California Fraud Laws

Fraud Under The California Penal Code

Fraud Exists In Many Forms In California

Fraud exists in many forms in California. There are, however, a few observations which can be made about the offense in all of its forms.

For example, fraud involves causing a harm or loss to a person or an institution. The harm is usually financial. But fraud needn't involve money to be criminal in nature; one can defraud another into doing something, which can be illegal as well. Furthermore, fraud usually involves taking some form of benefit to which you're not entitled. Of course, the same is true if one's fraud is intended to benefit another.

Fraud Penalties Can Be Severe

Fraud penalties can be severe in California. Many frauds are felonies, meaning that they can subject you to years in a state prison and fines in the tens of thousands of dollars. While most of the fraud laws carry their own penalties, some are prosecuted under sections of the Penal Code as though they were thefts.

Note, furthermore, that not all frauds are automatically prosecuted as felonies. Depending on your history, and the facts of your case (with emphasis on the value of the fraud, more often than not), you can be charged with a misdemeanor or a felony count of fraud. This makes fraud a “wobbler”¹ under California law; the charge ‘wobbles' between a felony and a misdemeanor, though there are a number of frauds which are always prosecuted as felonies in this state.

Common Defenses Against A Charge Of Fraud

Three common defenses against a charge of fraud are:

You Were The Victim Of Mistaken Identity

Example: Defendant Damian lives with his identical twin Brother who's committing insurance fraud by taking healthcare benefits to which he isn't entitled. Brother's crimes are discovered by the state. But when police serve a warrant at their home, they arrest Damian. (Brother isn't home at the time.) Damian insists he isn't guilty of a charge of health care insurance fraud. Is he guilty, on these facts?

Conclusion: Damian, as the facts make clear, didn't commit the crime of which he's accused. His identical twin Brother is guilty. Damian has been confused with Brother because he looks exactly like Brother and lives at the same address. Damian's Brother was simply, and unfortunately, not at home when police served their warrant. Thus, Damian is innocent. He was the victim of mistaken identity.

You Lacked The Intent To Defraud

Example: Defendant Deirdre submits a claim to her insurer after she gets into a car accident. She files for total collision coverage, claiming that the car is no longer unusable. But, unbeknownst to her at the time, Mechanic can return the car to working order. Mechanic does this even though Deirdre has received a payment for the total value of her car. Now she's being charged with fraud. Is she guilty?

Conclusion: Deirdre did not know that her car was salvageable at the time she filed her insurance claim. She believed that her car was totally wrecked and obtained a payment on that basis. The facts make this clear. She will likely have to return the money, but this does not make her a criminal. She was simply mistaken. Deirdre, therefore, is innocent. When she filed the claim, she lacked the intent to defraud.

You Were The Victim Of Police Misconduct

Example: Defendant Danny works for Insurer. Police Investigator tells Danny that Police Investigator will pay Danny a cash bribe for selling her a very valuable life insurance policy. Danny refuses because Police Investigator doesn't qualify for the policy. Police Investigator manufactures fraud charges against Danny in retaliation for his refusal. Now Danny is being prosecuted for fraud. Should he be convicted?

Conclusion: Danny has been accused of a crime by a law enforcement officer who was actually retaliating for Danny's refusal to take an illegal bribe and issue a policy. The accusation itself is also false. These are forms of police misconduct. Police Investigator, therefore, should be investigated with an eye towards criminal charges, but Danny should be acquitted. He was the victim of police misconduct.

You can find more information in the California White Collar Crime Attorney section of the Kann California Law Group's website. Feel free to contact the Kann California Law Group offices in Santa Clarita, Ventura, Encino, Pasadena or Los Angeles/Los Angeles County. Your call will go directly to a lawyer – and that's always guaranteed.

Insurance Fraud In California

Common forms of insurance fraud in California include:

i) Health Insurance Fraud

Health insurance fraud can be committed by patients and healthcare professionals under California law. For example, health insurance fraud is committed whenever a doctor takes a bribe in exchange for prescribing a drug. Similarly, fraud is committed whenever a healthcare professional submits a charge for medical services that weren't actually provided. In fact, all forms of false billing qualify as fraud under California law.

ii) Automobile Fraud

Another common form of fraud in California concerns false automobile insurance claims. The following are just a few examples of activities that'll expose you to auto fraud charges in this state: willfully damaging or destroying a vehicle in order to file an insurance claim; planning or participating in a staged vehicular accident; and inflating the value of an auto insurance claim.

