Fraud

Fraud

Fraud is an offence contrary to section 16A of the Theft Ordinance (Cap. 210). The maximum punishment is 14 years’ imprisonment. 

In gist, fraud is committed when a person makes a false representation, either by words, conduct or omission which induces someone to believe something untrue. The person must have the intent to deceive the victim, and that he must either know or believe that the content is false. 

Fraud is usually committed by words or conduct. However, a person may also commit fraud by not doing something (omission), such as concealing certain facts if he has a duty to disclose it to the other party. This can arise, for example, when there is a special relationship (such as agent and principal, trustee and beneficiary), or a contract or code of conduct specifically requires disclosure. In those circumstances, deliberately concealing relevant facts can amount to a false representation.

However, to prove the offence of fraud, the prosecution would also need to prove that the deception was for some purpose, either to induce the victim to do or not to do something that would either benefit anyone (apart from the victim), or such that anyone (apart from the deceiver) would be prejudiced or under a substantial risk of prejudice. 

It is not necessary for the intended victim to suffer actual financial or proprietary loss. A substantial risk of prejudice to that person’s financial or proprietary interests is sufficient for fraud.

Examples include:

1. Fraudsters use forged documents and unauthorized signatures to deceive lenders into believing that a property owner has approved a large loan secured by their property as collateral.

2. Individuals falsely claim to represent prominent entity seeking a service contractor. They then persuade victims to pay “tender fees” or “registration fees” for contracts or events that do not actually exist.