Legal Definitions - collateral fraud

Collateral Fraud

Collateral fraud, also known as extrinsic fraud, refers to deceptive actions that occur outside the main issues being litigated in a court case, but which prevent one of the parties from having a fair opportunity to present their side, or prevent the court from impartially deciding the matter. This type of fraud undermines the integrity of the judicial process itself, rather than merely involving false evidence presented during the trial. Because it corrupts the fairness of the proceeding, a judgment obtained through collateral fraud can often be challenged and potentially overturned, even long after the original case has concluded.

• Example 1: Misleading About Court Proceedings

  In a property dispute, one party intentionally sends their opponent an incorrect court date and time for a critical hearing, leading the opponent to miss the session. As a result, the court issues a default judgment against the absent party.

  This illustrates collateral fraud because the deception (providing false information about the hearing) occurred outside the core arguments about the property itself. However, it directly prevented the opposing party from participating fairly in the legal process, thereby corrupting the fairness of the judgment.

• Example 2: Tampering with Court Administration

  During a complex business litigation, a representative for one company secretly bribes a court official to "misplace" or "lose" a crucial piece of evidence that the opposing side had properly filed with the court. This evidence, therefore, never reaches the judge for consideration.

  This is an example of collateral fraud because the bribery and evidence tampering are external to the actual legal arguments and facts of the business dispute. The fraudulent act corrupted the administrative process of the court, preventing a fair and complete presentation of evidence to the judge.

• Example 3: Coercion of a Witness

  In a personal injury lawsuit, the defendant's associate threatens a key witness for the plaintiff, warning them of severe repercussions if they testify about certain damaging facts. Fearing for their safety, the witness subsequently refuses to appear in court or provides incomplete testimony.

  This demonstrates collateral fraud because the intimidation occurred outside the courtroom and was not part of the evidence presented during the trial. However, it directly interfered with the plaintiff's ability to present their full case by preventing a crucial witness from testifying truthfully, thus undermining the fairness of the judicial proceeding.