What is business fraud?

This post will discuss three topics in criminal business law: (1.) Corporate Criminal Responsibility; (2.) Burning Insured Property; and (3.) Burning Personal Property.

Can I sue a business just like I can sue another person?

No, not quite. A corporation is naturally not a living person and therefore it can act only through its agents.

How does the government prove that a business is guilty of a crime?

In order to prove that a corporation is guilty of a criminal offense that was committed by one of its agents, it must prove ALL of the following beyond a reasonable doubt:

  • That a specific person is guilty of this offense
  • That such person engaged in some particular corporate business or project
  • That the accused corporation had given that person authority and responsibility

Corporate criminal responsibility is different from criminal responsibility.

Does the person who committed the crime have to be a director, officer, or employee of the business?

It is NOT necessary that the perpetrator was a director, an officer, or even an employee.

It is also NOT necessary that those in control of the corporation directly requested or authorized the crime or approved of it afterwards.

The above factors can be relevant to the decision of jurors but they are not necessary.

What role does the authority of the person who committed the crime play?

The corporation is guilty of the crime in question if the person who committed the crime is in a position where he or she had enough power and authority to act for the corporation in the corporate project he or she was involved in when he or she committed this offense.

Courts consider the following factors:

  • How much authority and control that person exercised over corporate matters
  • How much control others in the corporation exercised over that person in corporate matters
  • If the criminal act involved corporate funds
  • Whether there was a repeated pattern of criminal conduct that might indicate corporate toleration or approval after the fact of that person’s criminal acts

What is burning insured property?

One way to commit fraud in Massachusetts is by burning insured property. Under Massachusetts General Laws Chapter 266, Section 10 a person who burns insured property can be punished with a prison term of up to five years.

Massachusetts law states:

“Whoever, willfully and with intent to defraud or injure the insurer, sets fire to, attempts to set fire to, causes to be burned, aids, counsels or procures the burning of a building [or] any goods, wares, merchandise or other personal property, belonging to himself or another, and which are at the time insured against loss or damage by fire, shall be punished…”

In other words, if a defendant willfully and with intent does any of the following acts to defraud or injure an insurer:

  • Sets fire to
  • Attempts to set fire to
  • Burns
  • Aids, counsels, or procures the burning of

…any of the following:

  • Goods
  • Wares
  • Merchandise
  • Other personal property

…belonging to themself, and which are at the time insured against loss or damage by fire, commits a crime.
Note that burning insured property is a different crime than burning personal property.

How does the government prove someone burned insured property

In order to prove a defendant guilty of the offense of burning insured property, the Commonwealth must prove all of the following beyond a reasonable doubt:

  • That the defendant set fire to; attempted to set fire to; burns; or aided, counseled or procured the burning of, a building or personal property belonging to himself or herself or someone else
  • That at the time of the alleged incident, the there was insurance on the property
  • That the defendant acted with the specific intent to injure or defraud the insurer

Moreover, there is a fourth part to the offense. If the defendant attempts to burn property:

  • That the defendant took some overt act toward carrying out such burning, and which came reasonably close to actually carrying it out

What do courts look at to determine if someone burned insured property?

Further, other factors that courts can consider in determining if a defendant has committed the offense of burning insured property include:

  • Over-insurance
  • Financial distress
  • Failure to report the fire
  • False statements during the investigation of the incident in question
  • Whether the defendant was an insurance beneficiary*
  • Who has accessibility to the burned object or objects
  • Positioning of the object or objects burned
  • Whether or not the insurance claim is an exaggeration
  • Where defendant was at the time of the fire

*Note that whether the defendant receives a direct benefit to the defendant is not a necessary element of the offense

Note that the introduction of insurance policy is not mandatory when there is testimony that property is indeed insured.

If I can't extinguish the fire, am I still legally responsible?

The intent to defraud an insurer does not necessarily need to precede the fire. A defendant can be convicted for burning insured property if he or she is capable of extinguishing a fire that has started accidentally, but intentionally fails to do soin order to injure the insurer.

Note however that negligence alone is not enough to convict a defendant.

Also note that arson of a dwelling and burning a building are NOT lesser included offenses of burning a building to defraud an insurer. A lesser included offense is a less serious crime that is necessarily committed during the perpetration of a greater crime because the lesser crime contains some of the same elements as the greater crime.

Is burning personal property for insurance money illegal?

Yes, willfully and maliciously burning personal property belonging to another person worth over $25 in value can be punished under M.G.L. c. 266, § 5. The punishment for this offense could include three years in state prison or a maximum fine of $500.

Commonwealth law states:

“Whoever willfully and maliciously sets fire to, burns, destroys or injures by burning, causes to be burned or otherwise so destroyed or injured, aids, counsels or procures the burning of, any personal property [belonging to another person and]…exceeding a value of twenty-five dollars…or any boat, motor vehicle…or other conveyance, whether belonging to himself or another…shall be punished…”

In other words, a person who willfully AND maliciously:

  • Sets fire to
  • Burns
  • Destroys by burning
  • Injures by burning
  • Burns, destroys, or injures
  • Aids, counsels or procures the burning of

…ANY personal property, or property belonging to another person, that is:

  • Worth more than $25
  • A boat
  • A motor vehicle
  • Another “conveyance”

…whether belonging to himself or herself, commits a crime.

How does the government prove that I deliberately burned my property?

In order to prove a defendant GUILTY of the offense of unlawfully burning personal property, a motor vehicle, or other items, the Commonwealth must prove ALL of the following four elements of the offense beyond a reasonable doubt:

  • That the property in question was (ONE OR MORE):
    • Personal property belonging to another person with a value of more than $25
    • A boat belonging to the defendant or another person
    • A motor vehicle belonging to the defendant or another person
    • A conveyance belonging to the defendant or another person
  • That the defendant (ONE OR MORE):
    • Set fire to or burned the property
    • Caused the property to be burned
    • Aided, counseled, or procured the property to be burned
  • That the defendant did so willfully—that is, intentionally and not by accident
  • That the defendant did so maliciously—that is, it was done with some wrong and unlawful motive and without excuse

What does it mean to act “willfully”?

In legal language, “willful” means intentionally and by design. Regarding this crime, this means the action(s) was not accidental or negligent. Note however that a person who negligently ignites a fire and then makes no attempt to extinguish or report it may be found in some circumstances as to have acted willfully.

What does it mean to act with “malice”?

That a defendant acted with “malice” does not necessarily require that he or she acted with any particular ill will against someone. A burning is malicious if is done with a wrong and unlawful motive or purpose OR if it is the willful doing of a harmful act without lawful excuse.

IF YOU OR A LOVED ONE HAVE A LEGAL QUESTION ABOUT BUSINESS FRAUD, AND YOU NEED AN EXPERIENCED CRIMINAL DEFENSE LAWYER WORKING ON YOUR SIDE TO PROTECT YOUR RIGHTS, PLEASE CONTACT CRIMINAL DEFENSE ATTORNEY WILLIAM J. BARABINO.

CALL 781-393-5900 TO LEARN MORE ABOUT YOUR AVAILABLE DEFENSES.

Related Articles:

Categories: Blog

sidebar_in_the_news

Contact Us

  • This field is for validation purposes and should be left unchanged.