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Thread: Help! What constitutes Fraud?

  1. #1
    Bronze Member BusNavig8's Avatar
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    Help! What constitutes Fraud?

    I need urgent help and dont know where else to post this?

    We went into what we thought was an exclusive contract for financing Start ups. (We signed contracts). We paid an fee for this exclusivity. Nothing happened. Followed Up. promises promises. Then they tried to get more money out of us another R225K. So my red flags were blazing. I analysed the emails and saw they they were also thrying to get our concept that we are launching in March. Well there was no way on earth they would get that. But thats off topic. I put them on terms which they ignored.

    I went to the SAPS yesterday and spoke to the Captain who says that it would be difficult to get the prosector to take on the case due to the fact that it would be considered a civil matter. I need to get the case to stick as a criminal matter to avoid a 3 year court battle and extensive legal fees. Apart from that I feel that it is also a criminal matter. There are scam alerts on aswell for the same company but on reported very recently.

    Any ideas???

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    eish ................. ever considered the "heavy" route ?

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    Diamond Member Vanash Naick's Avatar
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    Remember when they told you in university to never memorize study material word for word. They were right with the exception of one field, namely the LLB subject Criminal Law” Specific crimes. Let me explain, there are 6 essential legal requirements that must be perfectly complied with before an accused can be convicted of a crime namely:
    1. Legality
    2. Conduct
    3. Compliance with definitional elements
    4. Unlawfulness
    5. Capacity
    6. Culpability
    Now it is requirement 3 that we are concerned with here. The accused must meet the exact definition of that crime as it is expressed word for word in it’s ordinary meaning unless a legal technical meaning is indicated.
    “Fraud is the unlawful and intentional making of a misrepresentation which causes actual prejudice or which is potentially prejudicial.”

    Prof Snyman, who in my opinion is the leading expert on criminal law in South Africa as well as the leading author on the subject provides as followsVIDE UNISA2009: 179-183)

    “The misrepresentation

    The first requirement for fraud is that there must be a misrepresentation. This is the conduct requirement of the crime. By misrepresentation is meant a deception by means of a falsehood. X must, in other words, represent to Y that a fact or set of facts exists which in truth does not exist.
    (1) Form that the misrepresentation may take: Although the misrepresentation will generally take the form of writing or speech, conduct other than writing or speech may sometimes be sufficient, such as a nod of the head signifying consent (Larkins 1934 AD 91).(2) The misrepresentation may furthermore be either express or implied. Note the following rule relating to implicit misrepresentation: In the general course of events, somebody who buys goods, not by paying cash, but on credit, implicitly represents that at the time of purchase she is willing to pay for them or intends to pay for them in the future, and that she believes she will be able to do so. If at the time of purchase she in fact has no such intention or belief, she misrepresents the state of her mind (Persotam 1938 AD 92).(3) The misrepresentation may be made by either a commissio (positive act) or an omissio (omission). In most cases the misrepresentation is made by means of a commissio. A mere omission by X to disclose a fact may, in the eyes of the law, amount to the making of a misrepresentation, if there is a legal duty on X to disclose the fact. (Compare the discussion above of the liability for an omission.) The legal duty may arise ذ(a) specifically by statute. Thus, in terms of section 137(a) of the Insolvency Act 24 of 1936, an insolvent person is obliged to disclose the fact that she is insolvent to any person from whom she receives credit amounting to more than R20.(b) from considerations other than the terms of a statute, such as where a court is of the opinion that X should have acted positively to remove a misconception which would, in the natural course of events, have existed in Y's mind. The following is an example of such a case: In Larkins supra X informed Y on 24 August that his salary for the month would be deposited in his banking account on 30 August. On the strength of this, Y lent him money. However, X failed to mention that, prior to 24 August, he had ceded his entire salary for the month to some other person. He was convicted of fraud on the strength of his omission.
    In Yengeni 2006 (1) SACR 405 (T) X, a member of parliament failed to disclose to parliament a benefit negotiated for himself in breach of a parliamentary code of conduct. The court held that although the breach of the parliamentary code of conduct in itself did not amount to fraud, X could nevertheless be convicted of fraud because he was under a legal obligation to speak and had, by his deliberate failure to disclose the benefit, intended to mislead parliament.
    (4) It has sometimes been stated (eg in Larkins supra 92) that a mere false promise as to the future cannot be equated to a misrepresentation. From this it follows that the misrepresentation must refer to an existing state of affairs or to some past event, but not to some future event (Feinberg 1956 (1) SA 734 (O) 736). However, this contention is misleading, as a person who promises to do something at some future stage implies when making the promise that she intends fulfilling it. If this is not in fact her intention she is guilty of a falsehood regarding an existing state of affairs in that she implies that she has a certain belief or intention which she in fact does not have (Persotam supra).An important consequence of the above is the rule which has developed that a person writing out a cheque and handing it to another is generally deemed to have implied that at that stage she believes there are sufficient funds in her banking account to cover payment of the cheque when it is presented to the bank (Deetlefs 1953 (1) SA 418 (A)).

