Former chief executive charged with fraud
There are several types of fraud and multiple elements that make up the crime.
April 17, 2013
Former chief executive charged with fraudArticle provided by Law Offices of John D. Kirby, A P.C.
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Federal regulators recently charged Federico R. Buenrostro, the former chief executive of the country's largest pension fund, the California Public Employees' Retirement System, or CalPERS, with defrauding a private equity firm into paying $20 million to his close friend, Alfred J.R. Villalobos.
The suit, brought by the Securities and Exchange Commission, alleges that Buenrostro intentionally gave contracts to clients represented by Villalobos and fabricated documents that gave New York-based private equity firm of Apollo Global Management the false impression that CalPERS had approved the payments to Villalobos.
Villalobos also received around $58 million dollars in fees by helping secure investments for CalPERS. In return, he presented Buenrostro with extravagant gifts and promised him profitable employment after leaving CalPERS.
In California, this is just the latest in a line of cases that illustrate potential conflicts of interest in financial dealings at the state level.
Elements of fraud
The crime of fraud involves dishonesty. However, not all acts of dishonesty amount to fraud. Fraud is intentionally deceiving another for the purpose of financial or personal gain. There are slight variations in the wording of state and federal fraud statutes, but the basic elements of fraud include:
-Misrepresentation of an important fact
-Knowledge that the fact is false
-Rightful reliance on the misrepresentation by the party being deceived
-Injury or damage that results from the reliance
There are several different types of fraud, including:
-Mail fraud
-Tax fraud
-Insurance fraud
-Identity theft
Fraud does not have to be committed in person. It can also occur via telephone, Internet or wire communication. Identity theft is often committed over the telephone when callers ask for personal information such as an address or Social Security number.
Potential penalties for fraud
Penalties differ for civil and criminal fraud. Bad faith is usually involved in civil fraud, which is legally defined as dishonesty in a transaction -- from entering into an agreement with no intention of honoring it or knowingly misrepresenting the quality of something being bought or sold to the intent to deceive or mislead someone to gain an advantage over him or her. In many cases of civil fraud, the transaction didn't begin with the intent to defraud, but escalated to fraud over time. An individual convicted of civil fraud may pay significant fines or restitution to the individual who has been defrauded.
On the other hand, criminal fraud is a felony and carries more severe penalties. A person must be found to have had the intent to defraud to be convicted of criminal fraud. Prison time, fines or probation are normally imposed for a criminal fraud conviction, although penalties vary depending on the situation or whether the fraud was committed by a single individual or a group such as a business or corporation.
Legal help for those accused of fraud
The future and reputation of anyone under investigation for or charged with fraud are on the line. To pursue the best possible outcome, seek the counsel of an experienced fraud attorney -- during the investigation stage if possible.