There are dozens of variations to these scams all involving the mass distribution of emails. Some emails ask for charitable donations for a tragic event, such as the earthquake in Haiti, while others attempt to link you to counterfeit bank websites (phishing). It is assumed that internet fraud will become a growing industry as the baby-boomers age and we become more reliant on internet money transfers. In a broad strokes definition, fraud is a deliberate misrepresentation which causes another person to suffer damages, usually monetary losses. Most people consider the act of lying to be fraudulent, but in a legal sense lying is only one small element of actual fraud. A salesman may lie about his name, eye color, place of birth and family, but as long as he remains truthful about the product he sells, he will not be found guilty of fraud. There must be a deliberate misrepresentation of the product's condition and actual monetary damages must occur.
Many fraud cases involve complicated financial transactions conducted by 'white collar criminals', business professionals with specialized knowledge and criminal intent. An unscrupulous investment broker may present clients with an opportunity to purchase shares in precious metal repositories, for example. His status as a professional investor gives him credibility, which can lead to a justified believability among potential clients. Those who believe the opportunity to be legitimate contribute substantial amounts of cash and receive authentic-looking bonds in return. If the investment broker knew that no such repositories existed and still received payments for worthless bonds, then victims may sue him for fraud.
Fraud is not easily proven in a court of law. Laws concerning fraud may vary from state to state, but in general several different conditions must be met. One of the most important things to prove is a deliberate misrepresentation of the facts. Did the seller know beforehand that the product was defective or the investment was worthless? Some employees of a large company may sell a product or offer a service without personal knowledge of a deception. The account representative who sold a fraudulent insurance policy on behalf of an unscrupulous employer may not have known the policy was bogus at the time of the sale. In order to prove fraud, the accuser must demonstrate that the accused had prior knowledge and voluntarily misrepresented the facts.
Another important element to prove in a fraud case is justifiable or actual reliance on the expertise of the accused. If a stranger approached you and asked for ten thousand dollars to invest in a vending machine business, you would most likely walk away. But if a well-dressed man held an investment seminar and mentioned his success in the vending machine world, you might rely on his expertise and perceived success to decide to invest in his proposal. After a few months have elapsed without further contact or delivery of the vending machines, you might reasonably assume fraud has occurred. In court, you would have to testify that your investment decision was partially based on a reliance on his expertise and experience.
The element of fraud which tends to stymie successful prosecution is the obligation to investigate. It falls on potential investors or customers to fully investigate a proposal before any money exchanges hands. Failure to take appropriate measures at the time of the proposal can seriously weaken a fraud case in court later. The accused can claim that the alleged victim had every opportunity to discover the potential for fraud and failed to investigate the matter thoroughly. Once a party enters into a legally binding contract, remorse over the terms of the deal is not the same as fraud.
