Financial fraud

“ Fraud in law consists in acts which, though not fraudulently intended, yet as their tendency is to defraud creditors, if they vest the property of the debtor in his grantee, they are void for legal fraud, which is deemed tantamount to actual fraud, full evidence of fraud, and fraudulent in themselves, the policy of the law making the acts illegal. ”

“ It is good between the parties, and good as to all the world, unless it is liable to impeachment for fraud; which is of two kinds, fraud in fact, and fraud in law. The first is an intention or design to defraud, delay, injure or prevent creditors from receiving their just debts, by a sale, deed, settlement or agreement, by which the property of a debtor is withdrawn, or attempted to be withdrawn, from their reach. ”

“ The burden is upon the attacking creditor, but where the fraudulent intent on the grantor's part is made out, and the circumstances are suspicious, the purchaser must show that he has paid value; and, if he does, it must then appear that the purchaser had notice of the fraud. ”

“ Fraud is deception; it is inducing the other party to believe something which is not true, and, by inducing him to believe that, influencing his action. The ordinary way in which fraud is manifested is by misrepresentations. A purchase or sale of stock or of goods may be induced by fraud. A loan may be obtained from a bank by fraud, that is, by misrepresentation of material facts which influence the other side to act. ”

“ That, 'as respects creditors, the law requires of one, who has been drawn by fraud into the purchase of stock, that he shall be guilty of no negligence or want of reasonable care in discovering the fraud, and, on discovering it, promptly repudiating the purchase. ”

“ But before we can say that it is a fraud in law, to expend $5000 in furnishing a house costing $13,000, and the establishment to be supported by the income of an investment of $40,000 in productive funds, we must be satisfied, that it is, at the first blush, an extravagant and unwarranted expenditure under all the circumstances in evidence, and to an extent indicating some fraudulent or other motive unconnected with the fair execution of the contract, of which we are not satisfied ”

“ The promise not to assign with preferences against the bank does not of itself avoid such an assignment for fraud.
'It is claimed, however, that the deed is fraudulent and void on its face, (1) because it appropriates partnership assets to the payment of individual debts in preference to the debts of the partnership; and (2) because of the peculiar provision which is made for bidding by the creditors of the second class at any public sale that may be made of the assigned property. ”

“ The defendants insist that it was made with the fraudulent purpose, on the part of the vendors, of cheating, hindering, and delaying their creditors, and that the vendees either intended by their purchase to aid in accomplishing that result, or, at and before their purchase, were chargeable in law with notice of the fraud designed by the vendors. It is unnecessary to set out all the facts which, according to the bill of exceptions, the evidence tended to establish. ”

“ Contrary to the majority, I do not read the Court of Appeals' en banc opinion as holding that either § 206 (1) of the Investment Advisers Act of 1940, 54 Stat. 847 (prohibiting the employment of 'any device, scheme, or artifice to defraud any client or prospective client') , or § 206 (2) , 54 Stat. 847 (prohibiting the engaging 'in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client') , is confined by traditional common law concepts of fraud and deceit. ”

“ This fraud did not spend itself with the execution of the contract. Its taint entered into every swollen estimate which was the basic cause for payment of every dollar paid by the P.W.A. into the joint fund for the benefit of respondents. The initial fraudulent action and every step thereafter taken, pressed ever to the ultimate goal payment of government money to persons who had caused it to be defrauded.
Government money is as truly expended whether by checks drawn directly against the Treasury to the ultimate recipient or by grants in aid to states. ”

“ But we are not. To obtain money was the sole object of this fraud. The use of the mails was crucial to the total success of the fraudulent project. We are not justified in chopping up the vital banking phase of the scheme into segments and isolating one part from the others. That would be warranted if the scheme were to defraud the collecting bank. ”

“ It is the settled doctrine of this court that 'fraud' in the act of congress defining the debts from which a bankrupt is not relieved by a discharge in bankruptcy means 'positive fraud, or fraud in fact, involving moral turpitude or intentional wrong, as does embezzlement, and not implied fraud, or fraud in law, which may exist without the imputation of bad faith or immorality.' Neal v. ”

“ Cases are also to be found in the books where transfers, made by shareholders in anticipation of a bank's insolvency, to irresponsible persons, have been held to be a fraud on the statute, and inefficacious to relieve the original holder from liability. ”

“ This instruction was certainly correct, if the 66th section of the revenue collection act of 1799, ch. 128, now remains in full force and unrepealed; for it can never be permitted, that a party, who perpetrates a fraud upon the custom-house, and thereby enters his goods upon false invoices and false valuations, and gets a regular delivery thereof upon the mere payment of such duties as such false invoices and false valuations require, can avail himself of that very fraud, to defeat the purposes of justice. ”

“ In determining whether further regulations are reasonably necessary to prevent frauds against our revenue it is not conclusive, at least, to say that frauds against the revenue under the existing system have not been discovered. The question is, Are the regulations such as to provide proper safeguards against fraud, or are they such as to make fraud easy to those who have the disposition to commit it? ”

“ If so grave a condemnation is to be passed on those who lend trust-money to speculators, as well as on the speculators who borrow it, what shall we say of the still more delinquent class who obtain loans by fraud—who not only pawn other men’s property when obtained, but obtain it under false pretences? For how else than thus must we describe the doings of those who raise money by accommodation-bills? ”

“ The fraud, thus developed, was accomplished at the time by means of false certificates of the receipt of the purchase money by the receiver, which were given by him in the usual way, as the entries for the several tracts of land were made at the register's office, and also by entering and keeping the accounts with the government the same as if the money had been actually paid as fast as the lots were entered. The monthly or quarterly returns to the proper department would thus appear unexceptionable, and the fraud concealed until payment of the balances should be called for by the Government. ”

