Fraud is a deceptive act or omission of facts where a person causes harm by seeking an unfair advantage, typically for financial gain. Fraud is handled differently in criminal and civil court proceedings, relating to state and federal criminal statutes, burden of proof requirements and potential consequences.
In some cases, there can be both criminal and civil liability. But in other cases, there can be civil liability but not criminal liability.
Defining criminal and civil fraud cases
Fraud charges can result in a broad range of offenses, including financial crimes involving insurance policies, credit cards, bad checks, mortgages and wire transfers. Additionally, business owners who knowingly omit material information about their company during a sale can be accused of false representation. The primary differences between criminal and civil cases are:
- Criminal fraud: These are actions deemed illegal by state laws or federal statutes. The state or federal government prosecutes the accused seeking penalties such as fines to punish the behavior.
- Civil fraud: Civil cases involve disputes between private parties, aiming to resolve conflicts and provide remedies, such as monetary awards allowing victims to recover losses due to deceit or misrepresentation. Civil fraud can also involve enforcement proceedings by government regulatory agencies
In cases where there are criminal charges, defendants can also find themselves the subject of a civil proceedings, either by regulatory agencies or by people or businesses harmed by their actions. Civil proceedings can occur regardless of whether a defendant is convicted of a crime.
It is also not uncommon for a civil fraud lawsuit to morph into a criminal fraud claim, as was the case in Mosing v. Boston, 2017 WL 4228699 (Western District of Louisiana).
The burden of proof and penalties differ substantially
Prosecutors in criminal fraud cases must prove a defendant’s guilt “beyond a reasonable doubt” to juries or judges. This stringent standard necessitates showing the accused’s actions were intentionally deceptive or deceitful. Penalties include imprisonment, fines, probation or community service.
The standard for civil actions is much less rigorous than criminal proceedings. The burden of proof is lower, defined as a “preponderance of evidence.” Instead of a unanimous verdict, a majority of jurors decide the case. Remedies here involve monetary compensation for the victim’s losses through damage awards or other equitable relief.
Fraud cases are complex
Fraud charges often involve complicated financial information, and can include multiple business entities, government agencies or programs and private charities.
If you facing an investigation or possible charges, it makes sense to get strong legal representation from experienced counsel.