Definition of Fraud

Definition of Fraud

Fraud can be defined as an intentional act of deception or dishonesty perpetrated for personal gain or to cause harm to others. It involves the deliberate presentation of false information, concealment of facts, or engaging in deceitful practices with the aim of misleading and manipulating others. The fraudulent individual seeks to deceive victims, leading them to make decisions or take actions they would not have if they had been aware of the truth.

Fraudulent intent is, in essence, dishonesty or bad faith. What the misrepresenter knows or believes is the key to proof of intent. Wrongful intent, as a state of mind, is rarely proved directly, e.g. by an admission of bad faith, but is normally established through circumstantial evidence. P. Keeton, Fraud: The Necessity for an Intent to Deceive, 5 U.C.L.A. L.Rev. 583, 584 (1958). There is no doubt of fraudulent intent when the misrepresenter knows or believes the matter is not as he or she represents it to be. Fraudulent intent is also present when a misrepresenter speaks positively and without qualification, but either is conscious of ignorance of the truth, or realizes that the information on which he or she relies is not adequate or dependable enough to support such a positive, unqualified assertion. Our explication of the states of mind that constitute fraudulent intent parallels that of the Restatement (Second) of Torts. Under the Restatement formulation, a misrepresentation is made with fraudulent intent if the maker:

(a) knows or believes that the matter is not as he represents it to be,

(b) does not have the confidence in the accuracy of his representation that he states or implies, or

Restatement (Second) of Torts § 526 (1977).

How You Were Defrauded

False representation: It has been alleged that certain individuals or entities provided false information and made deceptive claims to secure loans and funds from the government.

Intent to deceive: The allegations suggest that these individuals or entities intentionally provided false information and made deceptive claims, with the intent to deceive the government and potentially gain financial benefits through fraudulent means.

Reliance: The government programs that were allegedly targeted, such as the Paycheck Protection Program (PPP) and Small Business Administration (SBA), rely on accurate information to distribute funds and support businesses. The alleged false representation and deceptive claims undermine the integrity of these programs, indicating that reliance was placed on the information provided.

Harm or loss: If the allegations are proven, it could result in financial harm or loss to the government, as funds might have been distributed based on false information and deceptive claims.

Unlawful gain: The alleged actions, such as securing loans and funds through false representation and deceptive claims, would constitute an unlawful gain for the individuals or entities involved.

Policy guarantees and 4% fixed account removal: The removal of policy guarantees and the 4% fixed account in variable universal life (VUL) policies may raise concerns of potential fraud if these changes were made without proper disclosure or justification, resulting in a loss or disadvantage to the policyholders.

Request to purchase conflicted funds: The request for beneficiaries to purchase conflicted funds could potentially indicate a conflict of interest and raise concerns about fraud if it is found that the individuals or entities were benefiting from recommending or selling these funds at the expense of the beneficiaries.

Minnesota Case Law on Fraud

“To establish common law fraud, the [Plaintiffs] must prove: (1) a false representation of a past or existing material fact susceptible of knowledge; (2) made with knowledge of the falsity of the representation or made without knowing whether it was true or false; (3) with the intention to induce action in reliance thereon; (4) that the representation caused action in reliance thereon; and (5) pecuniary damages as a result of the reliance. Martens, 616 N.W.2d at 747. Fraud may also be established by concealment of the truth.” U.S. Bank N.A. v. Cold Spring Granite Co., 802 N.W.2d 363, 373 (Minn. 2011), citing Estate of Jones v. Kvamme, 449 N.W.2d 428, 431 (Minn.1989).

It is a well-settled rule that a representation or expectation as to future acts is not a sufficient basis to support an action for fraud merely because the represented *369 act or event did not take place. It is true that a misrepresentation of a present intention could amount to fraud. However, it must be made affirmatively to appear that the promisor had no intention to perform at the time the promise was made.

Vandeputte v. Soderholm, 298 Minn. 505, 508, 216 N.W.2d 144, 147 (1974).

Reliance in fraud cases is generally evaluated in the context of the aggrieved party’s intelligence, experience, and opportunity to investigate the facts at issue. Murphy v. Country House Inc., 307 Minn. 344, 351, 240 N.W.2d 507, 512 (1976); Davis v. ReTrac Mfg. Co., 276 Minn. 116, 118-19, 149 N.W.2d 37, 39-40 (1967). When a party conducts an independent factual investigation before it enters into a commercial transaction, that party cannot later claim that it reasonably relied on the alleged misrepresentation. Davis, 149 N.W.2d at 39-40 (citing Lack Industries, Inc. V. Ralston Purina Co., 327 F.2d 266 (8^th Cir. 1964)).

