Legal Definitions - conscius fraudis

Conscius fraudis is a Latin term that translates to "aware of fraud" or "having knowledge of fraud." It describes a person who possesses guilty knowledge of a fraudulent scheme or act. This individual is not an innocent party but understands that a deception is taking place, often implying some level of involvement or complicity, even if they are not the primary perpetrator of the fraud.

Here are some examples to illustrate this concept:

• Example 1: Real Estate Transaction

  Imagine a real estate agent who is aware that a seller is intentionally concealing significant, unfixable water damage in a house from a potential buyer. Despite knowing about this deliberate misrepresentation, the agent proceeds with facilitating the sale without disclosing the critical information to the buyer.

  Explanation: In this scenario, the real estate agent would be considered conscius fraudis because they possess direct knowledge of the seller's fraudulent intent to deceive the buyer and actively participate in the transaction without intervention, thereby becoming complicit in the fraud.

• Example 2: Corporate Financial Reporting

  Consider an executive at a company who instructs the accounting department to deliberately inflate sales figures and hide significant debts in the company's quarterly financial reports. A junior accountant, while preparing these reports, discovers the discrepancies and realizes the figures are being manipulated to mislead investors. Despite this knowledge, the accountant completes and submits the reports as instructed.

  Explanation: The junior accountant, by knowingly preparing and submitting fraudulent financial statements, would be acting as conscius fraudis. They are aware of the deceptive nature of the reports and contribute to the fraudulent misrepresentation, even if the directive came from a superior.

• Example 3: Insurance Claim Scheme

  Suppose a person agrees to let their friend use their car to stage a minor "accident" with another vehicle, solely for the purpose of filing a fraudulent insurance claim for damages that never actually occurred. The person lending the car knows the entire setup is a fabrication designed to defraud the insurance company.

  Explanation: The individual who lends their car, knowing it will be used in a staged accident for a false claim, is conscius fraudis. They have full knowledge of the fraudulent intent behind the "accident" and actively enable the scheme, making them aware of and complicit in the fraud.