1. Fraud
Dr. Eric Engle DEA

2. Introduction
Fraud is one of the most basic financial crimes. We need to understand it to understand many other financial crimes.
In France Escroc Art Code pénal
In German Betrug Art. 263 StGB

3. Elements of Fraud Misrepresentation Of a material fact
Made with knowledge of falsehood
Intended to induce reliance
Which does induce reliance
Resulting in damages

4. Misrepresentation
The misrepresentation need not be a lie; half-truths can suffice: a false or misleading statement. In contrast statements of mere opinion are not fraudulent. Omissions can be misrepresentations.

5. Of a material fact
The false or misleading statement must be a statement of fact, not opinion
The false or misleading statement must be material: that is, economically relevant e.g. to the price, quality, quantity, delivery date, risk of loss, insurance, etc.

6. Made with knowledge of falsehood
The statement must have been made with knowledge of its falsehood: innocent mistakes are not fraudulent.
A false statement made without knowledge of falsehood might instead be “negligent misrepresentation” i.e. the tort of deceit.

7. Intended to induce reliance
The misrepresentation must have had as its object to induce reliance thereon. False statements about irrelevancies are not actionable.

8. Which does induce reliance (Causation)
The misrepresentation must have caused reliance, i.e. the false or misleading statement must have been intended to cause reliance and in fact caused reliance.

9. Resulting in Damages
The misrepresentation must result in some material injury to the plaintiff.

10. Varieties of Fraud
False Pretenses/Swindling (escroquerie Art , Criminal Code). Schwindel
Embezzlement (abus de confiance Art , Criminal Code).
Extortion (extorsion Art , Criminal Code). Erpressung
Bankruptcy fraud (organisation frauduleuse de son insolvabilité Article 314-7, Criminal Code).
Money laundering (blanchiment Article 324-1) Geldwaesche
Forgery (faux Article 441-1, Criminal Code). Faelschung; Geldfaelschung
Tax fraud (fraude fiscale Article 1741, Code Général des Impôts). Steuerhinterzieung
Misuse of corporate funds (abus de biens sociaux). This applies to corporate managers who directly or indirectly use corporate property for personal ends (Articles L241-3 and L242-6, Code de Commerce).
Consumer fraud (tromperie (Article L213-1, Code de la Consommation).

11. Conclusion: Questions?
Fraud in some form is similarly regulated in English, French, and German law.
We will look at each of these in detail in further lectures.
Thank you for listening.
Any questions or comments?