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Ryan Pacyga Criminal Law
333 South Seventh Street, Suite 2850
Minneapolis, MN 55402
Business fraud may take several forms. It may involve fraud inside a business, business-to-business fraud, or business-to-consumer fraud. Each of these Minnesota business fraud types is covered in more detail here, followed by a discussion of how to deal with business fraud.
Minnesota Fraud Laws
Minnesota has a number of state and federal laws addressing fraud in the business context. These laws range from common law fraud to federal securities laws. Identifying the particular law applicable to your situation typically depends on the relationship between or among the parties. That is, was it fraud within the business, business-to-business fraud, or business-to-consumer fraud?
Fraud within a Minnesota Business
Fraud inside a business is done by someone within the business. Often, a business owner discovers that an employee, officer, or another owner of the business has been engaging in business fraud. Someone who was trusted by the business has betrayed that trust to benefit themselves.
If the person who engaged in fraud was an officer, director, employee, shareholder, or owner of a Minnesota business, the person will also be liable under Minnesota fiduciary duty laws. If the person was an independent contractor, the person may be liable for breach of contract or breach of the duty of good faith. In addition to laws that make fraud a legal within a Minnesota business, Minnesota has laws restricting fraud between parties in contracts or transactions.
Business-To-Business Fraud & Business-to-Consumer Fraud
When at least one party to a contract, sale, or purchase resides in Minnesota, Minnesota fraud law will it apply to that transaction. A number of Minnesota laws are applicable to such transactions including the Uniform Commercial Code, Minnesota blue sky laws, and Minnesota common law.
Examples of Minnesota Business Fraud
Examples of business fraud include consumer fraud, breach of contract, breach of warranty, fraudulent sale of a franchise, investment fraud, financial fraud, misrepresentation, nondisclosure, ownership disputes, shareholder disputes, partnership disputes, conversation of business property, breach of fiduciary duty, fraudulent advertising and marketing schemes, false representations, mortgage fraud, and real estate fraud.
In his article, An Unholy Trinity: The Three Ways Employees Embezzle Cash, the founder of the Association of Certified Fraud Examiners in Austin, Texas, Joseph T. Wells, states:
According to the 1996 Report to the Nation on Occupational Fraud and Abuse, a study conducted by the Association of Certified Fraud Examiners, embezzlement schemes such as Miano’s are both prevalent and incredibly costly. Also known as The Wells Report, the study concludes that the average company loses about six percent of its gross revenues to all forms of occupational fraud and abuse. That staggering sum, if multiplied by the gross domestic product of the U.S., would mean an annual cost of more than $400 billion. Embezzlement, along with fraudulent statements and other corrupt acts such as bribery and bid rigging, represent the principal ways employees defraud their organizations.”
How to Deal with Fraud in Minnesota
There are various ways to deal with business fraud depending upon the circumstances. For example, fraud between business owners will be handled much differently from fraud involving a company in a contractual relationship with your company.
The precise way in which you deal with business fraud should be determined by a careful analysis of the circumstances with an attorney experienced in Minnesota business fraud. If the person engaging in fraud is not aware that you have discovered the fraud, you will analyze the quickest and most effective ways to gather evidence of the fraud.
Some fraud is best resolved by reporting it to law enforcement, while other fraud may be more appropriately resolved through a discrete letter explaining the serious legal consequences that will result if the person fails to take immediate action as requested by the letter.
Approach to Business Fraud
When appropriate, attorneys will conduct a meticulous review of the facts to discover critical evidence and winning theories of recovery that have gained powerful results in many cases. When necessary, the attorneys will enlist the services of certified fraud examiners, business appraisers, forensic accounts, or other leading experts to uncover fraud, discover missing assets, and gather evidence vital to the resolution of claims.
Aside from a few prominent Minneapolis and St. Paul business fraud cases, most business fraud cases are resolved before trial through discreet settlements without publicity. However, cases that involve criminal prosecution for fraud often make news headlines.
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