Health Insurance fraud, welfare fraud, tax evasion fraud, credit card fraud, and check fraud are among the most common types of fraud you are likely to be charged with in Los Angeles, California. The state’s prosecutors have the right to levy fraud charges against a person, victims have a right to report suspected fraud activities, and you have the right to seek a criminal defense attorney to represent you. When you are accused of fraud, we invite you to contact the Los Angeles Criminal Attorney for help.
The General View of Fraud in California
Fraud refers to the intentional deception aimed at ensuring certain gains unlawfully or in an unfair manner. It can also happen when a victim is deprived of their legal rights as outlined in the US Constitution. Only government prosecutors are authorized to levy criminal charges against alleged fraudsters, but victims are allowed to report these crimes.
There are two major criteria for fraud crimes: civil wrong where a victim sues to stop the crime or recover loses and criminal wrong where the perpetrator goes to trial and is prosecuted by relevant authorities. As well, the burden of proof is much higher in criminal cases as the prosecution must prove all elements of fraud beyond a reasonable doubt. In contrast, punishment in civil suits can have monetary compensation and restitution where the defendant is ordered to pay back the stolen money.
There are vital elements of fraud laws as listed below:
- Deliberate representation or indication of a critical fact
- Knowing that such information is fraudulent
- Victim relies on this misrepresentation (e.g., income statements)
- A victim is subjected to loss that can be proven
Fraud, along with other criminal activities, is common, and this upward trend is attributed to Proposition 47, a law that is fundamentally a measure of alleviating prison congestion. This proposition stipulates lesser penalties for various crimes like drug & non violent offenses, which allows people to serve shorter sentences reserved for misdemeanors.
In this article, we delve into the various fraud crimes in Los Angeles and how you can get legal counsel should you find yourself in this predicament.
- Automobile Insurance Fraud
Fraud is so pervasive in Los Angeles that the city has gained notoriety as the auto fraud capital globally. As per the California Department of Insurance, the city registered auto insurance fraud to the tune of $120 million between 2012 and 2013. The Fraud Division is governed by the California Penal Code Sections 548-550 where investigators examine different manner of auto fraud that includes organized crime, falsified insurance claims, economic theft, collision rings, and medical bills.
Further, the Department noted that while this kind of fraud is not unique to California, LA ranks much higher when it comes to fraud crimes. The city accounts for 43% of all fraud crimes in the sunshine state which is staggering by any standard. Automobile insurance fraud happens in several ways, and the most prevalent ones are as follows:
Swoop and Squat
This kind of crime is also known as a sudden stop, and it occurs when the 'squat' vehicle goes ahead of the victim's vehicle and then slows down such that the gap between both cars closes. The victim breaks suddenly and ends up, rear-ending the 'squat' vehicle, and of course, this collision launches an insurance claim.
As per due process, authorities are keen to investigate every case, and they have surmised that most instances of auto fraud share the same tell-tale signs:
- Relatively new insurance for the other (squat) car
- A smooth flow of traffic just before the sudden breaking
- Other vehicle is dilapidated or is indicated as salvage
- Passengers of the squat car claim injury despite a minor collision
The Property Casualty Insurers Association of America advises victims of such crashes always to take photographic evidence to bolster their case. Investigators can use pictures to determine if the injuries are proportionate to the accident scene or not.
This kind of collision happens when people collude to stage a legitimate accident by using a vehicle that is already damaged. Alternatively, they can destroy the victim's car intentionally in a covert manner.
This type of accident happens when an unknown vehicle collides into another car, and there is usually no proper description of the other vehicle. In 2014 alone, there were 16 false claims involving phantom collisions where seven insurance providers were defrauded $314,000. The California state insurance commissioner noted that such crimes are not victimless as taxpayers absorb this burden by paying higher premiums.
- Real Estate Fraud
real estate fraud is a collective term that describes illegal schemes where home buyers or real estate brokers misrepresent mortgage documents. A typical example of this crime is submitting falsified W-2 forms, or property inflation to dupe buyers into paying way above the actual market value.
