Can There Be Fraud if No Money is Lost?
That is the subject of our February Topic of the Month and the question posed by an article from the New York Times from last October:
The Challenge With Prosecuting Newsweek’s Former Owner for Fraud: There Were No Losses
"To prove fraud, prosecutors must show the defendants engaged in “a scheme constituting a systematic ongoing course of conduct with intent to defraud more than one person” of property with a value in excess of $1,000.
The key element in these types of cases is proving fraudulent intent. If the defendants can show they acted in good faith and did not try to deceive anyone, then they cannot be convicted of fraud."
The charges against these media companies allege the companies obtained loans from banks to purchase high-end computer servers, but instead funneled the funds back to accounts to make payments on other loans to maintain their credit profile. They also provided false information to the banks, including financial statements audited by a fictitious accountant. But in this case, the loans were repaid and the banks did not lose any money.