Committing Fraud by Obtaining a Financial Advantage

If you by deception or dishonestly obtain financial advantage from another person, or cause another person any financial disadvantage, you can be found guilty of the offence of fraud.

The maximum penalty for this offence in NSW is 10 years’ imprisonment.

While the maximum is reserved for the most severe of fraud offences, the court considers fraud to be a serious matter and periodic detention or a shorter term of imprisonment are possible penalties for lesser offences, depending on the circumstances of your individual case.

In order for you to be convicted of fraud, the prosecution must prove that you:

• Obtained a financial advantage or caused a financial disadvantage; and
• That the financial advantage or disadvantage was obtained as a result of a deception or act of dishonesty.

The legal definitions

The law has a definition for obtaining a financial advantage that is more than just its natural meaning.

It includes obtaining a financial advantage for yourself, or inducing another person to do something that results in you obtaining a financial advantage.

The financial advantage does not have to be permanent, and can be temporarily obtained.

For example, if you knock on someone’s door pretending to be a charity and asking for a donation from the homeowner, and the homeowner gives you money, then according to the law you obtained a financial advantage.

Other more complex examples of fraud include the misuse of credit cards or Cabcharges, unauthorised computer access, counterfeiting documents, providing false information, and identity theft.

Similarly, there is a definition for causing a financial disadvantage that is more than just its natural meaning.

It occurs when you cause a financial loss to another person, or when you induce another to do something that causes a financial disadvantage.

Element of dishonesty or deception

There must be an element of deception or dishonesty in the act. If you have the best of intentions, then you can’t be found guilty of fraud.

With the charity example, if the charity was in fact real, then you are inducing another and causing a financial advantage, but your honest intention is to pass the money on to a charity.

Essentially for you to have committed a fraud, there must be an element of dishonesty on your part, not acting truthfully, or acting in a way that deceives the person from your true intentions.

Dishonesty has a new definition in law.

Previously, it meant dishonest according to the standards of ordinary people.

Now, you also have to know that the act was dishonest in order to be found guilty.

This can be relatively easy to prove as a matter of logic.

In the charity example, collecting for a fake charity is plainly dishonest.

The prosecution could probably not only state that such an act was dishonest according to standards of our community, but could also easily say that it was reasonable and you knew it.

But what if you acted in a way at work that caused a financial disadvantage – such as incorrectly entering data into accounting books which caused a loss to the company?

Perhaps ordinary standards of the community knew the way in which the data was entered was wrong, but because you did not know it was wrong, it is not dishonestly done.

On the other hand, if your boss found out how you were entering the data and advised you it was wrong, and you then continued knowing it was wrong, causing financial loss to the company, those later acts are dishonestly done by you and amount to fraud.

You can also either intend this behaviour, or be reckless about it.

Put simply, recklessness is when you may not have intended the deception at the start, but you could see the person was being deceived somehow and you continued with that behaviour regardless, and in the end obtained a financial advantage.

A tidy example of this offence of fraud by obtaining financial advantage is if you steal an item of clothing from a store.

A few days later you return the item to the store but you are issued a full refund.

You have essentially deceived the store into believing you bought the product and you obtained a financial advantage by inducing the person into giving you a full refund.

Ultimately it is the prosecution that must prove beyond reasonable doubt the elements of fraud before you can be found guilty of the offence.

However, it is a serious crime, this area of law is complex, and the penalties on guilt can be imprisonment.

If you are charged with fraud, it is a good idea to speak with a criminal lawyer and seek expert advice and strong representation.