[dropcap]F[/dropcap]raud is deliberate deception to secure unfair or unlawful gain. Fraud is both a civil wrong (i.e., a fraud victim may sue the fraud perpetrator to avoid the fraud and/or recover monetary compensation, for example according to section 823 of the German Civil Code) and a criminal wrong (i.e., a fraud perpetrator may be prosecuted and imprisoned by governmental authorities according to section 263 of the German Penal Code). The purpose of fraud may be monetary gain or other benefits, such as obtaining a drivers license by way of false statements.

[dropcap]W[/dropcap]ith our deep knowledge of both the civil side of commercial contractual obligations as well as our expertise concerning the criminal dimension, including the forensic defense, we offer the best defense strategy possible for our clients.


[messagebox background=”#fff” color=”#303030″ border=”#ec0606″] [tagline]Section 263 para. 1 of the German Penal Code reads:[/tagline]

(1) Whosoever with the intent of obtaining for himself or a third person an unlawful material benefit damages the property of another by causing or maintaining an error by pretending false facts or by distorting or suppressing true facts shall be liable to imprisonment not exceeding five years or a fine.

(2) The attempt shall be punishable.

(3) In especially serious cases the penalty shall be imprisonment from six months to ten years. An especially serious case typically occurs if the offender

1.  acts on a commercial basis or as a member of a gang whose purpose is the continued commission of forgery or fraud;

2.  causes a major financial loss of or acts with the intent of placing a large number of persons in danger of financial loss by the continued commission of offences of fraud;

3.  places another person in financial hardship;

4.  abuses his powers or his position as a public official; or

5.  pretends that an insured event has happened after he or another have for this purpose set fire to an object of significant value or destroyed it, in whole or in part, through setting fire to it or caused the sinking or beaching of a ship.

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Different Types of Fraud Crimes according to Section 263 of the German Penal Code
[spacing size=”22px”] [tab_title_wrapper] [tab_title id=”contract” title=”Fraudulent representation to obtain a contract” icon=”fa fa-hand-o-right” active=”true”] [tab_title id=”healthcare” title=”Health Care Fraud” icon=”fa fa-file-text-o” active=”false”] [tab_title id=”brokering” title=”Brokering Loans Fraud” icon=”fa fa-bar-chart ” active=”false”] [tab_title id=”social” title=”Social Welfare Fraud” icon=”fa fa-bar-chart ” active=”false”] [tab_title id=”tendering” title=”Tendering Fraud” icon=”fa fa-bar-chart ” active=”false”] [/tab_title_wrapper] [tab_content_wrapper] [tab_content id=”contract” active=”true”]

Contract fraud occurs when one party during the course of negotiating and signing a contract deceives the other party by making it belief wrong factual circumstances. In most cases, the accused party deceives about its ability to fulfill the contractual obligation, either performing a certain prestation (i.e., ability to legally deliver goods) or to pay for services rendered (i.e., ability and willingness to pay a contractual debt). A typical contract fraud occurs when a company A enters into a contract with a company B for the sale and purchase of goods, while company A is already bankrupt, deliberately concealing this fact to make company B signing the contract. As a matter of course, most companies will not enter into contract with insolvent entities.

[/tab_content] [tab_content id=”healthcare” active=”false”]

Health Care Fraud often appears in the form of submission of false claims. Broadly speaking, healthcare fraud involves making false statements or engaging in illegal practices for financial gain. This happens for instance, when the billing by the accused person is deliberately false, making the other party pay more than is actually owed. In most of the cases, doctors, pharmacies or homes for elderly people hand in bills containing services which have not been rendered to the patient or medicine which has not been given to the patient, therefore deceiving the health insurance or social security fund. While this may make it sound like those who commit healthcare fraud are serious criminals, the reality is that physicians and other healthcare industry professionals often find themselves facing healthcare fraud charges when they have no idea what has gone wrong. The damage to the health care system with its solidary foundation is substantial, thus punishment in such cases is relatively severe.

