USA Law and Practice Contributed by: Steven Molo, Robert Kry, Megan Cunniff Church and Walter Hawes, MoloLamken
• the defendant made a false statement of material fact; • the defendant knew the statement was false; • the false statement was made for the purpose of inducing the plaintiff to rely on it; • the plaintiff was reasonable in relying on the false statement; and • the plaintiff was injured as a result of relying on the false statement. A plaintiff must also have taken reasonable steps to protect itself against reliance on false state - ments. In other words, a plaintiff must exercise due diligence in discovering the fraud. Only where the plaintiff is justified in relying on the false statement can it succeed in such a claim. False claims Another form of fraud arises under the False Claims Act (31 USC Sections 3729–3733) (FCA), which is a federal statute that is often invoked in the context of government contractor fraud. The FCA provides that any person who knowingly submits a false claim for payment to the govern - ment is liable for double the government’s dam - ages plus a penalty for each false claim. While the FCA allows the US government to institute actions alleging such claims, it also allows pri - vate whistle-blowers to bring lawsuits on the government’s behalf against those who have defrauded the government. These are called “qui tam” suits. The whistle-blower may receive a percentage of any funds recovered. Corrupt payments The Foreign Corrupt Practices Act of 1977 (15 USC Sections 78dd-1, et seq) (FCPA) makes it unlawful for certain people and entities to make payments to foreign officials in order to obtain or retain business. While the FCPA is widely known for its criminal provisions, it also provides for civil enforcement actions.
Only the DOJ has authority to pursue criminal actions under the FCPA, but both the DOJ and the US Securities and Exchange Commission (SEC) have civil enforcement authority. The DOJ and SEC routinely co-operate in parallel crimi - nal and civil investigations of FCPA violations. The DOJ and SEC also bring civil lawsuits for violations of the FCPA against companies and individuals who aided and abetted or recklessly provided substantial assistance to an FCPA violator. As of 10 February 2025, the DOJ tem - porarily paused FCPA enforcement, with limited exceptions, while it reviews existing enforcement guidelines and existing investigations. The SEC has not taken any similar action but may also re-evaluate FCPA enforcement in the near future. In most US jurisdictions, there is no express pri - vate cause of action for giving or receiving cor - rupt payments. Nonetheless, allegations that an individual or entity received or provided corrupt payments may help to establish fraudulent intent in a civil lawsuit. Conspiracy to commit fraud Under both federal and state law, a conspiracy is an agreement between two or more people to commit an illegal act. To prove a conspiracy to commit fraud under federal law, a party must establish the elements of conspiracy and its underlying fraudulent purpose. The typical elements of a conspiracy to commit fraud are: • an agreement between two or more people to commit a fraudulent act; • an overt act in furtherance of the conspiracy; and • damages or injury resulting from the overt act.
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