Fraud lies at the heart of many white-collar crimes. But in order for conduct to amount to fraud, various elements of the offense need to be present.
The impact of allegations of fraud is immediate and profound. Board members, managing directors, and other company officers who find themselves on the receiving end of such accusations should promptly reach out to lawyers who are well-versed in criminal law as it relates to economic offenses, as a conviction for fraud brings with it the prospect of not only fines but also custodial sentences of up to five years, and even up to as many as ten years in particularly egregious cases. However, just because something appears fraudulent does not mean that it actually lines up with the legal definition of fraud, notes attorney and managing partner at MTR Legal Rechtsanwälte, Michael Rainer.
While many people are quick to call fraud, a lawyer will only arrive at this conclusion if certain criteria have been met. For instance, the perpetrator must have deliberately deceived another person, with this leading the latter to make arrangements for the disposal of assets that belong to him or a third party, the result of which is a financial loss.
Section 263 of the German Penal Code (StGB) defines fraud as falsely representing, or distorting, or suppressing true facts. An erroneous understanding due to fraud is present if the untrue statements lead the victim to adopt a false understanding that is not consistent with the real facts. This misunderstanding must then give rise to a disposal of assets by the victim. In a corporate context, this often takes the form of payments made by the company that were arranged by the victim, or the conclusion of contracts. Lastly, a financial loss is deemed to have occurred if – as a consequence of the arrangements – the overall assets of the aggrieved party have been diminished. It also bears repeating that the perpetrator must have acted with intent at the time of the offending conduct.
All this goes to show that the crime of fraud is extremely complex, offering lawyers specializing in corporate crimes multiple possible avenues for mounting an effective defense. In addition to the criminal implications, it is equally important to consider the civil side of the equation, i.e., the need to fend off potential claims for damages.
The team of legal experts at MTR Legal Rechtsanwälte includes specialists in corporate crime.