[/tab_content] [tab_content id=”brokering” active=”false”]

A fraud in connection with brokering loans occurs if the accused person makes another person pay a commission fee for the brokering of a suitable loan as an advance payment, while it never intended to find a loan for the future debtor. The same applies if an advance fee is paid by the debtor while the alleged creditor promises to pay a loan in exchange, which is not intended to happen.

[/tab_content] [tab_content id=”social” active=”false”]

Social welfare fraud is the unlawful receipt of payments from social security funds based on false factual statements. For instance, the accused person applies for some kind of social aid, pretending to be pure, while he or she in fact is affluent. The competent authority is deceived into paying monthly instalments. Such fraud damages the solidary foundation of the society and its social security, therefore punishment can be severe.

[/tab_content] [tab_content id=”tendering” active=”false”]

Tendering fraud or submission fraud occurs, if one ore more persons are asked to submit an offer about a certain prestation in order for the receiving party to pick the best offer. However, the persons submitting the offer have secretly agreed on the content of their offers, especially the prices. As a result, the offers do not reflect a fair market price. The party asking for the offer is likely to pay more than the market price and thus its property will be damaged. The offering parties might share the profit or follow a rotating principle. Tendering fraud is not to be confused with Restricting competition through agreements in the context of public bids according to section 298 of the Penal Code.

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Other Fraudulent Crimes in the German Penal Code
[spacing size=”22px”] [toggle title=”Section 263a: Computer Fraud”]

(1) Whosoever with the intent of obtaining for himself or a third person an unlawful material benefit damages the property of another by influencing the result of a data processing operation through incorrect configuration of a program, use of incorrect or incomplete data, unauthorised use of data or other unauthorised influence on the course of the processing shall be liable to imprisonment not exceeding five years or a fine.

[…]

(3) Whosoever prepares an offence under subsection (1) above by writing computer programs the purpose of which is to commit such an act, or procures them for himself or another, offers them for sale, or holds or supplies them to another shall be liable to imprisonment not exceeding three years or a fine.

[/toggle] [toggle title=”Section 264: Subsidy Fraud”]

(1) Whosoever

1.  makes incorrect or incomplete statements about facts relevant for granting a subsidy to himself or another that are advantageous for himself or the other, to a public authority competent to approve a subsidy or to another agency or person which is involved in the subsidy procedure (subsidy giver);

2.  uses an object or monetary benefit the use of which is restricted by law or by the subsidy giver in relation to a subsidy contrary to that restriction;

3.  withholds, contrary to the law relating to grants of subsidies, information about facts relevant to the subsidy from the subsidy giver; or

4.  uses a certificate of subsidy entitlement or about facts relevant to a subsidy, which was acquired through incorrect or incomplete statements in subsidy proceedings,

shall be liable to imprisonment not exceeding five years or a fine.

(2) In especially serious cases the penalty shall be imprisonment from six months to ten years. An especially serious case typically occurs if the offender

1.  acquires, out of gross self-seeking or by using counterfeit or falsified documentation, an unjustified large subsidy for himself or another;

2.  abuses his powers or his position as a public official; or

3.  uses the assistance of a public official who abuses his powers or his position.

(3) Section 263(5) shall apply mutatis mutandis.

(4) Whosoever acts in gross negligence in cases under subsection (1) Nos 1 to 3 above shall be liable to imprisonment not exceeding three years or a fine.

(5) Whosoever voluntarily prevents the granting of a subsidy on the basis of theoffence shall not be liable pursuant to subsections (1) and (4) above. If the subsidy is not granted regardless of the contribution of the offender he shall be exempt from liability if he voluntarily and earnestly makes efforts to prevent the subsidy from being granted.

(6) In addition to a sentence of imprisonment of at least one year for an offence under subsections (1) to (3) above the court may order the loss of the ability to hold public office, to vote and be elected in public elections (section 45(2) and (5)). Objects to which the offence relates may be subject to a deprivation order; section 74a shall apply.