iii) Unemployment Insurance Fraud

Unemployment Insurance fraud involves attempting to alter an unemployment insurance benefit through any false statement. Examples of this form of fraud include: intentionally providing false information about why you lost your job; misrepresenting why an employee was terminated; misreporting work search efforts; collecting benefits as though you were domiciled in multiple states; and underreporting an employee's earnings to lessen an unemployment insurance program contribution obligation.

iv) Welfare Fraud

Welfare fraud in California occurs whenever anyone receives benefits to which he or she is not entitled. However, while those who receive benefits are usually associated with this offense, it shouldn't be forgotten that employees of government agencies violate fraud laws when they attempt to collect or distribute benefits without authorization of their government employer.

v) Workers' Compensation Fraud

Workers’ compensation fraud occurs whenever a false claim is made against California's employee compensation insurance fund. All these are examples of acts that may expose you to the possibility of workers' compensation fraud charges: claiming that a non-work injury is work-related and seeking compensation; falsifying injury; exaggerating the severity of an on-the-job injury; failing to disclose a prior injury; or failing to disclose another source of an injury.

Senior fraud

i) Financial Elder Abuse

Fraud committed against a person aged 65 or older is categorized as senior fraud under California law. This type of crime is known as financial elder abuse. Common examples of financial elder abuse include: predatory real estate lending schemes; home repair fraud; credit related schemes; and fraudulent insurance schemes.

ii) Nursing Home Abuse

Nursing home abuse can involve acts of financial abuse. Illegal acts include: overbilling patient for care and/or medication; acts of undue influence;² theft of an elder person's property; and forging an elder person's name on a check or any other document to benefit yourself or another person.

Forgery and Identity Theft

Forgery of any type of document is a fraud in California. Affixing another person's signature to a document, physically or electronically, is also identity theft. It follows that this type of fraud is becoming extremely common in this state. It also follows that there are numerous laws to address the situation.

i) Forgery of Government, Public, or Corporate Seal

Section 472 of the Penal Code³ makes it illegal to forge, counterfeit, or possess a fraudulent public seal of any government or corporation. If the seal involves another person's identity, furthermore, use of the same will also violate California's identity theft laws.

ii) Internet (Computer) Fraud

Internet (computer) fraud refers broadly to fraud committed using a computer. Common California examples of internet fraud include: cyberstalking, a form of stalking; making purchases with a fraudulent identity; and creating or forwarding a computer virus in the state.

iii) Forging/Counterfeiting A Driver's License Or ID Card

If you alter any government-issued driver's license or ID card, or make a counterfeit version, you are liable for forging or counterfeiting a driver's license or ID card. As a form of identity theft, merely creating the card is sufficient; you needn't take information from a person or institution. In fact, mere possession of a fake or counterfeit driver's license or ID card violates California law.

iv) False Impersonation Fraud

You commit false impersonation fraud when you pose as another person for your own benefit. The same is true if you pose as someone to harm another person. There are several examples, such as: using an unauthorized credit card to make a purchase; misrepresenting your identity to obtain public assistance; hacking another person's social networking profile and to create false postings; and signing someone else's name to a check, then cashing it as your own.

Real Property Fraud

It's illegal to make any deliberately false representation in connection with a real estate transaction in this state. Common examples of real property fraud in California include:

i) Forging A Deed

Section 115(a)⁴ of the California Penal Code makes it illegal to file, or attempt to file, register or record a deed which has been knowingly altered (or created) for fraudulent purposes. This is known as forging a deed. It is a felony. The offense is punishable with as many as three (3) years in a state prison⁵ and a fine of up to $10,000 (ten-thousand dollars).⁶

ii) Foreclosure Fraud

While foreclosure fraud encompasses a number of crimes in California, this form of fraud occurs generally whenever anyone interferes fraudulently with a home that has been foreclosed or is in the process of foreclosure.

iii) Falsifying Appraisals

It is a form of fraud in California whenever a seller submits a false property appraisal to any financially interested party. Typically, appraisals are falsified to justify increasing prices. Loan documents may also be falsified to this end.

iv) Predatory Lending

The term “predatory lending” actually refers to a number of illegal practices that're meant to allow lenders to take advantage of borrowers. In California, laws against predatory lending are violated generally when loans are made to maximize lenders' returns without regard for the borrowers' ability to repay.

v) “Rent Skimming”

Civil Code Section 890⁷ makes it unlawful to use rent proceeds from a residential rental property during the first year after acquiring the property without first applying the proceeds to your mortgage. This is known as “rent skimming.” The statute also makes it unlawful to rent a property that you don't own or have the authority to rent, or to collect rent for your own use. If you engage in “rent skimming” in California with five or more properties in two years, your acts will be punished civilly and prosecuted criminally.

vi) “Phantom Help” Schemes

California Civil Code Section 2945.4⁸ prohibits charging a homeowner facing foreclosure a fee to delay or prevent the foreclosure process when little or no work is done towards the goal. This is a form of “phantom help” scheme. The law also criminalizes a foreclosure consultant taking a proprietary interest or lien to pay for services rendered or acquiring interest in a property from an owner with whom the foreclosure consultant has contracted.

vii) “Straw Buyer” Schemes

“Straw buyer” schemes are actually both civil and criminal in nature. Fraud is sometimes committed by real estate agents who solicit a person to take a loan on behalf of another person. Then, when the loan is processed and paid, the agent steals the money. The “straw buyer” is left to repay the loan while being exposed to civil penalties and the possibility of criminal charges.