“ As an initial matter, I note that §17 (a) (2) does not require scienter, so the maker of the statement may still be liable under that provision. Aaron, supra, at 695–697. Moreover, an ongoing, “egregious” fraud is likely to independently constitute a primary violation of the conduct-based securities laws, wholly apart from the laws prohibiting fraudulent misstatements. ”

“ I've hated fraud as I hate all bad economy; I've no more patience with it than a bull with a red rag. Fraud is fraud; it's waste, it's wantonness, it's chaos; and I shall never give it the go-by. When I catch it, I shall hold it fast, and call all honest men to see how vile and drivelling a thing it is!"
Guest sat rigidly fixed, with his eyes on the carpet. "Do you expect to get your money?" he finally demanded.
"My money be hanged! I expect to let people know how they may be served if they intrust their affairs to you! A man's property, sir, is a man's person. ”

“ The sixty-sixth section limits the forfeiture to the case of fraud in making up the invoice prices below the actual cost of the goods, but leaves the time and place of detection unrestricted. Under this section, whether the discovery of the fraud be made by the custom-house officers while the goods are passing inspection, or afterwards, is immaterial. ”

“ I am of opinion, that, where an agent of an existing corporation procures a subscription of additional stock in it by fraudulent representations, the fraud can be relied on as a defence to a suit for the unpaid instalments, when suit is brought by the corporation; and that if the stockholder has in reasonable time repudiated the contract, and offered to rescind before the insolvency or bankruptcy of the corporation, the defence is valid against the assignee of the corporation. ”

“ Measures were taken to pursue the offender, and as far as possible to secure the bank by attachments upon his property, which is supposed to be considerable. For the present, we forbear all comment, except so far as to remark, that we look upon this atrocious fraud but as the natural fruit of that system of Whig measures which has cumbered the land with mushroom banks, filthy rags, and swarms of scrub aristocrats in the shape of presidents, cashiers, directors, and clerks. We may speedily expect to hear of many more Whigs following the example of our absquatulating Cashier. ”

“ Was it to mislead him by holding out false hopes of consummating an arrangement by which his cotton-tie could be introduced into the market, and was this in order to secure the defendants themselves against competition? Deceit in effecting such a purpose lay at the basis of the action. But how can such a purpose by shown when it has not been avowed? Actual fraud is always attended by an intent to defraud, and the intent may be shown by any evidence that has a tendency to persuade the mind of its existence. ”

“ The right not to be led by fraud to change one's situation is anterior to and independent of the contract. The fraud is a tort. Its usual consequence is that, as between the parties, the one who is defrauded has a right, if possible, to be restored to his former position. ”

“ When a forfeiture has been incurred by reason of a fraud, not even the secretary of the treasury and collector of the customs are authorized to remit or mitigate it, much less the appraisers and other subordinate officers of the collection of the revenue. ”

“ There was no evidence of fraud, unless the facts which have been referred to justify the inference of fraud. We are at a loss to understand how fraudulent conduct can justly be imputed to a pledgee when it appears that whatever was done in executing the power of sale was on e in full compliance with the terms of the pledge, and when there is no evidence that any unconscionable advantage was taken of the pledgeor or his creditors. ”

“ Acts of the officers, honest or dishonest, in the management of the corporation, would be among the most common causes of a change in value. The defendant, if he fraudulently induced the plaintiff to keep his stock, took the risk of all such changes. The loss to the plaintiff from the fraud is as direct and proximate, if he was induced to hold his stock until an embezzlement was discovered, as if the value had been diminished by a fire which destroyed a large part of the property of the corporation, or by the unexpected bankruptcy of a debtor who owed the corporation a large sum. ”

“ Imposing exemplary damages on the corporation when its agent commits intentional fraud creates a strong incentive for vigilance by those in a position "to guard substantially against the evil to be prevented." ”

“ Intention to defraud the government is not imputed, either to the corporations or to the plaintiff, unless the investment, in view of the circumstances, and the refusal of the plaintiff to add the proportional amount of the same to his list of annual gains and profits, constitute such fraud by implication of law; but the defendant contends that the plaintiff was required by law to pay the regular income tax on such proportion of the entire net profits made by the two companies as his stock bore to the whole stock of the corporations. ”

“ A court of equity will not stop half-way in the investigation of a fraud which is quite apparent, to give one of the parties to it affirmative relief at the expense of the other. In such cases better is the condition of the defendant.
It is also argued that the fraud was against the creditors of the company, and the assignee can pursue the party who defrauded them. ”

“ The result is well known; and it is believed that it is not too strong language to assert that there are no species of fraud and evasion of law, which the ingenuity of dishonest corporations has ever devised, which have not been practiced under this act. ”

“ If, as the evidence had some tendency to show, they actively participated in the fraud, their position is even worse.
It is consonant neither with good morals nor sound sense to hold that one may take a mortgage upon the property of another, which he knows to have been fraudulently acquired, and to which the purchaser has no valid title, whether the vendor elect to pursue the purchaser by a retaking of the property, or by an action for the price and an attachment of the property to secure the debt. ”

“ A case may be supposed, however, where the seller fraudulently retains his title, and here the buyer's creditors may seize the goods as if the title were in the buyer. Thus it is a fraud to make a conditional sale of goods to a person who intends, and who is understood to intend, to sell the goods again. The reason why it is a fraud is because it is inconsistent on the part of the wholesaler to say, "I retain title to the goods until paid for, yet I give them to you, knowing that you are going to put them in your stock of trade." ”