Legal Review: Criminal Fraud vs. Civil Fraud

Fraud is any dishonest deception intended to gain something by taking advantage of someone. It is an act of profiting from someone else’s loss. The basic elements of fraud include:

  • The intention to deceive
  • Misrepresentation of material fact
  • Knowledge of falsehood
  • Reasonable reliance by the victim
  • Injury suffered

Fraud can be a criminal or civil tort, depending on the situation. These two are different, and as such, criminal fraud cases will be handled differently from civil fraud cases. This article highlights the types of fraud, and their differences.

What is Criminal Fraud?

“Any action intended to deceive another through false representation of fact that causes a legal detriment to the person who relied on such information, according to criminal fraud law, amounts to a crime.” Criminal fraud is regarded as a “white collar crime.”

It is a crime that involves deception and cheating another party to gain a financial advantage over them. It includes using a false representation of facts to deceive an individual who is made to believe such information is reliable.

Local, state, or federal prosecutors usually enforce a criminal case. These prosecutors must prove that a defendant willingly committed the fraud, intending to enrich themselves from it and that the victim suffered losses. Even in cases where the fraud was unsuccessful, prosecutors can still pursue a criminal fraud case.

What is Civil Fraud?

Civil fraud is a type of fraud that also involves a forged misrepresentation or inducement. The plaintiff in a civil fraud claim must prove that they suffered damages from the act.

If the plaintiff in a civil fraud case wins, the defendant will have to pay back economic and non-economic damages. Economic damages include loss of income, property, and other financial assets. Non-economic damages would cover things like pain, stress, and suffering.

What Differentiates Criminal Fraud from Civil Fraud?

“A basic difference between the two types of fraud cases is that a criminal fraud case usually occurs between the government and an individual, while a civil fraud case is between two individuals,” says attorney William M. Bailey of BK Law Group.

In a civil fraud case, the plaintiff who goes against the defendant is the victim of the fraud. But in a criminal fraud case, the government (prosecutors) attempt to prove the defendant is guilty of the fraud they are accused of.

Another difference is that the defendant faces possible imprisonment or probation, paying fines, and restitution to the victims in a criminal fraud case. However, in a civil fraud case, the punishment is often to reimburse for the damage suffered by the victim.

The difference here is that civil fraud cases are concerned solely with the payment of damages. In contrast, a criminal case will sanction the guilty defendant with fines, prison time, and other punishments.

One way a civil lawsuit differs from a criminal lawsuit is that the burden of proof is placed on different parties. In a civil case, the plaintiff must prove that the defendant caused them injury through fraud. But in a criminal case, the prosecutor must prove the truth of the charges, and that the defendant committed fraud beyond a reasonable doubt.

Civil cases also see less publicity than criminal cases due to their nature. A lot of criminal cases involve witnesses, and may involve news coverage as well.

Conclusion

Criminal and civil are the two types of fraud that can lead to a lawsuit. While both cases have deception in common, they still differ.

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