Learning that you are the subject of a fraud investigation is heart wrenching. Our Houston, TX theft defense law office sees fraud cases all of the time, and so we understand the extreme stress that you are probably under right now.Unfortunately, your stress is warranted — a fraud conviction could change your life forever, and the change would not be positive. However, we do want to help to reduce your stress as much as possible so that you can think clearly and take the steps that you need to take in order to bring this matter to the best possible conclusion. That’s why we’ve put together this definitive guide. When you are armed with information you can make better, more informed choices about how to proceed.
Types of Fraud
The first thing to do is to determine exactly which type of fraud you’re being investigated for, as this will have a profound effect both on your defense strategy and on the potential consequences that you face.
Allegations of identity theft mean that you are suspected of wrongfully obtaining someone else’s personal, identifying information and then using that information for your own financial gain. This information could include another person’s social security number, date of birth, driver’s license number, banking information or credit card information.
In Texas, you can be accused of identity theft merely for being in possession of identifying information (such as a social security card) which belongs to three or more people. Identity theft would also be the appropriate charge to use if someone had found or used a lost or stolen credit card. Identity thieves don’t just use this information to open new credit accounts—it’s also common to use this information to gain employment, or to secure state benefits such as welfare.
Identity theft is a felony in the state of Texas, and the penalties depend on how many items were stolen, possessed or transferred. For example, if a person steals one driver’s licence and one Social Security card, that would be considered two total items stolen and would be classified as a state jail felony.
- If less than five items, the crime is considered a state jail felony. The penalty for a conviction would be 180 days to two years in a state jail and/or a fine of up to $10,000.
- If between five and nine items, the crime is a third degree felony with penalties of two to 10 years in prison and/or up to $10,000 in fines.
- If between 10 and 49 items are stolen, possessed or transferred, it is considered a second degree felony with penalties of two to 20 years in prison, and/or a fine of up to $10,000.
- For 50 or more items, the crime is considered a first degree felony. A conviction can carry a sentence of five to 99 years in prison and/or up to $10,000 in fines.
These are the penalties for theft outlined in the Texas Penal Code, which can be increased in certain cases. For example, the punishment might increase if a weapon was used in stealing the items or if defendant has other felony convictions.
Health Care Fraud
There are two kinds of health care fraud.
The first would be perpetrated by an individual who is trying to obtain medical services under false pretenses. Lying on a health insurance application is a form of fraud, for example. So is using someone else’s insurance card to receive treatment, or obtaining prescriptions and reselling them.
The second type would be perpetrated by health care workers, usually to entice insurance companies to pay money the hospital or doctor’s office is not entitled to. The health care worker might double bill for a procedure, for example, or bill for procedures that were never performed at all.
Medical fraud may be treated as a misdemeanor or a felony, depending upon the amount of money involved. Federal health care fraud convictions carry up to a 10 year sentence and up to $250,000 for each offense.
A person has committed bank fraud if they use false or misleading information to obtain benefits from a financial institution. This could include lying on a loan application, forging or using counterfeit documentation to get a loan, or using “straw borrowers” just so you can get better lending terms.
A lot of people commit bank fraud while trying to obtain a home loan, and so it is also common to see allegations that the defendant has obtained a false appraisal on a home, or has made false statements to the bank in the hopes of concealing the lack of a down payment.
Bank fraud is a federal crime that can carry a penalty of up to $1,000,000 in fines and up to 30 years in prison.
Mail and Wire Fraud
Allegations of mail or wire fraud would mean that you are being accused of using the mail service, a telephone, or the Internet in order to trick people into giving you money or property. Instituting a pyramid scheme or launching a telemarketing campaign to sell services with no intention of rendering said services would be two examples of this type of fraud.
Wire fraud also includes scams perpetrated over the Internet.
Wire fraud and mail fraud cases are usually federal cases. That is because the fraud often crosses state lines, uses utilities regulated by the FCC, or uses the United States Postal Service in order to commit the crime.
Each instance of mail and wire fraud can result in penalties of up to five years in prison and up to $250,000 in fines. If the fraud affected a financial institution, the potential sentence could increase to fines of up to $1 million and up to 30 years in prison.
An allegation of securities fraud would indicate that your accusers believe you have presented investors with false information in order to sell stocks, bonds, or commodities (like gold). There are a variety of ways to commit securities fraud, including Ponzi schemes, advance fee schemes, foreign currency fraud, and more.
These allegations are typically levied against brokers, investment firms, and other people who are in a position to sell securities to members of the public.
It could also involve attempts to make your company look better so that people will invest in it. Examples could include filing false quarterly and annual reports, issuing false press releases with the intent to drive investment activity, or using offshore accounts to inflate reported assets.
Securities fraud is most often prosecuted as a federal crime and carries severe penalties, including fines ranging from $10,000 to $5 million and a federal prison sentence of up to 25 years.
Check and Credit Card Fraud
Allegations of check or credit card fraud mean that you’re being accused of activities such as forging checks or purposefully using an expired or invalid credit card to obtain goods. You can be accused of this type of fraud simply for possessing a fraudulent credit card with the intent to use it.
Credit card and check fraud are both state jail felonies in the state of Texas, punishable by 18 months to 2 years in jail and with possible fines of up to $10,000.
Kiting checks, or purposefully writing checks that you know will bounce, also falls under this category. This can also happen when you knowingly issue a check from an account that has been closed or which does not exist. Many merchants will first try to contact you and get you to pay the check amount plus a fee before going to the authorities. If you’ve made an honest mistake it is in your interests to take care of a bounced check the moment you find out about it.
