Colorado Law on Fraud & Embezzlement

Fraud & embezzlement at a glance

• Under Colorado law, fraud is intentionally committing a wrongful act to gain a benefit or advantage that causes harm or loss to another person or entity.
• Embezzlement involves theft or misuse of property or funds from an employer or business organization by a person in a position of trust, often an employee.
• Colorado law considers both fraud and embezzlement as forms of theft, except when embezzlement involves public property.
• Both of these nonviolent crimes are often called white-collar crimes, carrying penalties of fines and imprisonment relative to the extent of the financial loss or harm.

What is fraud, embezzlement, and white-collar crime?

Fraud and embezzlement in Colorado are closely related. Fraud is an act of deception intended to result in personal gain, including financial gain.

Embezzlement occurs when a person in a position of trust – such as an employee – steals or misuses money or property entrusted to them. Both fraud and embezzlement involve deception and are prosecuted as forms of theft, except for public property embezzlement.

White-collar crime is considered a nonviolent crime committed for financial gain, often by professionals or business people. White-collar crime, a form of theft under Colorado law, can include various types of fraud or embezzlement. Examples given by the FBI include securities fraud, money laundering, mortgage fraud, public corruption, and healthcare fraud.

Prosecutors charge white-collar crimes under various fraud statutes. Penalties depend on the amount stolen and the method used to defraud.

Common types of fraud

Fraud is any act of deception intended to result in personal or financial gain. In Colorado, fraud is classified as a type of theft and can mean lying on official documents, identity theft, writing bad checks, or tricking people out of money. One doesn’t have to succeed with the deception in order to be charged with fraud.

Fraud penalties vary greatly. Minor offenses may result in fines or short jail sentences. Serious fraud, especially involving large sums or vulnerable victims, can mean years in prison and restitution by paying back for what was stolen via fraud.

Following are more common types of fraud charged under Colorado law as stated in Title 18, Article 5 of the Colorado Revised Statutes.

Bribery

Bribery is offering, giving, receiving, or soliciting something of value to influence the actions of a public official or another person having a legal duty. Examples of legal duties include a doctor’s duty to provide care to patients with reasonable skill and diligence, a construction company’s obligations to build structures or roads safely, and corporate executives’ duty to act in the best interests of shareholders. Bribery includes:

• Commercial bribery.
• Breach of duty to act with disinterest.
• Rigging public contests.
• Bribery in sports.

In Colorado bribery is typically a Class 3 felony. Minimum penalties for conviction are 4 years in prison and a $3,000 fine; maximum penalties are 12 years in prison and a fine of $750,000. In addition, a bribery conviction can prevent one from holding public office and can affect immigration issues.

Check fraud

A person commits check fraud when he or she knows they have insufficient funds in an account and issues a check in payment of services, wages, goods, property, or anything of value with the intent to defraud another person. Generally, the amount of the fraudulent check will determine the penalty.

For example, check fraud of less than $300 is a petty offense. From that check fraud amount, the penalty increases upward all the way to a Class 2 felony for check fraud of $1 million or more.

Credit card fraud & debit card fraud

Credit card fraud is taking another’s credit card or the information on a credit card and to use it to purchase goods or services for the benefit of the offender and charged to the credit card holder’s account. Credit card fraud can also happen when someone steals this information from a credit card reader or from a website. This also applies when a debit card is involved.

Credit card fraud can also involve selling such information. Using one’s own credit card when knowing the card is expired or that it has insufficient funds or credit line for the purchase is also credit card fraud. Credit card fraud can be an element of identity theft (see below).

Colorado law bases penalties on the amount of fraud involved as well as the number of times the fraud occurred.

• It’s a petty offense if the fraud was less than $300, with fines of $300 and/or up to 10 days in jail.
• A Class 1 or Class 2 misdemeanor if the value of the fraud was between $300-$2,000, with jail time from 120-364 days and/or fines from $750-$1,000.
• Felony convictions range from Class 6 to Class 2 fraud with fines ranging from $2,000 to $1 million or more and penalties ranging from 12 months to 24 years in prison.

Forgery

Forgery is when someone creates, alters, or falsifies a document with the intent to defraud. Means to perpetrate forgery include:

• Money, securities, or other valuable instruments issued by a government agency.
• Stocks or bonds representing claims against a corporation.
• A deed, will, or other document affecting a legal interest.
• Falsifying an unemployment application.
• Having a device to create such falsified documents.

Penalties range from a Class 2 misdemeanor (up to 120 days in jail and/or a $750 fine) to a Class 5 or Class 6 felony (up to 3 years in prison and/or up to a $100,000 fine).

