5 Legal Elements of Fraud. How Fraud investigators look for evidence of intent to defraud.

September 4, 2009 by kutenk · Leave a Comment
Filed under: Fraud 

Legal Elements of Fraud:
    Intentional
    False
    Representation
    Material point
    Victim suffers harm




It is not always so easy to prove intent. One of the first defenses that often surfaces in a fraud case is that the perpetrator simply made a mistake or error and there was no intent to defraud. In some situations, that may truly be the case. Plenty of errors are made daily in business, so that defense can’t immediately be ruled out.

Fraud investigators, therefore, look for evidence of intent to defraud in the documents and actions of the accused. Manipulation of documents and evidence is often indicative of such intent. Innocent parties don’t normally alter documents and conceal or destroy evidence. Although there may be times when these actions are taken to cover up a mistake due to fear of discipline, these things are usually perpetrated by those who had an active part in the fraud and its cover-up.




Obstruction of an investigation can also signal criminal intent on the part of a participant in a fraud scheme. Innocent parties don’t usually lie or conceal information when being questioned relative to an occupational fraud. Naturally, employees are sometimes nervous or hesitant about providing information and evidence when fraud is being investigated. They may be reluctant to participate in an interview because of the fear of implicating others in the fraud. But again, innocent parties are, for the most part, not inclined to cover up evidence or lie about the situation. Therefore, false statements and other obstruction of an investigation can be another factor that points to the intent to defraud.

Finally, two additional factors to consider when determining the intent of an involved party are past behavior and the benefits obtained from the fraud. Employees, managers, and executives who have a prior history of engaging in unacceptable behavior or being involved in inappropriate transactions should be eyed carefully Although past behavior doesn’t prove fraud in a current investigation, a pattern of unethical behavior certainly indicates something about the character and tendencies of the accused.

It is important to determine whether an individual obtained any benefits from a suspected fraud. Typically, errors are exactly that— errors that don’t personally benefit the person responsible. However, a transaction that creates a direct or indirect benefit for the person involved should be viewed as suspicious. Fraud is meant to give illegitimate benefits to the parties involved, and those benefits may be indicators of a participant’s intent to defraud.



None of these factors alone can prove intent to defraud beyond all doubt. In the absence of a confession from the accused, intent may need to be established by compiling a list of behaviors that signal the intent. The more factors identified in the commission of a fraud, the closer we come to proving that a fraudster intended to commit the crime.

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