USA Law and Practice Contributed by: Steven Molo, Robert Kry, Megan Cunniff Church and Walter Hawes, MoloLamken
1. Fraud Claims 1.1 General Characteristics of Fraud Claims In the United States, fraud claims can be brought under federal or state law, by federal or state prosecutors when criminal in nature, or by pri - vate litigants when civil in nature. Although there are similarities between federal and state law, there is no uniform law governing fraud claims, and no single entity is responsible for enforce - ment. Generally, both federal and state law allow a private litigant to pursue fraud claims when one party deliberately deceives another party for some financial advantage or benefit, caus - ing harm to the other party in the process. Elements of Fraud Generally, a civil fraud claim brought pursuant to US federal or state law must allege: • a false statement or omission of material fact; • the intent to deceive; • justifiable reliance by the victim on the false statement or omission; and • harm or injury to the victim as a result. The specific elements of a fraud claim may vary by jurisdiction and by the specific type of fraud alleged. In general, fraud claims are subject to a height - ened pleading standard, meaning that the spe - cific allegations of fraud – who, what, where and when – must be described “with particularity” in the civil complaint that initiates a private lawsuit. Who May Bring a Fraud Claim Criminal Federal prosecutors with the US Department of Justice (DOJ) and state and local prosecutors bring criminal charges against defendants who
engage in fraud. Federal prosecutors commonly charge defendants in a variety of financial fraud schemes, including bank fraud, government contracting fraud, healthcare fraud, mortgage fraud, tax fraud, embezzlement and misappro - priation, bribery, and corrupt payments to for - eign officials. Private litigants cannot directly prosecute crimi - nal charges but may help initiate criminal inves - tigations by reporting fraud to law enforcement. Private litigants who act as whistle-blowers and bring certain information regarding fraud and corruption to the attention of law enforcement may also recover a percentage of any settlement or financial penalty resulting from the investiga - tion or prosecution. Civil Federal prosecutors in the DOJ are also respon - sible for investigating and litigating civil fraud claims brought on behalf of the federal govern - ment. State and local prosecutors also pursue civil fraud claims on behalf of their local govern - ments and citizens. Private litigants may also bring civil fraud claims in lawsuits filed in federal or state court, depend - ing on the circumstances, and allege fraud based on federal or state law. Some of the spe - cific types of fraud claims are addressed more fully below. Fraudulent misrepresentation/false statements Fraudulent misrepresentation – fraud arising from a false statement – is the offence com - monly understood to be a claim for fraud. To state a claim for fraudulent misrepresentation, and using New York law as an example, a plain - tiff must allege that:
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