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The basics of financial fraud

While financial fraud has always existed, technology makes it easier to come up with new scams. There are several types of financial fraud that an individual in Miami, Florida, can commit.

Overview of financial fraud

Financial fraud is willfully deceiving a person or business to gain goods, money or services from another. The scammer commonly has access to information or tactics that the subject of the scheme does not, making them an easy target. Statistics show that consumers lost over $3 billion to financial fraud in 2020, but only around 15% of financial crimes get reported. There are many reasons victims may not report financial crimes, such as embarrassment.

When financial fraud gets committed against a business, it is often called a business tort. Criminal charges may occur at the state or federal level.

Types of financial fraud

A common type of financial fraud is ID theft, which is when a scammer steals financial information. They commonly use this information to open accounts with the person’s good credit or to withdraw funds for personal use.

Some scams involve investment and promise investors a high return, such as a Ponzi scheme. A Ponzi scheme depends on funding from new investors to pay the old ones, or it could fail.

Mortgage fraud includes several crimes that can be committed by lenders or borrowers. For example, some borrowers without good credit may use a straw buyer to qualify for a loan. Financial institution employees could attempt air loans, or creating a fake buyer and property, to increase profits.

Financial crimes often include stiff penalties, such as fines and jail terms. However, the prosecution has to prove several elements to bring a case against the defendant. If the evidence is weak, a defendant’s attorney might be able to get the charges reduced or dismissed.