FRAUDBASICS

The Many Faces of Fraud, Part Two

 


We continue to sharpen our focus on our search for white-collar criminals as we review the legal definitions of the principal types of fraud. 

In the March/April issue of The White Paper we reviewed the main fraud categories of misrepresentation of material facts, concealment of material facts, and bribery. In this issue we conclude with conflicts of interest, theft of money or property, theft of trade secrets or intellectual property, and breach of fiduciary duty. 

This article is excerpted from the Fraud Examiners Manual, 2.201-2.207, Third Edition Updated 2000-2001 ©2000 Association of Certified Fraud Examiners.

Conflicts of Interest 

Statutes in every state and the federal system (as well as common-law decisions in all jurisdictions) prohibit people from engaging in conduct that involves a conflict of interest. A conflict of interest may be prosecuted civilly or criminally. The criminal statutes vary widely and include prohibitions on public officers from accepting employment with government contractors or lobbying government agencies during specified time periods.

Elements of a typical civil claim for conflict of interest include:

  • an agent taking an interest in a transaction ...
  • that is actually or potentially adverse to the principal ...
  • without full and timely disclosure to and approval by the principal.

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