Fraud Charges in Phoenix, Arizona
Fraud Charges in Phoenix, Arizona
Identity theft continues to plague Phoenix, Arizona. As a result, prosecutors here pursue fraud cases aggressively. Unfortunately, this can sometimes lead to overzealousness that results in wrongful convictions, unfair sentences and unreasonable plea bargain demands.
If you have been accused of fraud, obtain legal council as early as possible. The sooner you lawyer up, the better the chances of avoiding incarceration and keeping your record clean. Even if you are innocent, prosecutors may still have evidence that makes you appear guilty. In that case, you will need a trial lawyer who will fight vigorously in court to clear your name.
What Constitutes Fraud in Phoenix, Arizona?
Unlike most laws, fraud falls under both civil and criminal statutes. For defendants, this is a double-edged sword. If the matter is handled in civil court only, they avoid stigmatizing criminal history and need not fear incarceration. However, in some cases, there is both a civil and criminal case against fraud defendants, a situation that can cost you all your assets and your freedom.
For a civil or criminal fraud case to succeed, the plaintiff/prosecutor must prove three key elements:
- the defendant misrepresented a fact
- the defendant knew or believed the fact to be false
- injury or loss resulted from the misrepresentation
In many cases, proving these four elements is far easier in civil court because the case is decided on the preponderance of the evidence, and civil law allows plaintiffs to recover damages even if the defendant’s actions were not intended to cause harm.
Criminal court standards are higher because prosecutors must prove mens rea (intent) beyond a reasonable doubt.
For example, unintentionally misreporting information in an unemployment insurance filing is no crime because there is no mens rea, though the state may impose civil penalties to recover fraudulent benefits. However, intentionally falsifying a filing to obtain money you know you are not entitled to meets the mens rea test for criminal fraud.
Prosecutors may try and find circumstantial evidence to prove mens rea. Also, law enforcement may attempt to question a fraud suspect in a way meant to draw out admissions that can be used to convince a court that criminal intent exists. Unfortunately, admissions are used to convict defendants who should be found not guilty due to a lack of mens rea. For this reason, never answer questions or make any statements without consulting a lawyer.
Types of Fraud in Arizona
Since fraud covers such a broad spectrum of criminal- and civil violations, the law classifies frauds into four broad categories: consumer fraud, employee fraud and fraud against a government/business.
Consumer Fraud
This type of fraud involves cheating or stealing from individual consumers. For example, the unauthorized use of another person’s credit card is a case of consumer fraud, as is false advertising. Most likely, a defendant who stole and used a credit card would face criminal penalties, while cases of false advertising are likely to remain in civil court.
Employee Fraud
Employee’s have a fiduciary responsibility to their employer, which means they must act in the employer’s financial interest. Violations of this responsibility range from embezzlement to accepting bribes to selling trade secrets.
Some employee fraud is clearly criminal, such as an embezzlement scheme that defrauds the company of thousands of dollars. Other types of employee fraud may not be criminal, but, if the company can prove damages, may expose the employee to civil liability.
Fraud Against a Government or Business
This type of fraud usually involves deception for financial gain. Fraud against governments often involves reporting false information to gain benefits, such as unemployment-, welfare- and tax fraud. Common frauds against businesses include insurance-, mortgage- and bankruptcy fraud.
Common Criminal Fraud Schemes
Many types of criminal fraud exist, but the following are most likely to land actors in a criminal court:
Tax fraud occurs when a person or entity provides false information in a tax filing. For example, a taxpayer may fail to report income, claim unauthorized deductions or falsify business records to avoid taxes.
People make mistakes on complex tax returns all the time. Mistakes do not count as tax fraud because there is no mens rea.
For instance, taking a deduction by mistake is not a criminal matter. The IRS uses its audit process to correct erroneous returns and collect any shortfall from the taxpayer. However, a businessowner who doctors invoices to hide income from the IRS may face criminal tax fraud charges.
Tax evasion involves the willful concealment of assets to avoid taxation and is a criminal offense. For example, hiding large amounts of income in an offshore account to avoid paying taxes on it. Failure to pay taxes is usually a civil matter, assuming the taxpayer does not hide assets and income from the IRS.
Healthcare Fraud
During the COVID-19 era, this type of fraud has exploded. Often, healthcare fraud involves a company selling a medical service or product under false pretenses. For instance, a company offering free Covid testing with a purchase while knowing that the tests are a sham.
Medicare- and Medicaid Fraud
This type of fraud comes down to billing the government for services under these programs that were never provided. Medicare and Medicaid fraud may involve fake invoices or legitimate invoices with phony services added to pad the bill.
Government Contract Fraud
Contract fraud happens in a very similar fashion to Medicare- and Medicaid fraud. For example, a construction company may hire an engineering firm as a subcontractor. To make extra money, the construction company owner may request the subcontractor submit its invoices to the construction company written in pencil. The owner would then erase the real figure, add a higher one, submit it to the government and pocket the difference.
Bankruptcy Fraud
When filing bankruptcy, individuals and businesses must declare all assets. Bankruptcy fraud occurs when the petitioner intentionally hides assets from the bankruptcy court. In that case, the bankrupt may face civil- and criminal penalties.
Arizona’s fraud statute defines criminal fraud as a Class 2 felony, which carries a sentence of 3- to 12 years in prison. With such severe sentencing requirements, it is important to ensure that no criminal charges are filed and, if they are, that you have a strong legal defense. If you are under investigation for fraud or have been arrested for fraud, contact an attorney as soon as possible. By not answering questions without a lawyer present and engaging a lawyer as soon as possible, you drastically increase your chances of receiving a lower sentence or acquittal.
