Fraud refers to the deliberate falsification of facts, by words or action, or to concealing the facts in order to deceive and to gain financial or some other personal gain. Cases of fraud are most common in buying and selling property, including real estate and intangible property like stocks, bonds or intellectual property. To be legally taken as a fraud, an act needs to be a false statement, a willful act, intended to deceive, verifiable through the statement of the alleged and that the act has inflicted legal injury upon the victim. Although there are complications in proving that an act of fraud contains all these elements, different State’s laws provide different laws to deal with the offense effectively. In Arizona the statute relating to fraud reads ‘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 felony.
1. United States v. Morris, Computer Fraud Case
Robert Tappan Morris was a student at Cornell University and, having been given access to the Cornell computer, he devised one of the first internet bugs, known as the Morris worm, after himself. The worm was released from the Massachusetts University of Technology and infected the internet through send mail, finger program and trusted hosts. the United States District Court for the Northern District of New York, found Morris guilty of violating 18 U.S.C. Ã‚§ 1030(a)(5)(A), part of the Computer Fraud and Abuse Act. He was sentenced to three years of imprisonment with 400 hours of community service and a $10,050 fine. An infected computer required between $200 and $53,000 for corrective action.
2. Ponzi fraud Case
In the 1920s Charles Ponzi devised a fraudulent scheme after which many other similar schemes are called Ponzi schemes till today. He made use of the profit by buying IRCs, International Reply Coupons, cheaply from one country in exchange for more valuable stamps in another country. Ponzi resorted to rob Peter to pay Paul. He paid profits to old investors from the new investments, keeping a big chunk for himself. He became a millionaire within days, at the cost of the investors who were deprived of their heavy investments. Ponzi was awarded 86 counts of mail fraud in two federal indictments and faced life imprisonment. Judge Clarence Hasle ruled ‘… It will not do to have the world understand that such a scheme as that can be carried out … without receiving substantial punishment.”
3. Stanford Financial Group fraud
Robert Allen Stanford was the chairman of the now defunct Stanford Financial Group of Companies. The U.S. Securities and Exchange Commission (SEC) charged Stanford for a massive ongoing fraud involving $7 billion in certificates of deposit On February 27, 2009 the SEC amended its original complaint and lodged it against Stanford for being involved in a massive Ponzi scheme. The FBI had raided Stanford’s company offices in Houston, Texas and Memphis, Tennessee. On investigation, he was found guilty of multiple violations of the American SEC laws. He was convicted of almost all the charges leveled against him. He is currently serving 110 years of imprisonment at Summer County Federal Prison in Florida.
4. The Sale of the Eiffel Tower Fraud
The sale of the Eiffel Tower was perhaps the most unbelievable fraud in the recorded history. The man behind this fraud was Victor Lustig, who was known as ‘the man who sold the Eiffel Tower.’ He was born in Bohemia in 1890 and his first fraud was to sell a money printing machine, which took 12 hours to counterfeit a 100 dollar bill. People bought the machine for $30,000. It did deliver two bills and nothing after that. In 1920 he disguised himself as a government official and invited six metal scrap dealers. He explained to them that the maintenance of Eiffel Tower was beyond the means of the city, and therefore the government had decided to sell the tower. The scrap dealers were only too happy to fill his suitcase with cash, with which he left for Vienna by train. Lustig was arrested in the U.S and was imprisoned at Alcatraz prison, where he died of pneumonia.
5. The Poyais Island Fraud
Gregor MacGregor was involved in the all-time most fatal fraud. His fraud caused the death of at least 300 people and in spite of that he was never convicted. Not only that, but also prior to his death in Caracas on December 4, 1845, he received Venezuelan citizenship with a pension as a general who fought for freedom. He created an imaginary island, Poyais, off Honduras and adopted the persona of its prince. He sold its land first in America and by the time the first 200 would-be colonizers reached the site of the nonexistent island, he was sending another ship of 200 would-be colonizers from France. All of the first 200 died in the way back, while more than half of the second group too could not survive.
6. Fraud cases of Ferdinand Demara
Ferdinand Demara is known as the Great Impostor on account of numerous, and amazingly successful, masquerades. He was born in Massachusetts and joined the U.S. Army in 1941 and after that whatever he did was just another fraud. During his long career of frauds he impersonated an assistant prison warden, a monk, a teacher, a lawyer, a child care expert, an editor, a deputy sheriff, a doctor of Applied Psychology and many others. The climax was his being the surgeon Joseph Cyr on the Canadian destroyer HMCS Cayuga. Robert Crichton wrote his story in his book The Great Impostor and it was a New York Times best seller.
7. Bernard Madoff Fraud cases
Bernard Madoff committed the largest commercial fraud in U.S. history. He is the former non-executive chairman of the NASDAQ stock market, and the currently most known white collar criminal. Through his massive Ponzi scheme, he inflicted losses of more than $18 billion to the investors. The FBI agents arrested him on one count of securities fraud. Madoff pleaded guilty to 11 federal felonies. He admitted to converting his wealth management business into a massive Ponzi scheme at the cost of the investors. On March 12, 2009 he was awarded the maximum permissible imprisonment of 150 years, which he is serving currently.
8. Robert Maxwell Pension Fraud
Robert Maxwell was a Czechoslovakian-born British media mogul who is known for having stolen many hundreds of millions of pounds from his company’s pension funds. He had been an MP for six years and after that he bought big publishing companies like Mirror Group Newspapers, British Printing Corporation and Macmillan, Inc. He lived a luxurious and showy life style, flew in his own helicopter and enjoyed his luxurious yacht the Lady Ghislaine, from which he had either slipped accidentally and was drowned or had committed suicide
9. Frank William Abagnale, Jr.
Frank William Abagnale, Jr. is a former impostor known for his unique frauds relating to confidence tricking, check forging and escaping prisons. He impersonated eight different versions, including a pilot, a U.S. Bureau chief of prisons and others. He escaped from police custody twice. He used to overdraw from his already consumed accounts and, then changing names, opened new accounts. In a speech, he described that during one of his frauds, there was a drop box where people dropped their daily collection of money. He pasted on the drop box ‘Out of Service, place deposits with security guard on duty” and of course he impersonated the guard on duty. Currently, he is an American security consultant.
10. United States v. Neil Scott Kramer, cell phone fraud case
United States v. Neil Scott Kramer is a famous court case relating to the use of the cell phone by an adult to compel a minor for sex. On November 10, 2008 Kramer sent a text message to the victim, a 15’year-old Missouri girl and, using illegal narcotics, engaged in sexual intercourse with her. The core issue in the case was to determine if a cell phone constituted a computer. The United States Court of Appeals for the eighth Circuit wrote ”¦ the court found that a cell phone can be considered a computer if the phone performs arithmetic, logical and storage functions.’ Kramer was found guilty and was sentenced to imprisonment for at least 18 months.
In addition to the frauds inflicting legal injury upon individuals, there are different kinds of frauds which are injurious to corporate bodies and even governments. Such frauds, like tax evasion or alien registration, are punishable according to the severity of the offence. In Hawaii, the law provides that ‘fraud on a state tax return is a felony warranting a fine of up to $100,000 or three years of imprisonment, or both, and a fraudulent corporate tax return is punished with a fine of $500,000.’
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