Fraud, Deception & Corrupt Practices Law

Fraud, Deception & Corrupt Practices LawIn today’s world, both businesses and individuals must be on their guard against fraud and deception.

If you have been the victim of fraud or deception, don’t be embarrassed!  Smart, careful people can be victims of fraud and misrepresentation.  Sometimes, despite even careful attention, clients find out, only after the fact, that they have been deceived.  That is common sense!  If the misrepresentations were obvious up-front, it would be unlikely that the bad actors would succeed with convincing many people of the deception, but more often than not, everything seems above board at the time of the transaction.

Our experienced team of lawyers has helped numerous clients who were the victims of fraud, deception, and other corrupt practices.  Some examples of circumstances where our lawyers have fought to help victims of fraud are:

  • Buyers defrauded by Sellers in buying a new business
  • Sellers defrauded by Buyers in selling their existing business
  • Franchisees defrauded by Franchisors in buying a franchise license
  • Buyers defrauded by Sellers in buying a license or business opportunity
  • Buyers defrauded by Sellers of Real Estate
  • Buyers defrauded by Sellers in buying a vacation club or timeshare package

We empathize with our clients who are bravely handling the challenging and very real effects of fraud, misrepresentations, deception, and other unfair and corrupt practices and are often struggling to recover from the negative impact on their finances.  Fortunately, our clients are often not without legal recourse.  Some of the laws that may provide remedies to victims in certain circumstances are:

