Fraud and extortion are serious offenses in California. A single allegation can result in significant consequences, interfering with professional, personal, and family life. They can also cost businesses large sums of money and ruin their social capital with important clients.
Fraud and extortion are serious accusations, and as a result, they need to be taken very seriously when a person is arrested or charged with these offenses as well as when a person is facing civil liability for these alleged offenses. Due to the dedicated nature in which civil and criminal prosecution for these offenses usually proceed and the complex nature of the underlying laws, professional assistance is often crucial to a positive outcome.
At Ivie McNeill Wyatt Purcell & Diggs, we understand how overwhelming a charge of fraud or extortion can be. Our criminal and white-collar crime attorneys have represented clients who were facing these offenses and allegations and have been able to secure positive outcomes on their behalf.
Reaching out to an experienced attorney quickly is crucial to defeating a charge or allegation of fraud or extortion. Any person facing these offenses can rely on our accomplished criminal and white-collar crime defense lawyers for legal representation and advice.
Fraud under California law is an umbrella term that describes various criminal acts that involve the use of deception or misrepresentation to secure illegal benefits. There are several types of acts that can amount to criminal fraud in California, which include:
- Check fraud
- Credit card fraud
- Tax Fraud
- Internet Fraud
- Identity Theft
- Health insurance Fraud
- Foreclosure Fraud
Check fraud occurs when a person writes bad checks or alters the dollar amount on an already existing check. The most common form of check fraud in California involves endorsing a check using another person’s name without their permission. Check fraud can also be committed by:
- Fabricating checks
- Altering the routing numbers on a check
- Changing the dollar amount on a check
There are certain elements a prosecutor must establish to secure a conviction for check fraud in California. These include proving that the defendant:
- Possessed, made, passed, used, or attempted to pass or use a false or altered check, note, bill, or other legal writing for the payment of money or property
- Knew that the document was false or altered
- Had the intent to defraud when they possessed, made, passed, used, or attempted to pass or use the document
If possession changed hands, the prosecution must also prove that when the defendant had the document in their possession, there was intent to pass it off or use it as a genuine document.
Credit Card Fraud
Credit card fraud occurs when a person dishonestly takes and uses another person’s credit card, debit card, or account information for personal benefits. A defendant may also be charged with forgery if they illegally gained access to a credit card that did not belong to them by using a fictitious name or signing the cardholder’s name.
Tax fraud is an act of intentionally trying to overcome or bypass the tax law to decrease one’s tax liability illegally. Types of tax fraud include:
- Tax evasion
- Failure to file tax returns
- Failure to pay employees payroll withholding tax
- Illegal source violations
- Falsifying books or records
- Sales tax fraud
- Claiming fake deductions
- Claiming fake dependents
- Overstating deductions
California law, concerning identity theft, deems it unlawful for a person to:
- Intentionally procure another person’s identifying information and use it for any unlawful purpose without that person’s permission.
- Obtain or retain possession of another person’s personal identifying information to commit fraud, without the person granting consent.
- Sell, transfer, or provide another person’s personal identifying information to commit fraud, without that person’s consent.
- Sell, share, or provide another person’s personal identifying information knowing that the information will be used to commit a fraudulent act.
California law states that an act done on purpose to secure an unfair or unlawful advantage or cause another person to suffer a loss establishes fraud. The first definition of identity theft above does not necessarily involve fraud but prevents using another person’s personal identifying information for an “unlawful purpose”. The second, third, and fourth definitions of identity theft mainly involve fraud.
Health Insurance Fraud
According to California law, it is unlawful to:
- Submit a claim for any healthcare service or procedure that was not used by the person making a claim;
- Submit fraudulent or false claims;
- Submit multiple claims for the same medical service;
- Bill a health insurance provider for services that were undercharged without billing for services that were overcharged; or
- Preparing a document to back up a fraudulent claim.
To sustain a conviction for health insurance fraud, the prosecution must prove beyond a reasonable doubt that the defendant:
- Knew that the claim was fraudulent or that a document prepared was intended to be used to submit a fraudulent claim;
- Had the intention to defraud.
California law states that it is unlawful for a foreclosure consultant (a person whose job is to prevent or postpone foreclosure sales) to do the following:
- Charge or collect compensation before the performance of any legitimate service he/she agreed to do on behalf of the property owner;
- Collect or charge excessive fees for his/her services;
- Take a lien on the property, request any other security as collateral for compensation, or develop any interest in the property;
- Collect money or property from a third party in relation to the services that the foreclosure consultant agreed to perform for the property owner without fully revealing the third party’s involvement to the property owner;
- Take Power of Attorney from the property owner (Power of Attorney is a document which authorizes someone to act on behalf of another person in business or legal matters); or
- Attempt to lead the owner into entering into a contract that doesn’t comply with all statutory rules and regulations.
According to California Penal Code section 518, extortion, also referred to as blackmail, occurs when a person makes a threat to apply injury or force to another person; accuse someone of a crime, or expose someone’s secret in a bid to obtain money or property or compel a public official to perform an official duty. If such a threat was made through a written letter or any other form of writing, the defendant may be charged with extortion by threatening letter. California Penal Code 523 PC.
Making a threat that demands a signature on a check or document that would “transfer property or create a debt, demand, or right of legal action, may amount to extortion of signature under California Penal Code 522 PC.
