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Best practices for making a referral to law enforcement on a fraud case

If the government pursues a fraud case to a successful conviction, it will send a deterrent message to would-be scammers

This is the fourth article in a series on discount and warranty fraud. Read parts one, two and three.

Even the most vigilant of companies have become victims of discount fraud schemes or fallen prey to warranty fraud scams. When that happens, making a referral to law enforcement may be the best approach under the right circumstances. If the government pursues the case to a successful conviction, that sends the strongest deterrent message possible. Prison gets everybody’s attention. Also, it may be possible to recoup your financial losses through court-ordered restitution. The bottom line is that a criminal referral should be an arrow in your enforcement quiver, to be used in the right circumstances.

2. Tackling and proving materiality

A prosecutor will need to prove the fraud beyond a reasonable doubt. A case that is a good candidate for referral has clear facts showing the company’s due diligence and the fraudulent statements. If the fraud is clear to you, then you must make it equally evident to the investigator and prosecutor. Preparation and investigation on your end can certainly have an effect on whether the case is worthy of government resources. Hone in on the misrepresentations that are the basis for the fraud. Gather all of the specifics of the deal, including emails and other communications, purchase orders, and other documents, to show that the deal was fraudulent at the inception.

Contributing Author

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Richard Nelson

Richard J. Nelson is a partner at Sideman & Bancroft LLP in San Francisco, where he specializes in litigation and government investigations. Mr. Nelson often...

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Contributing Author

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Erica Brand Portnoy

Erica Brand Portnoy is an associate at Sideman & Bancroft in San Francisco where she works with the firm’s Brand Integrity and Innovation Group. Her...

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