Crimes Against Business

CRIMES AGAINST BUSINESS: FORGERY AND FRAUD
"A bad forgery is the ultimate insult" (Jonathan Gash)

The world of business and/or commerce operates on the basis of documents (paper or electronic). It's been this way ever since the merchant class became literate, and documents took on the quality of expressing legal rights and obligations. In today's world, we prove important things by producing documents (e.g., birth certificates, drivers' licenses, titles, invoices, bills of sale). False documents represent a threat to social stability and order. They undermine confidence in the authenticity of documents.

Forgery and fraud offenses refer to a variety of criminal behaviors designed to cheat a person, a business, or government agency out of their money, goods, or services. This aspect of the criminal behavior -- cheating or deceiving -- is the resemblance between these offenses and property crime. Indeed, many states don't have separate fraud statutes; they include such crimes under theft or larceny by fraud statutes. Another aspect of fraudulent behavior is it's similarity to white-collar crime. Indeed, because it often involves the falsification of documents, it's a good example of this, but simple frauds aren't often committed by persons of high or respectable social status (which fits the definition of white-collar crime). Another aspect of forgery and fraud offenses is that they corrupt the very foundation of public administration and/or government regulation. Think about the harm done for a moment -- society is really the victim -- all the people who had a legitimate claim to money, goods, or services will now have to go without, with less, or burden society more to go with the same in order to make up for the losses incurred from those who had no legitimate right to the money, goods, or services. In many ways, forgery and fraud offenses are the hybrid of all hybrid crimes.

Although most crimes against business are distinguished by the means used to carry them out, forgery is a specific intent crime while fraud is a general intent crime. Forgery requires a rather unusual mental state which easily distinguishes it from other crimes of theft. With fraud, it's sometimes said that it must always be intentional, as distinguished from negligent, but there are so many different forms of fraud, spelling out so many different circumstances, that it's probably better to refer to fraud as requiring constructive intent.

Forgery is the false making or material alteration of a writing where the writing has the apparent ability to defraud and is of apparent legal efficacy with the intent to defraud.

1. False making -- The person must have taken paper and ink and created a false document from scratch. Forgery is limited to documents. There can be no such thing as a forgery of art or forgery of machine because these items are not written documents. "Writing" includes anything handwritten, typewritten, computer-generated, printed, or engraved.

2. Material alteration -- The person must have taken a genuine document and changed it in some significant way. It's the writing itself which must be false, not the document. This element is intended to cover situations involving false signatures or improperly filling in blanks on a form.

3. Ability to defraud -- The document or writing has to at least look genuine enough to fool people. Forgeries of completely ridiculous things, like titles to swamp land in Florida, deeds to land on the moon, or a license to kill, do not qualify as having the apparent ability to fool most people.

4. Legal efficacy -- The document or writing has to have some legal significance affecting at least another person's right to something, usually some property right, broadly defined to include intellectual property like the form of a signature. Legal significance is distinguished from social significance. A writing of social significance cannot be the subject of forgery; e.g., a letter of introduction. Similarly, if you found an old book by a famous author and wrote their signature inside the front cover to make it look like an autographed edition, you would not be guilty of forgery because this has social, and not legal significance. But, if you were to sell the autographed book at an auction, you would be guilty of false pretenses.

5. Intent to defraud -- The specific state of mind for forgery does not require an intent to steal, only an intent to fool people. The person must have intended that other people regard something false as genuine. A forgery is complete upon having created such a document with this requisite intent. No use need ever be made of the document nor does it ever need to be tried out or circulated by the offender ("Possession is 9/10ths of the law"). The test is whether anyone might have been defrauded.

Uttering a forged instrument is the passing or making use of a forged writing or document with knowledge of its forged nature. This is the more usual pattern -- to charge the offender with both forgery and uttering -- because the forgery is used to accomplish some other crime, like false pretenses, some other property offense, or something as simple as purchasing alcohol with a fake ID. Falsification of information on employment applications has also been held to involve uttering.

1. Passing or making use -- This is any putting into circulation a writing or document that involves forgery. Any form of material gain may be the motive, but generally financial gain is the motive, as in the common practice of passing a bad check. Motive is not the distinguishing factor, however. There must be some legal significance to the circulation.

2. Intent to defraud -- This is the same as intent to defraud under forgery law.

3. Knowledge of forgery -- This is held to exist even in the case of the person passing something without saying anything, like "This isn't my real name, or there might not be enough money in the balance to pay this, but can you cash the check anyway?" In other words, silence (when knowing about something unusual) qualifies as satisfying this element. Merely attempting to offer something as genuine which is suspected to be false qualifies as offering or transferring (i.e., uttering).

Bad checks are perhaps the number one crime problem in the United States. Every day, 1.3 million "bad checks" are passed, and there's no way for the law enforcement apparatus to keep up. Therefore, the U.S. has devised a rather unusual mix of criminal/civil law in this area, allowing businesses to let the person "make good" within a certain number of days (from 3-7 days) or else they are liable for up to triple the amount of the check.

Fraud consists of various deceitful means to convert or permanently deprive a person, business, or government agency of property, goods, or services. The statutory elements are usually the same as under the law of theft, although some states have separate fraud statutes that spell out the actus reus (like "bait and switch") more precisely. Fraud is always intentional (fraudulent intent), intentional by appearance (constructive intent), or intentional by inference from the act (general intent).

The investigation of fraud, like public order offenses, often requires law enforcement to engage in certain unethical practices, like infiltration, entrapment, and sting operations. The variety of fraud offenses is sometimes amazing, and constantly growing. They also vary in their levels of sophistication. Here's an alphabetical list of the more common frauds:

[definition:] Planned illegal or unethical acts of deception committed by an individual or organization, usually during the course of legitimate occupational activity by persons of high or respectable social status, for personal or organizational gain that violates fiduciary responsibility or public trust. (Proceedings of the Academic Workshop 1996; Morgantown, WV: National White Collar Crime Center)

Conspiracy:	White Collar Thefts:	Crimes @ Public Admin.:	Regulatory Offenses:	Cyber- Crimes:	Organized Crime:
Crimes of planning and organiz.	Embezzle- ment, extortion, forgery, fraud	Bribery, perjury, obstruction of justice	Labor, trade, manufacture, environment violations	Damage, alteration, threats, theft	Illicit services, infiltration

PRINTED RESOURCES
Albanese, J. (1999). Criminal Justice. Boston: Allyn & Bacon.
Gardner, T. & T. Anderson. (1996). Criminal Law. Minneapolis: West.
Samaha, J. (1999). Criminal Law. Belmont, CA: West/Wadsworth.
Skelton, D. (1998). Contemporary Criminal Law. Boston: Butterworth-Heinemann.

Last updated: July 08, 2006
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O'Connor, T. (Date of Last Update at bottom of page). In Part of web cited (Windows name for file at top of browser), MegaLinks in Criminal Justice. Retrieved from http://www.apsu.edu/oconnort/rest of URL accessed on today's date.