The entity that submits false information reels in others who rely on that data to complete mortgage transactions. While federal statutes do not mention real estate fraud directly, such crimes are charged under bank fraud, wire fraud, or conspiracy.
The Fraud Enforcement and Recovery Act (FERA) was formulated in 2009 to empower federal officials in implementing laws to negate real estate fraud. Culprits who are caught up in such legal messes can pay hefty fines going as high as $1 million and serve a prison sentence of up to 30 years.
The law recognizes two broad categories of real estate fraud:
- Fraud for Housing
This kind of criminal activity occurs when a borrower who intends to purchase a home submits falsified information to improve their chances of securing a loan or get favorable terms. Alternatively, they may leave out vital information in the loan application documents.
- Fraud for Profit
This crime is perpetrated by a real estate broker, realtor or mortgage broker where they inflate property value, so they get money when the transaction goes through. Seeing that Los Angeles is home to some of the priciest real estate properties in the US, this kind of fraud occurs much frequently.
These broad categories of real estate fraud notwithstanding, there are many specific cases of how this crime is committed with examples below:
The person borrowing a loan "straw buyer" conceals their identity by appointing a nominee with an impressive credit score and other factors. A loan application is then filled using the nominee's details.
This crime is where the applicant for a mortgage loan uses another person's details without their knowledge. They maliciously get hold of the victim's name, personal identifying information, and credit history so they can take out a loan on their behest but fictitiously.
Real estate dealers may flip properties to make quick money. They do this by buying homes then quickly valuing them at inflated prices and then offloading them just a promptly to the next unsuspecting buyer. It is imperative to note that flipping homes during a market boom is a sound business practice. Nevertheless, the fraudulent appraisal constitutes a criminal act that is punishable by California law.
In other instances, a person can use short sale approval letters supposedly approved by a bank. They then proceed to perform transactions mostly on distressed properties which they sell far below the market price to the detriment of owners. Afterward, they will sell the property at a much higher price, thus accruing a handsome profit in the process.
Fake approval letters have adversely impacted home-buyers and investors who end up closing deals on properties which appear to have clear titles while in reality, they were devalued. These victims could also be subject to tax liens to the tune of hundreds of thousands of dollars.
Stealing the identity of property owners is also common where schemers who sell and refinance the home sans explicit authority. Property schemes are quintessentially elaborate looping in escrow officers who fabricate or hide pertinent documents.
Escrow wire fraud
This kind of fraud is highly lucrative going to the tune of $5.2 billion on an international scale, and more specifically, the home buying industry loses $5.3 million per month. Business email compromise (BEC) is the industry term for wire fraud, as per the FBI which also warns that fraudsters are shifting their target.
As of spring of 2018, prospective homeowners became highly sought-after targets since it is possible to tap into escrow networks and harvest emails and other identifying details. The emails are then sent to unsuspecting victims requesting for wire transfers on a property for which they closed a deal. Wire fraud usually happens in collaboration with scammers overseas who acquire US bank accounts from dating sites, then manipulate their details.
This fraud involves two important entities: a straw buyer (as described earlier) and a property investor. The investor uses falsified income documents and credit statements to acquire property in the name of a straw buyer who then signs over the home. The straw buyer gives up any legal rights to the house leaving the investor in charge who then leases out space without making any mortgage payments to the bank. Eventually, the bank forecloses on the property and they are left with a mess to figure out who the actual owners are.
Like many other states, California has put laws in place to thwart instances of real estate fraud and those caught up in such crimes are charged accordingly.
real estate fraud cuts across diverse professional sectors. For instance, on February 8th, 2019, an attorney was charged with 100 counts of felony after defrauding homeowners who were either deceased or geriatric. This attorney has a long history of criminal acts that led to a suspension at the turn of the millennium. She later renewed her license in 2001 but charged with fraud this year.
- Tax Evasion and Fraud
These crimes typically go hand in hand. Tax evasion essentially involves the refusal to pay taxes that you legally owe to the federal or state government. Not fulfilling this mandatory duty can launch legal entanglements that may end with a prison sentence or forfeiture of properties.
