Legal Definitions - fraudulent or dishonest act

A fraudulent or dishonest act refers to any action characterized by deceit, trickery, or a lack of integrity, performed with the intent to mislead, cheat, or deprive another person or entity of something valuable, or to secure an unfair advantage. Such acts involve a deliberate intent to deceive or to breach a duty of honesty, often resulting in financial gain for the perpetrator or loss for the victim.

Here are some examples illustrating a fraudulent or dishonest act:

• Example 1: Employee Embezzlement

  A senior accountant at a manufacturing company secretly creates a fictitious vendor in the company's accounting system. Over several months, they approve payments to this fake vendor, diverting company funds into a personal bank account they control. This act is both fraudulent because it involves deception (creating a fake vendor and false invoices) and dishonest because it breaches the accountant's duty of trust and integrity to their employer, with the intent to steal money.

• Example 2: Misleading Investment Scheme

  An investment advisor promotes a new "guaranteed high-return" fund to clients, knowing that the fund is actually very risky and has a high probability of losing money. The advisor intentionally omits crucial information about the risks and exaggerates potential returns to persuade clients to invest, earning large commissions in the process. This is a fraudulent act because the advisor uses deliberate misrepresentation and concealment of material facts to induce clients to make a financial decision that benefits the advisor at the clients' potential expense.

• Example 3: Insurance Claim Deception

  After a minor fender bender, a car owner intentionally exaggerates their injuries to their insurance company, claiming severe whiplash and ongoing pain that requires extensive physical therapy, even though their actual injuries were minor. They submit fabricated medical bills and doctor's notes to support their inflated claim. This constitutes a fraudulent act because the car owner is deliberately misrepresenting facts and providing false documentation to obtain a larger insurance payout than they are legitimately entitled to, thereby deceiving the insurance company for personal financial gain.