Also known as theft by check, these cases can be felonies or misdemeanor crimes, depending on the amount of the bounced check:
- Less than $20: A fine of up to $500.
- $20 to $500: A fine of up to $2,000 and up to six months in jail.
- $500 to $1,500: A fine of up to $4,000 and up to a year in jail.
- $1,500 to $20,000: A fine of up to $10,000 and between six months and two years in state jail could be the sentence.
- $20,000 to $100,000: A fine of up to $10,000 and two to 10 years in prison.
- $100,000 to $200,000: From two to 20 years in prison and up to $10,000 in fines.
- $200,000 or more: From five to 99 years of imprisonment and a fine of no more than $10,000.
As with other theft crimes, the penalties for each level of crime can be increased if there are other factors involved, such as if the bad check was written to an elderly person or to a nonprofit organization.
There are many types of insurance besides medical insurance, and it’s possible to be involved in fraudulent activities targeting these types of insurances as well. Here are two common examples.
An allegation of auto insurance fraud would indicate that your accusers believe that you’ve padded your auto insurance claim, or they believe you’ve filed a claim for an accident or theft that never happened. It may also mean that someone believes you’ve set them up in order to make an accident appear to be their fault for the purposes of collecting an insurance check.
If the allegation is that you are committing worker’s compensation fraud then you are being accused of exaggerating an injury, faking an injury, or claiming an injury that did not occur at work, all for the purposes of collecting benefits. Taking a second job while you collect benefits from the first job is also considered to be fraudulent.
Insurance fraud can be either a misdemeanor or a felony in the state of Texas, depending on the amount or value of the claim. A claim of less than $50 would be a Class C misdemeanor and carry a penalty of up to $500. The most severe penalty would be a first degree felony for cases in which the value of the claim is $200,000 or more. This crime can carry a penalty of between five and 99 years in state prison and up to $10,000.
Falsifying information on an application for insurance can be charged as a state jail felony and carry a sentence of 180 days to two years in state prison and up to $10,000 in fines.
Many people are very tempted to commit fraud during a bankruptcy case, and often those who make this mistake do so thinking there’s little harm in it, or that nobody could possibly find out. It’s important to check and double check bankruptcy documents for accuracy. Understating assets or overstating debts are both fraudulent. Hiding assets to avoid their liquidation is also very common.
Some bankruptcy fraud occurs even before the case is filed. This happens when the defendant purposefully (or appears to purposefully) acquire credit only to exhaust it prior to filing the bankruptcy case. This is fraud because the defendants basically obtained the credit under false pretenses—the pretense that they would pay the debt, when they had no intention of ever doing so.
Bankruptcy fraud is a felony, and if you are convicted of it you will lose your bankruptcy protection in addition to being subject to other penalties, including up to 5 years in prison and up to $250,000 in fines.
You’ve been accused. Now what do you do?
You need to secure an attorney the moment you suspect you are being investigated for any type of fraud. Do not wait until you’ve been indicted for the crime.
You will also want to refer any investigators to your attorney once you have retained one. Often, insurance agencies or other parties will have internal investigators begin asking questions prior to the involvement of law enforcement officials. We often see clients getting into trouble because they give these investigators confused or conflicting information while they are flustered or stressed. It’s very easy for a prosecutor to use these discrepancies against you later on. Your best bet is to say as little as possible while allowing your attorney to handle the matter.
Follow your attorney’s advice to the letter, and obtain any and all documents as you are requested to do so. Your attorney won’t ask you for anything that isn’t absolutely vital to your defense. Get this information to your attorney promptly. Lisa Shapiro Strauss actually launches her own investigation into the matter to help ensure that you are well-prepared for the upcoming trial. Often, it becomes necessary to hire experts to pour through mountains of paperwork and documentation in order to examine it for opportunities which can be used in the crafting of your defense. You will miss those opportunities if you do not work with your theft lawyer to provide the necessary information.
What would be the consequences of a conviction?
The consequences of any fraud conviction are dire, though the specifics will certainly depend upon the type of fraud you are accused of; as well as the extent of the fraud and the unique nature of your case. Common penalties involve fines, jail time, loss of professional licenses, being required to pay restitution and the loss of assets (especially if you can’t pay court ordered restitution).
In some cases, a fraud case may even lead to other criminal penalties. For example, if you are involved in a medical fraud case involving the resale of prescription drugs then you might well find yourself facing drug trafficking charges in addition to medical fraud charges.
Is there any hope?
Yes. Our office has helped many defendants get reduced charges on their fraud case. We’ve also helped our clients get reduced sentences. Sometimes, we’re even able to help you get the charges dropped altogether.
There are several defenses we can use. For example, we can use a “mistake of fact” defense, which would prove that some vital element of the prosecution’s case is incorrect. For example, if the prosecution claims that you knowingly wrote a check on a closed account and we can prove that the account was in fact open on the date that you wrote the check in question then this sort of mistake of fact could lead to dropped charges. This is a very simplistic example, of course, but it demonstrates the principle all the same.
In some cases, a lack of intent to harm the plaintiff can also serve as a defense against charges, since in some types of fraud there must be some sort of intent involved. For example, it may become clear that you made an honest mistake on a loan application, rather than presenting the bank with deliberate misinformation.
Sometimes we can also show that the events in question occurred while your judgment was genuinely impaired by mental illness or age-based senility.
Starting early is the key, which is why you will want to contact our office right away. Lisa Shapiro Strauss is a former prosecutor, so she knows exactly what it takes to mount an outstanding fraud defense.
Contact our law firm today for a free consultation. The faster we can get to work building a case, the better prepared we will be to help you positively resolve your case.