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Fraud Schemes

There are a tremendous number of crimes that fit into the category of Fraud Schemes. In Arizona, Fraud Schemes range from complex white-collar crimes to a series of simple check fraud. The one common denominator these crimes have is – paper. I have had cases with over 40,000 pages of evidence. In order to properly defend these cases, your attorney (and his team – and yes, you must have a team) needs to read all 40,000.00 pages. This is because the smoking gun you may need might be on page 39,999.00. Moreover, in my experience the government may not have read all the documents. They may have just gone with the “let’s throw everything against the wall and see what he pleads guilty to” strategy.

The statute that defines a fraud schemes is A.R.S. 13-2310. In states:

  1. Any person who, pursuant to a scheme or artifice to defraud, knowingly obtains any benefit by means of false or fraudulent pretenses, representations, promises or material omissions is guilty of a class 2 felony.
  2. Reliance on the part of any person shall not be a necessary element of the offense described in subsection A of this section.
  3. A person who is convicted of a violation of this section that involved a benefit with a value of one hundred thousand dollars or more is not eligible for suspension of sentence, probation, pardon or release from confinement on any basis except pursuant to section 31 233, subsection A or B until the sentence imposed by the court has been served, the person is eligible for release pursuant to section 41 1604.07 or the sentence is commuted.

Below I have separated the different types of fraudulent crimes that may result in a fraud schemes charges if they are committed more than a single instance or against multiple.

WHITE COLLAR CRIMES

TYPE OF CRIME DESCRIPTION
Bank Fraud Bank fraud occurs when a person fraudulently attempts to control assets, monies, or property owned by a financial institution such as a bank.
BriberyA.R.S. §§ 13-2602 Under Arizona law, A person commits bribery of a public servant or party officer if with corrupt intent: (1) Such person offers, confers or agrees to confer any benefit upon a public servant or party officer with the intent to influence the public servant’s or party officer’s vote, opinion, judgment, exercise of discretion or other action in his official capacity as a public servant or party officer; or (2) While a public servant or party officer, such person solicits, accepts or agrees to accept any benefit upon an agreement or understanding that his vote, opinion, judgment, exercise of discretion or other action as a public servant or party officer may thereby be influenced.
Computer TamperingA.R.S. 13-2316 Under Arizona law, A person who acts without authority or who exceeds authorization of use commits computer tampering by: (1) Accessing, altering, damaging or destroying any computer, computer system or network, or any part of a computer, computer system or network, with the intent to devise or execute any scheme or artifice to defraud or deceive, or to control property or services by means of false or fraudulent pretenses, representations or promises; (2) Knowingly altering, damaging, deleting or destroying computer programs or data; (3) Knowingly introducing a computer contaminant into any computer, computer system or network; (4) Recklessly disrupting or causing the disruption of computer, computer system or network services or denying or causing the denial of computer or network services to any authorized user of a computer, computer system or network; (5) Recklessly using a computer, computer system or network to engage in a scheme or course of conduct that is directed at another person and that seriously alarms, torments, threatens or terrorizes the person; (6) Preventing a computer user from exiting a site, computer system or network connected location in order to compel the user’s computer to continue communicating with, connecting to or displaying the content of the service, site or system; (7) Knowingly obtaining any information that is required by law to be kept confidential or any records that are not public records by accessing any computer, computer system or network that is operated by this state, a political subdivision of this state or a medical institution; and (8) Knowingly accessing any computer, computer system or network or any computer software, program or data that is contained in a computer, computer system or network.
CounterfeitingA.R.S. 3-1209 Under Arizona law, no brand manufacturer, printer, or other person, firm or corporation shall cast, print, lithograph or otherwise make any device containing any official mark or simulation thereof, or any label bearing any such mark or simulation, or any form of official certificate or simulation thereof, except as authorized by the department.Moreover, no person, firm, or corporation shall:

  1. Forge any official device, mark or certificate.
  2. Without authorization from the department use any official device, mark, or certificate or simulation thereof, or alter, detach, deface or destroy any official device, mark or certificate.
  3. Contrary to the rules prescribed by the director, fail to use or detach, deface or destroy any official device, mark or certificate.
  4. Knowingly possess, without promptly notifying the department or its representative, any official device or any counterfeit, simulated, forged or improperly altered official certificate or any device or label or any carcass of any animal or part or product thereof bearing any counterfeit, simulated, forged or improperly altered official mark.
  5. Knowingly make any false statement in any shipper’s certificate or other nonofficial or official certificate provided for in the rules prescribed by the director.
  6. Knowingly represent that any article has been inspected and passed or exempted under this chapter when in fact it has not been so inspected and passed or exempted.
ExtortionA.R.S. § 13-1804 Under Arizona law, theft by extortion occurs when:

  1. A person commits theft by extortion by knowingly obtaining or seeking to obtain property or services by means of a threat to do in the future any of the following:
    1. Cause physical injury to anyone by means of a deadly weapon or dangerous instrument.
    2. Cause physical injury to anyone except as provided in paragraph 1 of this subsection.
    3. Cause damage to property.
    4. Engage in other conduct constituting an offense.
    5. Accuse anyone of a crime or bring criminal charges against anyone.
    6. Expose a secret or an asserted fact, whether true or false, tending to subject anyone to hatred, contempt or ridicule or to impair the person’s credit or business.
    7. Take or withhold action as a public servant or cause a public servant to take or withhold action.
    8. Cause anyone to part with any property.
ForgeryA.R.S. § 13-2002 Under Arizona law, A person commits “forgery” if, with the intention of defrauding someone, they: (1) falsely make, complete, or alter a written instrument, (2) knowingly possess a forged written instrument, or (3) offer a forged instrument or one that contains false information. Intent to defraud can be implied if the person possesses five or more forged instruments.
Health Care Fraud This crime usually occurs when an health care provider, without a license, and pretending to be a licensed healthcare provider, provides services for a monetary benefit.
Insurance Fraud Obtaining the monetary proceeds from an insurance company by fraud.
Investment Schemes Just think Bernie Madoff.
TheftA.R.S. § 13-1802 Under Arizona law, A person may commit theft if, without lawful authority, the person knowingly: (1) Controls property of another with the intent to deprive the other person of such property; or (2) Converts for an unauthorized term or use services or property of another entrusted to the defendant or placed in the defendant’s possession for a limited, authorized term or use; or (3) Obtains services or property of another by means of any material misrepresentation with intent to deprive the other person of such property or services; or (4) Comes into control of lost, mislaid or mis-delivered property of another under circumstances providing means of inquiry as to the true owner and appropriates such property to the person’s own or another’s use without reasonable efforts to notify the true owner; or (5) Controls property of another knowing or having reason to know that the property was stolen; or (6) Obtains services known to the defendant to be available only for compensation without paying or an agreement to pay the compensation or diverts another’s services to the person’s own or another’s benefit without authority to do so.
Money LaunderingA.R.S. § 13-2317 Under Arizona law, “Money laundering” generally occurs when a person hides the source of illegally obtained money. There are three categories money laundering.
Mortgage FraudA.R.S. 13-2320 Under Arizona law, a person commits residential mortgage fraud if, with the intent to defraud, the person does any of the following:(1) Knowingly makes any deliberate misstatement, misrepresentation or material omission during the mortgage lending process that is relied on by a mortgage lender, borrower or other party to the mortgage lending process; (2) Knowingly uses or facilitates the use of any deliberate misstatement, misrepresentation or material omission during the mortgage lending process that is relied on by a mortgage lender, borrower or other party to the mortgage lending process; (3) Receives any proceeds or other monies in connection with a residential mortgage loan that the person knows resulted from a violation; or (4) Files or causes to be filed with the office of the county recorder of any county of this state any residential mortgage loan document that the person knows to contain a deliberate misstatement, misrepresentation or material omission.
RacketeeringA.R.S. §§ 13-2301 The operation of an illegal enterprise for profit.
Telemarketing Fraud Usually this crime is seen when a business sets up a call center or “boiler room” and places massive amount of sales calls involving false promises.
Welfare FraudA.R.S. 46-215 Under Arizona law, A person commits welfare fraud if the person knowingly obtains by means of a false statement or representation, by impersonation or by other fraudulent device any of the following: (1) Assistance or service to which the person is not entitled; (2) Assistance or service greater than that to which the person is entitled; (3) Payment of any forfeited installment grant, or aids or abets in buying or in any way disposing of the property of a recipient of assistance or service without the consent of the department.

Regarding the crime of theft, there are different classes of the crime depending on the amount of money at issue in the case. Below is breakdown of the categories of the Arizona crime of theft:

Class of Felony Amount at Issue
Class 2 Felony $25,000 and above
Class 3 Felony $4000 – $24999
Class 4 Felony $3000 – $3999
Class 5 Felony $2000 – $2999
Class 6 Felony $1000 – $1999
Class 1 Misdemeanor Less than $1000

INTERNET FRAUD

Internet based crimes are growing at an alarming rate. What starts as a dissatisfied customer, becomes a civil dispute and ends with a felony fraud charge. While there are some real criminal masterminds perpetuating these crimes, it has been my experience that many people working for these people have no knowledge of the fraud, but still find themselves fighting felony charges.

Below is a list the most common internet based crimes:

TYPE OF CRIME DESCRIPTION
Auction Fraud The fraud allegation usually centers around the value of product or a failure to deliver the product. Moreover, there may be an alleged the person frequently claimed to be an authorized dealer of a product.
Credit Card Fraud Credit card fraud is usually charged where (1) there has been unauthorized use of a credit card (or debit card); or (2) the card was obtained a by pretending to be another person (usually as part of a identity theft scheme.)
Debt Elimination Schemes Debt elimination schemes often promise a “legal” solution to resolve credit card debt, or an unpaid mortgage. The person is asked to pay a flat fee for the service. They are then issue false documents stating the debts have been satisfied.
Business Opportunities Schemes These cases involve the promise of an “opportunity” to make money in a business. However, when the person does not make any money they claim there was no opportunity at all. Moreover, their person selling them the product often misrepresents their “expertise” in the specific area and turns out to be a mere sales person.
Escrow Services Fraud A common scenario is where a legitimate escrow service is essentially copied and the fraudulent service is set up. When the person uses the fraudulent service the money deposited is never seen again
Identity Theft Identity theft occurs when someone takes another’s information without his or her permission or knowledge. There are many vehicles on the internet and through email to facilitate the commission of this crime.

A special note about business opportunity fraud allegations: I have learned that many law enforcement organizations simply believe that ALL business opportunity are fraud schemes. No matter how much benefit the customer receives there is a prevailing thought that these businesses are always fraud schemes. Law enforcement will, at times, find customers that never had any complaints. After they are done “informing them” how they have been defrauded, they then have a victim. This process will then be repeated with other past customers. The net result can be a fraud schemes charge.

If you need legal advice for a specific problem, you must consult with an Arizona Criminal Defense Attorney. For more information about Arizona Criminal Law or a specific legal problem, please contact Lawrence Koplow online or by phone at (602) 494-3444.

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