Financial Fraud

i) Credit Card Fraud

Every fraudulent transaction that's made or attempted with a credit or debit card (or with account information linked to a credit or debit card) is credit card fraud. Common examples of credit card fraud include: using a credit or debit card which you know to be expired or revoked; using a credit or debit card without proper authorization; and selling counterfeit credit cards.

ii) Check Fraud

Check fraud occurs whenever you make, use, possess, or attempt to make or use, a check with the intent to defraud the payee. You must also reveal your intent by representing the check to be genuine. Note: Penal Code Section 476⁹ prohibits passing or attempting to pass a check if you know there are insufficient funds to cover the check. This is a form of check fraud all its own.

iii) Securities Fraud

Securities fraud involves willfully altering investor decisions using falsified information. Traders and stock promoters are among those often connected to this form of fraud in California. Examples of securities fraud include: misstating a company's value; counterfeiting financial statements; altering financial statements; stealing from a company; and stealing from investors.

Mail fraud

Mail fraud involves committing an act of fraud involving the postal system at any point in the fraud scheme. Examples include: mailing a forged check; advertising a fraud through the mail; maintaining a fraud using mail communication; and willfully failing to deliver a product ordered through the mail.

Telemarketing Fraud

California's Business & Professions Code 17511.9¹⁰ establishes the crime of telemarketing fraud, which occurs any time a deceitful or fraudulent business scheme or act is used to sell something via telephone. Telemarketing fraud is a “wobbler”¹¹ under California law. It's punishable with up to three (3) years in a state prison¹² and a $10,000 (ten-thousand dollar) fine¹³ if prosecuted as a felony.

Disabled Parking Fraud

Disabled parking fraud occurs whenever anyone illegally uses a disabled parking placard which wasn't issued to that person. Common examples in California include: using a disabled placard without being disabled; using a disabled placard without having the disabled placard owner with you; parking with a falsified placard; forging a disabled parking placard; and lending a placard to a person who isn't disabled.

Gambling Fraud

California criminal law prohibits fraudulently obtaining money or property through card games, scams, or tricks (Penal Code Section 332¹⁴). Well known examples of this kind of fraud include: “three-card monte” games; fraud in fortune telling; running confidence games; and cheating in card games or other forms of gambling. Gambling fraud is a “wobbler”¹⁵ crime if the fraud involves amounts exceeding $950.

Fraudulent Vehicle Registration

Intentionally interfering with a license plate, registration card, or registration sticker may expose you to charges of fraudulent vehicle registration. This violates California Vehicle Code Section 4463.¹⁶ Fraudulent vehicle registration also creates the possibility of being charged with forging an official seal or other identification.

What Can I Do If I'm Charged With Fraud?

The State of California regards Fraud as a serious offense. If you're charged with Fraud, it's essential that you retain a skilled, dedicated criminal defense attorney as soon as possible. Your rights, freedom, and livelihood are at stake.

Remember, a professional criminal defense attorney may be able to:

Negotiate a lesser charge in a plea bargain;
Reduce your sentence;
Or even get charges dismissed completely.

The attorneys at the Kann California Law Group have an excellent understanding of the local courts and an extensive knowledge of California's criminal justice system. We can represent you in Ventura, Santa Clarita, Los Angeles, Encino, Pasadena and many other Southern California cities.

If you or someone you know has been arrested for, or charged with, Fraud, our attorneys will analyze the facts of your case and plan a strategy that will help you obtain the best possible outcome.

Contact the Kann California Law Group today to schedule your free and confidential consultation.

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References

[1] See “Wobbler Law and Legal Definition” definition at UsLegal.com.

[2] See “Undue Influence Law and Legal Definition” at USLegal.com.

[3] See California Penal Code [CPC] § [Section] 472.

[4] See CPC §115 (a).

[5] See CPC §18 (a).

[6] See CPC §672.

[7] See California Civil Code [CIV] §890.

[8] See CIV §2945.4.

[9] See CPC §476.