Identity theft

This crime involves using someone else’s personal information, such as a Social Security number or bank account, without permission to commit fraud by obtaining something of value or making a payment. Prosecutors can charge identity theft if one is in possession of such personal information with the intent to unlawfully use it.

• Some forms of identity theft can be a Class 2 misdemeanor, carrying up to 120 days in jail and/or up to $750 in fines.
• If the number of abuses is three or more, prosecutors can raise this charge to a Class 5 felony, with up to 3 years in prison and/or up to a $100,000 fine.
• A Class 4 felony for identity theft carries up to 6 years in prison and/or fines of $2,000-$500,000.

Money laundering

Money laundering is concealing the origins of illegally obtained money. The goal is to both make money from a crime and prevent authorities from discovering the origin of the funds.

Money laundering involves introducing illegal funds, which can include a crime in obtaining these funds, into a financial system through deposits and transactions. The funds are then moved though different accounts to hide their initial origin. Finally, the laundered funds are put back into the economy.

Money laundering under Colorado law is a Class 3 felony. Conviction brings penalties of from 4 to 12 years in prison and fines from $3,000 to $750,000. Those convicted of money laundering can also forfeit financial gains there from.

Additional types of fraud

Colorado law recognizes a variety of other types of this offense, such as:

Insurance fraud

Insurance fraud is lying or exaggerating on insurance claims to get money illicitly. An example is reporting a car as stolen when the perpetrator actually sold it. Penalties depend on the amount of money involved and the type of deception employed.

Security fraud

This is the act of deceiving investors or manipulating financial markets for profit. An example is lying about a company’s financial health to sell stock at overvalued prices. Securities fraud is a Class 3 felony and can be a state or federal offense.

Mortgage fraud

Mortgage fraud is theft by deception involving the mortgage lending process. An example is submitting falsified income documents on a residential loan application to obtain a larger mortgage. Penalties are related to Colorado theft values.

Financial fraud

Under Colorado law this is obtaining another’s property (theft) by deception. Examples include embezzling client funds or running a Ponzi scheme that deceives investors.

Internet fraud

Colorado’s cybercrime statute defines internet fraud as use of a computer/network to devise or execute any scheme to fraudulently get money or passwords. An email phishing scheme is an example.

Computer fraud

Also part of Colorado’s cybercrime law and overlapping internet fraud, computer fraud includes unauthorized access, exceeding authorized access, using a computer to commit theft, or causing damage/interruption to computer systems.

Employee theft

Employee theft is knowingly obtaining or controlling an employer’s property without authorization, often by deception. Stealing company property or taking cash from a register are examples.

Workers compensation fraud

This is lying or misrepresenting material on a workers’ compensation claim with the intent to obtain benefits someone is not entitled to. An example is claiming that a nonwork injury happened on the job.

Auto insurance fraud

Insurance fraud covers auto insurance fraud, which is knowingly giving false information to get an unearned benefit from an auto insurance claim. An example is claiming auto damage occurred while someone’s car was unattended in a parking lot, when it was actually caused by the owner running into a fence.

Embezzlement

Embezzlement is the taking or misuse of money or property entrusted to the person who takes it and who has legal access to it. Colorado law, CRS 18-4-401 and 18-4-403, treats embezzlement as a form of theft, with specific rules for public property and private assets.

Private embezzlement

This form of embezzlement is generally perpetrated on an employer and is treated as theft by Colorado law. Theft by embezzlement is when someone obtains anything of value owned by another without approval in a manner that deprives the owner of the item’s value or use.

The class of charges depends on the value of the embezzlement. This starts at a petty offense charge for value under $300 and goes all the way up to a Class 2 felony for embezzlement of $1 million or more. A petty offense carries up to 10 days in jail and up to a $300 fine. Class 2 felony carries up to 24 years in prison and a fine up to $1 million.

Public property embezzlement

This is a specific crime involving embezzlement of property from the state or federal government. This occurs when a public employee takes possession of government property or money and keeps or uses that money or property for the employee’s own use.

Public property embezzlement is a Class 5 felony. The convicted is barred from holding any office of trust in the state and faces up to 3 years in prison and a fine of up to $100,000.

Colorado criminal defense attorney for white-collar crime

If you’ve been investigated or arrested for a white-collar crime such as fraud or embezzlement, make sure you do everything you can to defend against these charges. I am Denver attorney Christopher T. Braddock, and I have been defending clients against fraud and embezzlement charges in Colorado’s state and federal criminal courts for more than 15 years.

I am familiar with the challenges in these cases. My white-collar crime practice defends clients against charges such as conspiracy and racketeering, including through the Colorado Organized Crime Control Act (CoCCA) and the federal Racketeer Influenced and Corrupt Organizations Act (RICO). By conducting a thorough investigation into the details of your case, I will work to build the best possible defense.