Business scams are unlawful activities carried out by a person or a business that is done dishonestly or unethically. This form of commercial fraud is frequently intended to benefit the person or corporation committing it. Business scams go beyond the purported responsibilities of an employee and are distinguished by their intricacy and financial impact on the company, other employees, and third parties, including the general public. It becomes important to understand the penalties that may be attributed towards the delinquents in such cases and the remedies available to the victims of such business scams. The present article tries to provide insight into the same.
LAWS CONCERNING FRAUD AND RELATED CRIMES
The biggest threats come from fraud and scams, which are aggressively on the rise. 90% of these crimes are now committed from abroad, and investment, romance, and employment scams are those that cause the most crime proceeds and victim losses.
If a company conducts any of its business, it is unlawful to:
- with the intention of defrauding a company’s creditors or the creditors of another person, or
- for any dishonest intent
and the crime is committed by anyone who knowingly participates in the conduct of business in that way. Whether the company has been wound up or is in the process of being wound up, this still holds true.
Individuals, including officers of a company in their personal capacities, as well as corporations, can commit fraud crimes and offences. Persons or corporations who attempt, aid, or conspire to commit the aforementioned offences may also be found guilty under the Penal Code.
In Singapore, the main laws concerning fraud and related crimes are as follows:
1. The Penal Code: Under the Penal Code there is not one specific offence of fraud. There are a number of offences that can constitute fraud in certain jurisdictions under the Penal Code:
- Dishonest misappropriation of property (section 403, Penal Code): This offence is committed when a person dishonestly misappropriates or converts to that person’s own moveable property. Conversion means appropriating the property of others and then making use of it. Misappropriation means setting apart for or assigning to the wrong person or a wrong use.
- Criminal breach of trust (section 405, Penal Code): This offence is committed where a person has been entrusted with property (or is entrusted with any dominion over property) and:
- dishonestly misappropriates or converts to that person’s own use;
- dishonestly uses or disposes of the property in violation of any direction of law prescribing the mode in which the trust is to be discharged;
- dishonestly uses or disposes of the property in violation of any legal contract, (express or implied); or
- wilfully allows any other person to do so.
- Cheating (section 415, Penal Code): This offence is similar to fraud in a number of common law jurisdictions and is committed where a person, by deceiving another person, fraudulently or dishonestly induces that person to:
- deliver any property to any person; or
- consent to any person retaining any property.
- Omissions: A person also cheats where they intentionally induce another person (by deception) to do or omit to do anything that the person would not do or omit to do if the person had not been deceived, and which act or omission causes or is likely to cause damage or harm to any person in body, mind, reputation or property.
- Dishonest or fraudulent disposition of property (section 421, Penal Code): This offence is committed where a person dishonestly or fraudulently removes, conceals or delivers to any person without adequate consideration, any property, intending to prevent the distribution of the property among the person’s creditors.
- Dishonest or fraudulent prevention of payment of a debt (section 422, Penal Code): This offence is committed where a person dishonestly or fraudulently prevents any debt or demands due, being made available to that person’s creditors.
- Dishonest or fraudulent execution of a deed of transfer (section 423, Penal Code): This offence is committed where a person dishonestly signs, executes or becomes a party to any deed or instruments that purports to transfer or subject to any charge, any property, or any interest, and which contains any false statement relating to the consideration of the transfer or charge, or relating to the person(s) for whose use or benefit it is intended to operate.
- Dishonest or fraudulent removal or concealment of property or release of claim (section 424, Penal Code): This offence is committed where a person dishonestly or fraudulently conceals or removes any property of that person or any other person (or assists another in doing so) or dishonestly releases any demand or claim to which that person is entitled.
- Forging documents (section 463, Penal Code): This offence is committed where a person makes a false document (or part of a document) with the intent to cause damage or injury to any person, or to cause any person to part with property, or enter into any express or implied contract, or with intent to commit fraud or that fraud may be committed.
- Falsification of accounts (section 477A, Penal Code): This offence is committed where an officer or employee wilfully and with intent to defraud, alters, conceals, mutilates or falsifies a document held by that person’s employer.
- Theft (section 378, Penal Code): This offence is committed where a person, intending to dishonestly take any movable property out of the possession of any person without that person’s consent, moves the property in order to take it.
The offences can be committed by individuals (including officers of a company in their personal capacity) as well as companies and other legal entities (unless otherwise stated).
Persons (including companies) who attempt, abet and/or conspire to commit the above offences will also be guilty of offence(s) under the Penal Code.
2. The Companies Act
The Companies Act includes offences for false accounting, which are applicable against directors of a company (sections 201(1A), (3), (3A), (3C) and 15, Companies Act). The offences can be committed by directors where a company’s accounts do not give a true and fair view of the financial status of the company.
3. The Income Tax Act
Under the Income Tax Act (section 96A(1)), a person is guilty of an offence if they wilfully with the intent to evade tax or assist another person to evade tax by omitting any income or make any false statement in an income tax return or give any false answer to any question or request for information under the Income Tax Act.
4. The common law
One minor weakness is all it takes for a criminal to escape with sensitive data as scams become more sophisticated. Nevertheless, we can better protect ourselves and our loved ones from becoming victims if there is more law enforcement and more awareness of common scams. Therefore, it’s crucial to be aware of common con games and understand your legal options for compensation should you become a victim.
 Chapter 224, Penal Code, 1871.
 Durugappa v State of Mysore  Cri LJ 630.
 Sohan Lal v Emperor  AIR All 38
 Chapter 50, Companies Act, 1957.
 Chapter 134, Income Tax, 1947.
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