(7) A subsidy for the purposes of this provision shall mean

1.  a benefit from public funds under Federal or state law for businesses or enterprises, which at least in part

(a)  is granted without market-related consideration; and

(b)  is intended for the promotion of the economy;

2.  a benefit from public funds under the law of the European Communities which is granted at least in part without market-related consideration.

A public enterprise shall also be deemed to be a business or enterprise within the meaning of the 1st sentence No 1 above.

(8) Facts shall be relevant to a subsidy within the meaning of subsection (1) above

1.  if they are designated as being relevant to a subsidy by law or by the subsidy giver on the basis of a law; or

2.  if the approval, grant, reclaiming, renewal or continuation or a subsidy depends on them for reasons of law.
[/toggle] [toggle title=”Section 264a: Capital Investment Fraud”]

(1) Whosoever in connection with

1.  the sale of securities, subscription rights or shares intended to grant participation in the yield of an enterprise; or

2.  an offer to increase the capital investment in such shares,

makes incorrect favourable statements or keeps unfavourable facts secret in prospectuses or in representations or surveys about the net assets to a considerable number of persons in relation to circumstances relevant to the decision about acquisition or increase, shall be liable to imprisonment not exceeding three years or a fine.

(2) Subsection (1) above shall apply mutatis mutandis if the act is related to shares in assets which an enterprise administers in its own name but for the account of a third party.

(3) Whosoever voluntarily prevents the benefit contingent upon the acquisition or the increase from accruing shall not be liable pursuant to subsections (1) and (2) above. If the benefit does not accrue regardless of the contribution of the offender he shall be exempt from liability if he voluntarily and earnestly makes efforts to prevent the benefit from accruing.
[/toggle] [toggle title=”Section 265: Insurance Fraud”]

(1) Whosoever damages, destroys, impairs the usefulness of, disposes of or supplies to another an object which is insured against destruction, damage, impairment of use, loss or theft in order to obtain for himself or a third party a payment from the insurance shall be liable to imprisonment not exceeding three years or a fine unless the offence is punishable under section 263.

(2) The attempt shall be punishable.

[/toggle] [toggle title=”Section 265a: Obtaining Services by Deception”]

(1) Whosoever obtains the service of a machine or a telecommunications network serving public purposes or uses a means of transportation or obtains entrance to an event or institution by deception with the intent of not paying for them shall be liable to imprisonment not exceeding one year or a fine unless the act is punishable under other provisions with a more severe penalty.

(2) The attempt shall be punishable.
[/toggle] [toggle title=”Section 265b: Obtaining credit by deception”] (1) Whosoever, in connection with an application for or for a continuance of credit or modification of the terms of credit for a business or enterprise or for a fictitious business or enterprise

1. (a)  submits incorrect or incomplete documentation, in particular, calculations of balance, profit and loss, summaries of assets and liabilities or appraisal reports; or

(b)  makes incorrect or incomplete written statements,

about financial circumstances that are favourable to the credit applicant and relevant to the decision on such an application, to a business or enterprise; or

2.  does not inform a business or enterprise in the submission about any deterioration in the financial circumstances represented in the documentation or statements that are relevant to the decision on such an application,

shall be liable to imprisonment not exceeding three years or a fine.

(2) Whosoever voluntarily prevents the creditor from providing the credit applied for shall not be liable pursuant to subsection (1) above. If the credit is not provided regardless of the contribution of the offender he shall be exempt from liability if he voluntarily and earnestly makes efforts to prevent the credit from being provided.

(3) Within the meaning of subsection (1) above

1.  businesses and enterprises shall be those which require by their nature and size, but regardless of their purpose, a properly organised operation applying the appropriate commercial customs, rules and standards;

2.  credits shall be money loans of all kinds, acceptance credits, the acquisition for payment or the deferment of monetary claims, the discounting of promissory notes and cheques and the assumption of sureties, guarantees and other warranties.

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