Elements of extortion by threatening or force
The following must be proved to secure a conviction for extortion by threat or force under California law:
- There was a threat to:
- Injure or force another or their property
- Accuse another or their family of a crime; or
- Expose a secret about a person or their family
- The threat was made with the intent to force the victim to forgo money, their property or to perform an official act
- The victim agreed to forgo money, their property or to perform an official act as a result of the blackmail
- The person gave out the money, property or performed the official act
Extortion by signature
The following elements must be proved to secure the conviction of a person for extortion by signature:
- Threats were made to:
- Cause injury or apply force against a person or that person’s property
- Accuse the person or their family of a crime; or
- Expose a secret about a person or their family
- The threats were made with the intent of obtaining a signature on a document that would transfer property or create a debt, demand, or right of action; and
- The victim signed the document
Extortion by threatening letter
The following elements are required before a person can be convicted of extortion by threatening letter:
- A threatening letter was sent or delivered to a person
- The following threats were made in the letter:
- A threat to injure a family member of such person
- A threat to accuse such person or their family of a crime; or
- A threat to expose the person’s secret or that of a family member
- The threats were made to get money, property, or make the person perform an official act.
Punishment for Fraud and Extortion
The offenses of fraud and extortion are often subject to vigorous prosecution in California. These offenses can carry significant consequences, and prosecutors are usually looking to secure the highest punishment available. The punishment for fraud and extortion includes the following:
Punishment for Fraud
Fraud offenses in California can attract high fines and lengthy prison sentences. Most of these crimes have specific penalties under the laws that define them. However, others are charged under general offense laws including:
- California’s theft laws
- Penal Code 470 PC (California’s forgery law)
- Penal Code 118 PC (California’s perjury law)
Most California fraud offenses are “wobbler” offenses. This means prosecutors may charge them as misdemeanor offenses or felony offenses. Whether the offense will be charged as a misdemeanor or felony can depend on several circumstances, including the facts of the case and the offender’s criminal history. Some fraud offenses in California are automatically charged as felonies.
Additionally, many fraud crimes can also be charged as federal crimes. This means the offender could be prosecuted for a fraud offense in state court and also be tried in a federal court, leading to increased penalties.
Generally, in California, fraud offenses are considered crimes of moral turpitude. As a result, being convicted of fraud may result in deportation or removal for legal residents or foreign nationals.
In addition, fraud offenses in California can lead to suspension or revocation of a professional license. Finally, the government may seize any money or property involved in the fraudulent activity.
Punishment for Extortion
Extortion is a felony crime associated with hefty fines and prison sentences. A person who has been found guilty of extortion, either extortion by threatening letter or extortion of signature, money or property, faces up to four years in state prison and up to $10,000 in fines.
Any person found guilty of extortion may face a sentence of two, three or four years in state prison and fined up to $10,000.
For cases that involve aggravated circumstances, such as extorting or attempting to extort a senior citizen or someone with mental impairment or physical disability, additional penalties may apply under section 525 of the Penal Code.
Defenses against charges of Fraud and Extortion
Although fraud and extortion are vigorously prosecuted, there are several defenses for the person charged. They include the following:
Defenses for Fraud
The following are defenses that can be used to secure freedom from fraud allegations:
- Lack of intent to commit a crime: A person who acted without criminal intent may defeat a charge of fraud. However, the facts brought in support of this defense must clearly show there was no intent to defraud.
- Insufficient evidence: Most cases of fraud are dropped due to a lack of compelling evidence. Any criminal case can be dismissed due to a lack of evidence.
- Good faith or belief: Where a defendant believes, in good faith, that they were acting legally, rightfully, and servicing legitimate business purposes, they may be able to counter a charge of fraud.
- Duress: A person forced or threatened with violence to act fraudulently can raise their lack of will as a defense to a charge of fraud. In such cases, the defendant will have the burden of proving they were forced to commit the fraudulent act under duress.
- Limitation of action: In some cases, California law restricts how long a prosecutor has to file for a charge of fraud. If the limitation period has passed, it can serve as a good defense.
- Disproving the fiduciary relationship: This is when your attorney successfully proves no fiduciary relationship of reliance or trust between the victim of fraud and the defendant.
- Mistaken identity
Possible Defenses against Extortion
A knowledgeable attorney who is versed in successfully handling fraud and extortion cases will effectively raise viable defenses against a charge of extortion. Some of the defenses that may apply here include:
- Consent: Where a victim consented to part with their property or money, and a lawyer shows they were not motivated by a threat, this defense can succeed. It could also include circumstances where a person performed an official act for reasons other than the defendant’s threat.
- No intent: If it can be proved that the defendant never intended to blackmail the victim into facilitating the exchange of property or money or that there was no intention to create fear or force, the charge may fail.
- False accusations: This involves showing that the allegations and facts put forward in support of the offense are false.
Get in touch with Ivie McNeill Wyatt Purcell & Diggs.
Any person arrested or charged with the offenses of fraud or extortion will require an experienced criminal defense lawyer’s services.
Accusations of fraud and extortion should be taken seriously and addressed immediately. By engaging an experienced attorney, defendants stand a better chance of securing a positive outcome.
At the law firm of Ivie McNeill Wyatt Purcell & Diggs, our criminal and white-collar crime attorneys are experienced in the knowledge and practice of criminal law in California. For assistance with understanding the rights available to individuals charged with these offenses, contact our attorneys or reach us online to schedule a free consultation.