Los Angeles Business Fraud Litigation Lawyer

According to the California Employment Development Department (EDD), California is the fourth-largest economy in the world, and has 4.2 million small businesses, which account for 99.9% of the total businesses in California.

Business fraud isn’t just a distant concept reported in the news, but a real risk that California business owners face every day. Because of the size of its economy, California attracts both entrepreneurs and fraudsters looking for opportunities and victims.

What Business Owners Need to Know About Fraud

Business owners who are the victims of fraud need to know how to protect their rights. This unfortunately means pursuing litigation in many cases. Special consideration must be given when going after a fraudster, though, unlike a typical case. Sometimes, it may not make financial or business sense to pursue litigation, depending on the circumstances. If a fraud victim pursues legal action, a comprehensive strategy is necessary from the very beginning to ensure that the business owner’s interests are advanced, rather than worsening the owner’s overall situation.

Types of Fraud in California

 There are three general types of fraud in California.

An intentional misrepresentation means representing a fact as true when known to be false, or in reckless disregard for its truth, with the intent to have the other party rely on the representation.

Concealment concerns the intentional failure to disclose material facts or preventing of those facts from being discovered with the intent to deceive the other party by concealing the facts.

False promise or fraudulent inducement means making a promise with no intent to perform that another party reasonably relies on to be harmed.

Remedies for Fraud in California

The remedies can vary depending on the type and extent of fraud, but typically it may include any monetary losses as a result of the fraud, as well as exemplary or punitive damages.

Exemplary damages are permitted under California Civil Code section 3294 in actions not arising out of a contract for malicious, oppressive, or fraudulent conduct. Even though the business fraud may have arisen out of a contract, intentional torts such as fraud may be alleged in order to seek punitive damages, depending on the circumstances.

Other non-economic damages, such as reputational harm, may also be available.

Types of Business Fraud Cases We Handle

Examples of the types of cases or common scenarios we handle for business owners and partners include:

Sale or purchase of a business: the seller of an established business lied or concealed information about the true status of the business’ financial condition or immediately defaulted on installment payments after gaining control or access to the business. Or in other cases, the seller is unfairly accused of these fraudulent acts as a reason for default or failure to pay.

Business loans or other contracts: business owners are tricked into providing loans based on false financial information or other lies or incorrect information, or otherwise tricked into entering some type of contract based on material misrepresentations of fact that turned out to be untrue. In other cases, the business owners become the victims of a Ponzi-type scheme.

Partnership disputes: co-owners of a business owe fiduciary duties to one another, along with contractual obligations. But oftentimes, they are the victims of fraud by their trusted partner. This may include scenarios of embezzlement, stolen business opportunities, or the hiding of business assets for personal gain.

Real estate: co-owners or partners of real estate deals frequently and unfortunately enter into “handshake” agreements about flipping a property or owning one together. In common scenarios, a partner takes partnership funds to purchase a property but fails to identity the others as co-owners of the property, or a “flip” falls apart for one reason or another.

Why You Need a California Business Fraud Lawyer

Proving fraud is more difficult than other civil claims, because it has a higher burden of proof. You must prove that the conduct was intentional or reckless, and to obtain punitive damages, you must prove by clear and convincing evidence that such conduct was intended to cause harm, or in conscious disregard of another’s rights. Special consideration must also be taken to ensure that the pursuit of any legal action against a fraudster makes sense.