criminal-law
Isn&#39;t all fraud criminal?
<p>Isn't all fraud technically criminal, and whatever you can sue for civil fraud could also be sued by the government as criminal fraud? Is it just a matter of whatever the government decides to prosecute?</p>

<p>What I am asking is, isn't all fraud illegal? Regardless of whether it is prosecuted or who.</p>

<p>Just answering the definition of civil vs criminal fraud doesn't answer the question.</p>

<p>The essential elements of fraud as crime and fraud as tort are the same. The most important difference between the two is who decides to take action -- the victim in the case of a civil suit, and the government in the case of a criminal prosecution. The standards of proof are also different ("beyond a reasonable doubt" in the case of a criminal charge, something like "preponderance of evidence" in a civil case). Another difference between the two kinds of fraud is that in a civil case, the victim has to have actually suffered damage, but in the case of criminal fraud it is sufficient that the accused did the act of misrepresenting material facts, with the intent of gaining from the misrepresentation. The consequences of a finding of fraud are also different: restitution vs. punishment. (In the US, in some cases extra damages can be awarded as punishment, which blurs the distinction between criminal and civil fraud. However, jail time cannot result from losing a fraud lawsuit).</p>

<blockquote>
  <p>Isn't all fraud technically criminal, and whatever you can sue for
  civil fraud could also be sued by the government as criminal fraud? Is
  it just a matter of whatever the government decides to prosecute?</p>
</blockquote>

<p>Criminal fraud (of which there are several types) and civil fraud (of which there are several types) are not always the same, although there is a lot of overlap. For example, in Colorado, there are probably at least a dozen or two criminal statutes under state and federal law combined that criminalize various kinds of fraud or fraud-like conduct. </p>

<p>Some criminal frauds are not civil frauds, because, for example, wire and mail fraud, does not require justifiable reliance on a false statement causing harm or actual damages caused by the fraud, while civil fraud generally does.</p>

<p>Many criminal fraud claims don't have clearly identifiable damages (e.g. impersonating the Girl Scouts by using their insignia without authorization, or making false statements on an immigration form) and would not be actionable in a civil action.</p>

<p>Conversely, there are some kinds of civil fraud which are actionable, for example, making a financial projection for the future profits of a business, that the person making them knows to be extremely unlikely to actually happen, to a prospective investor, that are not necessarily actionable as a criminal fraud. Some criminal fraud statutes also require a showing that there was harm to the general public from the conduct and not merely to a specific individual who lost money as a result. Similarly, a "fraudulent transfer" that is not otherwise common law fraud, is almost never a crime, but can be a basis for seeking relief in a civil lawsuit.</p>

<p>All fraud cases, criminal and civil, require that the false statement made be material, but the definition of material in a criminal case may differ from that in a civil case.</p>

<p>In many circumstances civil liability for fraud can arise from "constructive fraud" (e.g. from failing to account for property over which someone had a fiduciary duty) that isn't always actionable as criminal fraud.</p>

<p>The definitions of criminal fraud, in general, vary quite a bit, while the definition of actionable common law civil fraud tends to vary less, although there may be statutes that provide remedies in fraud-like circumstances (e.g. in Colorado, civil theft claims).</p>

<p>As a matter of practical reality, state prosecutors and district attorneys will rarely bring criminal fraud cases in circumstances where the damages are low (the informal threshold for the FBI is $75,000 in a single incident), or where the persons harm have a capacity to hire their own lawyers and seek redress that way. These cases are a low priority, in part, because a criminal case does not generally provide full compensation to the party harmed, has a higher burden of proof, calls for the use of public funds for private benefit, and because the presumption of incarceration as a remedy undermines the victim's ability to recover fraud damages out of future earnings of the the wrongdoer. </p>

<blockquote>
  <p>What I am asking is, isn't all fraud illegal? Regardless of whether it
  is prosecuted or who.</p>
</blockquote>

<p>Definitely not.</p>

<p>Not all forms of intentional lying that are intended to deceive are potentially criminal or a grounds for a civil lawsuit. In many circumstances, a person can lie without facing any legal consequences. For example: </p>