Fraud is an intentional tort and scienter is an essential element. Humphrey v. Merriam, 32 Minn. 197, 198, 20 N.W. 138 (1884). We have stated that a representation is made with fraudulent intent when it is known to be false or, in the alternative, when it is asserted as of the representer’s own knowledge when he or she does not in fact know whether it is true or false. Davis v. Re-Trac Manufacturing Corp., 276 Minn. 116, 117, 149 N.W.2d 37, 39 (1967). This formula can be ambiguous. Whereas the words “fraudulent intent” naturally connote purposeful dishonesty, we have held that even if a misrepresentation is made without purpose to deceive or without knowledge of its falseness, “[t]he fraud is as great as if the party knew his statement to be untrue.” Bullitt v. Farrar, 42 Minn. 8, 11, 43 N.W. 566, 567 (1889). Elsewhere we have stated, “A bad motive is not an essential element of fraud.” Spiess v. Brandt, 230 Minn. 246, 252, 41 N.W.2d 561, 566 (1950).

Analysis of Gary Gregg, et. al. v. Ameriprise Financial, Inc. et. al.

The facts are very similar to your current circumstances. You can also introduce a cause of action for The main takeaway from the case is the court’s holding that strict liability is applied in cases of deceptive conduct, such as fraud, and that the state of mind of the defendant is not a requirement to prove deceptive conduct.

Specifically, the court stated as follows at page 18:

“The General Assembly knows well how to add a state of mind requirement to a statute. Within the CPL itself, numerous provisions require intent or knowledge before a violation will be found. See, e.g., 73 P.S. § 201-2(4)(ix) (requiring proof of intent not to sell goods and services as advertised); id. § 201-2(4)(x) (requiring proof of intent not to upply public demand); id. § 201-2(4)(xv) (requiring proof that the vendor made knowing isrepresentations). The absence of any reference to the actor’s state of mind in the atch-all provision demonstrates that the legislature did not intend to require proof of the actor’s state of mind. “[W]here a section of a statute contains a given provision, the omission of such a provision from a similar section is significant to show a different legislative intent.” Fletcher v. Pa. Prop. & Cas. Ins. Guar. Ass’n, 985 A.2d 678, 684 (Pa. 2009). It is not for the courts to add a state of mind requirement to the statute where the legislature did not choose to do so. See Commonwealth v. Rieck Inv. Corp., 213 A.2d 277, 282 (Pa. 1965) (courts should not add to a statute a requirement that the legislature chose not to include).

Strict liability is not a foreign concept in consumer protection. For example, the Fair Debt Collection Practices Act is generally characterized as “a strict liability statute to the extent it imposes liability without proof of an intentional violation.” Allen ex rel. Martin v. LaSalle Bank, N.A., 629 F.3d 364, 368 (3d. Cir. 2011); see also In re Porter, 961 F.2d 1066, 1078 (3d Cir. 1992) (recognizing that the Truth in Lending Act “achieves its remedial goals by a system of strict liability in favor of the consumers when mandated disclosures hve not been made.” (quotations omitted)). The Superior Court’s characterization of the catch-all provision as creating strict liability makes perfect sense in this context. Under the catch-all provision of the CPL, the actor’s state of mind as to either the truth or falsity of the representation or the effect that the misrepresentation will have on the consumer is irrelevant.”

In causes of action involving deceptive conduct, the application of the strict liability standard is justified. Strict liability means that a party can be held liable for fraudulent acts without requiring proof of their state of mind or intent. The focus shifts to the deceptive conduct itself, rather than the mental state of the person who was deceived.

By applying strict liability, the legal system recognizes the importance of deterring deceptive practices and protecting victims from harm. It places the burden on the party engaging in deceptive conduct to ensure the accuracy and truthfulness of their representations. This standard promotes fairness and accountability, as it holds individuals responsible for the consequences of their actions, regardless of their intentions.

Requiring proof of the victim’s state of mind would impose an unfair burden on the injured party and potentially undermine the pursuit of justice. It would create an additional hurdle in proving fraud, as intentions and beliefs are subjective and can be difficult to establish conclusively. By removing the state of mind requirement, the legal system ensures that victims are not unfairly burdened and that fraudulent actors can be held accountable for their deceptive actions.

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