Fraud is a complex topic. In North Carolina, the statutes surrounding fraud are complicated and many different types of actions fall under the umbrella of fraud. Not to mention, the legal consequences involved in fraud cases can be quite harsh.

Recently, a 19-year-old woman from Clinton, North Carolina found out just how harsh the justice system in the state treats those who are suspected of fraud. 

She was charged with felony insurance fraud for claiming that damage done to her vehicle occurred while she had the policy. The truth was discovered that the damage occurred years before she said it did. 

While many people view insurance fraud as a victimless crime, the truth is that the costs of fraud are passed on to the consumer and only drive up insurance rates.

For this reason, North Carolina takes all types of fraud seriously, which is why the North Carolina False Claims Act exists.  Learn more here about the Act as well as the penalties associated with insurance fraud convictions in this state.

What Is Fraud?

North Carolina law outlines fraud as a wide range of offenses that use false statements, lies, or deception to obtain something valuable. These elements must be present in order for something to qualify as fraud:

• Misrepresentation of crucial facts
• Understanding that the facts were being purposefully misrepresented
• Intent to deceive the victim of the fraud by providing false information
• Reliance by the victim on the information that was misrepresented
• Damages to the victim who relied on the misrepresented facts or false statements

What Is the North Carolina False Claims Act?

The North Carolina False Claims Act states that people who perpetrate insurance fraud are to be held liable for up to three times the amount of damages to the state. It applies to anyone who:

• Knowingly presents or causes to be presented fraudulent or false claims
• Knowingly uses, makes, or causes to be used or made a false statement or record material to the fraudulent or false claim
• Plots to violate a subdivision
• Has control, custody, or possession of money or property that is to be used by the state and causes it to be delivered or delivers less than that amount of property or money
• Is authorized to deliver or to make a document certifying a receipt of the property to be used or used by the state and defrauds the state by not knowing if the information on the receipt is true
• Knowingly receives as a pledge of a debt or obligation, or buys, public property from any employee or officer of the state who cannot lawfully pledge or sell property
• Knowingly uses, causes to be used or made, or makes a false record or statement material to an agreement to transmit money, property, or payment to the state or knowingly conceals and improperly avoids or decreases an agreement to transmit money or pay

Anyone who commits these acts is liable to the state of North Carolina for the costs of civil actions for as much as three times the amount of damages sustained by the state.

Protections for Whistleblowers

In cases of fraud against the state covered in the Act, there are whistleblower protections as well. This was done in order to encourage those who see fraud happening to report it so that it may be investigated. 

If you are an employee who becomes aware of fraudulent schemes being perpetrated at your place of business and reports it, then under the law your employer cannot retaliate against you by docking your pay, demoting you, suspending you, harassing or threatening you, or firing you.

The False Claims Act helps to reward those who report fraudulent activities by allowing them to receive a portion of the damages recovered in the case as well.

Penalties for Fraud

In North Carolina, there are several ways fraud is classified but all of them are considered felony offenses. That means that the difference in fraud cases is generally in the sentencing when several factors are taken into consideration by the judge. They will consider:

• The type of fraud perpetrated
• The value of the property that was misappropriated
• Who the victim was
• The extent of the fraud perpetrated
• Whether or not the defendant, during the offense, was in a position of trust
• How many people were involved in the scheme

The penalties for fraud are very case-specific. That’s why understanding the charges against you and what the possible outcomes may be if found guilty is vital if you are ever accused of fraud.