Previous posts on this blog address the issue of business fraud and the impact that it can have on both those accused of it and subjected to it. Most people in Illinois likely understand that in any professional transaction, there is a risk of unfavorable returns. Yet does every such instance truly constitute fraud?
One might understand the tendency of a person to claim they are the victim of fraud when their business dealings result in losses (as such a claim overrides any critiques of their business decisions). Yet considering the impact that such an accusation can have on those who face it, it stands to reason that such an offense should be very well-defined.
The “legal” definition of fraud
The problem, however, is that it is not. Indeed, according to the U.S. Department of Justice, “(f)raud is defined by nontechnical standards and is not to be restricted by any common-law definition of false pretenses.” This almost guarantees controversy when such an accusation occurs, as those who stand accused of it might rightly claim it to be almost impossible to classify the legality of their actions given no statutory definition exists.
A defense from fraud accusations
Yet simply because no formal definition exists does not mean that officials do not follow any legal guidance when prosecuting a fraud case. Rather, the DOJ cites generalities offered through court rulings, stating that a typical fraud case involves at least one of the following elements:
- False representations
Knowing this, one accused of fraud now understands what they need to answer to in order to defend themselves. Should one show that good faith drove their decision-making (regardless of the outcome they produced), it may prove difficult they attempted to defraud their business partners or clients.