  • The Racketeer Influenced and Corrupt Organizations (“RICO”) Act, 18 U.S.C. § 1961 et seq. The RICO act prohibits a person employed by or associated with an enterprise engaged in interstate commerce from directly or indirectly conducting or participating in the conduct of the enterprise’s affairs through a pattern or racketeering activity or collection of unlawful debt.  There are over 50 crimes that qualify as racketeering activity, with a “scheme to defraud” using the mail, wires, or banks, being among the most common in civil actions.  CBL’s trial lawyers have successfully brought federal litigation under RICO’s civil liabilities provisions.  Importantly, this federal act provides for treble (3X) actual damages and attorneys’ fees.
  • The Federal Trade Commission (“FTC”) Act. The FTC Act is a federal statute prohibiting unfair and deceptive trade practices.  The FTC Act empowers the Federal Trade Commission with specific rule making authority, and the FTC has adopted specific rules regarding, among other things, advertising and franchising.  While the FTC Act does not have a private right of action for violation of its rules, many state deceptive and unfair trade practices acts (which do have private rights of action) make violations of the federal act and regulations a violation of the state act.
  • State Specific Consumer Protection or Deceptive and Unfair Trade Practices Acts. While the statutes vary from state to state, every state has adopted laws protecting consumers from deceptive and unfair trade practices.  Some of these statutes make violations of the federal FTC rules an automatic violation of the state statute, some provide remedies for deceptive conduct without having to prove fraud, and some provide for the recovery of attorneys’ fees.  Be sure to talk to your attorney about any circumstances where you believe you were deceived or treated unfairly, so your attorney can help determine if any of these statutes provide relief for your situation.
  • State Specific Advertising and Promotion Laws. Many states have laws that impose specific obligations on sellers and advertisers and prohibit certain conduct with respect to advertising and promotions.   If your transaction followed a solicitation, special promotion, or advertisement, be sure to discuss the promotion with your lawyer.
  • Laws protecting special classes of individuals such as the elderly, disabled, and military. Many states have specific statutes protecting the elderly, disabled, active duty military, and military veterans.  These statutes often provide for the ability for victims in these special classes to recover punitive damages and/or attorneys’ fees.  Be sure to let your attorney know if you (or anyone else involved in your transaction) is elderly, disabled, active duty military, honorably discharged military, and/or the child of active duty military personnel or an honorably discharged military veteran.
  • Common Law Fraud. Every state has a body of case law that provides relief to victims of fraud.  Sometimes fraud occurs when misrepresentations are made, but it can also occur by the omission of material facts that would be necessary to make the statements made not misleading under the circumstances.  For example, in a timeshare sales situation, suppose a client asked about the ability to resell the timeshare, and the sales person said “the contract contains a right of first refusal where, if you want to sell, you have to offer the timeshare back to the resort.  They wouldn’t have gone through the trouble of putting that in the contract if this wasn’t a valuable asset that they would want to get back,” when in reality, the sales person knew that the resort had a policy of not taking back a timeshare and that prior purchasers were offering to sell their timeshares for $1.  The omission of these material facts, given the statements made would be fraudulent.  In each state, acts of fraud must be pled with specificity, so you will want to be sure to disclose all of the details and specific facts of your case to your lawyer.  Be sure to let your attorney know what your understanding was, in addition to what was specifically said.
  • The Securities Exchange (“SEC”) Act of 1934 and accompanying regulations. The SEC Act and accompanying regulations prohibit misrepresentations and impose specific registration and disclosure obligations on  sellers of “Securities.”  The definition of “Securities” is much broader than stocks and bonds traded on an exchange and can include many “investment” opportunities.  Be sure to talk to your attorney about any representations made to you about the investment, opportunity for profit, or ability to recoup your expenses as a part of the program.
  • State Securities Laws. Most states also have securities laws that may provide for broader protections than the federal laws or may apply even when a particular transaction is exempt from the federal laws.  Again, be sure to talk to your attorney about any representations made to you about the investment, opportunity for profit, or ability to recoup your expenses as a part of the program.
  • Regulation N as issued by the Bureau of Consumer Financial Protection, 12 C.F.R. § 1014.3, prohibits misrepresentations regarding any mortgage credit product. If your transaction includes a mortgage obligation, be sure to discuss with your attorney all the representations made and your understanding regarding the mortgage, its terms, and its effects on you.
  • Truth in Lending Act is a federal statute which imposes specific disclosure obligations in connection with the extension of credit to consumers. If your transaction involves an obligation where credit or a loan was extended to you, please be sure to discuss the representations made regarding the credit/loan.
  • Dodd-Frank Wall Street Reform and Consumer Protection Act, in part, amends the Truth and Lending Act, imposing additional obligations on consumer credit/mortgage companies in certain transactions and providing for additional remedies. If your transaction involved a credit obligation, loan, or mortgage, please be sure to discuss the lending with your attorney.
  • State Franchise Laws. Many states have franchise laws that prohibit misrepresentations in the sales process and often impose specific disclosure obligations, registration obligations, and other obligations on the Sellers of franchise opportunities.  Many of these statutes have specific remedies available for violations of the franchise laws, sometimes providing for the recovery of attorneys’ fees, rescission, and damages.  If your case involves a franchise, be sure to talk to your attorney about whether any of these laws apply in your case.
  • State Specific Business Opportunity Laws. Most states have adopted some form of business opportunity laws that impose obligations on sellers of business opportunities, opportunities to invest, and/or opportunities to earn income.  Be sure to let your attorney know if your issue involves a business opportunity or opportunity to earn money.
  • State Specific Timeshare Laws. Many states have timeshare laws that often impose specific disclosure obligations, registration obligations, obligations to advise purchasers of opportunities for rescission, and other obligations on the Sellers of timeshares or vacation clubs.  Many of these statutes have specific remedies available for violations of the timeshare laws.  If your case involves a timeshare or vacation club, be sure to talk to your attorney about whether any of these laws apply in your case.
  • State Specific Real Estate or Condominium Laws. Many states have specific statutes governing real estate transactions and/or condominiums, specifically.  If your transaction involves an interest in real property, including a partial or timeshare interest, be sure to discuss with your attorney.

Please note that with any legal case, rights and remedies an individual may have can lapse by the passage of time and failure to take action.

If you believe you may have been the victim of fraud, misrepresentation, or deceptive or other corrupt practices, don’t wait; we encourage you to Contact Clapp Business Law to see if our legal team can help you in your situation, or visit our Resources page for more information.