What is Fraud? (668 words)
by Sally Ramage
English law does not provide a definition of fraud, nor is there a substantive offence of fraud at criminal law. There are a number of offences that cover fraudulent activity. Fraudulent conduct involves deception and dishonesty. When the term fraud is used it can cover a wide spectrum of criminal activity ranging from minor offences such a benefit fraud to sophisticated frauds involving complicated financial transactions and large sums of money. The offences of theft and deception are contained in the Theft Acts of 1968 and 1978. There is also the common law offence of conspiracy to defraud. There are also offences of fraudulent trading . There is the Theft Amendment Act 1996 which aims to close the cases of mortgage frauds due to the impact of technology and electronic banking where the courts held that money transfers between banks by cheque or by electronic means were not offences under the Theft Acts because they did not involve the specific transfer of “property belonging to another”.
There used to be offences of fraud in wagering under the Gaming Act 1845, an example of such a case being R v Clucas and O’Rourke [1959]. In this case C and O were convicted of a number of offences of fraud in wagering , operating a scheme whereby one of them would contact a book-maker, giving a false name and pretending to be engaged on a works contract; the bookmaker would be asked to accept bets on behalf of the men on the site from C and O. When there were winnings, C and O collected them, and when there were losses of any substantial amount, they moved on to another place. Section 17 of the Gaming Act 1845 provided that “every person who shall , by any fraud… in wagering on the event of any game , sport, pastime or exercise, win from any other person to himself, or any other or others, any sum of money or valuable thing, shall be deemed guilty of obtaining such money or valuable thing by a false pretence.” The question put to the jury was “Were the accused at the time they made these bets with bookmakers intending to cheat and defraud those bookmakers by not paying losses?” And so the appeal failed. This is an example of deceit; concealment of their intention to move on without paying if they lost on the bets. It was known as the offence of fraud in wagering.
Fraud is concealed stealing and serious fraud is no more than fraud of a very large amount. Fraud may be defined as any behaviour by which one person intends to gain a dishonest advantage over another. It includes such diverse acts as petty theft, pilfering, extortion, embezzlement, forgery, unfair competition, commercial espionage and other white- collar crimes. Serious frauds consist of the most serious of these types of crime, namely complex embezzlement, long firm frauds and commercial and organised crimes. Serious frauds can also occur through terrorist offences and drug offences by way of money laundering. Other serious frauds are examples of blatantly dishonest financial conduct such as the unauthorised sale of financial products, market manipulation, the abuse of discretionary client account management, the churning of insurance or pension products and the continued promotion of unsuitable products in order to generate greater commission such as fraudulent pension transfers.
All frauds fall naturally into identifiable categories because, over time, all frauds have been shown to be of certain types, even though modern methods give them new leases of life by particular embellishments.
Reduced to its basic level, fraud is simple; its objective is to gain a dishonest advantage by reducing the victim’s assets, that is, a debit to the net worth of the victim. Fraud follows an incremental pattern limited only by the perpetrator’s greed, opportunities and success or otherwise in concealing previous losses. Greed is the motivation. Concealment is an essential part of most large-scale, prolonged frauds, this being concealment of losses, concealment of blame, misrepresentation or manipulation.
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