Business Fraud

Business Fraud in Orange County

Legal Definition of Fraud and Deceit

Fraud and deceit is an injury that can be resolved through a civil lawsuit. California law recognizes several different types of fraud including the following:

Intentional Misrepresentation

Intentional misrepresentation occurs when an individual makes a statement or representation of an important fact and claims that it is true when they know that it is false or they consciously disregard the risk that the statement is false. The individual must also intend to cause another to rely on the statement and the actual reliance on the statement must be reasonable, in other words the person who relied on the statement cannot do so if a person of average intelligence should have known that the representation was false. The reliance must also be a substantial factor in causing harm.

Negligent Misrepresentation

Similar to intentional misrepresentation, negligent misrepresentation differs in that the person making a false statement may believe that the statements are actually true. However, the person making the false statement can still be held liable if they had no reasonable grounds for believing that the statement was true at the time the statement was made.

Concealment

Unlike misrepresentation concealment arises due to a fiduciary relationship. This relationship is the kind between business partners with each other and officers with their corporations. The next requirement is that a person in this relationship makes false statements either by intentionally: failing to disclose an important fact, telling half truths regarding important facts, or concealing an important fact from discovery. The concealment must also be purposefully deceptive and cause harm.

Promissory fraud

Promissory fraud occurs during negotiations for transactions. It happens when one makes a promise that is important to a transaction but never intends to perform the promise. If the person making the promise intends others to rely on the promise and harms the other person by never performing the promise the lie becomes promissory fraud.

There are also a number of federal laws designed to combat securities and other types of fraud.

Who Are Involved in Fraud Disputes?

In every case for fraud there is a plaintiff and a defendant. The plaintiff is the individual harmed by the statements or representations that were false. The defendant is the person who made the statements. In some cases fraud can be prosecuted criminally in the connection of the sale of securities or due to embezzlement. These claims can also be pursued as civil actions.

Common Scenarios of Fraud

Any transaction can potentially be induced by fraud. Breach of contract can also be evidence of fraud if all the elements of intent are in place. Common examples of fraudulent activity include:

  • False advertising
  • Bait and switch scams
  • Pump and dump schemes
  • Embezzlement

Remedies for Fraud

Fraud lawsuits like the above mentioned are based in tort law. Unlike contract law the remedies for tort law are usually much broader. Compensatory damages are available to remedy the fraud. There are two basic measurements of damages, the out of pocket and the benefit of the bargain rules. The out of pocket rule basically gives the plaintiff the difference between how much was paid for the product and the fair market value of what the fraudulent party actually provided. The benefit of the bargain rule by contrast gives the aggrieved party the difference between what they received from the fraudulent transaction and what they should have received if the fraudulent party kept their end of the bargain. In cases of willful and malicious conduct punitive damages may also be sought.

Orange County Business Fraud Litigation Services

The Law Offices of Tony T. Liu provides experienced business fraud defense and prosecution representation. To consult with a California business law expert on your legal options call (714) 415-2007 today.

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