Tax fraud, on the other hand, is knowingly misleading authorities by inputting wrong information in the tax application forms. The new tax laws come with many opportunities for law-abiding citizens, but they also come with perils that may trigger an uptick in tax fraud.
When this happens, individuals and businesses are likely to be audited by the IRS and this stance is cause for alarm if things are not right. The IRS will examine your tax returns with a fine tooth comb, and any discrepancies will lead to disciplinary action. Stiff penalties of about $250,000 are a sure option in tax evasion, and where both crimes are involved, incarceration becomes a viable recourse.
- Business/ Corporate Fraud
This type of crime entails dishonest dealings and other unlawful activities that are facilitated by individuals and businesses in the interest of financial gain. Regrettably, the majority of these sagas unfold in the guise of legitimate business, and so they go under the radar without raising red flags. As you can imagine, corporate fraud can happen in many ways with common examples as below:
Non-delivery of Goods
Refusal to send goods is arguably the most prevalent types of fraud in business, and it happens when vendors – local and overseas – refuse to ship items despite payment having gone through. Customers on the other end follow up on their purchases to no avail.
This scheme happens when items are delivered at a residence then taken and repackaged to be sold yet again. Such goods are normally paid for with stolen cards and the individual signing for them is oblivious of this fact.
Non-payment of Money
This scheme is the opposite of refusal to deliver as explained previously. Goods are shipped but they are never paid for by clients (who may be abroad), and the debt collection process proves futile. Even if the afflicted entities report the crime, their business will have lost money and possibly creating cash flow problems. If you are defrauded, you will need to enlist an attorney who is adept at international business law.
This fraud plays to the inherent goodness of people seeking to make the world a better place. Charities promising to dig wells in the Global South, buy prescriptions to fight disease pandemics, or build schools for impoverished children are everywhere. All it takes is to curate a few video clips and photographs of starving children in war-torn places like Darfur, and you will have people opening their wallets. Other charities are perfectly timed to respond to natural disasters like hurricanes. People are fixated on the news cycles to see how their fellow citizens are fairing and how they can alleviate suffering.
Internet Auction Fraud
The Digital Age has brought on unique benefits and radicalized social lives, business, education, and just about every sphere of life. Nevertheless, the ubiquitous nature of the internet has created loopholes for cyber crimes especially where auctions are taking place.
- Credit Card Fraud
Counterfeit fraud happens when people get hold of credit card numbers and imprint them onto other cards, and then use them to shop at chosen stores. These schemes are pervasive in metropolises like Los Angeles but thanks to chip technology, prevalence rates are down by 75% as per the LA Times. Integrating EMV® chips into electronic payment cards enhances security for users and merchants alike, and this endeavor hit the mark pretty well going by a recent report by Visa. The option to use chips instead of relying on the conventional magnetic stripes is thwarting credit card fraud by utilizing a one-off code that makes it impossible to complete another transaction without authorization. In spite of these gains, your luck may run out, and you will need a seasoned attorney to represent you.
- Return Fraud
Return fraud is yet another fraudulent crime that is gaining traction in Los Angeles. This shopping capital has streets flooded with high-end clothing stores and some people with low budgets game the system by returning items without receipts. Retailers who have suffered in the hands of habitual shoplifters are now modifying their return policies.
Other kinds of fraudulent activities in California include bankruptcy fraud; mail fraud; securities fraud; telemarketing fraud; and identity theft. These crimes often attract stiff penalties, community service, suspension of licenses, possible jail sentences, and so on. Do not let the prosecution take advantage of your situation but find a defense attorney to guide you through the intricacies of the justice system and advocate for the best case scenario.
Find a Fraud Attorney Near Me
Fraud crimes are common in California and victims are crying foul feeling abandoned by a system that should protect them. Having a myriad of fraudulent crimes, it is fitting to arm yourself with the best legal counsel when things take a downward turn. Criminal attorneys in Los Angeles are a dime a dozen, but you want the most seasoned legal counsel to get you out of such predicaments. If you are facing fraud charges, you can always contact the Los Angeles Criminal Attorney at 424-333-0943 to help you navigate your case.