    14.1.4 The prejudice General
    We now come to the second element of the crime, namely the requirement that the misrepresentation must cause actual prejudice or be potentially prejudicial. Mere lying is not punishable as fraud. The crime is only committed if the lie brings about some sort of harm to another. For the purposes of this crime the harm is referred to as prejudice.
    In many instances of fraud the person to whom the false representation is made is in fact prejudiced. For example, X falsely represents to Y that the painting she is selling to Y is an original painting by a famous painter and therefore worth a great amount of money, whereas it is in fact merely a copy of the original and worth very little (if any) money. Actual prejudice is, however, not required; mere potential prejudice is sufficient to warrant a conviction. Nor is it required that the prejudice be of a patrimonial nature. We shall now examine these last two propositions (which incorporate important principles) in more detail. Prejudice may be either actual or potential
    Even if the prosecution has not proved that the misrepresentation resulted in actual prejudice, X may still be convicted if it is proved that her misrepresentation was potentially prejudicial.Assume X has insured with an insurance company all articles belonging to her, against theft. She subsequently claims an amount of money from the insurance company on the ground that certain articles belonging to her have been stolen. Her allegation that the articles have been stolen, is, however, false. If the insurance company pays her the money she claims, the company would have suffered actual prejudice. Assume, however, that after she put in her claim, the company discovers that the articles concerned were in fact not stolen and that X's claim was therefore false. It accordingly refuses to pay X the amount of her claim. Can X nevertheless be convicted of fraud? The answer is ``yes'', because although the company has not suffered any actual prejudice, X's misrepresentation resulted in potential prejudice.
    What is the meaning of ``potential prejudice''?
    (1) Potential prejudice means that the misrepresentation, looked at objectively, involved some risk of prejudice, or that it was likely to prejudice.(2) ``Likely to prejudice'' does not mean that there should be a probability of prejudice, but only that there should be a possibility of prejudice (Heyne 1956 (3) SA 604 (A)). This means that what is required is that prejudice can be, not will be, caused.(3) On the other hand, the possibility of prejudice should not be too remote or fanciful (Kruger 1961 (4) SA 816 (A) 832).(4) The prejudice need not necessarily be suffered by the representee (the party to whom the misrepresentation is directed); prejudice to a third party, or even to the state or the community in general, is sufficient (Myeza 1985 (4) SA30 (T) 32C).
    (5) It is not relevant that Y, the victim, was not misled by the misrepresenta- tion; it is the representation's potential which is the crucial issue. Thus in Dyonta 1935 AD 52, X attempted to sell glass as diamonds to Y. Both X and Y knew that the articles were glass and not diamonds. X was nevertheless convicted since the ``representation that the stones were diamonds was capable in the ordinary course of events of deceiving a person with no knowledge of diamonds and, that being so, the misrepresentation was calculated to prejudice ...'' It follows that it makes no difference whether or not Y reacts to the misrepresentation, or whether X's fraudulent scheme is successful or not (Isaacs 1968 (2) SA 187 (D) 191).(6) Since potential prejudice is sufficient, it is unnecessary to require a causal connection between the misrepresentation and the prejudice. Even where there is no causal connection, there may still be fraud, provided that one can say that the misrepresentation holds the potential for prejudice. After all, a successful misrepresentation is not required for fraud. Prejudice may be either proprietary or non-proprietary in nature
    The prejudice may be either proprietary or non-proprietary in nature. Prejudice may be described as proprietary if it has to do with a person's property or material possessions ذ in other words if it consists in money, or something which can be converted into money. In other instances of prejudice the prejudice is non-proprietary in nature.
    Although in most cases the prejudice or potential prejudice is of a proprietary nature, this need not necessarily be the case. A few examples of fraud involving non-proprietary prejudice are the following:
    (1) writing an examination for another ذ at the very least, this holds potential prejudice for the education authorities (Thabetha 1948 (3) SA 218 (T))(2) submitting a forged driver's licence to a prosecutor during the trial of a traffic offence (Jass 1965 (3) SA 248 (E))(3) making false entries in a register reflecting the sale of liquor ذ this prejudices the state in its control of the sale of liquor (Heyne supra)(4) laying a false charge with, or making a false statement to the police (VanBiljon 1965 (3) SA 314 (T))
    (5) Failing to disclose to parliament a benefit negotiated for oneself in breach of a parliamentary code of conduct (Yengeni supra 423). The prejudice, or potential prejudice suffered is that parliament and its individual members cannot function properly without correct information and accurate knowledge of a particular matter before it which has to be considered."
    “The philosophers have only interpreted the world, in various ways. The point, however, is to change it.” Karl Marx

    Disclaimer: The above is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered. Any reliance upon the above shall be at the user’s own risk
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  4. #4
    Diamond Member wynn's Avatar
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    Forget about fraud, go and lay a charge of theft.

    they stole your money??? they must be arrested???
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    Its certainly not theft - she gave them the money.

    Fraud? The captain does have a point. At first impression it does seem to be a civil matter. You have a contract which they have not fulfilled their side so you can now sue for damages. Trying to prove that this was their intention from the beginning, and that they deliberately misled you could be a huge ask. I'd be surprised if the public prosecutor took this on.

    Sorry. Perhaps spend some money on a legal opinion. If they are being reckless, the directors could be putting themselves at personal risk, which is often a good tool to encourage repayment.

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