanor – up to 6 months in jail and a maximum fine of $1000
  • Felony – between 16 months and 3 years in jail and a maximum fine of $10,000
  1. Gambling Fraud

California Penal Code Section 332 states that gambling fraud or gaming fraud is obtaining someone else's property or money via the use of sleight of hand, device, game, or pretensions to fortune-telling, any instrument, or trick. This type of fraud is considered a theft crime.

Penalties for Gambling Fraud

The potential penalties of gambling fraud depend on the amount of money or property involved that you got from the victim. If it is less than $950, you can be charged with a misdemeanor gambling fraud, and if it is more than $950, you can be charged with a felony gambling fraud.

For a misdemeanor conviction, you could end up facing these charges:

  • Misdemeanor probation
  • A maximum fine of $1,000
  • A maximum jail term of 6 months if the property is worth less than $950

For a felony conviction:

  • 16 months, two years, or three years in jail
  • A maximum fine of $5,000 or a maximum of $10,000 for subsequent offenses
  • Felony probation
  1. Health Care Fraud

There are different types of health care fraud, such as:

  • Anti-kick violations – It is unlawful for any person, such as health care providers, distributors, marketers, business owners, or contractors, to receive any remuneration or payment in return for referring an individual to a health care provider
  • Stark law – It is illegal for a doctor to refer an individual to a certain type of health care institution, such as a pharmacy or laboratory
  • False claims act violations – False claim leads to a liability for a misstatement of fact as a result of any billing error, any federal agency, or even accidental error and can result in charges
  • Prescription fraud – This is a prescription drug fraud that includes violating of the Drug Enforcement Act
  • Billing Fraud – These are errors that arise due to human error or billing codes errors
  • Certification errors – It is illegal for medical providers to provide false certifications that offer health care services

Penalties for Health Care Fraud

Penal Code 550(a) PC outlaws most types of medical and health care fraud in California. If you commit a health care fraud that is worth less than $950, you might be charged with a misdemeanor health care fraud. Otherwise, you will be charged with a felony.

The misdemeanor charge attracts the following penalties:

  • Serving a sentence of up to 6 months
  • A maximum fine of $1,000
  • Both the jail term and fine

The felony charge attracts these penalties:

  • A maximum fine of $50,000 or double the fraudulent amount
  • A sentence of two, three, or five years
  1. Identity Theft Fraud

Identity fraud law targets specific kinds of personal identity. The targeted information includes email passwords, credit card numbers, bank account numbers, and social security number that is used for personal gain.

For instance, a common case of identity theft includes phoning someone claiming to be his or her bank. A person might request you to confirm your bank details by providing your date of birth, social security number, and other details. Some days later, you learn that your bank account has been swept clean.

Note that you can be charged with identity theft even if you didn’t gain from the act. This is called fraudulent intent.

Penalties for Identity Theft Fraud

The penalties for identity theft include:

  • Incarceration – A sentence of up to 1 year in jail for a misdemeanor and up to 3 years for a felony crime
  • Fines – A fine of up to $1,000 for a misdemeanor and up to $5,000 for a felony crime.
  • Restitution – The court can order you to refund the lost money
  • Probation – This is for the first time offenders who didn’t cause significant harm to the victim
  1. Real Estate Fraud

California Penal Code Section 487 deals with all manner of real estate fraud. They include the following things:

  • Mortgage fraud like taking the mortgage with a stolen identity and equity skimming
  • Foreclosure fraud where a person accesses the information and collect a fee to prevent foreclosure
  • Rent skimming when a rent collector steals the rent paid by tenants
  • Property flipping that involves selling and buying properties quickly to make a quick profit
  • Forgery that involves forging title deeds
  • Antitrust fraud when people conspire to prevent rivals from entering the real estate market
  • Elder frauds are common since the elder owns more valuable properties

Possible Penalties for Real Estate Fraud

If you are charged with a real estate fraud, you could end up facing these punishments for a misdemeanor act:

  • A maximum fine of $1,000
  • A jail term of up to 1 year

For felony charges:

  • A maximum fine of $10,000
  • Between 16 months and three years in prison
  • Up to 5 years in prison is the value exceeds $65,000
  1. Unemployment Insurance Fraud

Most unemployment insurance frauds arise when a person knowingly and intentionally makes misrepresentations or false statements to get unemployment insurance payments. Some of the common types of unemployment insurance fraud include failure to report employment, false identification, identity theft, or false information, and employer fraud.

Probable Consequences of Unemployment Insurance Fraud

You can face criminal as well as civil charges if you are charged with unemployment insurance fraud. A civil conviction will lead to a fine while a criminal one will result in probation, fines, and other penalties.

Specifically, the penalties include:

  • Repayment of the fraudulently acquired funds
  • A fine of up to $500 and up to $1,500 for a misdemeanor and felony crime, respectively
  • Probation
  1. Welfare Fraud

Welfare fraud involves misstating or lying about your household or personal financial situation to obtain government welfare benefits. They include Head Start, CalWORKs, CalFresh, Medicaid, and Medicare. 

Penalties for Welfare Fraud

Welfare fraud is either a felony or a misdemeanor offense. In case of a misdemeanor charge, you might end up facing these penalties:

  • Up to 6 months in jail
  • Pay a fine of up to $500

For a felony conviction, you could end up facing the following consequences:

  • 16 months to two years in prison
  • A maximum fine of up to $5,000

Just like most fraud crimes, the felony charges go for welfare fraud of above $950.

  1. Workers Comp Fraud

Workers comp fraud is any misrepresentation or lie made by a worker, an employee, or a provider to gain financially. About 1% of all workers’ comp payments are illegal. 

Below are some of the common workers’ comp frauds:

  • Employees – Made up illness or injury, exaggerated illness or injury, and non-work-related illness or injury
  • Employers and workers – Lying about job safety, misclassifying employees, and not buying workers’ comp
  • Providers – They can abuse the system and exaggerate illness or injury

Workers’ Comp Fraud Consequences

If you are convicted of a worker comp fraud, you could end up facing the following penalties:

  • A maximum of 1 year in jail for a misdemeanor
  • Up to 5 years in prison for a felony
  • Paying back the fraudulently acquired funds

Possible Legal Defenses Against Fraud Crimes

In its many types, such as auto insurance fraud, welfare fraud, gambling fraud, or any other kind of fraud, there are common defenses that The LA Criminal Defense Law Firm can help you win your case. They include the following:

  1. Insufficient Evidence – The prosecutor or the victim has the liability of proving that you committed fraud. Your lawyer can help to ensure that there is little evidence linking you to the fraud.
  2. Absence of Intent to Defraud – Fraud is defined as any event or action that is intended to deceive another person. Thus, the prosecutor must prove that there was intent to commit fraud
  3. Non-Fraudulent Statement – Not all misreading statements are seen as fraudulent. The statement needs to link to a provable fact, and not the intent to do something in the future.
  4. Entrapment – Your lawyer can argue that you committed a crime when under duress.
  5. No Risk of Loss – Another defense that your lawyer can put forward is that there was no risk suffered. There could not be an offense if there was no risk.

Find a Los Angeles Criminal Defense Attorney Near Me

It is advisable to seek help from a professional attorney who can help protect your rights, offer advice on the way forward, and navigate the justice system. If you are in Los Angeles, contact The LA Criminal Defense Law Firm at 310-935-1675. You can have peace of mind knowing you will get the best lawyers to represent you in a fraud crime case. Get in touch with us today!