Financial fraud is a serious issue that affects individuals, businesses, and the economy as a whole. In Florida, as in other states, financial fraud can take many forms, and when the fraud involves civil claims, the victims may seek redress through civil litigation.
If you’re looking for professional litigation assistance, contact me, Attorney Scott D. Hirsch. At Scott Hirsch Law Group, PLLC in South Florida, we bring extensive experience to litigating diverse financial fraud cases. Here’s a closer look at the types of fraudulent activities, their connection to civil litigation, and the potential outcomes.
Mortgage Fraud
Mortgage fraud is a widespread issue in Florida, given the state’s real estate market and its vulnerability to domestic and international investors. Mortgage fraud occurs when individuals or entities intentionally misrepresent or omit material facts when obtaining a mortgage loan. Mortgage fraud typically comes in two forms:
Fraud for housing: This type of mortgage fraud usually occurs when a borrower provides false information on a mortgage application to secure financing for a property purchase. Common fraudulent activities include inflating income, misrepresenting employment status, and omitting debts or obligations.
Fraud for profit: This form of fraud involves multiple parties, such as lenders, real estate agents, appraisers, and borrowers, working together to engage in deceptive practices to obtain financial gain. This can include inflating property values, falsifying appraisals, or creating fictitious buyers.
In civil litigation, mortgage fraud claims typically center around the breach of contract, fraudulent misrepresentation, or civil conspiracy. Plaintiffs may sue for damages, including the return of funds obtained through fraud or compensation for any financial harm caused by the fraudulent activities.
Securities Fraud
Securities fraud refers to the illegal act of manipulating the stock market or misleading investors regarding the value or safety of a security. This is a significant concern in Florida, especially in financial markets and investment opportunities. Some common types of securities fraud include:
Insider trading: This occurs when individuals with access to non-public information about a company use that information to trade the company’s securities for profit.
Ponzi schemes: A Ponzi scheme is an investment scam where returns to earlier investors are paid using the capital of newer investors rather than from profit earned by the operation of a legitimate business.
Misrepresentation or omissions in securities offerings: When a company or individual provides false or misleading information about an investment opportunity, they can be held liable under securities laws.
In civil litigation, victims of securities fraud may pursue lawsuits under both state and federal securities laws, such as the Florida Securities and Investor Protection Act (FSIPA), the Securities Act of 1933, and the Securities Exchange Act of 1934. Civil suits for securities fraud often involve claims for damages, including financial losses sustained due to the fraud.
Identity Theft
Identity theft is a common and devastating form of financial fraud. It occurs when an individual’s personal information, such as Social Security numbers, credit card details, or bank account information, is stolen and used to open accounts, make fraudulent charges, or even drain existing accounts.
While criminal prosecution is often involved, victims can also pursue civil litigation. In civil lawsuits, plaintiffs may file claims against the perpetrators or against institutions that allowed the fraud to occur (such as banks or credit agencies) under theories of negligence, fraud, or breach of privacy to seek damages.
Credit Card Fraud
Credit card fraud occurs when someone uses another person’s credit card information without authorization to make purchases or withdraw money. It can happen in a variety of ways, including through physical theft of a card, hacking into a credit card account, or through fraudulent online transactions.
In Florida, victims of credit card fraud may file civil lawsuits against the fraudsters or third parties that facilitated the fraud, such as merchants who failed to implement sufficient security measures or financial institutions that didn’t provide adequate safeguards.
Common legal claims may include negligence, breach of contract, and violations of consumer protection laws. Damages in these cases can include the amount of money stolen and any costs incurred.
Insurance Fraud
Insurance fraud is another common form of financial fraud in Florida, in which individuals or companies deceive insurance companies to receive payments or benefits they aren’t entitled to. This type of fraud can involve a range of deceptive practices, including:
False claims: Making false claims about property damage, personal injury, or loss to collect insurance benefits.
Exaggerating claims: Overstating the extent of damage or loss to increase the payout amount.
Premium fraud: Fraudulently misrepresenting information to obtain lower insurance premiums.
Insurance companies are often vigilant about detecting fraud, but when they fail to act or engage in fraud themselves, consider civil litigation. Affected individuals or entities can file lawsuits to recover losses from fraudulent activity. Florida's laws, including the Florida Insurance Code, may be invoked to seek penalties or damages.
Bankruptcy Fraud
Bankruptcy fraud is a significant issue in Florida, especially considering the number of individuals and businesses who file for bankruptcy protection each year. Bankruptcy fraud occurs when someone abuses the bankruptcy system to avoid repaying legitimate debts or to defraud creditors. Common examples include:
Concealing assets: Hiding assets or income from the court or creditors to prevent them from being included in the bankruptcy proceedings.
Filing false information: Providing false statements, including falsifying income, debts, or other financial details, on bankruptcy petitions.
Abusive bankruptcy schemes: Engaging in schemes such as multiple filings or fraudulent discharge petitions to evade debt obligations.
In civil litigation, creditors may pursue claims for damages if they can prove that bankruptcy fraud occurred. In addition to damages, the court may impose sanctions or penalties. Creditors may also seek to have the debtor’s bankruptcy case dismissed or the discharge of their debts denied by the court.
Tax Fraud
Tax fraud is a major concern in Florida, as it involves illegal practices designed to avoid paying taxes. Some common forms of tax fraud include:
Underreporting income: Failing to report all income earned to the IRS or state tax authorities.
Claiming false deductions: Falsifying deductions to reduce taxable income, such as inflating business expenses or claiming non-existent dependents.
Tax evasion schemes: Engaging in schemes to hide income or assets in offshore accounts or through sham transactions.
Tax fraud is both a criminal and civil offense. Victims, including state and federal tax authorities, can file civil suits to recover unpaid taxes and penalties. Civil claims in tax fraud cases may also involve restitution for damages caused to the defrauded or claims against financial professionals who assisted in the fraudulent activities.
Consumer Fraud
Consumer fraud is a broad category that encompasses various fraudulent schemes aimed at deceiving or defrauding consumers for financial gain. In Florida, common types of consumer fraud include:
False advertising: Companies that deceive consumers through false or misleading advertising about their products or services.
Deceptive trade practices: Engaging in unethical business practices, such as misrepresenting a product’s quality or failing to honor warranties.
Pyramid schemes: Encouraging individuals to invest money into a scheme that primarily compensates participants for recruiting others, rather than for the sale of goods or services.
Consumers in Florida who are victims of fraudulent practices can pursue civil lawsuits under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). Legal claims may include damages, statutory penalties, and injunctive relief to prevent further fraudulent practices.
Contact Us Today
Financial fraud poses serious challenges for individuals and businesses throughout Florida and the United States. That’s why our firm based in Coconut Creek, Florida, offers personalized representation to clients nationwide. Contact Scott Hirsch Law Group, PLLC for a free consultation to get started with your case.
