Two prominent American media companies and their owners are facing criminal charges brought by the Manhattan District Attorney’s Office in New York for allegedly defrauding their banks. IBT Media, also known as Newsweek Media Group, and Christian Media Corp (CMC) took out millions of dollars in loans to purchase computer hardware. But prosecutors allege that they funneled that money back into their own accounts, using it to fund their day-to-day operations. The banks who made the loans were repaid in full, so no one lost money. Still, IBT and CMC may be subject to criminal liability, which explains a lot about how fraud cases work.

If you have been charged with or are under investigation for a fraud-related offense in New York City, do not hesitate to contact a criminal defense attorney from Protass Law PLLC. Manhattan fraud lawyer Harlan Protass will guide you through the process, ensure that your rights remain protected and work to achieve the best possible resolution for you, even if it means a trial before a jury. To schedule a free consultation of your case, contact us today at (212) 455-0335.

Can I Be Charged With Fraud Even if No One Loses Money?

To secure a conviction on fraud charges, prosecutors (both in state and federal court) must prove beyond a reasonable doubt that you engaged in conduct with the purpose of defrauding an individual or group of people of property or services. Or, at least, that you conspired to do so. Thus, you can be found guilty of having committed fraud even if your plan didn’t work and even if your purported victims never lost any money.

The central focus of financial fraud prosecutions is the question of fraudulent intent, meaning whether you willfully attempted to deceive others and to gain at their expense. So, you cannot be found guilty of fraud charges if you caused someone to lose money but did so without the necessary fraudulent intent. By contrast, you can be found guilty of financial fraud charges if you acted with fraudulent intent even if no one lost any money.

In a word, a claim that no one lost money as a result of what you did (or didn’t do) is not a viable or legally cognizable defense to fraud charges. But a defense based on the absence of fraudulent intent is. Indeed, most individuals charged with a financial fraud offense defend themselves by asserting they did not act intentionally, and lawyers who defend those charged with fraud help their clients avoid convictions by demonstrating – to prosecutors or, if necessary, to a jury – that their clients acted in good faith in their business dealings, and that any misstatements they made were honest mistakes, unintentional omissions or not material.

How Does a Prosecutor Prove Fraudulent Intent?

It’s virtually impossible to prove what a defendant was thinking when he did what he’s accused of doing. So, in most cases, prosecutors try to prove what was going on in a defendant’s head by stringing together other evidence that they suggest jurors can rely upon in figuring out what a defendant was thinking. This sort of evidence, which does not directly prove any fact, but permits jurors to draw inferences of fact, is known as circumstantial evidence. And, in a typical financial fraud case, it often makes up the bulk of the evidence presented by prosecutors.

This isn’t to say that prosecutors always have to rely on circumstantial evidence to prove fraudulent intent. Rather, they often have direct evidence of intent in the form of written or oral statements – that is, e-mails or text messages written by a defendant or a recorded call in which a defendant’s voice is captured on tape discussing a scheme with others.

In the Newsweek case, it is unlikely that prosecutors will be rely on direct evidence of intent. Instead, they will attempt to prove fraudulent intent with circumstantial evidence. According to reports, prosecutors’ strongest piece of circumstantial evidence is the false information that the defendants purportedly provided to the banks from whom they obtained loans, which is highly suggestive of fraudulent intent. For example, they are alleged to have created a website for a fake auditor who, in turn, allegedly created false financial statements that were submitted to the banks to obtain the loans at issue.

A Jury May Be Reluctant to Convict When There is No Victim

Although prosecutors do not have to establish monetary loss to prove that a fraud occurred, the absence of victims could still disrupt a prosecutor’s case. Jurors are human being who are potentially susceptible to a “no harm, no foul” type of defense. So, in a case like the Newsweek case, the fact that the alleged fraud did not cause any monetary damages could influence the jury, potentially heavily. The defense team seems keenly aware of this argument – They are already framing their defense of Newsweek and CMC as an instance of government power abuse because the Manhattan DA’s office is pursuing a case in which no financial harm was suffered.

Call a Fraud Lawyer for Help Today

Fraud cases involving big money and big companies tend to dominate the headlines and give the impression that prosecutors are only interested in large-scale, complex schemes. But, in reality, even everyday people can be charged with fraud if prosecutors believe there have engaged in wrongdoing. If you are under investigation for or have already been charged with fraud, financial or otherwise, contact Protass Law PLLC at (212) 455-0335, or reach out online to schedule a free and confidential case consultation.