The Many Faces of Fraud

January 12, 2013

The many faces of fraud

In October 2012, a former Chicago Mercantile Exchange floor trader was sentenced to three years in federal prison for an investment fraud scheme. A consultant at Boca Raton, Florida based, Avidus Trading Inc., the 54-year-old engaged in foreign exchange trading for investors according to the Chicago Sun-Times. Between July 2006 and October 2008, the company lost $2.3 million of its investors' money.

The former floor trader hid the losses to retain investors by disseminating false monthly spreadsheets with false information he knew would be passed along to investors. The 54-year-old also falsified internal financial statements to hide his actions from other employees. As part of his sentence, the former CME worker was ordered to pay $2.3 million in restitution to the victims of his fraud.

In August 2011, federal prosecutors indicted the former CEO of Central Sleep Diagnostics in Northbrook, Illinois, on 11 counts of wire fraud. The former sleep clinic owner was accused of soliciting money from investors in his Central Sleep (clinic), Advanced Sleep Devices (equipment sales) and Key Partners (marketing) companies through "materially false and fraudulent pretenses."

According to the Chicago Sun-Times, the former owner lied to the investors about his background and how their money would be used. While some was invested in his companies, the majority went to purchasing a mansion, a Range Rover and antiques, as well as vacationing on cruises and running a family-owned tattoo parlor.

The former CEO plead guilty to all 11 counts and admitted to misappropriating over $2 million in co-mingled funds and in his own words, "taking approximately $700,000 in bonuses and fees above reasonable salary." He faces up to 20 years in prison and up to $250,000 in fines plus restitution to victims of his scheme.

Fraud defined and explained

Generally speaking, fraud consists of words or acts intended to deceive a person or entity for personal gain of any kind. The essential elements of any fraud allegation or charges are 1) a misrepresentation of a relevant fact; 2) by a person or entity who knows the misrepresentation is false; 3) to a person or entity who justifiably relies on the misrepresentation; and 4) an actual injury or loss resulted from the justified reliance. The most common types of fraud include:
-Bankruptcy fraud
-Insurance fraud
-Tax evasion
-Identity theft
-Mail fraud
-Securities fraud
-Credit card fraud
-Wire fraud

Wire fraud is a generalized term for any scheme to defraud through the use of "interstate wires," which includes telephones, computers, the Internet, as well as television and/or radio signals. Because of the interstate possibilities involved in the use of wires, wire fraud is a federal crime.

The evidence in fraud cases can be very complex and the criminal punishments for fraud can be extremely severe. If you or a loved one has been accused of wire fraud or any other type of fraud, contact an experienced criminal defense attorney to protect your rights.

Article provided by Dziedziak & Marcus, P.C.
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