<ul>
<li><p>Lying is connection with a political campaign or certain other matters is specifically exempt from criminal liability due to First Amendment concerns (<em>see, e.g.</em> litigation over the constitutionality of the <a href="http://cdn.ca9.uscourts.gov/datastore/opinions/2011/03/21/08-50345.pdf" rel="nofollow noreferrer">Stolen Valor Act</a>). Similarly, an intentional lie in a campaign speech or a political promise made knowing that the person making it has no intention of following through on it do not give rise to criminal or civil liability, even though, in general, making a promise with a present intent not to perform it is a form of fraud. Closely related is that academic dishonesty almost never gives rise to criminal or civil liability in the U.S., although it may be grounds for institutional sanctions like expulsion.</p></li>
<li><p>Statements about deals you are willing to accept in a negotiation (e.g. "this is my final offer") are exempt. So is "puffing" and hyperbole (e.g. "this is the fastest car that money can buy" about an off the shelf vehicle on a dealer's lot) that is socially understood not to be literally true, or that is accepted as a common practice that is tolerated in sales or negotiations.</p></li>
<li><p>Statements of opinion are categorically exempt (even opinions such as bond ratings and appraisals that we often think of as "facts"). Some jurisdictions have allowed an exception to the exception for statements of opinion that are not believed sincerely to be true when made, but most do not. Some jurisdictions in some contexts will allow criminal or civil prosecution for frauds that on their surface involve statements of opinion but necessary imply false statements of fact. Closely related are lies related to religious matters made for religious purposes.</p></li>
<li><p>Statements that are not "material" are exempt (e.g. you said that a pallet of canned peas arrived on Tuesday, when it really arrived on Monday, and the difference isn't relevant to the reason you made the statement).</p></li>
<li><p>Police officers are allowed to lie to cause someone that the officer has probable cause to believe has committed a crime to be arrested in many cases (lawyers, however, are not).</p></li>
<li><p>False statements or deceptive conduct made to induce someone to have sexual intercourse or marry do not give rise to criminal or civil liability for fraud and does not constitute sexual assault, unless the deception causes someone to believe that they are having sexual intercourse with a spouse or significant other, when they are in fact (e.g. while blindfolded or in the dark) having sexual intercourse with someone else, even though the deception would seem to prevent someone from giving consent. (The case law is mixed regarding sexual intercourse induced by a knowingly false statement that one does not have a serious STD, although even then, this would typically be a separate specifically defined offense, rather than a form of the general fraud offense.) But see, a <a href="https://www.nytimes.com/2020/01/02/us/girls-do-porn-lawsuit-award.html" rel="nofollow noreferrer">notable case</a> in which fraudulent inducements to perform as pornography and related breaches of contract were actionable.</p></li>
<li><p>"White lies" told by medical professionals to patients intended to improve their health (e.g. telling someone that they have a higher chance of recovery than they actually do) are accepted and do not generally constitute criminal fraud at a minimum, and is probably not a basis for civil litigation either.</p></li>
<li><p>Lies about matters that are legally conclusively deemed to be true (e.g. the paternity of a child of the husband of the mother at the time the child was conceived and born after the statute of limitations for contesting that paternity have expired) are generally not a basis for criminal or civil liability, even if the people making the statement know it to be factually untrue as a genetic matter. There may be narrow exceptions to this rule, for example, statements made to a medical practitioner for purposes of medical treatment for which true paternity, regardless of its legal status, is material.</p></li>
<li><p>Arguably, lies about answers to questions that the person asking the question is not allowed to ask do not give rise to criminal or civil liability, either because they are not material, or as a form of self-help or self-defense in response to illegal conduct. For example, if a landlord who is not legally permitted to discriminate on the basis of religion asks if you are a Muslim, and you lie and say you are a Christian, this may not give rise to criminal or civil liability.</p></li>
<li><p>Statements that suggest or are consistent with a false inference about true facts rarely give rise to criminal liability and sometimes give rise to civil liability and sometimes do not, depending upon the context. For example, if a witness being interviewed by an investigator trying to pin down alibis states that he saw a fight happen, creating the false impression that the witness was present near where the fight happened, when the witness actually saw the fight through a telescope on a high rise balcony two miles away, this would rarely give rise to criminal liability, and would only rarely give rise to civil liability, even if the witness does not clarify the situation and knows that the investigator has been left with a false impression of the situation.</p></li>
<li><p>Needless to say, false statements of fact made with the intent that they be relied upon, that the person making the false statement of fact believes to be true, or has no reason to doubt the veracity of, do not give rise to criminal or civil liability for intentional fraud (also some kinds of fraudulent conduct are implied in law, and there is sometimes civil liability for negligently making a false statement of fact).</p></li>
</ul>
