False Pretenses

views updated


False representations of material past or present facts, known by the wrongdoer to be false, and made with the intent to defraud a victim into passing title in property to the wrongdoer.

Suppose Reba tells Alberto that a synthetic gemstone is a valuable diamond that she will give to Alberto in exchange for Alberto's truck. Alberto thinks this sounds like a good deal and transfers title of his truck to Reba. If Reba knows that the stone is a synthetic gemstone, she is guilty of false pretenses.

A truthful statement that causes someone to give up rights in property does not constitute criminal false pretenses; a representation must be false at the time the potential victim is about to pass title. If the representation was false when made, but changing circumstances made it true by the time the victim passed title, false pretenses did not arise. Also, if the alleged wrongdoer thought his or her statement was a lie, but the statement was in fact true, the crime of false pretenses was not committed. For example, if Reba thinks the stone is synthetic, but it actually is a diamond, her statement to Alberto claiming that it is a diamond is true (even if she doesn't know it). Therefore, Reba is not guilty of false pretenses.

A false representation can be a verbal, written, or implied statement. For example, if a statement suggests that the wrongdoer has the authority, power, or ability to perform what is represented, but the wrongdoer does not have that authority, power, or ability, the implication is a false representation.

A false representation can also occur when the wrongdoer says or does nothing. This is the case when someone knowingly conceals information that the victim should be made aware of. For example, if Reba tells Alberto that she will trade her valuable sports car for Alberto's truck, knowing that the sports car does not have a motor, she must tell Alberto about the missing motor or her nondisclosure will be a false representation.

The false representation supporting false pretenses must be about a material fact. A material fact is one that would be important to the victim in his or her decision-making process. For example, it is important for Alberto to know that Reba's sports car does not have a motor, because without a motor, the car is less valuable and cannot be driven. It is less important for him to know that the tire pressure is low, because that fact does not affect the value of the car, and thus Reba would not be guilty of false pretenses for failing to mention that the tires need air.

The representation must concern a past or present fact; a false representation of a future fact does not constitute criminal false pretenses. A car salesperson who claims that a car will run great in ten years is representing a future fact. An exaggerated expression of opinion, like a sales pitch, may not be entirely true but is not a criminal false representation. However, a promise about the future that, at the time it is made, the promisor does not intend to keep, is a criminal false representation of a material fact. If the salesperson promises to buy the car back if it is not running great in ten years, but he does not intend to satisfy the promise, the false promise is a false representation.

When a representation is in fact false, the wrongdoer must know it is false. If an alleged wrongdoer believed the statement was true— whether that belief was reasonable or unreasonable—he or she did not commit false pretenses because they did not knowingly make a false representation. If Reba believes that the synthetic stone is in fact a diamond, then she does not commit false pretenses when she tells Alberto it is a diamond. However, if the wrongdoer is not sure or does not care if a statement is false, and makes the statement with reckless indifference for truthfulness, the statement is a false representation.

It is important to determine why the wrongdoer told the lie. The wrongdoer must intend the false representation to defraud the victim. Intention to defraud the victim exists where the wrongdoer planned to unjustly acquire title to the victim's property by means of the untruth. That is, the wrongdoer will have planned the false representation in advance and will have calculated to deceive the victim into transferring title by way of the false statement. Telling an untruth, in and of itself, will not subject the liar to prosecution for false pretenses.

The victim of false pretenses must have relied on the false representation. The false representation must be the reason, or one of the reasons, that the victim passed title to the wrongdoer. It does not matter how gullible or naive the victim would seem for believing the representation; the wrongdoer is still guilty. On the other hand, to rely on a false statement, the potential victim must believe it to be true. An individual who does not believe a false representation but passes title to the statement maker anyway does not rely on the representation, and the statement maker will not be guilty.

Conviction of false pretenses requires the wrongdoer to obtain more than possession of the property; the wrongdoer must also obtain title to the property. A wrongdoer who gains possession of property but not title to the property is guilty of a different crime often referred to as larceny. For example, a wrongdoer who breaks a truck's window and hot-wires the truck acquires only possession of the truck and is guilty of larceny.

Other laws may require the delivery of the possession of property in order to complete a transfer of title. In such cases, the wrongdoer may have to obtain title as well as possession of the property to be guilty of false pretenses. Imagine that the laws of the state where Alberto and Reba live require a party to take possession in order to obtain a valid transfer of title. Alberto signs the paper title over to Reba, but before Reba drives the truck away, Alberto figures out the scam, and Reba runs off. No transfer of title has occurred, because the state's laws require possession in addition to paper title, and Reba is not guilty of false pretenses.

Title does not have to pass directly to the wrongdoer. A wrongdoer can cause a victim to pass title to someone other than the wrongdoer and still benefit from the transfer. A transfer of title to a family member or a corporation in which the wrongdoer has an interest constitutes a transfer of title for purposes of false pretenses.

In many states, crimes relating to theft of property, including false pretenses, have been combined and consolidated into one offense. Statutory consolidation usually does not change the essential elements of false pretenses, but instead ensures smoother prosecution so that wrongdoers cannot avoid criminal consequences by finding legal loopholes to slip through.

A number of crimes are very similar to false pretenses. For example, when an individual attempts to pass a bad check, there is intent to defraud because he or she is attempting to obtain money or property by issuing checks from an account that does not exist or has insufficient funds. mail fraud is a crime reasonably calculated to deceive victims, and accomplishes the deception by using the U.S. mail. A scheme to defraud using the mail is actionable whether or not any false representation was made. securities registration laws prohibit a wrongdoer from knowingly furnishing false information in connection with the sale or registration of securities. Forgery can be likened to false pretenses in that it is a crime where the genuineness of a document is falsely represented.

In addition to being criminally accountable for obtaining property by false pretenses, the wrongdoer may also be liable in a civil court. Liability for tortuous fraudulent misrepresentation, or deceit, closely parallels liability for criminal fraudulent misrepresentation. A wrongdoer who fraudulently misrepresents a fact in order to induce another to act or refrain from acting in reliance upon it may be liable for pecuniary loss caused to the victim by the victim's justifiable reliance upon the misrepresentation.

further readings

Allen, George B. 1999. The Fraud Identification Handbook. Highland Ranch, Colo.: Preventive Press.

Bishop, Joel Prentiss. 1986. Commentaries on the Criminal Law. Buffalo: Hein.

Lafave, Wayne R., and Austin W. Scott Jr. 1986. Substantive Criminal Law. St. Paul, Minn.: West.

Pickett, K. H. Spencer, and Jennifer M. Pickett. 2002. Financial Crime Investigation and Control. New York: John Wiley & Sons.

Torcia, Charles E. 1995. Wharton's Criminal Law. New York: Clark Boardman Callaghan.


White-Collar Crime.