Fraud

Fraud is usually classified as a non-violent, white-collar crime. Fraud laws cover a number of offenses in Illinois, but most fraud cases usually involve deceptive business practices or fraudulent insurance claims.

When a person files a false claim with the intent to mislead or trick the insurance company into paying out, the person could be charged with insurance fraud. Common insurance frauds include property insurance, such as house or automobile, life insurance, medical insurance and worker’s compensation.

The offense of fraud is covered under various sections in the Illinois Criminal Code. For example, 720 ILCS 5/46 covers insurance fraud while 815 ILCS 505 covers consumer fraud and deceptive business practices.

A person commits insurance fraud when he or she knowingly and through deception gains control over the property of an insurance company or self-insured entity by making a false claim on any insurance policy.

Consumer fraud is committed when an individual or business knowingly sells goods or services to another through deceptive practices. Deception includes misrepresentation, failure to inform the buyer of contract terms, refusal to honor any valid notice of cancellation or using coercion to influence the buyer to complete the transaction.

Seller’s refusal to honor any terms that were agreed upon at sale or knowingly misrepresenting information to the buyer can also be charged as fraudulent practices.

The punishments for fraud are dependent on the value of money in question. Fraud involving property that is less than $300 is charged as a Class A misdemeanor, which is punishable by up to one year in prison.

Where the value in question is more than $300 but less than $10,000, it can be charged as a Class 3 felony punishable by 2 – 5 years in prison.

If the value of the property obtained through fraud is $10,000 to $100,000, the offense can be charged as a Class 2 felony, punishable by 3 – 7 years in prison.

If the value of the property obtained is more than $100,000, the offense can be charged as a Class 1 felony, punishable by 4 – 15 years in prison.

A person convicted of fraud will also be required to repay the insurance company for damages. The courts may also order payment of additional fines up to $25,000.

Fraud charges may be elevated to aggravated fraud where a person commits fraud against

• An elderly person
• A person with a disability
• A state or federal institution

In the case of insurance fraud, the charges may be elevated to aggravated fraud if three or more incidents of fraud occur within a period of 18 months.

Aggravated fraud charges increase the Class of felony which increases the prison term.

Insurance fraud is categorized on the basis of hard or soft fraud. Hard fraud is carried out by criminals or individuals looking to scam their insurer where they deliberately damage their own property or fake an accident, injury or theft to get money out of their insurer.

Soft fraud occurs when people with a genuine injury or accident exaggerate their claims to get a higher payout from their insurer.

In a recent case, the Attorney General announced conviction and sentencing of two Illinois residents in a medical defrauding scheme.

Jeanie Akamanti 59, and Rene Cook 69, had submitted fraudulent time sheets to the Department of Human Services in order to receive payments for Personal Care Assistants. The department was investigating a number of people on its records after they learnt that people were misusing the system to claim additional benefits.

The investigations revealed that Rene Cook, who was also a care assistant, had falsely claimed to provide home services to Akamanti.

Both the defendants had pleaded guilty to the charges. Jeanie was sentenced to 4 years in prison while Rene was sentenced to 2 years. Jeanie was also ordered to pay restitution to the department for $71,852.

Consider a practical example in order to understand insurance claim fraud better. Let’s say your car gets stolen which is covered by theft insurance. You go to file a claim but can’t recall the exact miles on your car. You put down the figure as 60,000 miles but the car actually had 100,000 miles on it.

The insurance company determines the value of your car based on the information you provide and hand you the payout. Later that week, the police recover your vehicle and it is taken in by the insurance company. The insuring company realizes that the miles on the car are much higher than your claim.

The company decides to take you to court on account of fraud.

In a case like this, you can argue that the information you provided to the insuring company was given on good faith. A good defense team can successfully argue on this defense line to get the case dismissed.

A number of defenses are open for people and businesses accused of fraud. While the specific defense that would work best is dependent on the case, four commonly used defenses are outlined here.

The first is to argue from lack of intent or knowledge about defrauding another person. This can be used when there is compelling evidence that misrepresentation took place. The defendant may argue that he or she believed that correct details about contract or insurance claim were filed with the aggrieved party. The burden of proof lies on the prosecution to show that the defendant acted in bad faith or intention to deceive.

Another defense is to question the evidence. In a case where the prosecution relies on witness testimony or incomplete evidence, the defendant may bring the validity of the evidence into question.

The defendant may also challenge the charge of fraud itself. In case of consumer fraud for example a defending business would need to show that they clearly communicated all terms and conditions to their customers at the time of purchase.

If the defense team can show that the business took all reasonably expected measures to convey correct information to the customer, the judge may dismiss the case as negligence on the part of the customer.

Finally, the last option available for defense is an admission of mistake. This is quite different from a plea bargain which is treated as an admission of guilt. An admission of mistake shows the court that the defendant is acknowledging how their actions may have led to misrepresentation but do not acknowledge that there was an original intent to deceive.