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Fraud: deception, embezzlement, financial fraud

It is not just forgery of documents and money laundering that are typical charges in fraud cases, but the Public Prosecution Service also commonly makes accusations of deception or embezzlement.

Fraud: deception, embezzlement, financial fraud

In essence, deception is the intentional use of deceit to deprive another person of their money, property or a legal right through an illegal fraudulent act.

It is not always clear from the start whether a crime has been committed. Case law on this issue is highly casuistic, which should come as no surprise considering that it depends on the circumstances of a case whether or not actions can be regarded as deception. What is clear is that a single lie or a single misleading action is not enough to qualify as deception. Non-compliance with an agreement does not qualify as deception either. That is considered a civil matter (breach of contract).

For an act to qualify as deception, it must have been defined in Section 326 of the Dutch Criminal Code as a tissue of lies, an artful trick or the assumption of a false name or capacity. The Dutch Supreme Court [1] has ruled that a key common denominator of the different types of deception is that the alleged fraudster is looking to misrepresent the facts to another person through a specific, sufficiently serious form of fraudulent conduct calculated for advantage. It is up to the defence to perform a critical review to determine whether or not an act of deception was committed.

In addition, the victim must have been induced to surrender an item, whether it be money, property or a legal right, meaning that there is to be a relationship of cause and effect between the acts of deception and the surrender of the item or the money. This is highly factual in nature and the role of the victim is decisive. When exactly is a victim ‘induced to surrender an item’? And at what point should the victim have known better? Should they have looked into things more or have been more vigilant? This is where the defence has options.

Deception comes in many forms. Online fraud, such as phishing emails, is common nowadays, but misrepresentation of the facts in a subsidy application or insurance claim may qualify as deception as well. Financial fraud usually involves investment and bankruptcy fraud. In financial fraud cases, the facts are misrepresented to acquire a specific item or asset, for instance by providing incorrect information about an investment project or obtaining payments from a business based on sham contracts or through bogus firms. Each and every instance in which the facts are misrepresented with a view to acquiring a certain item can basically be considered an act of deception.

Embezzlement

Embezzlement refers to a form of fraud in which a person or an entity intentionally misappropriates the assets entrusted to them. An example would be not returning an item to its rightful owner after having rented it. For an act to qualify as embezzlement, there must be a fiduciary relationship between the parties involved. Besides the unlawful appropriation of the property, it must also be established that the property was placed under the control of the fraudster other than through a major offence (link to page in Dutch). The defence should be particularly alert to the latter as well as to the sequentiality of events.

Deception and embezzlement?

While deception and embezzlement may seem mutually exclusive at first glance, the Dutch Supreme Court has ruled that they can effectively co-exist in specific circumstances. [2]

Please do not hesitate to contact us if you are suspected of fraud, whether it concerns deception or embezzlement. Our specialists are here to help.

 

[1] Supreme Court, 20 December 2016, ECLI:NL:HR:2016:2892 (link to page in Dutch).
[2] Supreme Court, 10 April 2012, ECLI:NL:HR:2012:BV5575 (link to page in Dutch).

 

Fraud: deception, embezzlement, financial fraud

Embezzlement

Deception and embezzlement?

Contact our specialists

G.M. (Mariëlle) Boezelman

J.N. (Judith) de Boer

J.R.J. (Judith) Gijsen

L.M. (Luce) Smithuijsen

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